General Articles

August 14th, 2015 — In Articles

It’s Been 10 Years Since Kelo v. City of New London. Where are We Now?

On June 23, 2005, the U.S. Supreme Court handed down one of the most controversial property rights decisions in recent history. The Court’s 5-4 decision holding that New London, CT could condemn 15 homes and transfer ownership to a private entity for the purpose of encouraging “economic development” sent a shockwave through the property rights landscape and ignited a decade’s worth of debates, court battles and legislative efforts in response to the ruling. With June 2015 marking the 10-year anniversary of Kelo v. City of New London, let’s take a look back at how we got to where we are today.

Looking Back: The Supreme Court’s Landmark Decision in Kelo v. City of New London
The case of Kelo v. City New London arose out of a redevelopment plan proposed by the city which centered around the local government’s power to use eminent domain to acquire private property for a public purpose. The City of New London, CT condemned and seized private residential property in a working-class neighborhood near the waterfront in order to convey the property to Pfizer for the construction of a $300 million research facility.

Dana Berliner, Litigation Director at the Institute for Justice and one of the attorneys who represented Ms. Kelo and her neighbors before the Supreme Court noted that the abuse of eminent domain power by governments for the benefit of “essentially private projects” had become rather routine and one which many felt there was “little point in fighting.”

However, Ms. Berliner, along with fellow IJ attorney Scott Bullock, Ms. Kelo and her neighbors mounted a spirited challenge that caught the attention of the media and the public. The case catapulted the debate to the forefront of the media and our daily discussions. Did the government really have the right to seize private property from its citizens for the benefit of and use by major corporations?

While the Fifth Amendment of the U.S. Constitution — “nor shall private property be taken for public use, without just compensation” — requires the payment of just compensation for the taking of private property using the power of eminent domain, the prospect that corporations in cooperation with local government could take private property for their private use was too much for many people to swallow.

Despite IJ’s valiant efforts, the Supreme Court ruled in favor of the City of New London. Citing the public’s interest in economic growth and the public benefits (such as job creation and increased tax revenue) that could flow from private development projects such as Pfizer’s proposed research facility, the Court held that the municipality did not violate the public use component of the Fifth Amendment in seeking to promote “economic development.”

Major Developments (or the Lack Thereof) Since Kelo v. City of New London
In the 10 years since Kelo, there have been several developments in the law of eminent domain as it relates to “economic development.” However, broadly speaking, Kelo remains the law of the land.

A Patchwork Quilt is No Way to Protect Constitutional Rights – As Ms. Berliner wrote recently, “states have filled the vacuum of federal constitutional protection” that remained following the Kelo decision. A total of 47 states have increased protections for private property owners against the abuse of eminent domain for private development. However, in three states (Arkansas, Massachusetts, and New York), as well as the District of Columbia and U.S. territories (such as Puerto Rico, Guam and the U.S. Virgin Islands), owners are left with little protections since Kelo. Despite the steps that 47 states have taken to increase protections, the fact remains that each state responded differently and what we have currently is a patchwork quilt of varied protections or lack thereof across the country. This adds to the complexity of the eminent domain law and landowners’ need for qualified and experienced counsel when threatened by the government’s use of eminent domain.

Supreme Court Refuses to Consider Kelo Challenges – While the Supreme Court has weighed in on a number of property rights cases that have sought review since Kelo, it has specifically refused to consider Kelo-like challenges to the public use component of the Fifth Amendment’s Takings Clause. In the 2013 case of Ilagan v. Ungacta, Owners’ Counsel of America (OCA) and other property rights advocates and legal scholars petitioned the Court to clarify a key aspect of its decision in Kelo — the general distinction between authorized “economic development” condemnations and unconstitutional “pretextual takings.” However, the Supreme Court declined to hear the case, leaving this important question unanswered. Read more about OCA’s involvement in Ilagan v. Ungacta and our efforts in other landmark property rights cases here and here.

