WELCOME TO THE 11 th ANNUAL SOUTH TEXAS WILDLIFE CONFERENCE

1. WELCOME TO THE 11th ANNUAL SOUTH TEXAS WILDLIFE CONFERENCE

2. PERSONAL QUESTION? • Does speaking between two “Honorable” men make me: • An “Honoree” or • Just plain “Ornery?”

3. THE REAL ESTATE CENTER AT TEXAS A&M UNIVERSITY Judon Fambrough Attorney at Law Condemn me not!

4. PUBLICATIONS OF INTEREST FROM THE REAL ESTATE CENTER • Hints on Negotiating an O & G Lease • Secrets on Negotiating Groundwater Leases • “Blowing the Dirt off Wind Leases” • Minerals, Surface Rights and Royalty Payments • Understanding the Condemnation Process in Texas • The Texas Deer Lease

5. recenter.tamu.edu judon@recenter.tamu.edu

6. The Trans-Texas Corridor and Eminent Domain

7. Definitions • What is the difference between “Eminent Domain” and “Condemnation”?

8. PRONUNCIATION of“CONDEMNATION”? • Afterwards, “CONNED! DAMN NATIONS!” • I’ve been “CONNED” ANDDID NOT KNOW IT. • Insight gained in Hubanek Case decided by Tx Supreme Court in 2004.

9. I AM SITTING ON A POT OF GOLD! “Too many landowners focus on the amount of the payment and not the property rights being taken for that payment.”

10. Four Legal Restraints • Public Purpose (Public Benefit) Kelo v. New London • Public Necessity (Amt. of land and the type of estate taken) • Just Compensation (Questionable after Hubenak) • Due Process –Outlined in Chapter 21 of the Texas Property Code–Reinterpreted after Hubenak.

11. “Traditional” Texas Due Process(Three Stages) 1st Bona Fide Attempt to Purchase: (Negotiate in Good Faith based on Fair Market Value.) If “Unable to Agree on Damages” go to next stage. 2nd Special Commissioners Hearing before 3 freeholders: (Project may begin immediately after award posted.) 3rd If either party dissatisfied, Judicial Appeal all the way to Texas Supreme Court.

12. Traditional Strategies • Landowners: remain in Stage I to keep the project from going forward and hopefully getting the most money possible without any out-of-pockets costs. • Condemnors: get to and through Stage II, as quickly and as cheaply as possible, so the project can commence and hopefully never stop.

13. In 2004, HUBENAK DECISIONby TxSCt. Inadequate offer made to landowners in Stage I for pipeline easement, and • Condemnor offered to purchase 3 property rights it could not condemn: • Warrant and Defend Title • Transport both Oil and Gas • Right of Assignment.

14. 3 Issues on Appeal • Does the “Unable-to-Agree-on- Damages” standard in Stage I require a Bona Fide Offer based on Fair Market Value? • If the Bona-Fide-Offer Rule is violated, does it deprive the court of jurisdiction and result in a dismissal of the lawsuit in Stage III?

15. First Answer • “The dollar amount of the condemnor’s offer should not be scrutinized nor compared with other indications of value. A single offer by the condemnor satisfies the requirement regardless of the amount.”

16. Second Answer? • “Negotiating in Good Faith is no longer required to confer jurisdiction on the court.” • “The modern direction of policy is to reduce the vulnerability of final judgments to attack on ground that the tribunal lacked subject matter jurisdiction.”

17. Third Issue 3) Does the offer to purchase in Stage I have to match the property and property rights that can subsequently be condemned? • Answer: Yes and No. • The parties must negotiate for the same physical property and but only the same general use or uses.

18. Caveat Emptor“Here’s the Con” • The rights (property rights) that the Condemnor attempts to purchase in-lieu-of-condemnation do not have to match (mirror) the rights the Condemnor may ultimately condemn. • Do you know which ones these are? • What difference does it make?

19. What the Landowners Did Wrong in Hubanek • The issues were not discussed by the parties in the Stage I negotiations. • No issue raised as to the value of these property rights in Stages I or II. • No evidence the L.O. would have (1) accepted the offer had these property rights had been omitted from the offer or (2) purchased separately? • No evidence these matters were material to the negotiations.

20. This is a Trick Question. If the landowner prevails in litigation, either in Stage 2 or 3, can he or she recover attorney fees and expert witness fees?

21. THE COURT CON “If the commissioners award greater damages than the condemnor offered to pay before the proceedings began or if the decision of the commissioners is appealed and a court awards greater damages than the commissioners awarded, the condemnor shall pay all costs.” Section 21.047, Texas Property Code.

22. Query? • Do you “Aggies” know the difference between a “Cost” and an “Expense”?

23. GET THIS! • Attorney fees and expert witness fees are “expenses” for preparation of trial. They may not be recovered as an item of “cost” unless the statute specifically provides. Otherwise, they are merely incidental non-recoverable expenses. City of Houston v. Biggers, 380 SW2d 700, 1964

24. Voice of an Expert(James Noble Johnson) • “It makes no economic sense to appeal to Stage 3 unless the amount in controversy exceeds $50,000. Most pipeline cases are less than $5,000.” • A Houston attorney said $400,000.

