Part 1 of 4: A Temporary Victory for High-Speed Rail in the Lone Star State

Written by David Peter Alan, Contributing Editor
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When is a railroad not a railroad? Maybe “when it’s getting started in Texas.” The official answer to that question will come from the state’s Supreme Court within a few months. In a case with more twists and turns than a mountain railroad, the Court will decide whether Texas Central is a genuine railroad that can use a landowner’s private property by exercising eminent domain to build its right-of-way.

This case could be a seminal one in the decades-long struggle to establish high-speed rail (HSR) in the United States, or even new conventional rail lines that would be established by entities that have not yet reached the point where they are running trains on track that they own. The issue, in a nutshell, is whether an entity that is engaged in planning a new railroad can acquire the land that would be needed to build the first line. If the Court in Texas says no, it could spell not only the demise of the Texas Central plan to build a line between Dallas and a point at the intersection of two highways northwest of Houston, but such a rejection could apply the brakes to similar potential projects elsewhere.

Because of the complexity and potential implications of this case, it will require more than one article to present the case, the issues, and the potential ramifications if the Court finds against Texas Central. So we will present a four-part series for now and will report the Court’s opinion when it comes down.

Editor’s Note: The battle over whether Texas Central should or should not be able to exercise eminent domain has been in play for at least five years. See Contributing Editor Frank N. Wilner’s “Texas Choo-choo a pain on the range,” from June 2016. – William C. Vantuono

In this, the first article in the series, we will describe the dispute, the early victory for the property owner who is fighting against the establishment of a high-speed rail line in Texas, and a subsequent reversal in favor of the line on appeal. In the second article, we will analyze the issues presented by both sides before the Texas Supreme Court on a petition for review. At this writing, the case before the Court continues. We will look at the present controversy, as it now stands, in the third article in this series. In the fourth and final article for now, I will comment on what the case could mean for future efforts to build new rail lines, depending on how the Court rules. 

The dispute concerns the effort to build a new high-speed rail line between downtown Dallas and the intersection of two highways several miles from Houston for point-to-point service that would cover the distance in about 90 minutes. Officials in both metropolitan areas strongly favor the idea, but many landowners between the endpoints hate it, because the proposed line would go through their property. Some of them say that the infrastructure needed for the line could split their farms into two pieces.

Early Case History

One such landowner, James Fredrick Miles, sued Texas Central Railroad & Infrastructure, Inc. (TCRI) and Integrated Texas Logistics, Inc. (ITL), the two components of what we will collectively call “Texas Central” in Leon County, a county along the proposed route that is so heavily Republican that GOP candidates often get 90% or more of the vote. When Texas Central wanted Miles to consent to a survey of his land for use by the railroad, he refused. In essence, he alleged that Texas Central is not a “railroad company” within the meaning of the Texas statute that gives eminent domain authority to railroad companies and “interurban electric railway[s]” when building lines. Judge Deborah Oakes Evans agreed with Miles and gave him summary judgment against Texas Central (TCRI and ITL). It happens rarely, but Judges grant summary judgment when there is no material issue of fact that would require a trial, so Evans ruled that Texas Central lacked eminent domain authority, as a matter of law.

Texas Central appealed, and the Court of Appeals for the Thirteenth District (Case 13-19-00297-CV) reversed. Miles petitioned the Texas Supreme Court for review (Case 20-0393), which was originally denied. More recently, though, the Court has reversed its former ruling and took the case. Oral argument is scheduled for January 11.

The Appellate Court’s Opinion

The Appellate Court ruling now under review was issued on May 7, 2020 (the opinion can be found at https://law.justia.com/cases/texas/thirteenth-court-of-appeals/2020/13-19-00297-cv.html). Writing for a unanimous three-judge panel, Judge Nora L. Longoria concluded her 20-page opinion by saying: “We acknowledge Miles’s well-founded policy concerns regarding the wielding of eminent domain powers by private entities. However, it is not the Court’s role ‘to second-guess the policy choices that inform our statutes or to weigh the effectiveness of their results; rather, our task is to interpret those statutes in a manner that effectuates the Legislature’s intent’ … We reverse the trial court’s judgment denying appellants’ declaratory judgment requests that TCRI and ITL are railroad companies and interurban electric railways and we render judgment granting appellants’ partial summary judgment. We further reverse the trial court’s judgment granting Miles’s motion for summary judgment and render judgment denying same. We remand the issue of attorney’s fees and court costs to the trial court for its reconsideration in light of this opinion and to resolve the TCRI and ITL’s remaining claims for injunctive relief” (at 20). The issue of attorney’s fees and costs never went back to the trial court.