Proposed Federal Legislation – In 2015, Congressman Jim Sensenbrenner (R-Wis.) re-introduced the Private Property Rights Protection Act (PPRPA) on the floor of the House of Representatives. Several iterations of PPRPA – which, in its current form, would impose economic sanctions and provide a private right of action against governments that exercise eminent domain for economic development – have received consideration in years past. Additionally, Congressman Tom Reed (R-NY) introduced the Defense of Property Rights Act this year in response to recent actions taken by government relating to Marcellus Shale exploration and drilling. Reed’s bill seeks to provide an option for compensation for property owners unfairly harmed by government action and to change the judicial process owners must take in seeking to remedy government regulation of their property. At this time, no federal bills seeking to protect private property rights since Kelo have become law. OCA continues to monitor and will weigh in on any Federal legislation seeking to protect the right of private property ownership.

Economic Development Qualifies as a Public Purpose Even if the Government Can Not Prove the Benefit Will Materialize – Despite the City’s Supreme Court Victory, the Project Never Came to Fruition. No buildings have been constructed on the site of the condemned homes, nor in the larger project area. In fact, the planned beneficiary of the proposed redevelopment project, Pfizer, not only pulled out of the project, the company pulled out of the city altogether. The Fort Trumbull neighborhood where Susette Kelo and her neighbors lived is now a vacant field home to weeds and feral cats. As law professor Ilya Somin wrote on the 10th anniversary of the Kelo decision, the Court held that virtually any potential public benefit qualifies as a public use, even if the government cannot prove that the anticipated benefit will ever materialize.

As these and other developments have demonstrated, despite widespread support for clarification or outright reversal of the Supreme Court’s decision, 10 years later, Kelo v. City of New London remains firmly entrenched in U.S. law of eminent domain.

Owners’ Counsel of America | Experienced Eminent Domain Lawyers Nationwide
OCA’s eminent domain lawyers represent property owners in condemnation cases throughout the country. If you need help protecting your constitutional right to own property, call (877) 367-6963 or send us an email today.

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June 25th, 2015 — In Articles

Property Owners’ Frequently Asked Questions About Eminent Domain

When you learn that your property may be condemned, you need information and advice as to how to proceed and what actions to take. Here are a number of common questions and answers which may be helpful.

Q. What is eminent domain?

A. Eminent domain is the power of the government to take private property belonging to its citizen’s for public use, provided just compensation is paid to the owner. It can also be called “condemnation” or, in some states, “expropriation.”

Q. Who can use eminent domain?

A. Local, state and the federal government have the power of eminent domain. The government’s power of eminent domain extends to government agencies, such as your municipality’s public works department, state’s Department of Transportation or the U.S. Forest Service. Some private companies or individuals may also be granted the power to condemn private property to complete certain projects intended to benefit the public. These private companies may include redevelopment authorities, oil and gas companies, railroads or other privately-owned utility companies.

Q. What does “public usemean?

A. Typically, public use has been defined as government projects intended to bring a benefit to its citizens, such as widening roads, building schools, constructing parks and correcting drainage issues. That definition has expanded over the years to include improvement of run-down (“blighted”) neighborhoods and the redevelopment of certain areas with a plan approved by, and usually supervised by, the government.

Q. The government (or a transportation authority, redevelopment agency, utility or energy company) wants to take my property by eminent domain. What can I expect to happen? What are the steps in a condemnation case?

A. The laws and procedures relating to eminent domain vary from state to state and can be quite complex. We recommend that you consult with an experienced eminent domain lawyer in your state for specific information about your property rights and to learn more about the condemnation process.

Q. Can eminent domain be used to take my property and give it to another private party?

A. The federal and state constitutions say that property may only be condemned for “public use.” For many years, “public use” meant that property could be taken for things like roads, schools, and public buildings. Later, courts allowed eminent domain to be used for private corporations developing public utilities, like electric companies and railroads. In the 1950’s, eminent domain became increasingly used for “slum clearance.” Once an area was declared to be a slum or “blighted,” property could be taken using eminent domain and then transferred to another private party. More recently, local governments have tried to use eminent domain to transfer land to other private parties. Whether and under what circumstances courts will allow this use of eminent domain is a matter of state law. Several states permit condemnations for economic development, but some do not. You should consult with an experienced eminent domain lawyer in your state to determine if the condemnation threatening your property is legal.

Q. Should I discuss the value of my property with a government representative?

A. No. We recommend that you consult with an experienced condemnation attorney first before discussing anything with the government representative. Compensation by a condemning authority may include special benefits and rights which the property owner needs to know before dealing with the condemning authority. What the property owner gains by using an experienced eminent domain lawyer is a level playing field with the condemning authority.

