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FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #020 FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 16th day of March, 2010, are as follows:

BY GUIDRY, J.:

2009-C -1629

EXXONMOBIL PIPELINE COMPANY (Parish of Iberville)

v.

UNION

PACIFIC

RAILROAD

COMPANY

Kimball, C.J., participated in oral argument participate in the deliberation of this opinion.

but

did

not

For the reasons set forth above, we find in favor of ExxonMobil that it has the right to expropriate a permanent right of way across Union Pacific's property. Accordingly, we reverse the rulings of the district court and the court of appeal, and remand the matter to the district court for further proceedings involving the determination of any limitations or ancillary rights and the amount of just compensation. REVERSED AND REMANDED. KNOLL, J., dissents and assigns reasons. WEIMER, J., concurs in the result.

3/16/2010

SUPREME COURT OF LOUISIANA No. 2009-C-1629 EXXONMOBIL PIPELINE COMPANY VERSUS UNION PACIFIC RAILROAD COMPANY ON WRIT OF CERTIORARI TO THE COURT OF APPEAL FIRST CIRCUIT, PARISH OF IBERVILLE GUIDRY, Justice* ExxonMobil Pipeline Company (hereinafter, "ExxonMobil") as a common carrier pipeline company seeks to expropriate land belonging to Union Pacific Railroad Company (hereinafter, "Union Pacific") for a private, restricted-access, atgrade surface crossing over Union Pacific's spur track and runaround track in Plaquemine, Louisiana. These tracks are used to service customers Shintech, Air Liquide, and Georgia Gulf. ExxonMobil's reason for the access route is to facilitate performance of maintenance and federally-mandated testing procedures commencing at a valve assembly located within ExxonMobil's right of way on property owned by Georgia Gulf. This valve assembly was part of an extension of ExxonMobil's pipeline to provide ethylene to Shintech. The district court found ExxonMobil failed to show a necessary and public purpose for expropriation of the subject land. The court of appeal majority affirmed. For the reasons set forth below, we reverse the lower courts' rulings, enter judgment in favor of ExxonMobil, and remand the case to the district court for further proceedings. FACTS AND PROCEDURAL HISTORY

Kimball, Chief Justice, participated in oral argument but did not participate in the deliberation of this opinion. 1

*

ExxonMobil, as stipulated by the parties, is a common carrier pipe line company with the right to expropriate "private property under the state expropriation laws for use in its common carrier pipe line business...."1 La. Rev. Stat. 45:254. In 1979, ExxonMobil constructed an ethylene pipeline extending from LA Hwy 1 in Plaquemine, Louisiana, into what is now the Georgia Gulf plant. In 2007, by adding a valve assembly, ExxonMobil constructed an extension of the pipeline into what is now the Shintech plant. The valve assembly is located approximately 2500 feet from LA Hwy 1 on property owned by Georgia Gulf. ExxonMobil employees testified that federal statutes and regulations require monthly inspection of the valve assembly, biannual operation of the valves themselves, and a mechanical inspection every five years. This mechanical inspection consists of the placement of a device referred to as a PIG into the line at the valve assembly and then running the PIG to the end of the line. The PIG is placed into the line at the valve assembly with the use of a cherry picker, weighing approximately 40,000 pounds. Additional equipment is used to flare-off the ethylene removed from the valve assembly during insertion of the PIG. According to testimony at trial, ExxonMobil employees determined that the best access route to the valve assembly would lie from Evergreen Road through Georgia Gulf property, across Georgia Gulf's private outbound track, across Union Pacific's parallel spur and runaround tracks, and along ExxonMobil's right of way for the pipeline extension for about 1000 feet east of the valve site. ExxonMobil's Senior Staff Right of Way and Claims Agent testified that he had immediately ruled out accessing the valve assembly from LA Hwy 1 to the west, because of having to

La. Rev. Stat. 45:251(1) defines a "common carrier" as including all persons engaged in the transportation of petroleum as public utilities and common carriers for hire; or which on proper showing may be legally held a common carrier from the nature of the business conducted, or from the manner in which such business is carried on. ExxonMobil and Union Pacific stipulated prior to trial that ExxonMobil is a common carrier.

