Power Plays: Landowner Rights vs. Eminent Domain

Individual property ownership rights are engraved into the bedrock of this country. So is the government's power of eminent domain (the taking of private property for a greater public purpose). It was invoked more than a century ago, when the transcontinental railroad first connected this country. Since that time, many farmers have lost the use of their land to four-lane highways, regional airports, and public utilities.

It's for the public good. Nothing can be done. It's progress, they've been told. Despite the gut-wrenching impact on some farm families, eminent domain has remained an abstract topic for most.

Today, a brand-new world of eminent domain is looming on the horizon, and farmers would be well advised to take note. For-profit private companies increasingly are gaining the use of this governmental power to take property over a landowner's objections (after paying fair market value). Many of these power plays pit agricultural assets against energy infrastructure, cutting across a broad swath of land in multiple states.

Farm-to-market routes

The most prominent case is the Keystone XL oil pipeline, first proposed in 2008. It would move Canadian tar sands oil from Calgary to the Gulf Coast, crossing six states. The project was rerouted in 2011 because of its environmental risk to the Ogallala Aquifer. Many voluntary easements have been obtained. Yet, the question of eminent domain rose to the Nebraska Supreme Court in 2015 when landowners contested the governor's authority to approve the route. The southern portion of the pipeline, from Oklahoma to the Gulf Coast, is almost complete.

As Keystone's northern route awaits a State Department review, domestically produced crude oil pipelines also are overflowing with controversy. Dakota Access LLC, a division of the Texas-based Energy Transfer Partners, plans to build one that is 1,134 miles long – from the Bakken oil fields of North Dakota through South Dakota and Iowa, to a transfer point in Illinois near St. Louis. From there, oil would move by railcar or by pipeline to the Gulf.

Other energy projects are blowing in the wind. A company called Clean Line Energy Partners in Houston, Texas, has proposed six wind transmission projects. The Rock Island Clean Line (RICL) runs 500 miles across Iowa to Morris, Illinois, affecting 2,000 landowners (rockislandcleanline.com).

Another line, the Grain Belt Express, also would erect towers from Kansas, through Illinois, and into Indiana.

(These are transmission lines. Eminent domain is unlikely to be used for turbines.)

Fringe benefits

Although the power of eminent domain isn't new, these infrastructure projects raise some new questions. What is the definition of public use? Should a private company be granted franchise status (with eminent domain powers) if a majority of landowners reject voluntary easements? What is just compensation: fair market or commercial value?

Grassroots opposition groups have formed. Critics point out that, unlike interstates, state highways, or public utilities, the public use of these privately owned pipelines and wind transmission lines is destined for distant population centers.

"The benefits to property owners or citizens are tenuous at best," says Algona, Iowa, attorney, Mike Gabor. "Economic benefits would be generated by construction jobs, property taxes, and a limited number of permanent jobs, but for the majority who live along the lines, use of the energy won't be an option."

Landowners argue that eminent domain was designed as a last-resort tool when one person or a small group of property owners is in the position to stop a project and thwart the will of the majority; it's illegitimate if a majority refuses to accept a deal.

For-profit private companies must petition state utility boards for the power to use eminent domain. In Iowa, the RICL must have its franchise status approved by the three-member, nonelected Iowa Utilities Board (IUB). Now, 19 months into its acquisition effort, it's obtained fewer than 15% voluntary easements on 1,540 parcels across the 16 Iowa counties along the route, says Carolyn Sheridan, president of Preservation of Rural Iowa Alliance, a nonprofit group that's hired an attorney to represent all landowners with the IUB on the proposed pipeline (iowastopricl.com).

She says the group supports wind energy but objects to the use of eminent domain. "RICL originally proposed following the railroad rights-of-way, but now it plans to create a new easement through prime farmland," she says. It will erect four to six 115- to 150-foot-tall towers per mile. Other groups are opposing Clean Line Energy projects in Illinois, Missouri, Arkansas, and Oklahoma.

The Dakota Access LLC pipeline would cross 18 Iowa counties, creating 15 permanent jobs there. Objections include concerns over accidental leaks, damage to farmland and crops, reduction of property values, and interference with tile lines. The pipe would be buried beneath eight rivers and a handful of streams in Iowa alone.

Landowners also raise questions about fair payments. The easements are permanent. Yet, the compensation is a one-time, lump-sum payment. What about damages, lost profits, or property values?

"If the RICL is approved, it will be the largest taking of private property in Iowa," Sheridan says.

By April 2015, 1,296 formal objections had been filed with the IUB. The hearing dates are likely to be mid- to late summer.

Multifaceted approach

The definition of public use varies from state to state. The stakes of eminent domain were raised in 2005, when a Supreme Court decision (Kelo v. City of New London) supported a broader definition of public use, including private economic development. In response to the RICL and Dakota Access projects, Iowa legislators are proposing a law to clarify eminent domain.

Few farmers would dispute the need to transport domestic oil and wind energy from where it's produced to populated markets. No oil company, however, has come forward yet with plans for a pipeline to transport ethanol. Rail transport accidents involving the highly flammable Bakken oil also pose safety questions.

The Center for Rural Affairs has a report addressing eminent domain and use of fair market value at http://files.cfra.org/pdf/landowner-compensation- 052014.pdf.

Your farm may not be affected by these energy projects. Yet, domestic energy production is positioned on a fast track, and more landowners will be in its path. Today's decisions are likely to set a precedent

If you're asked to sign an easement or to negotiate terms, here are five steps you will want to take.

1. Contact your attorney to review any agreement.

2. Study damage, negligence, and abandonment clauses.

3. Determine exact size of easement area.

4. Learn if you would have more protection or compensation if you wait for condemnation.

5. File objections with utility board; ask for a survey permit.