Current Progressive Cattle digital edition
advertisement

Whose land is this? Fighting government on eminent domain

Jason Thomas Published on 01 July 2011
Cattle drive

A recent flurry of activity regarding the rights of landowners in Texas and Nevada, states where the cattle industry is influential, should be a reminder to all cattlemen that their most valuable long-term asset – private property rights – should not be considered unconditionally protected from the government or a party the government favors over the landowner.

Historically, cattlemen, whose land was relatively isolated, may have felt adequately removed from the well-publicized conflicts between individual landowners and the government, where private property rights are destroyed or adversely affected in the name of public use.

Unfortunately, considering the current climate in which cattlemen operate, they should be increasingly concerned about trends favoring public over private ownership.

These trends include, in part, shifts in societal attitudes toward private property rights, unprecedented decisions of the U.S. Supreme Court, the ever-growing threat of urban sprawl, the explosion of natural gas development and the focus upon wind and solar power in the rural Southwest.

Consequently, cattlemen must be alert to these threats and acknowledge that their private property rights are not absolute; private property rights are subject to what society is willing to acknowledge, defend and enforce.

Clearly, this is a troubling concept for any landowner, much less those whose livelihood and ability to pass on a way of life to future generations depends on maintaining their private property rights.

A theory of property rights that every first-year law student learns is that property rights are like a “bundle of sticks,” where each stick represents a distinct and separate right for the owner of that property.

As landowners, cattlemen want to preserve each individual right as his or her own to maximize the value of the property, not only as a current income stream, but also as necessity to pass on their livelihood to future generations.

Sadly, these goals may come into direct conflict with the government or a party the government favors over the landowner under the eminent domain process.

Generally, under the U.S. Constitution, a government’s power of eminent domain consists of taking private property for “public use” whereby the landowner receives “just compensation” in exchange for involuntarily forfeiting his or her private property rights.

Further narrowing and complicating the eminent domain process are each state’s laws. The recent legislation in Texas and Nevada are examples of how each state can further define the eminent domain process; in these situations, the legislation favored the landowner.

Texas Senate Bill 7 provided that private property may be seized under eminent domain only if needed for actual public use, clearly bans seizure for private use and requires the government to make a bona fide offer to the landowners.

Nevada, via Senate Bill 86, sought to repeal a 130-year-old provision giving mining companies the right of eminent domain, thereby equalizing the rights of a private industry and landowners.

Both pieces of legislation demonstrate that landowners must be knowledgeable of federal and state law in order to challenge a government’s attempt to confiscate the landowner’s private property rights.

A challenge to the “right to take” is the only way to prevent the taking from occurring; just compensation is determined once the “right to take” is established.

Therefore, the ability to acknowledge when to challenge a government’s actions under the “right to take” is crucial for all landowners.

Once a broad idea of what powers a government possesses under the eminent domain process is obtained and the importance of a landowner’s ability to challenge the “right to take” is established, the “bundle of sticks” concept must be re-examined.

The “bundle of sticks” concept enhances a landowner’s understanding that he or she must look beyond the surface of the land where a trade is conducted; the landowner must consider each “stick” as a right to protect and value. To do so is the first step in protecting private property rights.

The essential non-surface property rights or “sticks” every cattleman should value and generally understand how the eminent domain process impacts them under applicable state law(s) are mineral rights, water rights, airspace rights and pipeline easements.

All four are extremely common property rights impacted by the eminent domain process with large tracts of rural land.

Obtaining a general understanding of these rights as well as the surface rights and how they are impacted are the first and perhaps most important step in protecting private property rights.

When a landowner believes a “right to take” initiated by the government is challengeable, he or she should contact an eminent domain attorney, who can assist with evaluating a challenge’s success, and determine whether attorney’s fees and costs will be reimbursed if successful and refer the landowner to a qualified appraiser should the challenge fail.

If a challenge fails, the ability of an appraiser to quantify and maximize the change in the fair market value of the land under the specific circumstances of the taking before and after the governmental taking is critical.

A landowner faced with an eminent domain case following a failed challenge must recognize that his or her most important advocate at this stage is an independent appraiser.

The independent appraiser is a landowner’s only defense to the appraiser hired by the government. When selecting an appraiser, a simple rule of thumb to remember is that not all appraisers are equal and/or appropriate for the assignment.

While a firm may represent itself as qualified to conduct appraisals, a landowner and his or her attorney should ensure the appraiser is qualified to work on that particular type of case.

A cattleman’s ability to pro-actively arm him or herself against a government’s desire to encroach on his or her private property rights for the benefit of the public or a party the government favors over the landowner is critical.

To wait until the government acts puts a cattleman in a greater position to lose his or her most valuable asset, not only for the current generation but future ones as well.  end_mark

Jason Thomas, CPA, JD has legal, investment banking and accounting experience with agribusiness industries with Frost, PLLC in Little Rock, Arkansas.

References omitted due to space but are available upon request.

PHOTO

Cattlemen should understand the essential details of mineral rights, water rights, airspace rights and pipeline easements in an era of eminent domain. Photo by Deita Jensen.

00_thomas_jason

Jason Thomas

Frost, PLLC

LATEST BLOG

LATEST NEWS