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mitigate possible wetland delineations along that route, having to cross or build over other pipelines, having to secure rights of way and additional servitudes from four different property owners, having to build crossings over two ditches, and, most importantly, having to build the road or part of it above its own or another company's pipeline. While a road may cross over a pipeline at a minimum 30-degree angle, the witness explained, the pipeline company does not allow roads to be built alongside and above a pipeline for safety reasons. ExxonMobil prepared plans, obtained permission for the route from Georgia Gulf crossing its property, and then requested permission from Union Pacific for the 50-by-30-foot section crossing its spur and runaround tracks. ExxonMobil selected the location noting that it appeared there was some build-up at that location allowing informal, if unauthorized, passage over the tracks. At any rate, ExxonMobil

employees met at the site with Union Pacific employees, who then rejected the request noting that Union Pacific as a policy matter does not grant new at-grade crossings, even private ones, at least without a corresponding removal of other such crossings. Correspondence ensued, in which ExxonMobil offered inter alia to limit its access to monthly inspections and the mechanical inspection every 5 years, to place a locked gate at the crossing, and to provide sufficient notice to Union Pacific whenever a crossing is to be made. Eventually, ExxonMobil made an offer of money based on its expert's estimated value of the land to be expropriated. Representatives from both companies met again, this time at an attorney's office, but the parties could reach no agreement, with ExxonMobil desiring the at-grade surface crossing and Union Pacific refusing it. Thereafter, ExxonMobil petitioned for expropriation of Union Pacific's property under its authority as a common carrier pipe line company. Following a bench trial, the district court denied the petition for expropriation. The district court observed that ExxonMobil had to establish that the expropriation is
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for a public and necessary purpose. The district court further noted that the pipeline had been constructed and was moving product, so that ExxonMobil was required to show a public purpose for the requested servitude across a railroad track to cross the track and inspect its pipeline. Relying on Texas Pipe Line Company v. Stein, 190 So.2d 244 (La. App. 4th Cir. 1966), rev'd on other grounds, 250 La. 1104, 202 So.2d 266 (1967), the district court found the public character of the servitude is determined by the extent of the right to its use by the public. Here, the district court reasoned, ExxonMobil had restricted the right of the public to use the crossing by limiting its use only to ExxonMobil employees. The district court further noted that ExxonMobil had obtained over 9000 feet of servitude for the pipeline extension, along with an additional servitude for a road of 1000 feet. On this reasoning, the district court found ExxonMobil had failed to establish a public and necessary purpose for the servitude across Union Pacific's spur and runaround tracks. ExxonMobil appealed, and a majority of the court of appeal affirmed the district court's ruling. ExxonMobil Pipeline Company v. Union Pacific Railroad Company, 08-2347 (La. App. 1 Cir. 5/13/09), 15 So.3d 246. The court of appeal majority found that ExxonMobil had failed to establish a public purpose because the right of the public to use the desired servitude had been restricted by ExxonMobil itself. The court of appeal majority observed that, in determining whether a proposed expropriation is for a public purpose, the courts look to the extent of the public's right to its use rather than the number of persons actually using the property at any given time, citing, as did the district court, Texas Pipe Line Company v. Stein, 190 So.2d at 252. The court of appeal majority further noted there must be a general public right to a definite use of the property, as distinguished from a use by a private individual or corporation that may prove beneficial or profitable to some portion of the public, citing Terrebonne Parish Police Jury v. Kelly, 472 So.2d 229, 232 (La. App. 1st
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Cir.1985), which had cited River & Rail Terminals v. Louisiana Ry & Nav. Co., 171 La. 223, 130 So. 337, 340 (1930). However, the Court of appeal majority observed, "actual use by the public is not the criteria by which public purpose is determined," citing Texas Pipe Line Company, 190 So.2d at 250. 08-2347, p. 4, 15 So.3d at 248. Nonetheless, the court of appeal majority reasoned as follows: In the instant case, ExxonMobil seeks to expropriate a right of way to build an access road solely to enable it to access its pipeline to perform routine maintenance and inspections. ExxonMobil asserts that the pipeline serves a public purpose and that the access road is necessary to maintain that public purpose. However, the record is devoid of any evidence that the right of way and proposed access road itself will serve a public purpose. In fact, the evidence presented at trial suggests that the portion of the access road crossing Union Pacific's property will be a private crossing, with a locked gate that will only be accessible by ExxonMobil. Further, according to the record, the access road will only be used by ExxonMobil to access its pipeline at the valve site to perform routine maintenance and inspections. None of this evidence demonstrates, however, that the public has a general right to a definite use of the property. 08-2347, p. 5, 15 So.3d at 249. The majority concluded that the land sought to be expropriated would not itself be used to protect the safety of the public, but rather, would be used only by ExxonMobil to access its pipeline and right of way to perform statutorily-required maintenance and inspections. Thus, the majority found no error in the district court's finding that ExxonMobil had failed to establish a public and necessary purpose for the expropriation of the right of way and access road servitude across property owned by Union Pacific. The dissenting judge on the appellate court panel believed that ExxonMobil did not have to prove the public will directly use an access road to establish a public purpose. The dissenting judge reasoned that ExxonMobil did prove a public purpose because it established it needed access to its pipeline to perform inspections and maintenance of the valve site to ensure the integrity and safe operation of the pipeline and safety of the public. It was sufficient to prove public purpose, the dissenting

