Since 2016, Texas landowner James Frederick Miles and the companies that are planning the Texas Central high-speed-rail line between Dallas and the edge of Houston have been engaged in a battle that has worked its way to the top of the court system in the Lone Star State: the Texas Supreme Court. The briefs have been submitted and oral argument was held on Jan. 11. Now it’s time to wait for the Court’s opinion, which will essentially determine whether or not the proposed line will actually be built. Beyond that, the case could create an atmosphere that will be either friendly or hostile to new railroad starts within and beyond Texas, whether those starts are high-speed or conventional rail lines.
Big Case File to Review
The record in this case is voluminous, and reviewing it was an arduous task. Boiled down to its most basic expression, the issue is whether or not an entity claiming to be a “railroad company” has the authority to condemn land (or, at least, an easement across that land) to build the railroad that it intends to operate. In the matter at issue, there were many arguments presented on both sides, about policy concerning infrastructure generally, about railroads, about statutory construction, and even about the grammatical consequences of using a particular word in a specific statutory provision. While the results remain to be seen, the twists and turns of this case and the political realities in Texas today could spell the doom of not only the Texas Central project, but possibly for others contemplating using its model.
The literature of legal scholarship is replete with a type of article called a “case comment”; a long and usually dull, but detailed, look at a case decided by the U.S. Supreme Court or the highest court in a state. Some are written by law students attempting to get a start as scholars, while others bear the imprint of long experience practicing in the field with which the case is concerned. There seems little doubt that a future legal scholar will engage in such an endeavor about the present case, but this writer will not; it would require in the range of 500 to 1000 hours of effort. Still, we present some of the elements of a case comment here, because of the potentially far-reaching effect that it might have on new rail starts in the future, high-speed or not; and because of the cultural and political landscape of the place where it arose.
Infrastructure: Wanted or Unwanted?
The case is about “infrastructure”; a hot topic these days, in the wake of the Biden Administration’s signature achievement, the Infrastructure Investment & Jobs Act. The idea of building infrastructure for the public benefit (even if that “public benefit” was collateral) is not new; most of it was done by private-sector entities in the past, like railroads and early “turnpikes” which were toll roads. The theory was that private benefit for the builder would bring about a public benefit, too. Then came the Depression of the 1930s, with President Franklin D. Roosevelt’s “New Deal” and vigorous involvement by the public sector in building infrastructure of all sorts. Today’s highway system, with the consequent elimination of most of the country’s passenger trains and nearly all of its rail transit, came later.
At one time, towns fought for the privilege of having a railroad build its infrastructure nearby, but part of the deal was often that the railroad would build a station, carry local passengers to other places, and ship locally-grown or locally-made products. The present case is about another sort of railroad: a high-speed line that would whisk passengers between two large metropolitan areas, but would not stop in the rural territory between them. The plan, though, called for infrastructure to be built in that rural territory, which local residents considered invasive. Plaintiff James Frederick Miles objected to having his land used for the railroad’s purpose, and other counties and legislators between Dallas and Houston joined him in that objection. In contrast to the past, this case is about infrastructure that “locals” do not want.
The case is also about the role of private-sector entities in building infrastructure, purportedly for the public good. That is what the companies collectively referred to as “Texas Central” set out to do. They planned a line between a point near downtown Dallas and another point several miles away from downtown Houston that would offer essentially point-to-point service, with a 90-minute running time between its terminals; although extra time would be needed for a rider to get downtown or to another destination on local transit, especially in Houston. The proposal sounded great; perhaps better than what it could actually deliver. As I noted here three years ago (“Whither (wither?) high-speed rail?” posted on February 21, 2019), one of the problems with the plan was that it did not propose a means for getting to and from downtown Houston easily. The proposed line would have been useful for Houston-area motorists going to Dallas, but not so useful for motorists in Dallas who would be dropped several miles from downtown Houston and Houston Metro’s light rail system, or for non-motorists coming from and going to either city.
The Urban/Rural Divide
Still, Texas Central planned to offer a new transportation option, which deserved to be evaluated on its own merits as a transportation mode, rather than being buffeted by the arbitrary and capricious political winds that blow hard over the prairies of the Lone Star State.
Miles originally won in Leon County, a venue where almost everybody is a Republican and where he had been a county Commissioner. We do not know exactly what Texas Central would have done with his land, because he refused to allow them to enter for the purpose of surveying it. It is reasonable to expect that the company would have wanted to run the line somewhere on his land, so they would want an easement. Miles’s objection may or may not have been “reasonable,” depending your point of view, but it is, at least, understandable. One of the common complaints made by his supporters was that the proposed line might be good for Dallasites or Houstonians, but not for the folks living in-between.
