State Supreme Court Upholds Texas Central’s Eminent Domain Right: Special Report

In July 2019, Jay Groppe visited the land that Texas Central had an option to purchase near Lancaster, Texas. (Bob Johnson)

AUSTIN, Texas — The Texas Supreme Court took nearly six months to rule that Texas Central’s proposed 200 mph rail line between Dallas and Houston was entitled to take ownership thanks to eminent domain provisions that were established for “Electric Intercity Railways” in 1907.

The question now is how much life is left in the organization moving forward.

Judge Debra Lehrmann wrote the 30 page decision on a case brought in 2016 by rural landowner James Frederick Miles. Some of the 600 acres he owns were to be bisected by Texas Central’s 100-foot-wide right-of-way. The eight-to-four decision upheld a reversal by the Texas Court of Appeals from a Leon County trial court.

Miles’ attorneys had attempted to argue that the 1907 law did not apply to high-speed rail, but Lehman used the telegraph communication precedents applied in telephone cases to argue that “the statutory scheme does not impose no limitations on the speed or size of the train and envisions much more than a bulky tram.

The Federal Railroad Administration has approved an environmentally clear route along with operating exemptions that pave the way for the use of the Shinkansen system based on Japanese technology. But Texas Central’s ability to make use of the decision is unknown. A combination of the lengthy legal battle, the impact of the COVID-19 pandemic on suspension of collaboration from European and Japanese engineering and construction partners, and financial uncertainty recently led the CEO of Texas Central , Carlos Aguilar, to resign [see “Texas Central faces issues …,” Trains News Wire, June 14, 2022].

News Wire has made several attempts to contact Texas Central officials for their position on all the challenges the company has faced in the past year. The trains Magazine article about the project [see “Going Big,” December 2019]but has not received an email or phone response since a message from April 19, 2021 saying “someone from our outreach team will get back to you later today”.

With reports of voluntary or forced exodus of personnel, it is unclear who is responsible, but the most important issues remain as they were: the completion of the right-of-way, the financing and the development of a operating and construction plan for the Surface Transportation Commission.

Land acquisition

Texas Central began making deals to acquire parcels of land from landlords in 2016 as portions of the proposed right-of-way were finalized. Although the railroad generally only needed a 100-foot-wide path for most of its run, the plan was to buy parcels of land and resell the unused remainder to landowners.

To encourage voluntary transactions without having to rely on a then-uncertain eminent domain outcome, Texas Central routinely offered double the estimated land value.

When The trains visited Jay and Kathy Groppe’s farm in Lancaster, Texas in July 2019, the railroad had offered them an option to purchase an acre of land, with a taxed value of $5,000, for 10,000 $ by December 31, 2020. Accepting the option, the Groppes immediately received a check for $1,000. The company has similar agreements along the 240-mile route. The options were later extended until December 31, 2021. Now this option has expired.

Computer screen shot showing plots of land
A screenshot from 2019 shows how Texas Central’s proposed route, in blue, divides into two various parcels of land, outlined in yellow. (Bob Johnson)

Jay Groppe now tells News Wire that in the meantime, a land speculator rushed to buy a number of undeveloped parcels near one acre for $10,000 parallel to the railway right-of-way. The speculator then petitioned Dallas County’s Pandemic Central Assessment District to have them reassessed at $500 per acre for a reduced tax burden. The properties have since been sold to a manufactured home company for $30,000 per acre. As a result, the Assessment District now assesses an acre of Groppe land at $40,000.

“Texas Central could have purchased these parcels for one-third the price if this project had gone unhindered,” Groppe says. He adds that the cost of building materials has also “skyrocketed. Listed prices for the electrical conduit I need have tripled over the past year and fuel costs have increased dramatically. »

For property that the railroad has acquired, tax assessments are coming due. In March 2022, eight counties claimed the railroad owed $622,975 in overdue tax payments. Texas Central had argued that rural counties where the train did not stop would directly benefit from tax payments when it began to acquire property.

Funding issues

The railroad’s business plan has always implied that although funds were raised from Texas investors, the bulk of the $30 billion needed would come from Japanese rolling stock manufacturers and the Japanese government. Strong support seemed to waver after an April 2019 visit to Washington, DC, by Japanese Prime Minister Shinzo Abe. At that meeting, President Donald Trump allegedly told Abe, “Americans don’t take trains,” according to a News Wire source who spoke to an official at the meeting.

This happened before the pandemic and the court battles. Meanwhile, in addition to the tax liability mentioned above, suppliers and vendors report that the company has many unpaid invoices. Departing staff will also have to be replaced or rehired in a tough job market.

STB approval

Before construction can begin, the company must submit a full financing and operating plan with the Surface Transportation Board. The agency gained jurisdiction when Texas Central successfully argued that, through a proposed joint ticketing agreement with Amtrak, it was an integral part of the American railroad system and not just an exclusively Texas entity that would be subject to whims and politics. of State. government.

Straight railway line parallel to the roadway
Entrance to Texas Central’s Houston terminal would be on an elevated structure adjacent to UP’s former Eureka Subdivision and Hempstead Road on the northwest side of town. (Bob Johnson)

The Texas Supreme Court decision removes significant uncertainty, but whatever operating plan Texas Central had on the drawing board when it was complete will need to be updated based on economic and current policies.

“It’s a Catch-22,” observes Jay Groppe. “Texas Central is held up because they don’t have the money, but they don’t have the money because they were held up.”

Nonetheless, other supporters continue to voice support in light of the ruling. In a statement, the Greater Houston Partnership business group said, “Faster, safer and more reliable connections between our region and other parts of Texas are essential to our continued economic growth. We have been and remain supporters of the Texas Central Railroad’s plan to connect Houston to Dallas via a high-speed passenger train, and we applaud the Texas Supreme Court’s decision recognizing Texas eminent domain law and will allow the project to move forward.

News Wire will continue to follow developments as they occur.