Eminent Domain Musings

The Wyoming Legislature formed a select committee in 1979 and 1980 to study eminent domain and, after many public hearings about how the energy industries run roughshod over landowners, many of which I attended, the legislature enacted a huge overhaul of the eminent domain statutes in 1981.

The energy industries went dormant for a while (low oil and uranium prices), so the new law did not get tested much until the advent of high-density drilling and more gas pipelines and power lines in the early years (2002-2006) of this decade.

Then, in 2006, the landowner groups and their environmentalist allies, irritated with energy companies and lawyers like me, took another run, and a bunch of new laws were enacted in 2007.

The effective date was July 1, 2007.  This deadline motivated the Dakota, Minnesota and Eastern Railroad to file four condemnation cases against about 20 landowners just before July 1.  This turned out to be a bad strategy.  Truth in advertising:  I played a big part in defeating this condemnation.

We have had few opportunities to test the new statutes in court, but I have been representing a bunch of land owners recently and they are finding the new eminent domain statutes to be useful.

Meanwhile I should not complain; this is the stuff which makes work for eminent domain lawyers.

Bottom line:   Everything has to have a tie-breaker.

From the standpoint of municipalities and industry, the new laws create significant delays and traps for the unwary.

A big priority for the folks who wanted to “reform” the eminent domain statutes in 2007 was to increase the time between the first formal offer by a potential condemnor and the date of filing the court complaint.  They decided to give the landowner 65 days to consult attorneys and appraisers and accountants before responding to the initial offer.  If the landowner failed to respond or counter-offer within 65 days, the company made a final offer and then had to wait 15 days to file the condemnation.  This built in a mandatory 90 day negotiation period.

I have filed a lot of condemnation petitions.  We always made multiple offers, usually over a much longer period than 90 days, to try to work out an agreement.  We were usually ignored.  No response.  Offers of thousands of dollars for each year for use of existing roads: No response.  I was not wildly enthusiastic about creating a statutory “cooling-off period” of 65 or 90 days for landowners who had already blown off months or years of negotiations.  But, I am not a legislator; it was not my decision.

Then, the well-intentioned reformists went a step further, one which guarantees more litigation than was intended; they wrote into the law a requirement that a company which possesses rights of eminent domain MUST include in its offer letter a disclosure that the company has the right to condemn, AND a statement that a failure to respond within 65 days is a waiver of certain objections to condemnation.  How do you pick the right words to totally piss off a rancher?  This statute would meet the goal.

Hello??  Why would you “fix” the eminent domain code to introduce more conflict?  Landowners receive the required formula letters stating in the best possible diplomatic phrasing that the company sending the letter possesses condemnation powers and the landowner has 65 days to respond…If I sent them a letter stating that the Taliban has recently decided to “occupy your ranch” and they are bringing pickup loads of suicide-bent maniacs packing fully automatic weapons, the reaction would be the same.  Okay, that’s an exaggeration, but it illustrates the point.

Every landman (negotiator) and attorney representing pipeline and utility and oil company shrinks away from the day that he or she must mention eminent domain.  We measure stupidity by how early a neophyte landman mentions condemnation (Oh *&*^*, expletives again,  that  *&^%$# you hired said WHAT???).  These are fighting words; everyone understands that.

We have a CO2 pipeline going through Campbell County to the Bell Creek oil field in southeast Montana.  The landowners have been working out details with the landmen.  In the midst of this early process, they get the formula letter drafted by the attorneys.  This letter is REQUIRED by the 2007 amendments to the eminent domain code.  The letter recites the first offer and warns that the company can condemn and the landowner has 65 days to respond, else they forfeit certain rights and the condemnation is coming.  It is very difficult for me to persuade these landowners that this offensive letter is REQUIRED BY LAW and they should basically ignore it.

Oops, unintended consequences.  These landowners are mad and they are headed toward a courtroom confrontation.   I think maybe my clients won’t be among them.

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