On the day of the explosion, Randy Zgabay’s grandmother kept him inside. His grandfather would usually hold Randy, who was only eighteen months old, while his seven-year-old-sister, Laura, played in the pasture near his grandparents’ home in Rosenberg, a small town southwest of Houston. But on this August day in 1966, his grandmother just had a feeling: Randy should stay inside the house with her.
With no warning, the natural gas pipeline exploded about three feet from Laura and her grandfather, engulfing the field in flames. In her haste to get away, Laura ran into a barbed-wire fence; the fire singed her eyebrows and face before her grandfather pulled her to safety. “I felt this hand pull my left arm,” she says. “We walked back to the house, and they put me in front of this great big AC unit, and I remember Granny rubbing some vaseline out of a brown jar.” When Zgabay was older, his grandfather often told him that he wouldn’t have been able to save both him and his sister if Randy had been in his arms.
Now 54 and living in the Hill Country, Zgabay’s childhood near miss has taken on new meaning. In October, he received a notice from Kinder Morgan, the Houston-based pipeline giant, that a portion of a 430-mile natural gas pipeline from the Permian Basin to the Houston area was slated for his 28-acre ranchette in Fredericksburg. Called the Permian Highway Pipeline, the $2 billion project threatened to gobble up 360 pecan trees that Zgabay had planted over the past fourteen years as a source of retirement income. Best he could tell, the 42-inch pipeline would also cross under the home plate of the baseball field he built for his son. But then in April, Kinder Morgan representatives told him they were shifting the pipeline route across the road onto his neighbor’s place. Zgabay is far from relieved. He estimates the Permian Highway will still be 1,200 feet from his house and 400 feet from the baseball diamond.
“Even at that, it’s still pretty scary to know you’d be playing out there and something could happen,” Zgabay says.
Zgabay also worries about the other eight hundred landowners spread across sixteen counties with property in the pipeline’s path. Those who do not reach an agreement with Kinder Morgan—or, like Zgabay, are among the landowners who have benefited from about 150 minor route adjustments—could be forced to cede property through eminent domain. Their circumstances illustrate an increasingly tense tug-of-war between two of Texas’s most cherished resources: land and oil. No longer are the effects of the fracking boom confined to the drilled-to-hell oil patches of West Texas. Record amounts of fossil fuels—about 4 million barrels of oil and 13 billion cubic feet of gas per day in 2019—need to get from the Permian Basin to Gulf Coast refineries and the global market.
Texas is already crisscrossed with oil and gas pipelines—some 466,000 miles in all, nearly enough to go to the moon and back. But pipeline companies are finding that many of their preferred routes are occupied by landowners and homeowners protective of their trees, streams, and peaceful country living. The Hill Country in particular is one of the few parts of Texas that’s never really been touched by the oil industry. Folks in the Hill Country, along with their more suburban neighbors in the booming I-35 corridor, are giving Kinder Morgan unusually feisty opposition. A series of meetings hosted by Kinder Morgan and local governments this winter and spring have drawn hundreds of disgruntled residents. Hays County filed a lawsuit to stop construction of the pipeline.
Zgabay would like to see the Permian Highway Pipeline rerouted out of the Hill Country altogether. He suggests moving it south of San Antonio, where there are already numerous existing pipelines. Hays County and San Marcos officials have also proposed alternative routes to the south. A Kinder Morgan representative provided a statement saying the current route was chosen based on internal studies showing it would have less of an effect on landowners and the environment than areas to the north and south.
“This is the biggest thing [oil and gas companies] have had to grapple with [in recent history],” says Jim Bradbury, an attorney who represents landowners in eminent domain cases. That’s putting state lawmakers, most of whom are cozy with the energy companies, in the uncomfortable position of reining in a powerful industry unaccustomed to substantial challenges from Texas government.
Lawmakers, both Republicans and Democrats, are pushing a variety of bills regarding pipelines this session, most of which have not made it out of committee. But after unsuccessful attempts in 2015 and 2017, legislation reforming the eminent domain process has cleared the Senate and is being considered in the House. Carried by Republican senator Lois Kolkhorst and Republican state representative DeWayne Burns, Senate Bill 421 would force private companies with eminent domain power to hold landowner meetings, reduce the possibility of lowball offers, and create minimum easement standards. The goal is to bolster the rights of landowners without significantly interfering with the transport of fossil fuels and the jobs that depend upon them.