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judge further reasoned, that such maintenance of the pipeline is required by federal statute and that the access road is needed to perform these mandated inspections. On application by ExxonMobil, we granted the writ application to consider the correctness of the rulings below. ExxonMobil Pipeline Company v. Union Pacific Railroad Company, 09-1629 (La. 10/30/09), 21 So.3d 269. DISCUSSION The issue before this court is whether ExxonMobil has established a public and necessary purpose for expropriation of a servitude across Union Pacific's rail tracks for an access road, which ExxonMobil asserts is necessary to perform statutorilymandated inspections on its pipeline. As previously noted, ExxonMobil is a common carrier pipeline company as defined in La. Rev. Stat. 45:251. La. Rev. Stat. 45:254 thus grants ExxonMobil with the authority to expropriate private property under certain circumstances. That statute provides, in pertinent part: All persons included in the definition of common carrier pipe lines as set forth in R.S. 45:251 have the right of expropriation with authority to expropriate private property under the state expropriation laws for use in its common carrier pipe line business, and have the right to lay, maintain and operate pipe lines, together with telegraph and telephone lines necessary and incident to the operation of these pipe lines, over private property thus expropriated, and have the further right to lay, maintain and operate pipe lines along, across, over and under any navigable stream or public highway, street, bridge or other public place, and also have the authority, under the right of expropriation herein conferred, to cross railroads, street railways, and other common carrier pipe lines by expropriating property necessary for the crossing under the expropriation laws of this state. Article I, Section 4 of the Louisiana Constitution of 1974 addresses the expropriation of private property by a private entity for public purposes: Property shall not be taken or damaged by a private entity authorized by law to expropriate, except for a public and necessary purpose and with just compensation paid to the owner; in such proceedings, whether the purpose is public and necessary shall be a judicial question.

