C.S.H.B. 2006 78(R)    BILL ANALYSIS


C.S.H.B. 2006
By: Jones, Elizabeth
Energy Resources
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Many railroads have turned their right-of-way over to outside management
companies. Utilities, pipeline and cable companies who need to build
facilities that cross the right-of-way or go alongside the right-of-way
have to deal with those management companies. A number of disputes have
arisen with the management companies and the demands those companies have
made with respect to existing facilities as well as proposed new
facilities. Fees for the use of the right-of-way have been sharply
increased even for existing facilities.  Projects are often delayed for
months waiting new agreements from the management companies or the
railroads. In many instances, it is not clear that the railroads have an
ownership interest in the property. A number of states have already
addressed this problem with various types of legislation because of the
need to build essential facilities that provide service to the public. 

The purpose of this bill is to create a uniform process for gas companies,
electrical companies, telecommunication companies, cable companies and oil
and gas or products pipelines to build facilities along, across or over
the railroad right-of-way in a timely and economical fashion.   
RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

SECTION 1. The purpose of this Act is to:

 (1) create uniform laws relating to the construction and maintenance of
utility, common carrier, and energy transporter facilities along, over,
under, or across a railroad right-of-way; and 

 (2) grant utilities, common carriers, and energy transporters certain
rights, privileges, and responsibilities and provide a uniform process for
those entities to obtain easements or other rights to construct and
maintain their facilities in the railroad rights-of-way in this state; 

 (3) declare that energy transporters as defined herein have a public use
because such entities transport essential energy supplies to the public
and should be granted limited eminent domain authority to obtain easements
along, over or across a railroad right-of-way. 

SECTION 2. Chapter 186, Utilities Code, is amended by adding Subchapter E.

SUBCHAPTER  E. CONSTRUCTION AND MAINTENANCE OF   FACILITIES ALONG, OVER,
UNDER, OR ACROSS RAILROAD RIGHT-OF-WAY. 

Section 186.051. DEFINITIONS.

 (1) "Common carrier"is defined as a common carrier as described by
Section 111.002, Natural Resources Code, or a person who submits to
regulation by the state as a common carrier under Article 2.01, Texas
Business Corporation Act. 

 (2) "Energy transporter" is defined as a pipeline used for gathering or
transporting oil, gas,  or oil and gas products. 

 (3) "Railroad" is defined as an entity that owns, operates, or controls a
railroad or property or assets owned or previously owned by a railroad in
this state, including agents, assignees, or parties that by contract own,
control, or manage railroad right-of-way, easements, or other real
property rights belonging to the railroad. The term includes inter-urban
and street railroads. 

 (4) "Railroad right-of-way" is defined as the real property rights owned
or controlled by a railroad, including fee and easement interests. 

 (5) "Utility" means
  (A) a gas, water, electric, or telecommunications entity that is defined
as a utility under the laws of this state; 
  (B) an electric cooperative; or
  (C) a municipally owner utility.

Section 186.052. EXEMPTIONS.

    (a)The inclusion of an energy transporter in this subchapter does not
subject the transporter to regulation as a utility or common carrier. 

     (b)The inclusion of a common carrier in this subchapter does not
subject the carrier to regulation as a utility. 

Section 186.053. CONSTRUCTION AND MAINTENANCE OF UTILITY, COMMON CARRIER,
AND ENERGY TRANSPORTER FACILITIES. 
    
    (a) A utility, common carrier, or energy transporter has the right to
construct and maintain its facilities along, over, under, or across a
railroad or railroad right-of-way pursuant to the provisions of this
subchapter if the facilities: 
 
 (1) as they pass over, under, or across a railroad or railroad
right-of-way are not parallel to the railroad or railroad right-of-way; or
 
 (2) before they pass along a railroad or railroad right-of-way are
parallel to the railroad or railroad right-of-way for a distance of not
more than 500 feet within any one mile segment of the railroad
right-of-way: 

 (3) a utility or common carrier shall provide reasonable notice to the
railroad of any proposed activity relating to the construction,
maintenance, or operation of the facilities, shall comply with all state
and federal safety regulations applicable to construction along, over,
under, or across a railroad right-of-way and shall not unreasonable
interfere with railroad operations. 
  
     (b) A railroad may require a utility, common carrier, or energy
transporter to:  

 (1) provide notice to the railroad within a reasonable period if any
activity relating to the construction, maintenance, or operation of the
facility will substantially interfere with the operation of the railroad;
and 

 (2) relocate any portion of the facility that is located in the railroad
right-of-way that is not in the public right-of-way if: 

  (A) a reasonable alternate route is available;
  (B) a reasonable amount of time is provided;
  (C) substantial interference with the railroad operations is
established; and 
  (D) the railroad reimburses the utility, common carrier, or energy
transporter for the                               cost of relocation
unless provided otherwise in existing agreement. 