25. “THE TTC CON”

26. Current Map of “Preferred Corridor” Route appox. 10-mile wide.

27. FACTS ABOUT TTC • Chapter 227 of the Transportation Code contains the Trans-Texas Statute. • But, Section 227.041 gives the TTC the same powers and “duties” as given toll projects under Subchapter D, Chapter 203 of the Transportation Code.

28. FACTS ABOUT TTC • Statute says TTC “may condemn the fee or lesser interest property.”(203.051) • All land prices are falling within the PREFERRED CORRIDOR ROUTE (10-mile width.) (Not Normal) • TTC cannot condemn the minerals, but it can condemn the right of ingress and egress to produce the minerals. (203.051)

29. DEVELOPMENT RIGHTS According to the Statute, property owners “May Elect” to retain development rights. If retained and owner does not develop property W/I period set by Dept., the Department may acquire Dev. Rts. by purchase or condemnation.

30. REAL PROPERTY LAW 101 • The seller’s rights and interests not reserved in a Deed are Conveyed. • If you deed the land to TTC in lieu of condemnation without any reservations, TTC gets all the rights and interest you own in the property even though TTC could not condemn them… including the minerals, groundwater, wind, uranium and development rights.

31. Is the TTC offering FMV? • The Austin American Statesman says NO.

32. Austin-American StatesmanFeb. 14, 2005 Report based on 49-mile route cutting through Travis and Williamson Counties to be Texas Hwy. 130 and 1st part of the Trans Texas Corridor. • 44% of landowners rejected state’s first offer, three times the normal rate.

33. Comparison • In eight side-by-side tracts that share critical characteristics, the Special Commissioners Court awarded, on the average, 71% more to those who appeared than to those who took the state’s first offer.

34. How did the State React? • Remember either side may appeal the award and ask for a jury trial, • And, the landowner cannot collect attorneys’ and/or appraisers’ fees whether he or she wins on appeal. • Guess what, about half of the Special Commissioners Court awards have been appealed by the state!

35. How does Hubanek help the TTC? • Hubanek insures that the process goes quickly, cheaply and uninterruptedly.

36. Legislative Assistanceduring 80th Legis. Session? • Two key bills were passed: • HB 2006 (Reinstated pre-Hubanek procedural rules) and • HB 1465 • (HB 2006 passed the House 125 to 11 and the Senate 28 to 2.)

37. HB 2006 • Required Bona Fide Attempt to purchase based on FMV in Stage I. • Required Abatement if bona-fide-attempt rule violated. • FMV defined. • Payment for diminished access. • Attorney fees if declared frivolous. • Attorney fees if they do not produce requested information.

38. Fate of HB 2006? • Vetoed by Governor in June after Legislative Session adjourned. • Why? • Payment for diminished access is an “unreasonable burden on taxpayers.” • “Enrich a finite number of condemnation attorneys at taxpayers’ expense.”

39. New Legislation (eff. 2/1/08)(HB 1495) • “The Landowner’s Bill of Rights (and Wrongs) Act” • The Attorney General shall prepare a written statement that includes a Bill of Rights (and Wrongs) for property owners facing condemnation. • It must notify each property owner of the 5 following facts.

40. Notice of proposed acquisition. • You are entitled to a bona fide, good faith effort to negotiate acquisition by purchase. Note: This is a false statement. HB 2006 was vetoed! 3) The condemnation will result in a taking of your property. 4) You are entitled to a hearing (Stage II) 5) You are entitled to judicial appeal (Stage III)

41. What the BORdoes not say! • You cannot recover attorney fees and appraisers fees if you successfully combat “Damages.” • The property rights they attempt to purchase in lieu of condemnation do not have to match the actual property rights they can condemn. • No payment for diminished access??? • Condemnation of Fee Title is optional, not mandatory. • A participation payment may be received after 15 years when bonds retired.

42. Reaching the “Other Side” 1) The TTC may allow the owner to tunnel under corridor in compliance with federal law. (227.047) How BIG is your shovel? 2) The TTC shall offer to purchase the other side if it has little or no value or utility to the owner (or) the TTC can purchase the entire tract at substantially the same price. (203.0521)(a)…but inapplicable if hazardous materials or substances present.

43. Sec. 203.0521(b) 3) When real property is severed, the condemnor shall pay the owner: a) the value of the property acquired and b) the damages caused by inaccessibility of one tract from the other.

44. Finally • Sec. 203.051(d), the TTC is not authorized to condemn property that is used and dedicated for cemetery purposes under the Health and Safety Code.

45. Closing Biblical Advice Matt. 10:16: “Behold I send you forth as sheep in the midst of wolves; be ye therefore wise as serpents and as harmless as doves.” GOOD LUCK!

46. HAPPY TRAILS (NOT TRIALS) to you…