Texas Central Wins Texas Supreme Court Victory

By Jim Mathews / President & CEO

The Texas Supreme Court ruled that the Texas Central Railway qualifies as an interurban electric railway and therefore can exercise eminent domain authority – putting an end to years of litigation by aggrieved landowners who have tried to get the state’s courts to declare that Texas Central is neither an electric railway nor a railroad.

In a 5-3 decision issued today, the Court roundly rejected landowner James Miles’ entire thesis, upholding a 2020 Appeals Court ruling which found that Texas Central was both a railroad and an interurban electric railway. The Appeals Court relied largely on the Texas Supreme Court’s previous rulings about how to read the text of the Texas legislature’s laws and what is and is not a “common carrier,” and the Supreme Court affirmed that judgment completely.

When Miles declared his intention to take his case to the state’s Supreme Court, we told you that Miles would have to get the Court to do two extraordinary things in order to win – ignore Texas’ Code Construction Act and repudiate a then three-year old decision the Supreme Court already made about how to meet the test of being a common carrier. Today’s Texas Supreme Court ruling echoed Appellate Judge Nora Longoria’s original reasoning and declined to do either of the unlikely things Miles asked.

“Transportation Code Chapter 131...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,’” the Court ruled today:

“There is no dispute that the Texas Central Entities (1) were actually chartered for the statutorily authorized purpose of ‘constructing, acquiring, maintaining, or operating lines of electric railway between municipalities in this state for the transportation of freight, passengers, or both freight and passengers” – satisfying the requirements of Texas transportation law – “and (2) are engaged in activities in furtherance of that purpose. Nor is there any question that the proposed railway is for ‘public use.’”

The Court also told Miles his reliance on a 2017 decision called Denbury Green Pipeline-Texas, LLC v. Texas Rice Land Partners, Ltd., as well as the language of the Texas Constitution, was misplaced. Miles tried to use the Denbury case to show that even if Texas Central were actually found to be a railroad or an interurban railway, the company had to demonstrate a “reasonable probability” of being completed before it could be granted eminent domain authority, but the Court “finds no support in Denbury or the Constitution” for that argument.

“The reasonable-probability-of-completion test Miles proposes would constitute an unprecedented and improper judicial intrusion into the legislative sphere,” the Court said in today’s ruling.

In a concurring opinion joined by Justice Evan Young, Chief Justice Nathan Hecht would also have found Texas Central to be a railroad as well as an interurban electric railway, just as the Appeals Court did in May 2020. The majority opinion by Justice Debra Lehrman, however, notes that “we do not address that ground for affirmance of the Court of Appeals’ judgment, not because we disagree with the concurrence, but because we need not reach the issue in light of our holding that the entities have eminent-domain authority as interurban electric railway companies.”

[You can read the full text of the Texas Supreme Court's ruling by clicking on this link.]