By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
By Jeff Balke
Benjamin Hall has never lacked for audacity, and the latest legal gambit of the self-described "South Carolina country boy" has Houston energy executives fuming and political consultants shaking their heads in bemusement.
As Mayor Bob Lanier's city attorney, Hall ramrodded a lawsuit against Valero Energy that resulted in the company forking over $14 million to the city for unpaid user fees on pipelines running under Houston rights of way. Hall hired noted plaintiffs' lawyer John O'Quinn to work with the city's legal department on that suit, then resigned as city attorney at the end of last year to join O'Quinn's firm, O'Quinn, Kerensky & McAninch. [See "Boss Hall," by Brian Wallstin, in the December 22, 1994, Houston Press.] He was barely out the door at City Hall when he began recruiting Texas municipalities for a large-scale blitzkrieg against pipeline owners using principles he learned in the Valero litigation.
Hall is considered a potential mayoral candidate in many quarters, but he may have struck a gusher of political poison along with the vein of legal gold he sees buried beneath the streets and other properties of the state's cities. The companies he's now attacking are the very firms whose contributions help fuel the campaigns of candidates for Houston city offices, and, as a major downtown player points out, the local economy remains very energy-dependent: "The major employers are energy companies, all of whom have pipelines that run under public streets. And they are, it's safe to say, furious about the theory that Benjamin's advancing. People don't soon forget those sorts of things."
A consultant who works in city campaigns puts it more bluntly: "The spin out there is Ben has totally screwed himself with the business community in filing this lawsuit and his chances for a shot at the mayor's seat or any political office are now dead ... Hopefully, he'll make a lot of money from this, 'cause that's all it's going to get him, if he wins."
Hall acknowledges he might pay a price for the litigation, but says the pipeline companies' "greed" won't cause him to back off.
He's doing it for the little guy, he explains.
"The taxpayers deserve this," he says, "and nobody deserves to use public property without paying for it."
Hall claims to have more than 20 municipal clients lined up, and he already has filed two suits on behalf of Baytown -- one against a group of Enron subsidiaries and one against Houston Lighting & Power. In the former, Hall is squaring off against attorneys from his old law firm, Vinson & Elkins.
The basic theory that Hall is pushing is that the transmission pipelines that run under cities' rights of way are actually distribution lines, similar to cable and electrical lines, and therefore the owners are subject to municipal franchise fees.
"The law requires anyone using public property to get the consent of cities to use public property," says Hall, who claims that a number of companies have simply trespassed on public property without permission. "We've found 'em. Now they are all upset because they've essentially stolen public property, didn't get the consent, and don't want to pay for it."
Some companies have even been making money off the use of municipal property that they never had rights to in the first place, Hall claims. "There are so many tricks that have gone on, it's almost unforgivable what we've discovered," he says. "People are not only using public property, but in some cases leasing public property for profit. Those people who are doing that would not like this [litigation] to go on. They'd like to kill it."
His predecessor as city attorney, Clarence West, credits Hall with pointing the way to a line of litigation that could mean big bucks for taxpayers and attorneys. West himself is considering signing on some municipal clients of his own for similar lawsuits.
"In my looking at the statutes, I think the pipeline companies have to have consent of the cities," says West, now with the firm of Dow Cogburn & Friedman. "I think they have to pay street rental fees. What the magnitude of the fees are will be determined by how many streets they cross. In aggregate, it could perhaps add up to a substantial amount of money."
Hall's targets apparently think so, too, because they're going all out to exterminate the litigation before it spreads. A raft of energy companies have formed the Texas Energy Coalition Against Lawsuit Abuse, with Fulbright & Jaworski as their counsel, and they've launched a publicity and lobbying campaign utilizing consultant Denis Calabrese and Austin publicist David Weeks, among others. Hall labels the maneuver a propaganda effort by the coalition members because "they can't win in court, and they're trying to win it now by causing cities not to collect the money." The coalition, Hall claims, is hoping to stall litigation until the next Legislature, when they can get designer legislation from compliant lawmakers to immunize pipeline companies from the municipalities' claims.
Calabrese says Hall's argument that the pipeline companies owe the cities 2 percent to 4 percent of their gross receipts doesn't make sense.
"[Company officials] have been in meetings with Hall, where they say 'What do you mean, how can we have 2 to 4 percent of gross sales? We don't make sales,'" Calabrese claims. "Hall says, 'Then, maybe we need to talk about another way to base this on.'"