Commercial Litigation

Senate Bill 18: Important Changes for Texas Landowners in Condemnation

Recently enacted Senate Bill 18 (“SB 18”) takes effect September 1, 2011, and alters the Texas property, education, government, local government, transportation, and water codes.  Among the provisions of SB 18 are new procedures emphasizing the importance of the offer process in condemnation and affording landowners additional rights with respect to property access and repurchase.

Offer Process Emphasized

 Texas law has long required condemning authorities to make offers to purchase property before initiating formal condemnation proceedings.  Much debate in the Texas Legislature has transpired over the fairness of the offer process to landowners facing a condemnor’s exercise of its “super power” to take land for public use.  For example, debate has circled around landowners’ concerns about receiving “lowball” offers, being unable to truly negotiate with condemnors in the offer process, and being unable to recover any attorneys’ fees if condemnors do not negotiate in good faith.

 Although SB 18 does not fully assuage all landowner concerns, it does put in place new requirements with a renewed emphasis on the “good faith” offer process.  For example, Texas law requires a “bona fide” offer by the condemnor, which SB 18 defines to require, among other things, written initial and final offers delivered by certified mail/return receipt requested, at least 30 days between offers, minimum limits for final offers, and additional time (14 days) for landowners to respond to final offers.  In addition, landowners are now entitled to 20 days notice (rather than the prior 11 days) before a condemnation hearing, giving the parties further time for purchase negotiations after a final offer has been made.  The new requirements give the offer process more structure, a slightly longer timeline, and more standards for assessing fairness in the amounts of offers and the manner in which offers are made.

To further emphasize the importance of the offer process, the Texas Legislature has now given landowners the right to recover some attorneys’ fees in condemnation lawsuits, albeit under only limited circumstances.  For example, if a court determines that a condemnor did not make a bona fide purchase offer conforming with all of the new statutory requirements, the court is required to abate the condemnation suit, order the condemnor to make a bona fide offer, and order the condemnor to pay reasonable attorneys’ fees and other professional fees (e.g., appraiser fees) that the landowner has incurred up to that point in the condemnation proceedings.  Attorneys’ fees are also now recoverable for compelling a condemnor to produce various documentation, such as appraisals, that the condemnor is required to provide to the landowner in the offer process.

These new limited rights to recover attorneys’ fees do not go as far as the law in some other states, where a successful landowner can recover all attorneys’ fees in a condemnation case.  Likewise, SB 18 may not protect landowners from final offers based on “lowball” appraisals.  But the new law does afford landowners in Texas more protection than they previously had and should hopefully incentivize condemnors to heed the Texas Legislature’s clear call for the offer process to be carried out more fairly to landowners.

Property Access and Repurchase

 In addition to emphasizing the offer process, SB 18 also puts in place new protections for landowners’ access to their property.  For example, in partial takings cases where the landowner will continue to own a remainder tract, SB 18 requires a landowner be paid for damage to the remainder where there is a “material impairment” to access between the landowner’s property and adjoining public roads.

SB 18 also impacts landowners’ ability to repurchase property a condemnor has previously taken.  While a repurchase right previously existed, SB 18 adopts additional circumstances under which the right to repurchase may be exercised.  At the same time, however, SB 18 imposes a short, 1-year statute of limitations to exercise the repurchase right once it arises, which can be triggered by actions the landowner has to take.  The new law thus broadens landowners’ repurchase rights in certain respects, but at the same time imposes burdens on landowners when seeking to exercise their rights.