Section 186.054. DOCUMENTATION OF RIGHTS ACQUIRED.
 
If a railroad requires a utility, common carrier, or energy transporter to
obtain from the railroad a right to use a railroad right-of-way, the
railroad shall produce, if requested, the documentation on the extent of
the railroad's right, title, or interest in the property sought to be used
by the utility, common carrier, or energy transporter. The utility or
common carrier shall reimburse the railroad for reasonable cost of
producing such documentation from the railroad's records, not to exceed
$250, including internal costs. If the railroad has no demonstrable real
property interest in the property sought to be used or no right to grant
an easement along, over, under, or across the railroad right-ofway, the
utility, common carrier, or energy transporter does not owe the railroad
compensation for the use of the property. 

Section 185.055. VALUATION OF RIGHTS ACQUIRED.

    (a)In the absence of an agreement for the right to use a railroad
right-of-way, a utility, common carrier, or energy transporter may obtain
the right to use the right-of-way through the exercise of eminent domain
pursuant to Chapter 21 of the Texas Property Code. 

    (b) The damages due the railroad under Texas Property Code, or its
successor, is the market value of the real property interest to be used.
Market value is determined by measuring the value of the property interest
immediately before and immediately after the taking. 

   (c) The property interest may not be valued at more than the valuation
of the real property adjacent to the right-of-way. 

  (d) The railroad may also recover costs and expenses including internal
costs for providing flagging services, for interference with railroad
operations and the cost to repair any damage to its facilities caused by
the construction or maintenance of the utility, common carrier, or energy
transporter facilities. 

  (e) The payment by the utility, common carrier, or energy transporter
determined under this section is the only compensation due to the railroad
for the perpetual use of the interest obtained. 

Section 186.056. RIGHT TO MAINTAIN FACILITIES.

During the pendency of the condemnation proceedings or good faith
negotiations for the purchase of the right to use a railroad right-of-way,
the utility, common carrier, or energy transporter may not be required to
remove any existing facilities provided such facilities were initially
located on railroad right-of-way with agreement of the railroad.  

Section 186.057. LICENSE AND RENEWAL.

  (a) A utility, common carrier, or energy transporter may obtain an
original license or subsequent license for the right to use a railroad
right-of-way for a one-time paid fee based on: 

 (1) the agreement of the railroad and the utility, common carrier, or
energy transporter; or  

 (2) a mutually acceptable third-party determination of market value.

  (b) A fee paid under this section is the only fee payment required. The
license remains in effect without the requirement of additional fee
payments for renewal of the license. 

Section 186.058. PROHIBITED ACTS. A railroad may not:

 (1) interfere with the right of a utility to cross a railroad
right-of-way using a public right-ofway that is not restricted; or 

 (2) require a utility to pay a fee to cross a railroad right-of-way on a
public right-of-way. 

Section 186.059. INDEMNITY AGREEMENTS VOID. An agreement between a
railroad and a utility, common carrier, or energy transporter relating to
the sale, lease, license, or other use of a  railroad right-of-way,
including a purchase agreement, deed, bill of sale, lease, or license, is
void to the extent the agreement: 

 (1)claims to indemnify or require the defense of the railroad or an
employee, agent, or independent contractor of the railroad against any
loss, liability, or other damage that results from the gross negligence of
the railroad or an employee, agent, or independent contractor of the
railroad; or 

 (2) requires the utility, common carrier, or energy transporter to
purchase insurance providing coverage or other indemnity protection for
the railroad or an employee, agent, or independent contractor of the
railroad against any loss, liability, or other damage that results from
the gross negligence of the railroad or an employee, agent, or independent
contractor of the railroad.  

 (3)the change in law made by Section 186.059, Utilities Code, as added by
this Act, applies only to an indemnity agreement entered into on or after
the effective date of this Act.  An agreement entered into before the
effective date of this Act is governed by the law in effect on the date
the contract was entered into, and the former law is continued in effect
for that purpose. 

Section 186.060 CUMULATIVE RIGHTS AND RESPONSIBILITIES. The rights,
privileges, and responsibilities provided by this subchapter are in
addition to and not in substitution for those rights granted by any other
state or federal law. 

SECTION 3.  If any provisions of this Act or its application to any person
or circumstances is held invalid, the invalidity does not affect other
provisions or applications of this Act that can be given effect without
the invalid provision or application, and to this end the provision of
this Act are declared to be severable.  

SECTION 4. (a) This Act takes effect September 1, 2003.

EFFECTIVE DATE

This Act takes effect September 1, 2003.

COMPARISON OF ORIGINAL TO SUBSTITUTE

CSHB 2006, Section 1:  

-adds subsection (3).