The specific issue was the interpretation of a statutory provision that grants authority to take land by eminent domain to railroad companies. Specifically, Section 81.0022(2) of the Texas Transportation Code gives such authority to “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” and railroads incorporated before September 1, 2007, which does not apply here.

The case turned on the construction of the phrase “operating a railroad” in the above-quoted provision. The issue, in a nutshell, was whether or not TCRI and ITL were “operating a railroad” when they expressed their intent to survey Miles’ land and asked him for permission to do so, which he denied. If Texas Central was “operating a railroad” within the meaning of the statute, it would have had the authority to use privately-owned land for the railroad project under eminent domain.

The court construed the statute in the customary manner, examining legislative intent and interpreting it according to the plain meaning of the words at issue: “we must determine if appellants are railroad companies under §81.002(2). In so doing, we must construe the statutory language. Our objective in statutory construction is to give effect to the Legislature’s intent, “which we ascertain from the plain meaning of the words used in the statute” because the best indicator of what the Legislature intended is what it enacted. Thus, ‘[w]hen text is clear, text is determinative of that intent.’ We read these words and phrases in context and construe them according to the rules of grammar and common usage” (at 5, citations omitted).

The opinion continued: “Miles contends, to the contrary, that because TCRI and ITL ‘own no trains, have constructed no track or train depots, have expended less than 1% of the total estimated cost of the Project, and cannot even purchase the parcels optioned along the Project’s proposed alignment,’ they are not operating a railroad. The term ‘railroad’ is defined in Title 5 of the Transportation Code as ‘an enterprise created and operated to carry passengers, freight, or both on a fixed track. The term includes all real estate and interests in real estate, equipment, machinery, materials, structures, buildings, stations, facilities, and other improvements that are necessary to, or for the benefit of, the enterprise” (at 7, citing §199.002(a)(1) of the Texas Transportation Code; other citations omitted).

Tensions Over Tenses

Regarding the tense of verbs, because the project was in an early stage when the case arose (and still is), the court said: “The Code Construction Act states clearly that ‘words in the present tense include the future tense. Consistent with the legislature’s instruction under the Code Construction Act, we should not focus on verb tense in determining legislative intent because words in the present tense include the future tense” (Id., citing §311.012(a) of the Texas Government Code; other citations omitted). 

In that vein, considering Miles’s argument, the court said: “Miles focuses the majority of his argument on the basis that a ‘fair reading’ of the statute would find that an entity must already have trains, tracks, depots, and some physical form to be a railroad company; however Miles’s interpretation would have this Court ignore the legislature’s instruction under the Code Construction Act to limit the word ‘operating’ to solely the present tense. We decline to do so” (at 8-9). 

The court then concluded that TCRI and ITL “railroad companies” under the statute (at 10). Similarly, the court held that they are also “interurban electric railway companies” under §131.011 of the Transportation Code, which states: “In this subchapter, ‘interurban electric railway company’ means a corporation chartered under the laws of this state to conduct and operate an electric railway between two municipalities in this state.” The opinion quoted that provision, adding: “ITL’s intent is to transport freight, passengers, or both freight and passengers, and Miles does not challenge this intent” (at 12). 

Miles argued that the statute pertained to historic interurban lines of the past and not to “modern bullet trains” as a matter of legislative intent (noted at 13). Regarding that argument, the court said: “we must determine whether appellants are interurban electric railways under §131.011 of the Transportation Code, and as previously stated, we find that they are. To the extent that Miles contends that this statute does not extend to high-speed rails, but rather was intended for ‘localized, electronic trolley-car companies of a century ago,’ we find nothing in the statute to confirm this assertion. Section 131.011 has not been repealed, nor amended, to exclude high-speed rails or to be limited to specific technology. Therefore, we conclude that TCRI and ITL are interurban electric railway companies” (at 14). 

There were other issues concerning the Landowner’s Bill of Rights and rules of civil procedure in Texas, but we have focused on the railroad-related aspects of this case in this article. The court held for the Texas Central companies on those issues, too.

So, the trial judge had found for the landowner against Texas Central, and the three-judge appellate panel reversed that decision. Miles fought on, and he had strong backers, who were willing to make their own arguments supporting his side of the case. On July 18, 2020, Miles petitioned the Texas Supreme Court for review of the appellate court decision. 

The battle lines were clearly drawn, and the arguments presented to the Court ranged from allegations of bad faith on Texas Central’s part, to questioning the likelihood that Texas Central could actually complete and operate the line now being planned, to technical arguments about grammar that remind us why elementary schools were traditionally called “grammar schools.” Even after Miles petitioned the Court to review the case, there were more twists, turns and sharp curves ahead. We will focus on the case as presented to the Court the first time (in 2020) in Part 2 of this series.

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