Q. Why shouldn’t I negotiate on my own?

A. Everything you say or do may be used against you by the condemning authority at different stages of negotiations and litigation. By waiting to select an attorney after talks have been underway, you risk compromising your rights and compensation. Keep in mind that you, as the property owner, are engaging with a condemning authority which has full knowledge of its rights while you have little knowledge of your rights under eminent domain law.

Q. I have plans to develop my property. Should I continue to secure government approvals to develop my land?

A. No. We do not recommend that you attempt to obtain building permits, variances, zone changes, subdivision approvals or curb cuts without consulting experienced eminent domain counsel. A failed attempt to obtain such approvals can be used against you in condemnation litigation and can be extraordinarily harmful to your case.

Q. Should I appeal my real estate tax assessment?

A. Prior to considering an appeal of your real estate taxes, you should consider consulting an attorney experienced in eminent domain litigation. If you do appeal the tax assessment, your opinion of value in the tax appeal may be used against you in the condemnation proceeding and affect the amount of just compensation you receive.

Q. Should I stop caring for and maintaining my property?

A. No. Even if you are facing condemnation, the value of your property is often determined at the time it is actually taken by the government. A lack of maintenance may decrease its value affecting the amount of just compensation you may be entitled to receive.

Q. What should I tell the government real estate appraisers?

A. Very little, if anything. They are not interested in you receiving the highest possible value for your property. They are hired by the governmental agency seeking to acquire your property. Consult with an experienced eminent domain attorney before giving any information to the government appraisers.

Q. What information and documents should I provide the government if they are looking to condemn my property?

A. Nothing, prior to consulting with an experienced condemnation lawyer. As a general rule, do not supply copies of leases, expense records, profit and loss statements, or similar documents to the government or its representatives.

Q. Should I let the government conduct any environmental or other tests?

A. No. Talk to an experienced condemnation attorney first. Some of the tests the condemning authority might wish to do are routine and not invasive. However, some tests require boring large holes into the ground or establishing monitoring wells and may disrupt your use and enjoyment of the property. Further, potential contamination underground or in a building can further complicate the eminent domain proceedings. Contamination on your property could significantly impact your compensation if not handled correctly.

Q. Can I rely upon the government’s relocation personnel to obtain all of my relocation benefits?

A. No, you need to make sure you are fully informed of your monetary and non-monetary rights under relocation laws. In some instances, federal relocation laws apply and in others situations your state relocation law will apply. An experienced condemnation lawyer will insure that your benefits are maximized and will know how to resolve differences without additional litigation.

Q. What is relocation assistance and who qualifies to receive it?

A. Although reimbursement for relocation expenses is related to the eminent domain process, it is handled separately. In 1970, Congress passed the Uniform Relocation Assistance and Real Property Acquisition Policies Act, and amended it in 1987. Although this action provided clarification in some areas, the relocation reimbursement process for state projects still varies according to location, and cases are usually evaluated on an individual basis.

If you have been displaced due to federal or federally funded projects, an experienced condemnation lawyer can insure that your benefits are maximized.

Q. Why should I consult with an eminent domain lawyer?

A. Eminent domain proceedings are complex and can involve complicated issues such as the property’s highest and best use, the calculation of just compensation and the damages a property has suffered due to the taking. Property condemnation can also be a confusing and stressful process. Having a qualified condemnation lawyer on your side to assist as you navigate the process is not only helpful, but possibly essential. The government will have experienced eminent domain counsel on its side. To protect your rights, shouldn’t you?

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January 13th, 2015 — By  William G. Blake, CRE — In Articles

“It Ain’t Over ‘Til It’s Over:” Nebraska Supreme Court Rules (or Maybe Not) on the Validity of the TransCanada XL Pipeline Route Approval Through Nebraska

Probably no appeal to the Nebraska Supreme Court has been watched more closely by more people than the challenge to the statutory routing process for the proposed TransCanada XL Pipeline.