An animated video entitled “Life on the Fast Train” and shown on the project’s website, www.texascentral.com, shows a rendering of an elevated right-of-way with support members placed a distance apart, but with apparently plenty of room between them for access to the land through which the line would pass. The video also extolled the benefits for busy people making a fast trip between Dallas and Houston, but did not mention benefits for landowners in-between. Some of those landowners gave video “testimonials” in support of the project, though.
Not only did the rural counties and some businesses in those counties object to the line, but much of that objection was based on a severe annoyance coupled with a perceived lack of benefit for the region, while the benefits would flow to people living in or near Dallas and Houston. It was a classic case of the division between heavily Republican areas (the “R” stands for “Rural” and “Republican”) and urban areas where Democrats dominate (likewise the “D” stands for “Democrat” and for “Densely-populated”).
The intermediate-level appellate court reversed, with an opinion that construed the phrase “operating a railroad” in the statute that grants eminent-domain authority to “railroad companies” to include the early steps in the effort to build a line, before the company is actually running trains on their tracks. For any new start, that construction is a necessity. The appellate court also construed an “electric interurban railway company” broadly enough to include an electrically-powered high-speed rail line running between cities. The construction concerning the interurbans may have been a bit of a stretch, but it was colorable, at the very least. The court had interpreted the applicable statutes in a manner that was reasonable, at least on its face, and Texas Central now had a “clear” indication to keep working toward the goal of completing its line. Then came Miles’s petition to the Supreme Court and many letters and briefs from his supporters, as we reported. Despite all that, the Court denied review. It looked like Texas Central still had a green signal.
A Matter of Politics?
Then, seven days later, everything began to change. That happened after Miles requested reconsideration, and effectively reopened the case. The record does not indicate a reason for that change, and it appears that the Court was not required to specify one. That particular change, in itself, was not fatal to Texas Central, but subsequent events would change the course of the case.
We mentioned the non-parties who filed letters or briefs in an amicus (“friend of the court”) capacity on both sides. The counties in the region, as well as seven Republican legislators, supported Miles. Officials from Dallas and Houston, along with some from other cities, supported Texas Central. From the filings in August and September, it became clear that a Republican region strongly opposed the Texas Central proposal, while it appeared that only Democrats in cities supported it. To make matters worse for the plan, the Republican opposition along the proposed right-of-way was obdurate and solid.
In theory, the political party affiliation of any party to a case or the supporters of any party to that case should not matter. In theory again, the law is the law, and there are time-honored rules for statutory construction. Also, in theory, judges should refrain from allowing their political views to influence how they decide on issues before them. Is that standard always attainable in practice? Without disparaging any particular judges or their reputations, it sometimes appears unclear that the above-mentioned standard will necessarily prevail.
At the state level, Texas is solidly Republican, with many of the Democrats concentrated in cities like Dallas, Fort Worth, Houston, Austin, San Antonio and El Paso. There has not been a Democrat who held statewide office since the 1990s. The state’s House delegation now consists of 25 Republicans and only 13 Democrats. The state legislature is also dominated by the GOP, with 58% of the Senate seats and 55% of the House seats. The stark reality is that Republican-dominated “red” states are not supportive of passenger trains these days. There are only two state-supported trains in all such states: Amtrak’s Heartland Flyer between Fort Worth and Oklahoma City, and Missouri River Runner, one round trip between Kansas City and St. Louis. Until this year began, there had been two, but the State of Missouri reduced the funding.
Legislative politics should not matter when it comes to courts, but all judges are elected in Texas, including Supreme Court justices. Article 5, Section 2(c) of the Texas Constitution (adopted in 1876) says that members of the Court are elected for six-year terms on a staggered basis. The governor appoints new justices to fill a vacancy for the remainder of a term. Currently, all nine justices are Republicans. Four were elected, and the other five were appointed by Gov. Greg Abbott since 2019 to fill unexpired terms. The issue of how judges are selected is controversial in legal circles, but one problem often mentioned about judges running for re-election is that they become unduly subject to political concerns, as their continuance in office depends on getting enough votes.
The Apparently Likely Outcome
There is always some risk involved with predicting how a court will rule. Judges can surprise everybody, and they do from time to time. Still, “court-watchers” make predictions, and they are often correct. It appears almost certain that the Court in Texas will reverse the appellate court and stop the Texas Central project dead in its figurative tracks, even before it could construct any physical tracks. To this writer, it seems very difficult to believe that the Court would affirm the court below and allow the project to continue. They are all Republicans, as are all of the project’s opponents who have filed amicus letters and briefs. They will all have to face the voters within the next few years and making a decision against the expressed wishes of elected officials who represent their party’s base may not turn out to be the best way to secure six more years on the bench. There is also the factor that, while they are not doing very well at the moment, Texas Democrats hope to make some gains by that time.