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Expropriation laws are special and exceptional in character, in derogation of common rights, and as such, must be strictly construed. United Gas Pipe Line Company v. Blanchard, 149 So.2d 615 (La. App. 1st Cir.), writ denied, 244 La. 135, 149 So.2d 615 (1963). Public Purpose ExxonMobil argues that its ethylene pipeline supplies petroleum to Shintech, and that by supplying even one consumer, a plant facility that provides jobs and other benefits to the community, the pipeline serves a public and necessary purpose. ExxonMobil further argues that the access road is necessary to perform federallymandated inspections on the pipeline and that these inspections are intended to protect the safety of the public and ensure the delivery of needed resources to its consumers. Thus, ExxonMobil argues, the access road serves a public and necessary purpose, by allowing ExxonMobile to maintain and inspect its valve site and pipeline. The lower courts found that the public would be restricted from actual use of the access road itself, and thus the extent of the right of the public to use the access road indicated that it would not serve a public purpose. ExxonMobil argues the lower courts erred in focusing primarily on whether the public would have actual use of the railroad crossing, when the authority granted to ExxonMobil as a common carrier pipeline company is broad enough to include additional real estate to facilitate the maintenance and inspection of its pipeline. Before this court, Union Pacific has downplayed the lower courts' focus on actual public use of the requested crossing; instead, Union Pacific argues the district court did not only find the lack of a public purpose, it also found that the requested crossing was not shown to serve a necessary purpose. We find the lower courts erred in focusing primarily upon the actual usage of the public of the desired railroad crossing in determining whether the requested
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servitude would serve a public purpose. While actual public use of the servitude may play a role in the appropriate case in determining whether the expropriation serves a public purpose, we do not read the constitutional provision and the statutes granting ExxonMobil its authority to expropriate private property as restricting expropriating real estate to that on which the pipeline itself is placed, nor do we interpret these provisions and the jurisprudence as requiring direct public use as the sole factor in determining whether the expropriated property will serve a public purpose. As the court of appeal majority noted, see 08-2347, p. 7 n.3, 15 So.3d at 250 n.3, the courts of this state have taken arguably divergent views on finding a public purpose when a proposed expropriation is alleged to serve only a single, private entity, and thus some courts have focused solely upon whether the public would have the right to actual use. For example, in River & Rail Terminals, Inc. v. Louisiana Ry. & Nav. Co., a railroad laid a spur track across the property of the plaintiff to reach the property of an oil refinery company. The plaintiff accused the railroad of illegal and tortious trespass and sought injunctions prohibiting the railroad from using the track and requiring the track's removal. Although not an expropriation action, this court stated that "[t]he outstanding issue in this case is whether the spur track in question is for a private or public purpose." Id., 130 So. at 338. The plaintiff argued that "the spur track was constructed for the private accommodation of both defendant railroad and the oil refinery, and to make the private business of both more profitable." Id. at 339. This court agreed, finding that the public had the right to use neither the refinery's loading station nor the spur track and that the spur track "serves no other enterprise but the [refinery], and ... was constructed solely for the purpose of enabling [the railroad] to handle tank cars shipped out of the refinery." Id. at 340. In so holding, this court stated, "It is well settled that there must be a general public right to a definite use of the property, as distinguished from a use by a private individual or
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corporation which may prove beneficial or profitable to some portion of the public." Id. at 340. However, this court later identified the somewhat differing approaches to determining public purpose, quoting Corpus Juris, vol. 20, p. 551 et seq., as follows: No general definition of what degree of public good will meet the constitutional requirements for a "public use" can be framed, as it is in every case a question of public policy. The meaning of the term is flexible and is not confined to what may constitute a public use at any given time, but in general it may be said to cover a use affecting the public generally, or any number thereof, as distinguished from particular individuals. Some courts ... hold that "public use" is synonymous with "public benefit," "public utility" or "public advantage," and to authorize the exercise of the power of eminent domain to promote such public benefit, etc., especially where the interests involved are of