Court Ruling Elevates Eminent Domain Battle on $20B Texas Rail Project
A long-running legal battle in Texas over eminent domain on a privately funded high-speed railroad project planned for a 240-mile route from Houston to Dallas now moves up to state Supreme Court—after a lower court earlier this month said Texas Central Partners LLC is a legally recognized railroad company in the state.
The state appellate court's May 7 decision allows the firm, operating as Texas Central Railroad, to access the mostly private route properties for land surveys and possible parcel acquisition in its plan to build the estimated $20-billion project, which includes a bullet train using Japanese technology that travels in a fully sealed rail corridor.
“This decision confirms our status as an operating railroad and allows us to continue moving forward with our permitting process and all of our other design, engineering and land acquisition efforts,” said Texas Central CEO Carlos Aguilar. The company had completed more than 2,000 pre-condemnation surveys in 2015 when the plaintiffs filed the lawsuit claiming it was not entitled by law to conduct them.
But landowners, in their May 13 appeal to the state's highest court, contend the ruling that could extend the same authority to builders of pipelines, electrical lines and similar public-use projects in Texas, is an overly broad interpretation of state law.
Lead plaintiff James Miles has refused to sell property for the project, although Texas Central has said use of eminent domain would be a 'last-resort' option, according to one report.
'Wild, Wild West'
Said Blake Beckham, attorney for the landowners: “If ever there was a ruling that created the wild, wild west of eminent domain authority, this is it."
The plaintiffs claimed that the Texas Central Railroad is not a railroad because it is not yet built and not operating and therefore does not have the right of eminent domain and access to properties along the route. Texas law defines a railroad as “operating,” they contend.
The project received a draft environmental impact statement from the U.S. Dept. of Transportation in 2017 and expects to receive a final EIS by the end of May, with construction starting before the end of the year, with passenger service on its 186-mile-per-hour trains beginning in 2026.
That schedule has been thrown into disarray by the COVID-19 pandemic’s far-reaching effects on Texas Central’s multi-national design, construction and financial partnerships, which the firm said on March 31 included schedule disruptions and layoffs of its own staff.
In addition to U.S.-based program manager Bechtel, rail system contractors Kiewit and Mass Electric Construction Co., and station contractor Suffolk, the project team also include Italy-based WeBuild, formerly Salini-Impregilo, and its U.S. subsidiary Lane Construction, which won the project's $14-billion design-build award last September.
System technology providers are Central Japan Railway and Team Shinkansen United of Japan, and Renfe of Spain.
Court: Running Trains on Tracks
In its ruling, the appellate court found that while tracks have yet to be laid and the train does not yet carry passengers, the developer has taken many steps to create and operate a railroad in the future and therefore qualifies as a railroad company with eminent domain power because it will have running trains on the tracks after construction is complete.
The plaintiffs also had argued that a mere filing with the state does not grant the right to eminent domain because no hearing took place and no investigation was conducted to determine that the rail project would be built for public use.
“The ruling allows two companies, Texas Central and a foreign shell company it created, Integrated Texas Logistics, with no assets and no employees and no significant investors, to have eminent domain power. It’s very troubling for landowners,” Beckham told ENR, noting that it “allows a startup to take land that’s been in families for hundreds of years.”