By: Kolkhorst, Perry S.B. No. 421
(In the Senate - Filed January 23, 2019; February 14, 2019,
read first time and referred to Committee on State Affairs;
March 14, 2019, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 9, Nays 0; March 14, 2019,
sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR S.B. No. 421 By: Nelson
A BILL TO BE ENTITLED
AN ACT
relating to the acquisition of real property by an entity with
eminent domain authority.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 21.0113, Property Code, is amended by
amending Subsection (b) and adding Subsections (c), (d), and (e) to
read as follows:
(b) An entity with eminent domain authority has made a bona
fide offer if:
(1) an initial offer is made in writing to a property
owner that includes:
(A) an offer of compensation in an amount equal
to or greater than 145 percent of the market value of the property
sought to be acquired and damages, if any, to any of the property
owner's remaining property, based on:
(i) an appraisal report on the property by a
certified appraiser; or
(ii) a market study of the property
conducted by a certified appraiser; and
(B) the complete written appraisal report or
market study that forms the basis for the amount of the offer of
compensation under Paragraph (A);
(2) a final offer is made in writing to the property
owner that includes an offer of compensation in an amount equal to
or greater than the amount of the offer of compensation included in
the initial offer;
(3) the final offer is made on or after the 30th day
after the date on which the entity makes a written initial offer to
the property owner;
(4) before making a final offer, the entity obtains a
written appraisal report from a certified appraiser selected or
approved by the property owner of the value of the property being
acquired and the damages, if any, to any of the property owner's
remaining property;
(5) the final offer is equal to or greater than the
amount of the written appraisal report [obtained by the entity];
(6) the following items are included with the final
offer or have been previously provided to the owner by the entity:
(A) a copy of the written appraisal report;
(B) a copy of the deed, easement, agreement, or
other instrument conveying the property sought to be acquired; and
(C) the landowner's bill of rights statement
prescribed by Section 21.0112; and
(7) the entity provides the property owner with at
least 14 days to respond to the final offer and the property owner
does not agree to the terms of the final offer within that period.
(c) Notwithstanding Subsection (b), a private entity as
defined by Section 21.031 has made a bona fide offer only if the
entity:
(1) satisfies the requirements of Subsection (b); and
(2) includes in the initial offer:
(A) notice of the terms described by Section
21.0114(b) for which the property owner may negotiate to be
included in a deed, easement, agreement, or other instrument of
conveyance relating to the property; and
(B) notice that the property owner will also
receive a final offer accompanied by an appraisal.
(d) Notwithstanding Subsections (b) and (c), a private
entity subject to Subchapter B-1 has made a bona fide offer only if
the entity:
(1) satisfies the requirements of Subsections (b) and
(c);
(2) includes in the initial offer a copy of the notice
of the property owner information meeting required by Section
21.036; and
(3) participates in the meeting in the manner
prescribed by Section 21.038.
(e) A court with jurisdiction of a condemnation proceeding
involving property for which an entity is required to make a bona
fide offer under this section may:
(1) determine whether the entity has complied with the
requirements of Subsection (b), including whether the entity or the
entity's certified appraiser intentionally omitted damages to the
property owner's remaining property; and
(2) if the court determines that the entity has not
complied with the requirements of Subsection (b):
(A) abate a pending proceeding; and
(B) make an award of such relief as the court
considers appropriate.
