Part 6: The Texas Supreme Court Rules

Written by David Peter Alan, Contributing Editor
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I thought it was all over but the waiting: The beleaguered Texas Central high-speed rail (HSR) project, which would have sent fast trains between Dallas and the outskirts of Houston, was dead. The project had lost its leadership, and it appeared that the political forces in Texas had aligned to position the state’s Supreme Court to deal the death blow.

In a surprising decision delivered on June 24, the Court affirmed the appellate court’s decision that the Texas Central entities have the authority to take land for the line, under the applicable statute governing transportation providers. While the Court did not reach the question of whether or not Texas Central was a “railroad” for eminent-domain purposes, it ruled that the project had such authority as an “interurban electric railway company.”

An Unexpected Holding 

In the legal profession, I am always aware that judges can render surprising decisions. In my five-part series from last winter here in Railway Age (“Is Texas Central Really a Railroad?”), I reported on the legal and political considerations that the Court encountered concerning the case, Miles v. Texas Central Railroad & Infrastructure, Inc. and Integrated Texas Logistics, Inc., ___ S.W.3d ___ (Texas, June 24, 2022), Case No 20-0393. I will refer to those entities collectively as “Texas Central.”

James Frederick Miles, a landowner whose property Texas Central wanted to survey for use as part of the right-of-way for the new line, objected and sued in the local court. He won, but the appellate court reversed and appeared to give Texas Central a green signal. The Supreme Court at first denied review, so it appeared that the project was finally allowed to go forward. Shortly thereafter, the Court changed its position and granted Miles’s petition, and later allowed the State to intervene. The State supported Miles’ claim. Republicans are strong in rural parts of Texas, while Democrats are concentrated in cities. All nine members of the Court are Republicans, either elected or appointed by Gov. Greg Abbott to fill unexpired terms. It seemed almost inconceivable that the Court would affirm the decision below.

Yet, that is what happened. The Court’s summary, released with the opinion, but not part of it, said: “At issue in this case was whether two private entities (collectively, Texas Central) formed to construct and operate high-speed passenger rail between Houston and Dallas have statutory eminent-domain authority.” The Summary continued: “Miles, who owns property along the railway’s proposed route, sued to challenge Texas Central’s eminent-domain authority after it attempted to survey Miles’s property. Texas Central counterclaimed, seeking a declaratory judgment that it is a ‘railroad company’ and an ‘interurban electric railway company’ with eminent-domain authority under Chapters 112 and 131 of the Texas Transportation Code, respectively. The trial court granted summary judgment for Miles. The court of appeals reversed, holding that Texas Central qualified as both a railroad company and an interurban electric railway company.” 

The next paragraph of the Summary stated the pertinent and surprising holding: “The Supreme Court affirmed. Chapter 131 grants eminent-domain authority to an ‘interurban electric railway company,’ which is 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.’ TEX. TRANSP. CODE §131.012. The Court held that Texas Central falls within the plain language of this grant of authority, as the company was chartered for the purpose of constructing and operating an electric railway between municipalities in this state—Houston and Dallas—for the transportation of passengers.” That is the holding in a nutshell, but the Court did not reach the question of whether Texas Central is also a “railroad” for eminent-domain purposes. All of the opinions and the summary can be found at https://www.txcourts.gov/supreme/orders-opinions/2022/june/june-24-2022/.

More Issues, More Coverage

There is a type of scholarly legal article called a “case comment,” a thorough examination of a case from the U.S. Supreme Court or the Supreme Court of a State. Legal scholars write these articles for the “law review” literature, and the present case has enough interesting twists and issues that a scholar could write about it in the future. Case comments contain several parts, including the background of the case, an analysis of the decision itself, and an evaluation of how the court’s holding might affect the future of the law in that field. I presented the background of the case in my series last winter, and this article will focus on the opinions rendered by the members of the Court. I will have commentaries in the near future that will evaluate the case and how it can reasonably be expected to influence the course of HSR development in Texas and elsewhere in the country.

Justice Debra Lehrmann wrote for the majority, which included four others. The complete package was more complex than that, however. There were two concurring opinions and two dissenting opinions, all of which raised pertinent issues. Since one member did not take part, the official tally was 5-3. 

The Majority Opinion

At the beginning of her 30-page opinion, Lehrmann stated that the case was not about the merits of the Texas Central proposal, but about what sort of entity had authority to exercise eminent domain: “The narrow issue presented is whether the two private entities behind the project have been statutorily granted the power of eminent domain, a power otherwise reserved to the State and its political subdivisions because of the extraordinary intrusion on private-property rights that the exercise of such authority entails” (at 2). The opinion noted that the parties filed cross-motions for summary judgment (at 4), and that Texas Central claimed a list of accomplishments in its effort to get the railroad started (at 4-5). Miles contended that Texas Central was not a “railroad” for several reasons, including that it is not operating any trains on its own track yet, and that any authority it might have had as an “interurban” had expired long ago (at 6-7). 

