In a 5-3 decision the Texas Supreme Court held Friday that entities seeking to build a Dallas-to-Houston high-speed railway have statutory eminent-domain authority to take land to build it.
In Miles v. Texas Central Railroad & Infrastructure Inc. and Integrated Texas Logistics Inc. the court concluded in a majority opinion by Justice Debra Lehrmann that Texas Central Railroad and Integrated Texas Logistics qualify as an interurban electric-railway company possessing eminent-domain power the Legislature granted more than 100 years ago to further such developments.
“The narrow issue presented is whether the two private entities behind the project have been statutorily granted the power of eminent domain,” according to the majority. Justice Jane Bland did not participate.
The case dates to November 2015 when James Fredrick Miles, a former Leon County commissioner who owns 600 acres that the high-speed rail would bisect, refused to let surveyors enter his property to plot the rail line’s route. Miles claimed eminent-domain power did not exist because the prospect that the railway would be completed was not reasonable. He sued both Texas Central and Integrated Texas Logistics to declare that the companies have no statutory authority to take his land for the project.
To that, the two high-speed rail entities – Texas Central, as operator, and Integrated Texas Logistics, as planner – relied on two statutes: one authorizing “railroad companies” to exercise eminent domain and the other to give takings power to corporations chartered by the state “to conduct and operate an electric railway between two municipalities in this state (as interurban electric-railway companies) for that authority.”
The Leon County district court ruled that neither Texas Central nor Integrated Texas Logistics qualifies as a railroad company or as an interurban electric-railway company. The court granted Miles summary judgment, refusing the power to take Miles’ property with a 100-foot right of way.
The Corpus Christi-Edinburg Court of Appeals reversed, holding both statutory bases allow the private railway to take Miles’ property. The Miles lawsuit is one of more than 40 challenging the eminent-domain authority to take property along a 240-mile route.
“We agree,” the supreme court held, “with the court of appeals that the entities have eminent-domain power as interurban electric railway companies and need not address whether they also qualify as railroad companies.”
Miles argued Texas Central Railroad had no railroad tracks, did not own trains and had only a fraction of the financing it needed for the planned rail line. More than that, he contended, Texas Central Railroad did not qualify as an interurban-electric railway company because the statute authorizing interurban rail and the eminent-domain authority to take private property to build one had been obsolete for more than 70 years, was not intended to apply to high-speed rail and that authority to take property expired.
Texas Central Railroad counterclaimed for a declaratory judgment that it is a “railroad company” and an “electric railway” with eminent-domain power under Transportation Code chapters 112 and 131. Texas Central also sought to enjoin Miles from interfering with its surveying.
The Texas Central companies contended that they satisfy the plain language of the statute granting eminent-domain authority to interurban electric railway companies. The court agreed: They are both “corporation[s] chartered under the laws of this state to conduct and operate an electric railway between two municipalities [Houston and Dallas] in this state.”
In tackling Miles’ argument, the supreme court said it was beholden to a review standard that eminent domain’s implications on “fundamental property rights” means the scope of such power is “strictly construed in favor of the landowner.”
But the court cited the applicable Transportation Code provisions that confer eminent-domain authority—“with all the rights and powers granted by law to a railroad company”—on a “corporation chartered for the purpose of constructing, acquiring, maintaining, or operating lines of electric railway between municipalities in this state for the transportation of freight, passengers, or both.”
“This language,” the court reasoned, “could not be more plain insofar as its application to the rail project at issue, which is an ‘electric railway between municipalities in this state’—Houston and Dallas—’for the transportation of … passengers.’”
“Viewed as a whole,” the court concluded, the Transportation Code provisions establishing eminent-domain power is not limited as Miles contends: No provisions in the code place any limitations on the train’s speed along the projected railway line, the train’s size or the distance between the “municipalities in this state” that the railway connects.
“And in addition to the broad grant of authority … the statutory scheme contemplates much more than a ‘lumbering’ trolley car,” according to the majority opinion, noting its authority for an interurban rail line to “lay out right-of-way not to exceed 200 feet in width for its railways,” to “construct its railways and appurtenances on that right-of-way” and to “take [with appropriate compensation] for the purpose of cuttings and embankments additional land necessary for the proper construction and security of its railways.”
Although these “particular provisions” do not apply to Texas Central Railroad’s high-speed rail, “which undisputedly will not operate on streets within a municipality, they are not an indication” the Transportation Code’s chapter 131 as a whole “encompasses only those projects involving trains that will do so.”
“To construe Chapter 131 as inapplicable to the Texas Central Entities,” the court determined, “requires placing extratextual, and thus improper, limitations on the statute’s reach.”
In addition, the court continued, “we have long interpreted statutes, including eminent-domain statutes, to embrace later-developed technologies when the statutory text allows.”
In her dissent, Justice Rebeca Huddle, joined by Justices John Devine and Jimmy Blacklock, accused the court of resurrecting “a 115-year-old statute governing ‘interurban electric railways’—sisters to the trolley car—that were popular in the late nineteenth century but largely disappeared in the 1930s with the rise of the private automobile.”
“No one questions that the statute, Transportation Code Section 131.012, granted eminent-domain authority to facilitate construction of small electric railways for ferrying Texans short distances between adjacent towns and up and down Main Streets alongside horse-drawn carriages,” Huddle wrote. “But it blinks reality to conclude, as the Court does, that the same trolley-car statute confers eminent-domain power on private entities aspiring to build—in 2022—a massive $30 billion infrastructure project capable of supporting an elevated, 672-foot-long high-speed train … between Houston and Dallas.”
The majority countered that “nothing in Chapter 131’s language limits its applicability to only the ‘small, single train, streetcar-based operations’” as Miles describes. “The dissent uses the common meaning of ‘interurban’ not to clarify ambiguous terms in a statutory definition,” Lehrmann wrote, “but to change the meaning of unambiguous terms.”
The majority noted that the interurban-rail statute, and its eminent-domain authority, was recodified. “Indeed, leaving Chapter 131 on the books as part of this statutory revision program makes little sense if it is as outdated and useless as Miles and the dissent claim.”
“But we see no principled basis to conclude that a ‘railroad company’ includes a high-speed rail operator while an ‘interurban electric railway company’ does not.”
“In sum,” Justice Lehrmann wrote, “we hold that Section 131.012’s plain, unambiguous language confers eminent-domain authority on the Texas Central Entities. While we resolve doubts about the scope of eminent-domain power in favor of the landowner, none are presented here.”
“The constitutional and statutory provisions governing eminent domain, as a whole, reflect a balance between the rights of property owners and the benefits served by projects for which eminent domain is authorized,” the court reasoned. “It is not our place to second-guess the product of that balance.”
The court remanded the case to determine Texas Central Railroad and Integrated Texas Logistics’ attorney fees and costs.
Miles was represented in the appeal by Dylan O. Drummond of Gray Reed & McGraw in Dallas; Blake L. Beckham and M. Patrick McShan of the Beckham Group in Dallas; and Jeffrey S. Levinger and J. Carl Cecere (of counsel) Levinger PC in Dallas.
Texas Central Railroad and Integrated Texas Logistics were represented by Marie R. Yeates, Catherine B. Smith and Michael A. Heidler of Vinson Elkins in Houston; Robert B. Neblett III, Monte F. James, Danica L. Milios and Adam W. Aston of Jackson Walker in Austin and Jennifer Caughey of Jackson Walker in Houston; and Gil P. Peralez and Chris C. Franz of Peralez Franz in McAllen.