The most telling act by the Court was to invite the State to file a brief and participate in oral argument. A review of the briefs shows that, while the State’s brief was thorough and strong in arguing the case, the presence of the State did not add much to the arguments that Miles and amici who supported him had already made. The Court could have decided the substantive issues as easily without the State’s participation as with it. The Court did not furnish an explanation of its action to request that the State join the case, and probably was not required to furnish one (personal note: this writer is not admitted to practice in Texas), but they must have had something in mind. We just don’t know what. It should be noted, though, that five of them (there are nine, in all) were appointed by Gov. Greg Abbott.
A Sensible Decision Below, But Does That Matter?
The appellate court’s decision, which is at issue before the Court, appeared sensible on its face. The three-judge panel found that Texas Central was “operating a railroad” because it was following normal procedure for any railroad company that was planning to build and operate a line when other steps had been taken, and was taking those steps. That appears to be a reasonable construction of the term, since a contrary opinion would have rendered it impossible for any company planning new rail start to acquire the needed land; at least for the first line that company builds. The holding that Texas Central is also an “electric interurban railway company” might have been a bit of a stretch, but it remains colorable, and if it were held to be “operating a railroad” under that statute, that would be enough.
The court below did not consider the “reasonable probability” test; Miles introduced that argument later. It is true that investors apply that test when buying stock in a company, but there is a qualitative difference between investors making a decision based on a company’s performance and a government conditioning permission for a private-sector entity to build a facility, based on an undefined level of likelihood that it could complete that facility. Texas claims to be more “business-friendly” than other states, especially the “blue” states along the coasts, where Democrats dominate state and local politics. Republican states, including Texas, often make such arguments, but imposing a “reasonable probability” test before authorizing construction sounds more like the sort of decision that is made before committing State funds to a project; not before allowing a private-sector firm to take its chances.
Still, the present case appears to be more about politics than about the wisdom of investing in a privately-owned railroad. Within the next several months, we will know which side prevailed, in a balancing test between a private-sector entity with a plan and politically-active “locals” who hate it.
The End of the Line?
So, in all likelihood, this could very well be the end of the line for Texas Central. How will that result affect future efforts to build new rail lines, whether high-speed or not, in Texas and elsewhere?
There is no reason to believe that there will be any more such attempts in Texas in the foreseeable future. That expectation would not be restricted to high-speed rail lines, but would apply to new conventional lines, too. Historically, “railroad companies” were organized and chartered, and then allowed to start planning lines and taking the necessary steps to build them. If “operating a railroad” requires actually running trains on tracks, which is usually the last step after construction is completed, no new entity could build an initial line in Texas, because it would not be allowed to condemn land (or, at least, the use of it) for a right-of-way. In theory, at least, an organization that is “operating a railroad” somewhere else; a foreign entity that operates rail lines in its home country, or even an American railroad like Brightline, might be allowed to build a railroad in Texas. That arrangement might pass muster, but we can’t be sure of that. A landowner might make a similar objection to another project, claiming that the alleged “railroad company” is not “operating a railroad” in Texas, and such a foreign operation would not meet the Texas standard. What the Court might do with that is anybody’s guess.
There is another possibility: Texas Central could acquire another railroad, perhaps a short line, that is already running trains on tracks. That might legally satisfy Miles’s objection that Texas Central was not “operating a railroad” and, therefore, had no eminent-domain authority under the Texas statute. Such a deal would need to comport with Texas law in that it would need to fulfill any conditions that the Court might specify in its opinion, and it must also conform to any statutory requirements that would apply. Could the “operating railroad” portion of the company retain a level of autonomy as a component of the new, larger entity? Could it be a subsidiary, for example? Would a joint venture between the Texas Central entities (TCRI and ITL) and the “operating railroad” be sufficient? The last alternative seems less likely than the other two, but that is a question which can’t be answered yet.
If the Court reverses the decision below, would Texas Central have any legal, rather than corporate, recourse? It does not appear likely. Going through the Federal court system would not get around the Texas Court’s construction of the statutes at issue, because a state’s highest court is the ultimate authority on interpreting that state’s statutes. Texas Central could possibly petition the U.S. Supreme Court for review, on the basis of the Commerce Clause of the Constitution, but it seems unlikely that SCOTUS would grant such a request. SCOTUS has developed a strong states’ rights orientation lately, and it appears improbable that they would take the case, much less reverse the Texas Court.