Although the above-discussed changes to Texas condemnation law and others under SB 18 are a step in the right direction, there is still more to reform in Texas condemnation law for private landowners.  In addition, private landowners should be careful navigating the new law in order to protect their rights.

 by J. Allen Smith and Michael R. Steinmark

Business Counsel Services

ObamaCare Health Reform Update


President Obama’s health care legislation was a major topic throughout 2009, and the beginning of 2010 has been no different. Just as 2009 was filled with confusion, debates, and general concerns, 2010 continues on this weaving path toward uncertainty. In fact, a comparison of this update with the previous update and supplement in the November 2009 issue will reveal the paradox used to describe the health care legislation both then and now: while Congress is no closer to approving revised healthcare legislation, many significant developments have taken place in the intervening months. This update will again attempt to provide an understanding of where the process currently stands and briefly touch on the status of some of the legislation provisions.

Status of Legislation

At the end of 2009, the House of Representatives ("House") and the Senate unveiled their respective versions of the health care bill. While the House bill was unveiled, submitted and passed by its members within a relatively short timeframe, the Senate bill was not approved until Christmas Eve.

Following approval, both bills were to be sent to a conference committee to begin the negotiations necessary to produce a single health care bill. Instead of a formal conference, private negotiations were conducted with key lawmakers to address issues relating to the merging of the bills. However, during these negotiations, a major roadblock descended from Massachusetts.

In the Massachusetts’ Special Election to replace the late Edward M. Kennedy in the Senate, Republican Scott Brown defeated Democrat Martha Coakley. This Republican victory resulted in the Democrats losing their 60 member Supermajority voting block; the same 60 member Supermajority voting block that narrowly approved theSenate bill version. Because there were not enough votes in the Senate to likely approve any bill version or prevent a Republican filibuster, new strategies are being examined to determine how health care legislation should move forward. On January 27, 2010, during his State of the Union Address, President Obama reiterated his commitment to the health care legislation, but also indicated that a cooling off period would take place while health care legislation is being reexamined.

Legislation Provisions

Even though the status and direction of the health care legislation as a whole is uncertain, a brief summary of the status of specific provisions within the legislation should be examined. Please note that the following summary is based simply on a comparison of the provisions within the House and Senate bill versions and does not comment on the level of support or disapproval from the Democratic or Republican parties.

It appears that there are several issues on which the House and Senate bill versions are in agreement. First, both bill versions are in agreement when it comes to immediate reforms (i.e. reforms that would become effective immediately upon passage of a final bill). The reforms would include such things as eliminating pre-existing condition exclusions. Second, there is general agreement for the creation of new health insurance marketplaces (i.e. exchanges) for individuals and small businesses to obtain health insurance. Sliding scale subsidies would be provided to make the premiums of the exchange plans affordable. Third, Medicaid eligibility levels would be expanded. Fourth, both bill versions contain individual and employer mandates resulting in tax penalties for the failure to purchase or offer coverage. Finally, there would be limitations on physician ownership in hospitals. Both bill versions would amend Section 1877 of the Social Security Act ("Stark Law") by imposing additional requirements to meet the hospital ownership exception.

While the House and Senate bill versions are in agreement on several issues, the three issues that are conflicting are the most contentious aspects of the legislation. The first issue the bills are in disagreement about is how the legislation will be funded. The House bill desires to impose taxes on high income individuals while the Senate bill aims higher taxes towards insurers and their "Cadillac" plans. The Senate bill additionally proposes a tax on elective cosmetic surgery. Another issue relates to the health insurance exchanges. While the bills agree that the exchanges should be created, there is a difference in the logistics. The House bill would establish a national exchange but allow for the formation of state exchanges in lieu of the national exchange. The Senate, on the other hand, would require each state to establish an exchange. The final issue involves the establishment of a government-run insurance plan. While the House bill aims to create a national insurance option that would be offered through the exchanges, the Senate bill would require the Office of Personnel management to contract with insurers and create at least two multi-state health plans that would be offered through the state exchanges.


When the country embarked on the road towards enacting comprehensive health care legislation the principal theme in any discussion was: wait for the process to become more complete before evaluating what the legislation will entail. As it currently stands at the end of January 2010, that theme has not changed. But given the impact of potential health care legislation, it is imperative to stay informed.

 By Michael S. Byrd and Bradford E. Adatto.