SECTION 2. Subchapter B, Chapter 21, Property Code, is
amended by adding Sections 21.0114 and 21.0115 to read as follows:
Sec. 21.0114. REQUIRED TERMS FOR INSTRUMENTS OF CONVEYANCE
BY CERTAIN PRIVATE ENTITIES. (a) Except as provided by
Subsections (c) and (d), a deed, easement, agreement, or other
instrument of conveyance provided to a property owner by a private
entity, as defined by Section 21.031, that has or asserts the power
of eminent domain to acquire the property interest to be conveyed
must include the following terms, as applicable:
(1) if the instrument conveys a pipeline right-of-way
easement:
(A) the maximum number of pipelines that may be
installed in the easement;
(B) the maximum diameter, excluding any
protective coating or wrapping, of each pipeline to be installed in
the easement;
(C) the type or category of substances permitted
to be transported through each pipeline to be installed in the
easement;
(D) a general description of any aboveground
equipment or facility the private entity intends to install,
maintain, or operate on the surface of the easement;
(E) the best available description of the
location of the easement, which may include a metes and bounds or
centerline description, a plat, or an aerial or other map-based
depiction of the location of the easement on the property;
(F) the maximum width of the easement;
(G) the minimum depth at which each pipeline to
be installed in the easement will initially be installed;
(H) a provision identifying whether the private
entity intends to double-ditch areas of the easement that are not
installed by boring or horizontal directional drilling;
(I) a provision limiting the private entity's
right to assign the entity's interest under the deed, easement,
agreement, or other instrument of conveyance without:
(i) written notice to the property owner at
the last known address of the person in whose name the property is
listed on the most recent tax roll of any taxing unit authorized to
levy property taxes against the property; or
(ii) if the assignee, including an assignee
that is an affiliate or subsidiary of or entity otherwise related to
the private entity, will not operate each pipeline installed on the
easement as a common carrier line or gas utility, the express
written consent of the property owner, provided the property owner
does not unreasonably withhold consent;
(J) a provision describing whether the easement
rights are exclusive, nonexclusive, or otherwise limited;
(K) a provision limiting the private entity's
right to grant a third party access to the easement area for a
purpose that is not related to the construction, safety, repair,
maintenance, inspection, replacement, operation, or removal of
each pipeline to be installed in the easement;
(L) a provision regarding the property owner's
right to actual monetary damages arising from the construction and
installation of each pipeline to be installed in the easement, or a
statement that the consideration for the easement includes any
monetary damages arising from the construction and installation of
each pipeline to be installed in the easement;
(M) a provision regarding the property owner's
right after initial construction and installation of each pipeline
to be installed in the easement to actual monetary damages arising
from the repair, maintenance, inspection, replacement, operation,
or removal of each pipeline to be installed in the easement;
(N) a provision regarding the private entity's
rights and obligations regarding the removal, cutting, use, repair,
or replacement of any gates or fences that cross the easement or
will be used by the private entity;
(O) a provision regarding the private entity's
obligation to maintain the easement, including leveling of the
easement, and a provision regarding the entity's obligation to
restore the property owner's property used by the private entity to
original condition or as near to original condition as is
reasonably practicable or a statement that the private entity will
reimburse the property owner for actual monetary damages incurred
by the property owner that arise from damage to the property caused
by the private entity and not restored;
(P) a provision regarding:
(i) the repair and restoration of areas
used or damaged outside the easement area to their original
condition or better, to the extent reasonably practicable; or
(ii) the payment of actual monetary damages
for areas not restored; and
(Q) a provision describing the private entity's
rights of ingress, egress, entry, and access on, to, over, and
across the easement, including the location where the entity will
access the easement; and
(2) if the instrument conveys an electrical
transmission right-of-way easement:
(A) a general description of any use of the
surface of the easement the entity intends to acquire;
(B) the best available description of the
location of the easement, which may include a metes and bounds or
centerline description, a plat, a map-based depiction of the
location of the easement, or another legally sufficient description
of the location of the easement on the property;
(C) the maximum width of the easement;
(D) the manner in which the entity will access
the easement;
(E) a provision limiting the private entity's
right to grant a third party access to the easement area for a
purpose that is not related to the transmission line's
construction, safety, maintenance, inspection, or operation;
(F) a provision regarding the property owner's
right to actual monetary damages arising from the construction,
maintenance, repair, replacement, or future removal of lines and
support facilities in the easement, or a statement that the
consideration for the easement includes such future damages;
(G) a provision regarding the private entity's
rights and obligations regarding the removal, cutting, use, repair,
or replacement of any gates or fences that cross the easement or
will be used by the entity;
(H) a provision regarding the entity's
obligation to maintain the easement and restore the easement to the
easement's original contours and grades and a provision regarding
the entity's obligation to restore the easement following any
future damages caused by the private entity or a statement that the
consideration for the easement includes such future damages;
(I) a provision regarding:
(i) the repair and restoration of areas
used or damaged outside the easement area to their original
condition or better, to the extent reasonably practicable; or
(ii) the payment of actual monetary damages
for areas not restored;
(J) a provision describing whether the easement
rights are exclusive, nonexclusive, or otherwise limited; and
(K) a prohibition against the assignment of the
entity's interest in the property to an assignee, including an
assignee that is an affiliate or subsidiary of or entity otherwise
related to the private entity, that will not operate as a utility
subject to the jurisdiction of the Public Utility Commission of
Texas or the Federal Energy Regulatory Commission without:
(i) written notice to the property owner at
the last known address of the person in whose name the property is
listed on the most recent tax roll of any taxing unit authorized to
levy property taxes against the property; and
(ii) the express written consent of the
property owner or record owner on the tax records.