Since the first pipelines started transporting crude oil in southeast Texas more than a hundred years ago, the industry has wielded extraordinary power. As either “common carriers” or gas utility pipelines, private pipeline companies can use eminent domain to seize private property in Texas, so long as they fairly compensate the owners. Under state law, they don’t have to seek approval for their planned route with the Texas Railroad Commission or local governments. They don’t have to follow rules about the pipeline’s location, diameter, or depth. About the only requirement is that the landowner be fairly compensated, and some landowners feel the process is set up so that even that mandate is rarely followed.
Though pipeline companies are required to negotiate with landowners before they resort to eminent domain, the power to seize land gives the firms a big advantage “from the moment they knock on the door the very first time,” says Bradbury. Ron Pack, a rancher in Stephenville, has had plenty of experience with the process. His thousand-acre ranch hosts four abandoned pipelines, three currently in use, and three new ones scheduled for construction. In 2015 he negotiated with Energy Transfer Partners for $45 per linear foot for a 24-inch pipeline that crossed about a mile of his land. This year, with increased property values, a first offer for a new pipeline from Magellan Midstream came in at $16 per linear foot. Russell Boening, president of the Texas Farm Bureau and a supporter of eminent domain reform, said companies frequently offer prices well below market value. “We feel like quite often that initial offer is what we call a lowball offer,” Boening said.
Landowners were pleased with the eminent domain bill as originally drafted. It required initial offers to be at least 145 percent of the market value of the desired property, essentially forcing private acquirers to offer an up-front bonus. The legislation also mandated public meetings, set minimum easement terms, and required the reimbursement of attorneys’ fees if the private acquirers failed to comply with the law. Those terms left representatives of oil and gas groups and other private entities warning of the end of the oil business and chaos in the courts. The bill was “so onerous you would shut down the court system,” Tom Zabel, of the Texas Pipeline Association, warned lawmakers. For three weeks, Kolkhorst, Burns, interest groups on both sides and even Lieutenant Governor Dan Patrick engaged in after-hours discussion in the Capitol’s storied Ramsey Room.
After Kolkhorst agreed to major changes, the Senate passed a version of the bill that was significantly weaker, at least from the standpoint of landowners. Instead of requiring initial offers to come in at 145 percent of market value, they need only be based on an independent appraisal, a broker’s estimate, or comparative sales. Instead of public hearings on proposed projects, pipeline operators would only have to meet with landowners in private. Attorneys’ fees are no longer covered. The easement guidelines remain about the same. Despite the changes, the landowners are still in support, but oil industry interests have signaled that they want to further dilute the bill.
Even without further dilutions, the reforms face at least one formidable enemy in the House: Midland oilman Tom Craddick, one of the House’s most powerful and longest-serving members and chair of the House Land and Resource Management Committee. During a packed committee hearing (it was so crowded, he joked, “we’re selling cots and renting pillows”), Craddick expressed concern that SB 421 would impede getting fossil fuels across Texas. “I live in the West, and we’ve got to move product,” Craddick said. “And if we don’t move the product you can forget expanding the ports in South Texas.” While addressing Boening, Craddick asked him if he would make a commitment that there would be no more eminent domain proposals next session if this bill passed.
The line of questioning didn’t sit well with landowners in attendance.“His attitude was the way they come at you when they show up to take your land,” said Trent Walls, whose six-hundred-acre ranch in Stephenville is slated to host three new pipelines.
Though the bill remains stuck in Craddick’s committee, negotiators still believe it could reach the House floor before the session ends if further concessions are made to the industry.
Bradbury, the eminent domain attorney, suggests that the oil and gas and pipeline companies, despite their immense power, may need the legislation every bit as much the landowners. Environmental groups have greater influence elsewhere in the country, and some universities and foundations have divested from fossil fuels. What happens if more everyday Texans, feeling pushed around on their own land, lose their reverence for the oil and gas industry? When the eminent domain legislation failed to pass in 2017, Bradbury says he received phone calls from Wall Street investment advisers who work with hedge funds that own major portions of oil and gas companies. They were curious about what was happening in Texas.
“They were trying to tease out if there is a trapdoor coming for some of these industries,” Bradbury says.
This article has been updated to correct a typo; 13 billion cubic feet of gas, not 13 million, need to get from the Permian Basin to Gulf Coast refineries each day.