Landowners Association of Wyoming: Eminent Domain

Eminent Domain

1. What is “eminent domain”?
Eminent Domain is the legal authority to take a person’s private property against their will. The U.S. Constitution preserves the right of government to take someone’s private property, for due compensation, if that property is necessary to benefit the public. Historically, eminent domain powers were primarily granted to allow for the construction of national highways, railroads, electric transmission lines, and for public buildings such as jails and schools. Over the years, the courts have expanded the definition of “public benefit” to apply the doctrine to private economic development projects that may provide additional tax revenues or economic development advantages to town and states.

2. What authorities does the Wyoming Constitution grant to public and private entities so that they may take private property through the powers of eminent domain?
Article 1, Section 32: “Private property shall not be taken for private use unless by consent of the owner, except for private ways of necessity, and for reservoirs, drains, flumes or ditches on or across the lands of others for agricultural, mining, milling, domestic or sanitary purposes, nor in any case without due compensation.” Article 1, Section 33: “Private property shall not be taken or damaged for public or private use without just compensation.”

3. What authorities do Wyoming laws grant to public and private entities by the Wyoming Statutes to take private property through the powers of eminent domain?
W.S. 1-26-801-809: grants the right of eminent domain to any state, county, municipal organization or public utility.
W.S. 1-26-810-812: grants the right of eminent domain to railroads and limits rights of way to 200 feet. Section 812 requires railroads to construct and maintain crossings.
W.S 1-26-814: grants the right of eminent domain to petroleum and other pipeline companies.
W.S. 1-26-815: Broad Right of Condemnation: “Any person, association, company or corporation authorized to do business in this state may appropriate by condemnation a way of necessity over, across or on so much of the lands or other real property of others as necessary for the location, construction, maintenance and use of reservoirs, drains, flumes, ditches including return flow and wastewater ditches, underground water pipelines, pumping stations and other necessary appurtenances, canals, electric power transmission lines, railroad trackage, sidings, spur tracks, tramways, roads or mine truck haul roads required in the course of their business for agricultural, mining, exploration drilling and production of oil and gas, milling, electric power transmission and distribution, domestic, municipal or sanitary purposes, or for the transportation of coal from any coal mine or railroad line or for the transportation of oil and gas from any well.”

4. Is condemnation, or eminent domain, really a problem in Wyoming?
Instances of condemnations are increasing in Wyoming. For example:

To build a new library, Laramie County condemned private homes in downtown Cheyenne at their appraised fair market value rather than their replacement cost. If the homeowners been non-profit organizations, Wyoming statutes would have required that they be compensated for the replacement value of their homes.
A school district in Sheridan County threatened private property owners with eminent domain regarding the school district’s purchase of private property. Acquiring the land through condemnation would have cost the school district less than a fair-market negotiation with the property owners.
After five years of study, the City of Cheyenne Board of Public Utilities proposed a location for a future municipal water storage facility on private land – without notifying or working with the private landowner. The city’s effort is currently suspended due to the outcry of private property owners in the area.
A major oil company condemned the productive creek-bottoms of a family-owned ranch in Campbell County. This allowed the company to discharge its coal-bed methane produced water in the least expensive manner available, rather than piping the produced water to a treatment and storage facility.
The City of Rock Springs condemned a local business owner so that the Wyoming Department of Transportation could construct a new turn land near a highway interchange. Although the landowner was compensated for the minimum appraised value of his building, he was not compensated for the building’s replacement cost and bore the financial burden of purchasing another building with similar public access and consumer traffic. If the business owner had been a non-profit organization, he would have been entitled to his building’s replacement costs.
A major interstate natural gas pipeline company sued an Albany County couple in a pre-condemnation lawsuit over a $500 access fee to obtain survey data from the couple’s hayfields.
An independent gas operator condemned a private property owner in Johnson County in order to lower its costs by locating its pipelines and transmission lines on private property rather than using the established utility corridor a half a mile away.
The Wyoming Infrastructure Authority is creating four new interstate electricity transmission corridors without acknowledging their impact on private land or making any effort to place the lines in ways that minimize impacts to private property. The State’s powers of eminent domain skew the good faith negotiations and compensation values that will eventually be negotiated between the power companies and property owners whose land is condemned.
The U.S. Department of Energy has proposed major new energy corridors on public and private lands throughout the state of Wyoming. These corridors are 3500 feet wide, and allow for the condemnation of up to 424 acres out of every 640 acres (one square mile) along the proposed corridor.
The DM&E Railroad filed for powers of condemnation over 40 Wyoming landowners just two days before the new law became effective. DM&E is seeking the powers of condemnation to build a new railroad to deliver Power River Basin coal even though they have no financing for a new railroad, no contracts from coal producers, and the federal Environmental Impact Statement determined that the existing carriers have the capacity to deliver more coal in coming years and any benefits from a new line would be “de minimus”.

