ARTICLE
23 April 2024

How Exclusive Is An "Exclusive" Pipeline Servitude?

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Gray Reed & McGraw LLP

Contributor

A full-service Texas law firm with offices in Dallas, Houston and Waco, Gray Reed provides legal services to companies ranging from start-up to Fortune 100 as well as high net worth individuals. For more information, visit www.grayreed.com.
In ETC Tiger Pipeline LLC v. DT Midstream Inc. et al. it was not as exclusive as the servitude owner wanted it to be.
United States Energy and Natural Resources
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In ETC Tiger Pipeline LLC v. DT Midstream Inc. et al. it was not as exclusive as the servitude owner wanted it to be.

Pursuant to a Servitude Of Use For Pipeline, ETC operates a 42-inch, high pressure, high volume natural gas pipeline in DeSoto Parish, Louisiana, that runs from Panola County, Texas, to Richland Parish (east of DeSoto). ETC rejected DTM's request to be allowed to route a smaller pipeline across ETC's servitude beneath and perpendicular to ETC's pipeline. The stated reason was that DTM could not fulfill ETC's necessary safety and operational requirements.

ETC sought a TRO, alleged that DTM's actions exposed ETC to immediate and ongoing damages, infringed upon its servitude rights, and constituted trespass, and that its exclusive servitude does not allow any other pipelines to cross the ETC servitude.

DTM responded that at the location in question it planned to cross four different pipelines, including ETCs. The DTM pipeline would run approximately 19 feet below the largest pipeline and 25 feet below the ETC pipeline. DTM had a servitude from the landowner and cleared the crossing with other pipeline operators. DTM claimed it would suffer $18 million in damages and potential loss of its anchor shipper if the project could not be completed.

Testimony came from several witnesses (10 by my count) covering issues and topics too numerous to discuss here. The trial court granted ETCs preliminary injunction and denied DTMs, preventing DTM from constructing its pipeline. The trial court saw ETCs exclusive servitude as granting the right to prevent DTM's crossing. DTM appealed.

The court of appeal's reasoning

The court of appeal reversed, first concluding that ETC had a personal servitude of right of use conferring in favor of a person a specified use of an estate less than full enjoyment. It was not a predial servitude.

The court observed that the Civil Code anticipates multiple servitudes burdening a servient estate and states that servitudes should be interpreted in favor of the servient estate, which in this case was the owner of the land.

"Exclusive"? No.

ETC argued that its servitude grants the right to use of an unlimited depth and right to prevent other pipelines from crossing under ETCs pipeline. The court did not agree. The one-time use of the word "exclusive" does not mean that ETCs servitude includes all depths and that ETC can subjectively block the crossing of another pipeline. The word "exclusive" does not convey any intent to specifically retain an exclusive depth when the servitude is silent as to depth. The depth was made certain at the time the pipeline was completed. Once that happened, the depth became defined. The servitude granted a broad array of rights inherent in a pipeline servitude, but once the pipeline was completed ETC's rights are limited to operating and maintenance activities.

The servitude grants ETC the right to lay only one pipeline. A depth separation provision means that the servitude anticipates the possibility of future underground crossings. ETC was not granted the right to prohibit underground crossings; it only prevents any use that may unreasonably damage, injure or interfere with ETC's use.

The trial court found that safety was not an issue. ETC did not prove that safety was an actual concern and that DTM could not meet ETCs requirements for crossing under its pipeline.

The court saw the record as reflecting that ETC's concern was to gain a "commercial" benefit from the crossing.

Lagniappe – How will this decision be applied?

While this dispute is between dueling gas pipelines; with increasing competition among pipeline, solar, wind and other servitudes, expect this ruling to have wider implications.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
23 April 2024

How Exclusive Is An "Exclusive" Pipeline Servitude?

United States Energy and Natural Resources

Contributor

A full-service Texas law firm with offices in Dallas, Houston and Waco, Gray Reed provides legal services to companies ranging from start-up to Fortune 100 as well as high net worth individuals. For more information, visit www.grayreed.com.
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