CSHB 2006: 

-strikes Section 2, subsection(3), of original bill.

CSHB 2006, Section 2: 

-adds subsection (5) by adding (B) and (C).

CSHB 2006, Section 2, Section 186.053:

-adds language on line 19, page 2, "pursuant to the provisions of this
subchapter if the facilities: 

-adds subsections (1), (2), (3) to "a".

-adds "b" and subsection (1) and (2).

-adds (A), (B), (C), (D) to subsection (2).

CSHB 2006, Section 2, Section 186.054: 

 -strikes the phrase "that demonstrates" on page 3, lines 9 and 10, of
the original bill, and adds the word "on" to CSHB 2006 on page 3, line 13. 

-adds "The utility or common carrier shall reimburse the railroad for the
reasonable cost of producing such documentation from the railroad's
records, not to exceed $250, including internal costs.", on page 3, lines
14-16, between the words "transporter." and "If", on CSHB 2006. 

CSHB 2006, Section 2, Section 186.055(a):

-adds "pursuant to Chapter 21 of the Texas Property Code"; on page 3,
lines 22-23 of the CSHB 2006. 

CSHB 2006, Section 2, 186.055(b):

-strikes the phrase "The compensation due the railroad under an eminent"on
page 3, lines 22-23, of the original bill.  

-strikes the word "fair" on page 3, line 23, between the words "the" and
"market" on page 3, line 23 of the original bill. 

-strikes the  phrase "The value includes only the value of the property
interest owned by the railroad and sought to be used by the utility,
common carrier, or energy transporter" on page 3, lines 24-26, of the
original bill. 

-adds the phrase "The damages due the railroad under Texas Property Code,
or its successor" on page 3, line 23 to CSHB 2006. 

-adds the phrase, "Market value is determined by measuring the value of
the property interest immediately before and immediately after the
taking." on page 3, lines 25-26 of CSHB 2006. 

CSHB, 2006, Section 2, Section 186.055(d):

-adds the word "also" before the word " may" and adds the phrase "costs
and expenses including internal costs for providing services, for
interference with railroad operations and" on page 3, lines 29-30 of CSHB
2006.  

CSHB 2006, Section 2, Section 186.056:

-adds the phrase "provided such facilities were initially located on the
railroad right-of-way with agreement of the railroad." on page 4, lines
8-9 of CSHB 2006. 

CSHB  2006 adds the following sections:

Section 186.057. LICENSE AND RENEWAL.

  (a) A utility, common carrier, or energy transporter may obtain an
original license or subsequent license for the right to use a railroad
right-of-way for a one-time paid fee based on: 

 (1) the agreement of the railroad and the utility, common carrier, or
energy transporter; or  

 (2) a mutually acceptable third-party determination of market value.

  (b) A fee paid under this section is the only fee payment required. The
license remains in effect without the requirement of additional fee
payments for renewal of the license. 

Section 186.058. PROHIBITED ACTS. A railroad may not:

 (1) interfere with the right of a utility to cross a railroad
right-of-way using a public right-ofway that is not restricted; or 
 
 (2) require a utility to pay a fee to cross a railroad right-of-way on a
public right-of-way. 

Section 186.059. INDEMNITY AGREEMENTS VOID. 

An agreement between a railroad and a utility, common carrier, or energy
transporter relating to the sale, lease, license, or other use of a
railroad right-of-way, including a purchase agreement, deed, bill of sale,
lease, or license, is void to the extent the agreement: 

 (1)claims to indemnify or require the defense of the railroad or an
employee, agent, or independent contractor of the railroad against any
loss, liability, or other damage that results from the gross negligence of
the railroad or an employee, agent, or independent contractor of the
railroad; or 

 (2) requires the utility, common carrier, or energy transporter to
purchase insurance providing coverage or other indemnity protection for
the railroad or an employee, agent, or independent contractor of the
railroad against any loss, liability, or other damage that results from
the gross negligence of the railroad or an employee, agent, or independent
contractor of the railroad.  

 (3)the change in law made by Section 186.059, Utilities Code, as added by
this Act, applies only to an indemnity agreement entered into on or after
the effective date of this Act.  An agreement entered into before the
effective date of this Act is governed by the law in effect on the date
the contract was entered into, and the former law is continued in effect
for that purpose. 

Section 186.060 CUMULATIVE RIGHTS AND RESPONSIBILITIES. 

The rights, privileges, and responsibilities provided by this subchapter
are in addition to and not in substitution for those rights granted by any
other state or federal law. 

SECTION 3.  If any provisions of this Act or its application to any person
or circumstances is held invalid, the invalidity does not affect other
provisions or applications of this Act that can be given effect without
the invalid provision or application, and to this end the provision of
this Act are declared to be severable. 

SECTION 4. (a) This Act takes effect September 1, 2003.