What You Need to Know About Utility Eminent Domain Takings

Well, it's finally happened.  An electric transmission owner sited its line in the backyard of the wrong person.  Those transmission siting etch-a-sketch toys can be so risky!

And now the way society thinks about the use of eminent domain for energy transmission easements is about to change.

Andrew P. Morriss, Dean & Anthony G. Buzbee Dean’s Endowed Chairholder, Texas A&M School of Law; Senior Fellow, Property & Environment Research Center; Senior Fellow, Reason Foundation; and Research Scholar, Regulatory Studies Center, George Washington University. A.B. Princeton University; J.D., M.Pub.Aff. The University of Texas at Austin; Ph.D. (Economics) M.I.T., lately found himself in the bullseye of an electric transmission project.  And he hired counsel.  And then Morris and his lawyers wrote a paper published in the LSU Journal of Energy Law and Resources.

In the interests of full disclosure, we should note that we are not neutral observers of
eminent domain abuse in this area. Morriss’s wife’s parents, wife, brother-inlaw, and sister-in-law are involved in proceedings contesting the valuation of a power transmission easement across property held by a family limited partnership in Kimble County, Texas, in which they are represented by Barron & Adler. As a result, none of us feels particularly charitable toward utilities that make use of eminent domain for acquisition of power line corridors.

Whoopsy!  But, finally, someone with a big enough megaphone to question the utility easement status quo has done the unspeakable -- suggested that the use of eminent domain for "large infrastructure easements" (or LIEs, proving that acronym creation is an art) should end.

We argue that eminent domain laws need to be reformed to address these problems. The simplest reform is to eliminate eminent domain from LIEs entirely, forcing utilities to negotiate easement terms in arm’s length transactions and leveling the playing field between the utilities and landowners. Because the burdened landowners are a dispersed and unorganized interest group, while utilities have considerable political clout, this may be
unobtainable through the political process in many states. Similarly, the even more potent “bootleggers and Baptists” coalition of utilities and environmental pressure groups, which
back expansion of transmission lines for renewable energy, if not natural gas or oil pipelines, mobilize powerful interests behind
maintaining the power.

In Involuntary Cotenants: Eminent Domain and Energy
and Communications Infrastructure Growth, Morriss and his co-author attorneys point out the bald truth about utility LIEs:

• Easement agreements are written by utilities in their own interests.
• Easement agreements do not adequately compensate landowners.
• Courts hearing the eminent domain case simply accept the easement agreement as written and concentrate solely on "fair market value" of the property taken.
  

Why do we allow ourselves to be treated this way?

Much of the growth is likely to involve the use of eminent domain because utilities and
governments often consider eminent domain to be a cheaper and easier alternative to negotiating with potentially resistant, unhappy landowners for the acquisition of property.

The paper points out that in lieu of doing away with utility eminent domain authority altogether, reform is needed.

 For example, providing courts (and other third parties with roles in eminent domain proceedings) with the opportunity to alter the easement terms proposed by utilities for LIEs would serve as an important step toward solving many of the problems we describe. In addition, states and the federal government can take further steps to improve the LIE acquisition process by gathering and disseminating market data to, and providing greater statutory guidance for, valuation
decisions.

The five reforms recommended in the paper include:

1. Limiting eminent domain power of utilities.
2. Empowering neutral decision makers to structure easements.
3. Create exit rights.  (Utilities should not be able to take perpetual easements).
4. Create better data on LIE costs and provisions.
5. Establish standards to guide determination of value.  (Not all costs to landowners are immediate or quantifiable).
   

The paper is also a great guide to things you should consider adding to any proposed easement agreement presented to you by a utility during the "good faith" negotiation period required by law before the utility resorts to eminent domain.  Of course, the utility will most likely bat your efforts away, but in that case, how much "good faith" is the utility actually displaying?  It's all about the money to them, although money is usually at the bottom of the landowner's list of concerns about involuntarily hosting a utility LIE.

And this paper makes you think.  Ever since I saw my first purchase option agreement and easement agreement presented to landowners by the PATH transmission company more than five years ago, I've wondered how anyone thinks this playing field is fair.  The agreements contained many clauses that I would never agree to, however these agreements are often presented to landowners lacking legal knowledge of any kind, and without the benefit of counsel.  When real estate changes hands in a market-based arm's length transaction, both parties are represented by their own counsel.  It's the way we do things.  Have you ever sold your real property sitting alone at your kitchen table with a fast-talking stranger who's just come knocking on your door, checkbook in hand?  Of course not, unless you've been a victim of a utility LIE.  Why is it okay for utilities to prey on landowners this way?  This needs to stop!  The landowner should have the right to independent counsel, at the utility's expense, before signing any agreements.  In fact, it should be required.

Any why should eminent domain for utility LIES continue?  If you've never been affected by a LIE, you may think eminent domain is a necessary evil to providing a public necessity, like electricity, highways, and other public infrastructure.  Arrogant eminent domain proponents believe that because the power you use required an easement across someone else's land at some point, that you should be eager to provide that same easement for someone else's electric need.  It's been many, many years since America was electrified.  During electrification, eminent domain was accepted because everyone was getting the benefit of the infrastructure.  Today, some greedy transmission companies are proposing eminent domain be used for LIES that aren't needed to provide anyone with basic service.  Transmission lines have been proposed that are intended to make the electricity cities waste keeping their skylines lit up all night "greener."  This isn't public necessity.  It's keeping you stupid believing that utilities shall have the right of eminent domain for whatever they propose.  It's time to rethink this because America is rebelling against this kind of thinking in a big, big way.

Start your thought journey by reading the Morriss paper.  And think, really think, what if this happened to me?  Because if we let this continue unabated, it will.

This post wouldn't be complete without thanks to Janna Swanson in Iowa for digging up this thought-provoking paper.  Janna moonlights as an energy activist and researcher, when not producing food to feed ungrateful utility executive pieholes.