South Dakota’s approach to condemnation
The use of eminent domain (condemnation) is a modern legal problem. Condemnation is the taking of property for a public and in some cases a private interest. Condemnation is a legally sanctioned sword. My argument in this article is not that eminent domain as a concept is wrong. My argument is that in its present state, as a legal vehicle attempting to provide fairness, eminent domain is a lemon in need of repair on both sides. This law allows a governmental body – and a private business – to convert privately owned land to another use, often over the objections of the landowner. Traditionally in a legal taking a landowner receives “market value” for the land taken. This often includes money for reduction in agriculture output or for the loss of other productive use of the land.
Problems with the current law:
1. While eminent domain makes sense under a public utility easement paradigm, how does this process apply when a pipeline easement on a landowner’s property is the “transportation vehicle” for a commodity? How does one calculate “fair market value” when millions of dollars’ worth of product are flowing across privately-held land? President-elect Donald Trump said, “I want the Keystone pipeline, but the people of the United States should be given a piece, a significant piece of the profits.” South Dakota law does not take this into consideration.
2. Condemnation of one’s land involves forced negotiation required by law, and sometimes involuntary litigation. Is a one-time payment for an easement fair compensation? Is the condemnor (developer or government agency) required to provide its plan of work and operations to the condemnee (property owner) so the owner can evaluate this information? This would create a fairer playing field in negotiations. S.D. law does not provide for this.
3. Should the landowner be granted his expenses and attorney’s fees in a trial and for an appeal if the final award given is greater than the last ‘offer’ made by the condemnor? Or if a mistrial is called which is not the fault of the landowner? S.D. law does not provide for this.
4. Is the condemnor required to provide written disclosure of its calculations and basis for a proposed offer for the property? S.D. law does not provide for this.
5. In a federal condemnation, even if a landowner does not formally answer the lawsuit the landowner may still present evidence of the value of his land and may participate in the distribution of awarded monies. S.D. law does not provide for this.
6. State law allows condemnation for a ‘public use,’ but the law does not define ‘public use.’ This leaves great discretion in the hands of those in power. There exists no statutory guideline or restriction on what is considered public use in a condemnation proceeding, except those involving telephone services. The exercise of prevailing political winds by those in power should never be the benchmark for the taking of property.
Condemnation law brings out a curious inconsistency in the character of the state. S.D. is a strong property-rights and individual-rights state. Aside from the important and unique relationships of Indian reservations to the state and to the federal government, private property in S.D. is a hallowed right. State laws are vigilant in protecting one’s real estate and other property from intrusion, reduction in value as well as protecting the right to use the property for any lawful purposes. The state Constitution, like the federal, directs that, “Private property shall not be taken for public use, or damaged, without just compensation … .”
Thus we get to my puzzlement. S.D. has done very little to modernize eminent domain laws. This is not a case of the emperor having no clothes. This is a case of the emperor having no vision. The takeaway is that state leaders have no appetite for changing the status quo. This legislative “indifference” to modernizing the law of eminent domain is caused by three things. First, lack of interest. Second, legislators’ deference to government agencies that want to keep the extraordinary government power of condemnation. And third, the influence of business lobbyists who act to protect the private right of condemnation.
In modern vernacular, ‘trending’ means that which is currently popular in social media, however in common English it means that which is changing or developing in a certain direction. The word ‘trending’ applies to the painfully slow, but observable changes in the law of eminent domain. Unfortunately these changes are not coming from S.D. political leaders. The state’s recent passage of a voluntary mediation statute for condemnation cases does nothing to address the substantive changes needed. A national trend has started toward balancing the sacrifices a property owner makes when business or government does its eminent domain dance. Courts, and over time other state legislatures, will continue to correct the ills of eminent domain when it is used as a legal sword. S.D. must cultivate a fairer system for the taking of property.
Author: David Ganje. David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law in South and North Dakota.
