On January 6, 2017, the Texas Supreme Court issued its long-awaited decision in Denbury Green Pipeline-Texas v. Texas Rice Land Partners (“Texas Rice II”), reversing the 9th Court of Appeals and reinstating the trial court judgment finding that a pipeline company, Denbury, had conclusively established its common carrier status through the presentation of a transportation agreement, entered after the pipeline was constructed, with at least one unaffiliated customer.

1. ByTré Fischer and Ben Rhem
2323 Ross Avenue
Dallas,TX 75201
214.953.6000
DISCLAIMER:
This is not intended nor should it be used as a
substitute for legal advice or opinion, which
can be rendered only when related to specific
fact situations.
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DENBURYV.TEXAS RICE “TEXAS RICE II”:
TEXAS SUPREME COURT
AFFIRMS COMMON CARRIER STATUS

2. Background
• Dispute over the common carrier status of Denbury
Green Pipeline-Texas’ pipeline, known as the “Green
Line”
• Case began nearly 10 years ago
• Denbury attempted to access private property to
determine a route for the pipeline
• Landowners James and David Holland refused and filed
suit against Denbury
• Argued that despite approval from the Texas Railroad
Commission, Denbury couldn’t exercise eminent domain
authority because there was no proof the pipeline would serve
the public
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3. Texas Rice I
• Texas Supreme Court issued its first decision on the
case in 2012 (Texas Rice I)
• Agreed with landowners
• Rejected longstanding practice for establishing common
carrier pipeline status and obtaining eminent domain
authority in Texas
• On remand, the trial court granted Denbury summary
judgment based on two third-party transportation
service agreements Denbury signed after it began
construction on the pipeline
• Trial court’s decision was then reversed by the Court
of Appeals
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4. Texas Rice II
• After the Court of Appeals reversed, the case
returned to the Supreme Court
• Supreme Court sided with Denbury
• Held that intent to serve the public could be formed after the
pipeline was constructed
• Held that even a single contract was sufficient to establish this
intent
• Texas Rice II demonstrates that the standards
established in Texas Rice I are not as rigorous as
many believed
• Also provides insight into the factors courts may consider in
determining whether the standards in Texas Rice I have been
met.
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5. Specifically, the court held that Denbury:
conclusively established that there was a reasonable probability that,
at some point after construction, the Green Line would serve the
public.With evidence that Denbury Green entered into a contract in
2013 to transport CO2 for Airgas Carbonic, along with the proximity of
the Green Line to potential customers such as Airgas Carbonic and Air
Products, no longer could a reasonable fact-finder determine that a
genuine fact issue exists as to whether the Green Line would, at some
point after construction, do what it now most certainly does:
transport CO2 owned by a customer who retains ownership of the
gas.
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6. Conclusion
• The decision in Texas Rice II:
• Clarified that the intent for the pipeline to serve the
public can be formed and supported by evidence after
the pipeline is constructed
• Affirmed that use by even one unaffiliated customer is
substantial enough to convey common carrier status
• Establishes at least two factors that would weigh in favor
of a pipeline company seeking to meet the Texas Rice I
test:
• a transportation service agreement with at least one
unaffiliated customer
• proximity of the pipeline to potential customers
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7. AboutTré Fischer
Joseph “Tré” August Fischer, III represents companies in the energy and
manufacturing industries in complex litigation, transactional matters,
administrative and regulatory issues, and concerning compliance and
liability issues.
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8. About Ben Rhem
Benjamin Rhem advises clients in the power generation, oil and gas, and mining
industries on compliance with federal and state environmental laws. He works
regularly before theTexasCommission on EnvironmentalQuality and the U.S. EPA.
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9. Learn more about Jackson Walker:
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www.jw.com
Jackson Walker LLP
@Jackson_Walker
Jackson Walker LLP