A motion for summary judgment means that, without the need for a trial to bring out any facts to establish its case, a party believes that it has a meritorious case and will win, as a matter of law. Cross-motions for summary judgment indicate that both parties believe they will win that way. Accordingly, there was no trial in this case, and all facts were presented through documents submitted as exhibits. I cited many of those briefs and other documents submitted in our previous reporting.

In a case like the present one, the Court’s job is to interpret the statute that allegedly confers authority for Texas Central to use Miles’s land for the railroad it planned to build. That statute comprises the provisions of the Texas Transportation Code that allow entities like railroads and interurban lines to exercise eminent domain authority. Because the power of eminent domain intrudes on property rights, the statute must be construed liberally, in favor of the landowner (at 8). 

The Transportation Code defines a “railroad” that was not incorporated before Sept. 1, 2007 as “any other legal entity operating a railroad, including an entity organized under the Texas Business Corporation Act or the Texas Corporation Law provisions of the Business Organizations Code.” The pertinent provision here, §131.012 of the Transportation Code, confers similar authority on an interurban railway company: “The Transportation Code confers 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’” (at 10). 

The Court held that the plain language of the statute supported Texas Central’s authority: “This language 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.’ Indeed, Miles does not contend otherwise” (at 11). Further, the Court noted that a dissenting opinion attempted to distinguish between today’s HSR and the interurban lines of a century ago (the statute at issue was enacted in 1907), but rejected that contention: “No provisions in Chapter 131 (or its statutory predecessor) place any limitations on the speed a train may reach in traveling along the anticipated railway, the size of the train, or the distance between the ‘municipalities in this state that the railway connects’” (at 12). In addition, the opinion stated: “We have long interpreted statutes, including eminent domain statutes, to embrace later-developed technologies when the statutory text allows.” Moreover, “The 1907 statute’s text may have been capacious, but it was not unclear” (at 16).

The Court also rejected that Miles’s contention that Texas Central could not be an “interurban” because it connects with the interstate rail system: “Miles also appears to contend that the fact that the Texas Central Entities’ proposed railway will connect to the interstate rail system, and thus be subject to the Surface Transportation Board’s jurisdiction, means it cannot be an ‘interurban’ railway. We disagree. The Board ‘has jurisdiction over transportation by rail carrier,’ 49 U.S.C. §10501(a)(1), including ‘transportation in the United States between a place in … a State and a place in the same or another State as part of the interstate rail network,’ id. §10501(a)(2)(A)” (at 14, note 5).

As the opinion moved toward its conclusion, the Court reiterated the balancing of competing rights inherent in an eminent domain case: “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. It is not our place to second-guess the product of that balance” (at 27). 

At the end, the opinion noted Chief Justice Hecht’s concurrence, which argued that Texas Central should also have been granted eminent-domain authority as a “railroad” but rejected that argument, saying, “I do not address that ground for affirmance of the court of appeals’ judgment, not because I disagree with the concurrence, but because I need not reach the issue in light of our holding that the entities have eminent-domain authority as interurban electric railway companies” (at 29-30).

Concurring Opinions

In a concurring opinion, a judge agrees with the result that the majority opinion produces, but states a different reason or an additional reason for arriving at that result. Chief Justice Norman L. Hecht agreed with the majority that Texas Central should have eminent domain authority, but he also argued that it also qualifies as a “railroad” within the meaning of the statute.

Hecht strongly criticized Miles’s contention that that Texas Central did not qualify as a “railroad” because it was not yet operating trains on its own tracks: “Miles argues that ‘operating a railroad’ means running trains on tracks. Consequently, Section 112.053’s authorization to a railroad company to ‘acquire property by condemnation’ extends only to entities with trains and tracks. The chicken-and-egg illogic is obvious: An entity cannot obtain a right-of-way on which to run trains on tracks without first running trains on tracks” (at 2, footnote omitted).

Hecht also quoted §81.002 of the Transportation Code in its entirety (at 2-3), and noted that a railroad company could condemn land before operating trains, and even before it is incorporated (at 3), and added: “Clearly from these provisions, the meaning of ‘operating a railroad’ cannot be restricted to running trains on tracks. Rather, it must extend to the operation of the railroad business from its inception, including the acquisition of tracks, trains, and other facilities” (at 4), concluding that he would have allowed Texas Central to exercise eminent domain authority both as an interurban line, and as a “railroad company” within the meaning of the statute.  

Justice Evan A. Young, who joined in Hecht’s concurrence, also agreed that requests to use the power of eminent-domain should be scrutinized carefully, and called it “scary” (at 1). He nonetheless argued that the present case was one instance where that was done properly.

