Banding together for protection and common welfare was one of the earliest signs of civilization. Oftentimes, individuals would be required to dedicate some of their land for common use. We find this dynamic play out when governments authorize eminent domain proceedings to be used by, or in conjunction with, private entities that develop transportation corridors, whether for highways, electric transmission lines, oil and gas pipelines or, yes, railroads.
The United States and each of its states recognize this fundamental dynamic, and each ameliorates the individual’s loss by requiring the community to pay reasonable compensation – market value. Texas permits local juries to determine that value in the event the property owner disagrees with the community’s offering price.
It is not uncommon for individuals, when anticipating their own property may be sought for the larger community’s benefit, to seek a local court’s help in circumventing the processes and procedures otherwise in place. Such an effort is playing out in a Leon County, Texas, courtroom.
James Miles, a property owner in Leon County, sued Texas Central Railroad & Infrastructure, Inc., asserting that his property was at risk of being taken by Texas Central and asking the local trial judge to conclude Texas Central and its affiliate, Integrated Texas Logistics, Inc., had no lawful authority to do so. For simplification, I’ll just refer to the defendants as Texas Central.
At the root of Mr. Miles’ complaint and Texas Central’s defense is the meaning of Texas Transportation Code, Sections 81.002 and 131.011. Under the first section, the question is whether Texas Central is an “operating” railroad. Under the second, the question is whether Texas Central is “chartered … to operate an interurban electric railway”? If the answer is yes to either of these questions, then Texas Central also has the statutory authority to initiate eminent domain proceedings to acquire the necessary transportation corridor.
Recently the local judge ruled in favor of Miles, essentially holding Texas Central is neither operating a railroad nor chartered to operate an interurban electric railway. Not surprisingly, Texas Central plans to appeal.
Let’s look at the law. Texas’s Transportation Code, Section 81.002, says a railroad company is one that is “operating” a railroad. Section 131.011 says an interurban electric railway is “a corporation chartered under the laws of [Texas] to conduct and operate an electric railway between two municipalities in [Texas].”
What are the facts? Texas Central was organized under Texas law to operate a railroad, specifically, a high-speed electric rail system connecting two urban centers, Dallas and Houston. Texas Central started operating seven years ago (Texas Logistics started operating two years ago). Texas Central has a number of full-time employees who are engaged in daily operations, planning, developing, presenting proposals, raising investor capital, conducting local-area information sessions, and participating in governmental agency reviews of the project and its impact on the communities it touches. Texas Central has expended more than $125 million supporting its operations. The crux of Miles’ argument is that, because Texas Central’s equipment isn’t literally rolling down the track, it isn’t “operating.”
Though the outcome on appeal is yet to be determined, the judges on the appellate court will give close study to the root issue, the relevant statutes and the legislative intent reflected in those statutes. As for me, I think Texas Central has the stronger argument – that it, in fact, is operating a railroad and, most certainly, it is chartered to operate an interurban electric railway. Here’s why.
Texas courts have long held that they must apply statutes as written. Because the Legislature cannot anticipate all types of arguments one might craft to seek or to avoid enforcement of a statutory provision, the Texas Legislature has, by statute, also provided interpretation instructions. The Texas Supreme Court, as well, has developed rules for a statute’s interpretation.
Primarily, the Legislature instructs the courts to give its statutes a reasonable construction – one that is consistent with the Legislature’s intent reflected in the statute’s language. Another important guide given by the Texas Supreme Court is that a court’s obligation to give “strict” construction to a statute does not mean that courts must give the statute the narrowest of readings. To the contrary, “strict” means relying on the text of the statute as the best expression of the Legislature’s intent. And as applies in the Leon County suit, the Legislature expressly tells courts that when it uses the present tense of a verb in a statute, it also intends the future tense.
So here, in asking the local court to interpret “operating” a railroad as meaning only an engine pulling cars along already laid rails, Mr. Miles violates all those statutory construction rules. First, asserting that developing a railroad is not a railroad operation because the railroad is not yet running a train is, even at first blush, unreasonable. Nothing in the statute suggests the Legislature intended to authorize eminent domain for only companies with running trains, essentially favoring legacy operations over start-up innovations. And to suggest otherwise would be totally inconsistent with decades of Legislative enactments encouraging competition and new business entrants into Texas. As well, to say that a tool for acquiring a track corridor is available only after the corridor has been acquired, built upon and over which trains are running, would be absurd – there would be no need for the acquisition tool when the acquisition has already happened.
Furthermore, to pack within “operating” all the words necessary to restrict “operating” to merely operating engines and rolling stock over laid rails improperly limits the breadth of the actual words the Legislature used. In his argument before the judge, Mr. Miles didn’t illustrate Legislative intent based on the actual words of the statute, but rather sought to have the trial court narrow “operating” to mean nothing other than actual trains running down a track. Fatal to his argument is the Legislature’s own instruction that its use of present tense was intended, as well, to include the future tense. So an entity established to run a railroad means both one that “is” and one that “will be” operating a railroad.
Perhaps more significantly, Texas Central is chartered to run an interurban electric railway. Though Mr. Miles focuses his argument nearly entirely on Texas Central not driving trains down a track, he ignored the statutory definition for “interurban electric railway”as “a corporation chartered under the laws of [Texas] to conduct and operate an electric railway between two municipalities in [Texas].” Texas Central qualifies as an interurban electric railway, not because it’s now operating a railway, but because it is chartered to do so. And the Texas Supreme Court has instructed that if a statute defines a term, the courts are bound to apply the term as defined.
The efficient movement of people, goods and services is critical to Texans’ economic well-being. Eminent domain has been long recognized as essential to a community’s well-being, both enabling progress and providing an orderly process for determining and paying private landowners a reasonable price for use of the land. Since the founding of this state, the Legislature has considered railroads sufficiently important to the economic well-being of Texas citizens to grant those enterprises the tool of eminent domain.
Texas Central, because it has railroad operations and is chartered to operate electric rail service between Dallas and Houston, has been granted the authority by the state Legislature to acquire, through eminent domain proceedings if necessary, the right-of-way necessary to serve the state’s need for high-speed rail transportation between its two most populated urban areas.
Craig T. Enoch is a former Texas Supreme Court Justice, having also served as chief justice of Texas’ Fifth District Court of Appeals and presiding judge of Texas’ 101st District Court. He is now a member at Austin law firm Enoch Kever.