(b) A property owner may negotiate for the following terms
to be included in a deed, easement, agreement, or other instrument
of conveyance described by Subsection (a):
(1) a provision regarding the property owner's right
to negotiate to recover damages for tree loss and the income loss
from disruption of agricultural production or hunting;
(2) a prohibition against any use of the property
being conveyed, other than a use stated in the deed, easement,
agreement, or other instrument of conveyance, without the express
written consent of the property owner;
(3) a provision:
(A) requiring the private entity to maintain at
all times while the private entity uses the easement, including
during construction and operations on the easement, liability
insurance:
(i) issued by an insurer authorized to
issue liability insurance in this state; and
(ii) insuring the property owner against
liability for personal injuries and property damage sustained by
any person caused by the use of the easement by the private entity
or the private entity's agents or contractors; or
(B) if the private entity is subject to the
jurisdiction of the Public Utility Commission of Texas or has a net
worth of at least $25 million, requiring the private entity to
indemnify the property owner against liability for personal
injuries and property damage sustained by any person caused by the
use of the easement by the private entity or the private entity's
agents or contractors; and
(4) a provision that the terms of the deed, easement,
agreement, or other instrument of conveyance will bind the
successors and assigns of the property owner and private entity.
(c) A private entity, as defined by Section 21.031, or the
property owner may:
(1) negotiate for and agree to terms and conditions
not required by Subsection (a) or provided by Subsection (b),
including terms and conditions not included in a subsequent
condemnation petition; and
(2) agree to a deed, easement, agreement, or other
instrument of conveyance that does not include the terms required
by Subsection (a).
(d) Except as provided by this subsection, this section does
not prohibit a private entity from amending the terms required by
Subsection (a) after the private entity makes an initial offer or
final offer to a property owner as required by Section 21.0113. A
private entity that changes the terms required by Subsection (a)
must provide a copy of the amended deed, easement, agreement, or
other instrument of conveyance to the property owner not later than
the 14th day before the date the private entity files a condemnation
petition relating to the property.
(e) A private entity that amends a deed, easement,
agreement, or other instrument of conveyance after the initial
offer or final offer is not required to satisfy again any
requirement of that section that the private entity has previously
satisfied.
(f) A court with jurisdiction of a condemnation proceeding
involving property the acquisition of which is subject to the
requirements of this section may:
(1) determine whether the private entity has complied
with the requirements of this section; and
(2) if the court determines that the private entity
has not provided to a property owner a deed, easement, agreement, or
other instrument of conveyance that complies with the requirements
of this section:
(A) abate a pending proceeding;
(B) order the private entity to provide to the
property owner a deed, easement, agreement, or other instrument of
conveyance that complies with the requirements of this section; and
(C) order the private entity to pay to the
property owner:
(i) all costs related to the private
entity's failure to comply with this section; and
(ii) any reasonable attorney's fees and
other professional fees incurred by the property owner that are
directly related to the private entity's failure to comply with
this section.
Sec. 21.0115. EX PARTE COMMUNICATION. (a) A private
entity, as defined by Section 21.031, that wants to acquire real
property for a public use, the entity's representative, or the
owner of the real property may not, without first attempting to
include the property owner or the entity, as applicable, engage in
ex parte communication concerning the merits of the condemnation
with:
(1) a court that has jurisdiction of a condemnation
proceeding involving the property; or
(2) a special commissioner appointed in the
condemnation proceeding.