Dissenting Opinions

Justice Rebecca A. Huddle disagreed, and two other members of the Court joined her. She would not have given Texas Central the authority to take land for the railroad project, saying that property rights should have been considered strong enough to prevent such a taking, and using much of her opinion to distinguish the HSR project at issue from the interurban lines that were on the ascendancy when the statute in question was first enacted. 

She began her 21-page opinion by saying: “Today the Court holds that two for-profit corporations wield the power of eminent domain, allowing them to forcibly take thousands of parcels of privately owned Texas land located along the proposed route of a high-speed train they hope—someday—to build and operate” (at 1, footnote omitted). She continued: “To justify this mass-scale exercise of an extraordinary sovereign power by 2 private parties, the Court resurrects 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” (at 1-2). Later, she specifically relegated the interurban to the dustbin of history: “The electric interurban railway played a major but short-lived role in the development of intercity passenger transport. This mode of transportation achieved broad success in the first decade of the 1900s. But the eventual adoption of the automobile led to the technology’s demise. By the mid-1930s, the interurban rail industry was ‘virtually annihilated,’ and within three decades, no trace of it remained in its original form” (at 6, footnotes omitted). She argued this, relating to construction of the statute at issue: “I would not construe the phrase ‘electric railway’ broadly to apply to contexts unimaginable to the statute’s drafters. After all, the meaning of a statute that governs is the ordinary meaning ‘commonly understood at the time of enactment’” (at 11). She also said that HSR technology and scale are so different from the historic interurban lines that applying the statute to them stretched it too far” (at 13).

In my previous commentaries, I mentioned grammatical arguments that Miles and his supporters used to claim that Texas Central was not “operating a railroad” within the meaning of the statute, and those used by Texas Central and its supporters to demonstrate that it was taking steps toward the goal the statute envisioned. Huddle repeated one of those arguments that Miles used: “‘Operating’ is the present participle of ‘operate’ and ‘indicates the then-existing state of the action’” (at 16). She continued: “Taking these terms together, the statutory text indicates that the Legislature delegated eminent-domain powers to entities presently causing passenger or freight trains to run on fixed tracks. All agree that Texas Central is not doing so” (at 17, footnote omitted). She began her conclusion by saying: “Whether Texas Central’s project will succeed is anyone’s guess. What is certain is that today’s decision places Miles and hundreds of other Texas landowners at Texas Central’s mercy” (at 20, footnote omitted). 

Justice John P. Devine also dissented, and filed a seven-page opinion. Divine stressed what he considered to be the sanctity of property rights, beginning his opinion this way: “This Court has long recognized that strong judicial protection of individual property rights is essential to freedom itself” (at 2). He decried the holding in Kelo v. City of New London, 405 U.S. 469 (2005), where “the United States Supreme Court upheld a city’s taking of private property through eminent domain only to turn it over to private parties for economic development. But Kelo sparked a revolution in Texas exemplified by judicial and legislative decisions that strove to ensure that constitutionally granted property rights are protected” (at 2; footnote omitted). 

Devine went on to condemn the majority opinion on that ground: “Today, the Court ignores Article I, Section 17 of the Texas Constitution and hammers another nail in the coffin of private property rights” (Id.)He also analogized the situation to Kelo; a ruling that land could be taken by eminent domain for the purpose of economic benefit to the community: “There are few things of more importance than Texans’ private property rights. The Court fails to consider that Texas Central itself recognizes that the primary purpose of building the proposed high-speed train is for economic development or enhancement of tax revenues in direct violation of the Texas Constitution’s Takings Clause” (at 4). As he concluded his opinion, Devine took another shot at Kelo: “After Kelo, Texas stood as a bastion for private property rights, with our Constitution purposefully strengthened to protect these essential rights. The Court’s holding today flies in the face of that history and proud legacy of safeguarding the sacred right of land ownership” (at 5-6).

More to Come 

So that is what the Court said. The majority opinion spelled out the law for the future, at least in Texas, on the subject. Still, the concurring and dissenting opinions are instructive, as well. I will have a lot more to say about the case and what I can expect to see, in Texas and maybe elsewhere in the nation, now that the Court has surprised us by affirming the court below. Part 7 of this series will evaluate the legal arguments that the Court used in its opinions. Stay tuned.

David Peter Alan is one of America’s most experienced transit users and advocates, having ridden every rail transit line in the U.S., and most Canadian systems. He has also ridden the entire Amtrak network and most of the routes on VIA Rail. His advocacy on the national scene focuses on the Rail Users’ Network (RUN), where he has been a Board member since 2005. Locally in New Jersey, he served as Chair of the Lackawanna Coalition for 21 years, and remains a member. He is also a member of NJ Transit’s Senior Citizens and Disabled Residents Transportation Advisory Committee (SCDRTAC). When not writing or traveling, he practices law in the fields of Intellectual Property (Patents, Trademarks and Copyright) and business law. The opinions expressed here are his own.

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