On January 9, 2015, the Nebraska Supreme Court issued its decision, or lack thereof, in a sixty-four page opinion.[1] By state constitution, the Nebraska Public Service Commission has plenary power over all common carriers.[2] However, the Legislature adopted a process in 2012 to specifically address the route of the proposed XL Pipeline through Nebraska. The Legislature allowed the Governor, after input from the Nebraska Department of Environmental Quality, to approve the route.[3] The proposed route was studied and the Governor issued approval. A group of citizens then challenged the process, claiming that approval was unconstitutionally taken away from the Public Service Commission and delegated to the Governor. They made their challenge on the basis of their standing as taxpayer citizens, claiming the approval process was an unlawful expenditure of public funds. Their standing was challenged, but the trial court found they had standing as taxpayers, that the XL Pipeline would be a common carrier, and that the statutory approval process was unconstitutional. The decision was immediately appealed to the Nebraska Supreme Court. The Court’s hearing process was expedited, but many weeks went by without a decision being issued. We now know the reason for the delay. Unfortunately, we learn little else from the decision. It raises more substantive and procedural questions than it answers, exhibiting an unprecedented amount of acrimony among our Nebraska Supreme Court Judges.

Pursuant to the Nebraska Constitution, a statutory enactment cannot be declared unconstitutional without five of our seven judges so ruling. However, in the challenge to the XL routing process, four of the judges agreed that the plaintiffs had standing and that the courts therefore had jurisdiction to hear the case. The four also agreed that the statutory approval process was unconstitutional. However, the other three judges dissented on the question of standing and refused to address the merits of the case. While no judge stated a vote in favor of the constitutionality of the process, the four member majority was not enough to declare the process unconstitutional. Therefore, the legislation and the proposed route of the pipeline through Nebraska would appear to be approved by default. The three member dissent accused the other four members of reaching an absurd result, but the four members were quite clear that they thought the dissenting members had shirked their judicial duty and forced an absurd result. The two camps could not even agree on whether to refer to the four members as a majority or a plurality.

For condemnation lawyers, the most important part of the opinion is that the four members fairly clearly ruled that eminent domain cannot be exercised by just any company that owns a pipeline. Prior case law in Nebraska, as well as our statute authorizing eminent domain for pipelines, had made it appear that privately owned pipeline companies could exercise eminent domain for private use pipelines, and in fact case law had approved condemnation proceedings for such pipelines. However, the court carefully considered the history of pipeline regulation in the state and recognized that the prior decisions allowing private pipeline companies to exercise the power had been issued at a time when it was thought that the federal government had preempted state regulation of interstate pipelines. The court, referring to a prior opinion[4], stated that:

“[the] argument that a private carrier could exercise the right of eminent domain in this state for a non-public purpose….is simply wrong….[T]he reason common carriers can exercise the right of eminent domain lies in their quasi-public vocation of transporting passengers or commodities for others. A citizen’s property may not be taken against his or her will, except through the sovereign powers of taxation and eminent domain, both of which must be for a public purpose. Eminent domain is the State’s inherent power to take property for a public use.” (Court’s italics).[5]

The court then clarified what is meant by the term “common carrier”, finding assistance from Texas case law and stating that statutes authorizing use of eminent domain power by common carriers do not include the owner of a pipeline built for that owner’s exclusive use. “Under the Nebraska Constitution’s limitation on the power of eminent domain, pipeline carriers can take private property only for a public use. That minimally means that a pipeline carrier must be providing a public service by offering to transport the commodities of others, who could use its service, even if they are limited in number.”[6]

The Court did not appear to be comfortable with the conclusion that the XL Pipeline would be a common carrier, but the district court had so concluded, and the parties did not contest the issue.

Given the rather perplexing result and the nature of the matter, this will likely not be the end of the litigation. News services were quick to declare Nebraska’s approval of the XL, and proponents urged Congress and/or the President to do the same. However, opponents were just as fast in arguing that they are not ready to give up. TransCanada still needs easements through more than 100 properties in Nebraska, and must file condemnation before its routing permit expires. The permit will expire on January 22, 2015. Any effort to condemn can be expected to be challenged by somebody who has standing as a property owner in the path of the proposed route. Would such challenge gain the fifth court vote to declare the siting unconstitutional? Can the Governor extend the siting permit to avoid the two-year window of opportunity? How will this affect the political battle in Washington, D.C. over Federal approval of the pipeline?

As Yogi said: “It ain’t over ’til it’s over.”