(b) A private entity shall provide written notice to a
property owner of any communication between the entity and a court
or special commissioner described by Subsection (a) for which the
property owner is not present.
(c) For the purposes of this section, "private entity"
includes:
(1) the entity's attorney; and
(2) any third-party contractor of the entity,
including a right-of-way agent.
SECTION 3. Section 21.012, Property Code, is amended by
adding Subsection (b-1) to read as follows:
(b-1) In addition to the contents prescribed by Subsection
(b), a petition filed by a private entity as defined by Section
21.031 must state the terms to be included in the instrument of
conveyance under Section 21.0114.
SECTION 4. Chapter 21, Property Code, is amended by adding
Subchapter B-1 to read as follows:
SUBCHAPTER B-1. ACQUISITION OF PROPERTY BY CERTAIN PRIVATE
ENTITIES
Sec. 21.031. DEFINITION. In this subchapter, "private
entity":
(1) includes:
(A) a corporation authorized to exercise the
power of eminent domain to acquire private property for public use;
and
(B) any affiliate or subsidiary of or entity
related to a corporation described by Paragraph (A), including a
corporation organized under Chapter 67, Water Code, if the
affiliate, subsidiary, or other entity was formed for purposes of a
project for which property may be acquired through eminent domain;
and
(2) does not include a railroad operating in this
state on or before January 1, 2019.
Sec. 21.032. APPLICABILITY OF SUBCHAPTER. This subchapter
applies only to a private entity that wants to acquire for the same
public use one or more tracts or parcels of real property:
(1) located entirely in one county; and
(2) owned by at least four property owners.
Sec. 21.033. NOTICE OF INTENT. (a) Not later than the 45th
day before the date a private entity makes an initial offer to
acquire real property under this chapter, the entity must send a
written notice of intent to a court that would have jurisdiction of
a condemnation proceeding involving the property.
(b) A notice sent under Subsection (a) must:
(1) state the private entity's intent to acquire real
property for public use;
(2) specify the public use;
(3) identify the real property the entity intends to
acquire and the owners of the property; and
(4) disclose the date by which the entity will make the
initial offer.
Sec. 21.034. PROPERTY OWNER INFORMATION MEETING. (a) Not
later than the 30th day after the date a court receives a notice of
intent required by Section 21.033, the private entity shall select
the date on which a public meeting regarding the proposed
acquisition will be held.
(b) The meeting described by Subsection (a):
(1) must take place:
(A) in a public location appropriate to the size
and nature of the meeting in the county in which the real property
is located; and
(B) at a time when the property owners identified
by the private entity under Section 21.033 may reasonably be able to
attend; and
(2) may not take place earlier than the 14th day after
the date a private entity makes an initial offer to a property owner
identified in the notice of intent under Section 21.033.
Sec. 21.035. PERSONS AUTHORIZED TO ATTEND PROPERTY OWNER
INFORMATION MEETING. In addition to the property owner and the
private entity, the following individuals may attend a meeting held
under Section 21.034:
(1) an individual invited by the property owner who is
related to the property owner within the third degree by
consanguinity or affinity, as determined under Chapter 573,
Government Code;
(2) an attorney or appraiser representing the property
owner;
(3) any individual with a real property interest in
the property subject to the initial offer under Section 21.0113;
and
(4) any public official.
Sec. 21.036. NOTICE OF PROPERTY OWNER INFORMATION MEETING
IN INITIAL OFFER. A private entity that gives a notice of intent
under Section 21.033 must include with the entity's initial offer
notice of the meeting to be held under Section 21.034, including the
date, time, and location of the meeting.
Sec. 21.037. PARTICIPATION BY PRIVATE ENTITY REQUIRED. A
representative of the private entity that gives a notice of intent
under Section 21.033 shall:
(1) attend the meeting; and
(2) participate in the meeting in the manner
prescribed by Section 21.038.