The Case’s Effect on New Railroads in Texas or Beyond
There is a legal maxim that says; “Good cases make good law and bad cases make bad law.” That saying appears to hold in the present case. The legal reasoning that the appellate court applied in giving a green signal to Texas Central had its problems, but it appears far more solid than the interpretation requested by Miles and his supporters, who now include the State of Texas. On its face, the idea that a railroad company must complete construction of a line and start operating it before the company can acquire land to build that line appears to make no sense, whatsoever.
There is another difficulty with an argument against Texas Central: that it would require a “reasonable probability” of success before a company would be granted authority to acquire land for the venture. The American subsidiary of French railroad SNCF first raised the issue, but nobody suggested a standard for determining how much “probability” is “reasonable”; 90%, 50%, 10%, or what? Even with a defined numerical ratio (which could probably not be determined, anyway, since subjective judgment would play a large role in such a determination), that ratio would probably vary, depending on many variables surrounding the particular project in question.
On its face, Texas does not look like the sort of place where passenger trains could be expected to make a comeback anytime soon. Amtrak operates one now-downgraded daily train (at least when Congress insists that Amtrak run it every day), one train that has run on a tri-weekly schedule for more than fifty years, and a train in Oklahoma that happens to make two stops in Texas. There is a strong, full-service rail-transit network in the Dallas-Fort Worth metropolitan area and three full-service light rail lines in Houston. That comprises most of the rail transit in the state. Austin, El Paso, and Galveston each have one line that does not run on a full-service schedule. Nowhere else, including San Antonio, has any.
So, it could be argued that the Texas Court’s holding would be irrelevant beyond the state’s borders. That is true in theory, but only to an extent in practice. Certainly, no state outside Texas would be bound by the Texas Supreme Court. While it would not be mandatory for a court elsewhere facing similar issues to follow a lead from Texas, the opinion from the highest court of any state is persuasive.
There is always somebody who will object to a new rail line, and there will always be some issues that an objector could raise. If the issue is whether or not the entity that wants to build a new line is actually “operating a railroad” or whether the project has a “reasonable probability” of success, a court in another state could be guided by the holding of the Court in Texas when making a decision. Even if a knowledgeable observer could conclude that the Texas case became mired in politics, or that the factual situation in Texas is not comparable to the factual situation elsewhere, it would at least be prudent, if not necessary, for a judge in another state to consider the Texas case and either follow it or distinguish it from the case at issue in that state.
So, as the situation appears now, the Texas Central project appears headed for the end of the line. It’s not an absolute certainty; the Texas Court could render a surprising decision. Most likely, though, high-speed rail will not be going anywhere in Texas anytime soon, and the same might be said of conventional rail. If a large-scale revival of passenger rail were to take hold and gain momentum, it could reach Texas. If the political scene changes in that state someday, a legislature with a different orientation than the current one could change the statute to favor more new passenger rail lines. There could be changes sometime in the future, but not in the foreseeable future.
If the Court prevents Texas Central from building the proposed high-speed rail line, the next battle may be a struggle to keep the influence of the Court’s decision from having a chilling effect on rail projects elsewhere.
Ellzey Fires a Missile. Target Destroyed?
On Jan. 10, the briefs had all been submitted to the Court, oral argument was scheduled for the following day, and there was no reason to believe that there would be any more newsworthy events in the saga of the Texas Central project and its opponents until the Court hands down its decision.
It did not turn out that way. We could not have known this at the time, but one of the project’s most vocal and most powerful opponents had begun the attack that would open a second front against Texas Central. He is Congressman Jake Ellzey (R-Tex.), a former U.S. Navy fighter pilot. Ellzey had filed an amicus brief opposing the project and urging the Court to reverse the appellate court below, which had ruled in favor of Texas Central. He used his position in Congress to introduce H.R. 6365,the High-Speed Rail Land Acquisition Assurance Act, which would effectively preclude a permit for any high-speed rail (HSR) project before all of the land needed for that permit had been acquired.
While this was an unexpected development, the bill is now in the House pipeline, and its fate is uncertain, apparently doubtful. It’s in play, at least for now, and it would not be proper for us to ignore it as we ponder the fate of HSR generally and the Texas Central project in particular. Stay tuned for an upcoming report on Ellzey’s bill, what it says, how its prospects look, and what effect it could reasonably be expected to have in the future, in Texas and elsewhere.