William G. Blake
Baylor, Evnen Law Firm
Lincoln, Nebraska

Endnotes


[1] Thompson v Heineman, 289 Neb. 798 (2015) https://supremecourt.nebraska.gov

[2] Nebraska Constitution, Article IV, Section 20.

[3] Nebraska Unicameral, L.B. 1161 (2012).

[4] City of Bayard v North Central Gas Co., 164 Neb. 819, 83 N.W.2d 861 (1957).

[5] Thompson v Heineman, at 843.

[6] Id. at 845.

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April 30th, 2014 — By  William G. Blake, CRE — In Articles

The Saga of the Keystone Pipelines in Nebraska: Unconstitutional Regulation, and Lessons on How to Acquire Property and How Not to Acquire Property

Members of Owner’s Counsel of America, who regularly represent property owners in condemnation situations, tend to be naturally very protective of private property rights. We enjoy events that shed light on this dark corner of the law, especially when they help to shape public opinion in favor of property rights.

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January 25th, 2012 — By  Mark M. Murakami — In Articles

Motion for Leave to File Brief Amicus Curiae in Support of Petitioner and Brief Amicus Curiae of Owners Counsel of America in Support of Petitioner, Stop the Beach Renourishment v. Florida Department of Environmental Protection, No. 08-11 (June 17, 2010), Robert H. Thomas (Hawaii), Counsel of Record.

In this case, the U.S. Supreme Court considered whether a 2008 Florida Supreme Court decision upholding the Florida Beach and Shore Preservation Act which reversed a century of Florida law was a “judicial taking.”  The Court found that the Florida court’s decision neither violated the Fifth Amendment’s due process guarantee nor consituted a taking of private property.  The Owners’ Counsel of America’s brief in support of the property owners argues that “property” embodies core components transcending a state court’s power to redefine. The rule of accretion, which insures that littoral parcels remain so, is one of those fundamental components.

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January 23rd, 2012 — By  Mark M. Murakami — In Articles

Motion for Leave to File Brief Amicus Curiae and Brief Amicus Curiae of Owners Counsel of America in Support of the Petitioner, River Center LLC v. Dormitory Authority of the State of New York, No. 11-922 (cert. petition filed Jan. 23, 2012), Robert H. Thomas (Hawaii), Counsel of Record.

This case involved one of the largest condemnations of private property in the history of New York City.  At issue were important questions concerning the Just Compensation Clause of the Fifth Amendment.  The brief argues that all evidence of value must be considered by a reviewing court which cannot disregard evidence that a potential buyer of the property would consider important in assessing value and that the Fifth Amendment protects the right of both a property owner and developer to testify to the property’s value.

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July 17th, 2011 — By  Michael Rikon, CRE — In Articles

“Moving the Cat into the Hat: The Pursuit of Fairness in Condemnation, or, Whatever Happened to Creating a Partnership of Planning?” by Michael Rikon (New York)

In this 2011 article, Mr. Rikon criticizes Article 2 of New York’s Eminent Domain Procedure Law (EDPL), the procedure used to approve and challenge condemnation. The article comments on the fact that New York is often oblivious to property rights in an eminent domain context.

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June 17th, 2011 — By  Hertha L. Lund — In Articles

“Kelo in the Country…HB198 and the taking of rural property” by Hertha Lund (Montana)

This article argues against Montana House Bill 198 that seeks to grant the power of eminent domain to a Canadian power company in order for that company to acquire private property throughout Montana for the purposes of constructing a private (for profit) “merchant” transmission line.  Ms. Lund writes “rural landowners should not be sacrificed in the false choice between ‘development’ or ‘property rights.'”

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July 1st, 2009 — In Articles

“Fair Market Value in a Down Market” by Alan T. Ackerman (Michigan)

This excerpt from the American Bar Association’s 2009 annual review questions the ability to establish fair market value during a down real estate market. Mutual motivation and market timing are two key factors examined.

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July 1st, 2008 — In Articles

“The Perils of Prior Appraisal” by Michael Rikon (New York)

In this 2008 article, Mr. Rikon supports New York’s two-step appraisal law for inverse condemnation but cautions against requesting draft appraisals since they are admissible at trial and may create problems by undermining the credibility of the appraiser. The role of the Appraisal Foundation and the Uniform Standards of Professional Appraisal Practice (USPAP) are discussed as related to this issue.

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