Sec. 21.038. PROPERTY OWNER INFORMATION MEETING AGENDA. At
a meeting scheduled under Section 21.034:
(1) the private entity shall present:
(A) the information contained in the landowner's
bill of rights statement required to be provided to a property owner
under Section 21.0112;
(B) a description of the public use for which the
entity wants to acquire the real property, including technical
details;
(C) if applicable, a statement of the terms
required under Section 21.0114 to be included in a deed, easement,
agreement, or other instrument of conveyance provided by the entity
to the property owner;
(D) the method and factors used by the entity to
calculate the entity's initial offer, including:
(i) how damages to remaining property were
evaluated; and
(ii) if the entity used a property
appraisal report or market value study, the name of the person that
performed the appraisal or study;
(E) the entity's justification for the proposed
public use, including any materials used by the entity to obtain a
determination that the project is a public use;
(F) the legal and factual basis for the entity's
exercise of its eminent domain authority;
(G) the name and contact information of any
third-party contractor to be used by the entity to acquire the land
or undertake the project; and
(H) a description of any regulatory process
required for approval of the project, including any evaluation of
the project's necessity, and information about how a property owner
may participate in the process; and
(2) each property owner identified by the private
entity under Section 21.033 or the property owner's designee, must
be given an opportunity to ask questions and make comments
regarding:
(A) the rights of the property owners;
(B) the proposed public use; and
(C) terms required under Section 21.0114 to be
included in a deed, easement, agreement, or other instrument of
conveyance provided by the entity to a property owner.
Sec. 21.039. CONTACT AFTER PROPERTY OWNER INFORMATION
MEETING. A private entity may not contact a property owner to whom
the entity has made an initial offer before the seventh day after
the date of the meeting held under Section 21.034.
Sec. 21.0391. CERTIFICATION OF ENTITY PARTICIPATION IN
PROPERTY OWNER INFORMATION MEETING REQUIRED. (a) After a private
entity participates in a meeting held under Section 21.034, the
entity shall submit evidence documenting its participation to the
court to which the entity gave notice of intent under Section
21.033. The court shall review the evidence submitted by the entity
and, if the court determines that the entity has satisfied the
requirements of this subchapter, shall certify that the entity has
satisfied the requirements of this subchapter.
(b) In this subsection, "electric utility" means an entity
subject to Chapter 37, Utilities Code, and this subchapter.
Notwithstanding any other provision of this subchapter, a court
shall certify that an electric utility has satisfied the
requirements of this subchapter if the electric utility
participates in a hearing under Chapter 37, Utilities Code, that
also complies with the requirements of this subchapter.
(c) A private entity may not acquire property to which this
subchapter applies unless the entity receives a certification under
Subsection (a) or (b) with respect to the property.
Sec. 21.0392. PUBLICATION AND PROVISION OF CERTAIN
MATERIALS. A private entity shall:
(1) publish on an Internet website any materials
presented under Section 21.038(1)(E); and
(2) provide to property owners identified by the
entity under Section 21.033 any materials presented under Section
21.038(1)(E).
SECTION 5. Section 21.042, Property Code, is amended by
adding Subsection (d-1) to read as follows:
(d-1) In estimating injury or benefit under Subsection (c)
in a condemnation proceeding relating to the acquisition of real
property by an entity subject to Subchapter B-1, the special
commissioners shall consider, in addition to the considerations
required under Subsection (d), an injury or benefit to the
remaining property as a result of:
(1) the characteristics of any infrastructure on the
condemned property, including the size or visibility of the
infrastructure or the pressure or voltage range provided by the
infrastructure;
(2) any limitation of future expansion of the
remaining property; and
(3) terms of the easement acquired in connection with,
or the alignment of an easement in connection with, the
condemnation.
SECTION 6. The changes in law made by this Act apply only to
the acquisition of real property in connection with an initial
offer made under Chapter 21, Property Code, on or after the
effective date of this Act. An acquisition of real property in
connection with an initial offer made under Chapter 21, Property
Code, before the effective date of this Act is governed by the law
applicable to the acquisition immediately before the effective date
of this Act, and that law is continued in effect for that purpose.
SECTION 7. This Act takes effect September 1, 2019.
* * * * *