Louisiana Oil Pipeline Expropriation System is Constitutional

Originally published by Charles Sartain.

The battle lines between pipeline companies and landowners are still being drawn. In Bayou Bridge Pipeline v. 38.00 acres nobody had a gun, nobody got taken away, and one side was right and one side was wrong.

There were two survivors:

• The constitutionality of Louisiana’s statutory scheme for expropriation of private land for oil pipelines, and
• BBP’s gamble to trespass and begin work before a judgment was obtained.  As BBP said, “time is money”.

Note to non-Louisiana lawyers: Unlike Texas at least, a Louisiana pipeline must obtain a judgment of expropriation before going on the property.

BBP owns a crude oil pipeline that runs from near Lake Charles to a marketing hub in St. James. BBP began acquiring servitudes from the 470 heirs to the title of the parcel and began construction after entering servitude agreements with everyone BBT recognized as having ownership. BBP began work on the property and after the work was pretty much complete initiated the expropriation litigation against the property owners with whom agreements could not be reached. Three defendants who bothered to answer alleged that the Louisiana expropriation system was unconstitutional as applied to oil pipelines.

Louisiana’s scheme passes constitutional muster

The defendants alleged that Louisiana’s expropriation scheme allows oil pipeline companies the unrestrained ability to restrict landowner’s property rights in violation of the due process clause of the Fifth Amendment to the US Constitution. The court disagreed. The Louisiana Constitution adequately protects due process and property rights of Louisiana landowners. Expropriation of land for a servitude to lay the pipeline served a public and necessary purpose.

Louisiana Constitution Art. I, Section 4, sets up appropriate standards to guide expropriating authorities and the courts. That, along with notice requirements and standards for judicial review, prevented BBP from having the unrestrained ability to restrict citizen’s property rights. Under La.RS 45:251 a pipeline operator can expropriate private property only if it is a common carrier of petroleum products and only for a public and necessary purpose.

BBP’s expert economist testified that increased diversity of supply of crude oil as a result of the pipeline would lower consumer prices and that greater crude oil transportation alternatives increase Louisiana refinery competitive competitiveness and help pipelines create new consumer opportunities.

The Louisiana Constitution prohibits consideration of economic development, enhancement of tax revenue, and incidental benefits to the public in determining whether the taking is for a public purpose. That testimony was not allowed.

The defendants had claims too

Pipeline work began before the final judgment on the expropriation. Defendants alleged trespass and denial of procedural due process. Because BBP disturbed the defendants’ property before it acquired the right to do so, the court award each defendant $75 for trespass but awarded no damages for violation of defendants’ due process rights. That was error.  BBP had eviscerated the constitutional protections laid out to specifically protect those property rights.

The court did not accept BBP’s argument that the defendants were out-of-state residents who had an incredibly minor ownership interests, had virtually no contact with property, and never paid taxes or tried to possess or maintain the property. Everyone has the right to own, control, and dispose of their private property. The defendants were entitled to assert their constitutionally guaranteed due process rights.

Damages for violation of defendants’ due process rights was a claim separate and apart from trespass damages. Based on testimony about the emotional harm defendants experienced from BBP’s activities without their consent, the court of appeal awarded each defendant $10,000 for violation of their due process rights.

We could have the perfect musical interlude, no matter who wins the big Tuesday contest.

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