Thursday, September 1, 2011

Ruling on Denbury Resources pipeline could have extensive reach

FORT WORTH, Texas - A Texas Supreme Court ruling against Plano-based oil producer Denbury Resources, questioning its exercise of eminent domain in constructing an $850 million pipeline, could potentially affect construction of other proposed pipelines, observers say.

Texas' highest civil court ruled on Aug. 26 that Denbury had not properly established that it was a "common carrier" offering its pipeline for "public use" and therefore had no right to exercise eminent domain to run across a swath of farmland in Jefferson County in southeast Texas. The court sided with Texas Rice Land Partners, which owns the property, and tenant farmer Mike Latta.

The Supreme Court reversed a decision by the 9th Court of Appeals in Beaumont and remanded the legal fight back to a state district court in Jefferson County that had ruled in favor of Denbury. The lower court now must determine whether the Denbury pipeline provides a legitimate "public use."

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