considerable magnitude, and it is sought to use the power in order that the natural resources and advantages of a locality may receive the fullest development in view of the general welfare. ... Other courts, however, ... hold[] in effect that "public use" means use by the public. ... Under this view it is essential to constitute a public use that the general public have the right to a definite and fixed use of the property appropriated, not as a mere matter of favor or by permission of the owner, but as a matter of right. ... The character of the use, and not its extent, determine the question of public use. It is not essential that the use or benefit extend to the whole public or any considerable portion thereof, nor that each and every individual member of the community have the same degree of interest therein; the fact that the use and benefit is limited to the inhabitants of a small locality, or that the number of persons who are expected to avail themselves thereof is small, is immaterial provided it is open to all upon the same terms. City of New Orleans v. New Orleans Land Co., 173 La. 71, 136 So. 91, 92-93(1931). Later jurisprudence from this court and our appellate courts, except for that of the First Circuit, has not followed the arguably more restrictive line set forth in River & Rail Terminals. In Calcasieu & S. Ry. Co. v. Bel, 224 La. 269, 69 So.2d 40, 43 (1953), for example, the plaintiff established that its railroad would serve the public generally and any industries located near its tracks, and that it hoped to move and transport over its line various commodities, including timber, gravel, and cattle. The plaintiff further established that lumber corporations, owners of large tracts of land situated in the vicinity of the proposed rail line, and purchasers of forest products
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would and could make use of the facilities of this railroad in the shipment of these products. This court in approving the expropriation, reasoned as follows: "It was shown that the railroad will serve the public, and that the public may use and enjoy its facilities; that the construction of the road will be a public advantage and will tend to enlarge the resources, increase the industrial energies, and promote the productive powers of a considerable number of the inhabitants or businesses of a section of this state, and manifestly will contribute to the general welfare and prosperity of the community in which it is located. Consequently the taking is for public purposes and for purposes of public utility, within the meaning of those terms as they are used in the Constitution." Id., 69 So.2d at 42-43. Another example is Dixie Pipeline Co. v. Barry, 227 So.2d 1 (La. App. 3d Cir.1969), writ refused, 255 La. 145, 229 So.2d 731 (1970), in which the Third Circuit acknowledged that a proposed pipeline would connect a privately owned plant with the proposed expropriator's pipeline, but nonetheless found a public purpose where the plant produced propane from the raw stream it received from area producers and where "the effect of the pipeline will be to transport large quantities of propane gas from the plant to a large market in several states." Id. at 7. Similarly, in finding a public purpose for a proposed pipeline that connected to a single enterprise in Louisiana Resources v. Greene, 406 So.2d 1360 (La. App. 3d Cir. 1981), writ denied, 412 So.2d 84 (La. 1982), the Third Circuit held that "[t]he public need not be supplied gas directly from the pipeline for which expropriation is sought for the expropriation to meet the test of public purpose." Id. at 1364. Rather, "[t]he pipeline serves a public purpose merely by placing more natural gas in the stream of commerce." Id. See also Texas Pipe Line Co. v. Stein, 190 So.2d at 250 ("`actual public use' is not the criteria by which public purpose is determined"). Given the long line of cases since River & Rail Terminals, we agree with the
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Third Circuit that, despite some previous "restrictive language, the Louisiana jurisprudence has not defined `public purpose' so narrowly." Town of Vidalia v. Unopened Succession of Ruffin, 95-580 (La. App. 3 Cir. 10/4/95), 663 So.2d 315, 319 (per then Judge Knoll). "Rather, any allocation to a use resulting in advantages to the public at large will suffice to constitute a public purpose." Id. Accordingly, applying these precepts to the facts of this case, we find the servitude across Union Pacific's spur and runaround tracks would serve a public purpose. Even if the access road, and the private at-grade crossing that is the subject of this litigation, are not directly or actually used or open to the public at large, the road and the servitude do serve a public purpose in that they permit the pipeline company to maintain and inspect its pipeline, which delivers petroleum products to end users, and which redounds in benefits to the public at large. Indeed, we note the rather circular logic of the court of appeal and district court, in that they both reasoned that ExxonMobil's offer to restrict use of the crossing only to ExxonMobil employees once a month and every five years

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