5. Is condemnation mainly a problem for property owners who live in towns and who could be condemned for new public buildings or highways?
The risk of condemnation of private property is equal for Wyoming citizens who live in towns or in the country. The issues are the same: At what point in Wyoming is a public or private entity entitled to take and use another’s private property, and what constitutes “just compensation” for the “taking”? The private property rights for citizens who live in towns should be no different than those afforded to citizens who live in the country. All citizens should be equally entitled to the strongest private property rights and adequate “just compensation” when their private property is legally taken for the use by another entity.

6. When private homes are condemned, how are those property owners compensated?
Wyoming law [W.S. 1-26-704] requires private property owners to be compensated for the “appraised value” of their taken property. The same law requires non-profit organizations to be compensated for the “replacement” value of their condemned property. This places an undue burden on condemned private property owners, especially those who are elderly or retired, live on fixed incomes, and live in homes that are paid for but have relatively low appraisal values. Although these property owners will be compensated for an appraised value for their taken property, they may not be able to relocate, or be “replaced” into another home that is also paid for – causing an unexpected new rent or mortgage payment that can severely strain limited incomes.

7. What improvements were included by the Wyoming State Legislature in 2007 to provide greater protection for private property rights in Wyoming?

Improved GOOD FAITH NEGOTIATIONS to require a three-part negotiation system to include: 1) Notice and offer from taker (which includes proposed compensation as well as identification of proposed property for taking); 2) Counter-offer from property owner (which includes compensation as well as any changes to lands/property that could be taken); and 3) Response from taker to that counter-offer. All three offers can be submitted as evidence in the courts.
Improved COMPENSATION to allow comparable "market values" to be considered for the final price of the taking, rather than a strict "before-and-after" appraisal valuation, which had artificially restricted the land price ultimately paid for the taking. "Market value" can include lost land value, what another person was paid for the same project, etc.
Improved ACCOUNTABILITY for the taking by allowing reimbursement of legal fees to the condemned property owner if the taker does not comply with the following three statutory tests: 1) The taken property served a public benefit; 2) The taken property was a necessity for the project; and 3) The taken property provided for the greatest public good at the least private harm.

8. What additional improvements are needed?
Wyoming law [W.S. 1-26-704] requires private property owners to be compensated for the “appraised value” of their taken property. The same law requires non-profit organizations to be compensated for the “replacement” value of their condemned property. This places an undue burden on condemned private property owners, especially those who are elderly or retired, live on fixed incomes, and live in homes that are paid for but have relatively low appraisal values. Although these property owners will be compensated for an appraised value for their taken property, they may not be able to relocate, or be “replaced” into another home that is also paid for – causing an unexpected new rent or mortgage payment that can severely strain limited incomes.

Wyoming's constitution allows private entities to take another's private property. While the statutory reforms of 2007 improved the process for such a taking, and strengthened the power of private property owners to protect their lands during a taking, the right of a private entity to take another’s private property for their own economic gain is still allowed by our State constitution. In the wake of the U.S. Supreme Court decision on Kelo v. New London, citizens and legislatures across the country continue to grapple with this fundamental issue: Who should have the rights of eminent domain and for what purposes?

Amendment to the generally-accepted policy that private lands, rather than public lands, should be the prioritized location for projects that provide a public use or benefit (for example, electricity transmission lines, natural gas pipelines or railroads) in order to preserve the apparent sanctity and integrity of public lands. LAW believes that if a project benefits the public, then public’s land should be used in priority, and private land should be relied upon as a last resort.
Minimize the lack of transparency in prices paid for condemned projects, or projects threatened for condemnation. The current lack of transparency skews the negotiations so that the affected property owners cannot readily obtain the prices paid for similar condemned properties. This makes it difficult for property owners to identify “comparable sales” in order to negotiate compensation of their condemned properties. LAW supports a state-wide data-bank that includes the prices paid for projects that are built under the powers of eminent domain. This will help ensure that the market can function property when establishing “fair market values” of condemned or potentially-condemned properties.
Resist any new statutory efforts to extend the powers of condemnation to other private economic endeavors, including carbon sequestration or nuclear waste storage. For economic projects that require using private lands, LAW believes that the surface owner’s consent should be required, rather than allowing for powers of eminent domain. Surface Owner Consent has been effectively applied for all mining activities in Wyoming pursuant to the 1979 Surface Mining Control and Reclamation Act.
Revise or eliminate regulatory programs that restrict the ability of private landowners to CONTROL and MANAGE their private lands due to impacts from decisions made by upstream or neighboring property owners, particularly in the case of coal-bed methane water discharge and disposal.

9. Will economic development suffer if Wyoming’s eminent domain laws are amended?
Wyoming’s economic development activity should not occur at the detriment of, or be subsidized by, private property owners. LAW believes that healthy economic development can and will occur in conjunction with the protection of private property rights.

10. Where can I learn more about eminent domain and what is happening nationwide?
The Institute for Justice is a leading non-profit organization located in Arlington, VA that is dedicated to protecting private property rights.