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Bar News - May 17, 2013

Real Property Law: Eminent Domain Lawyer: Process Needs Updating


Protracted Cases, PAD Rules Negatively Affect Landowners
Assessing the Value of Eminent Domain

By Mark Hodgdon

Nearly every modern convenience can trace its origins along one common thread: the power of eminent domain. The ability to take property from landowners to advance the greater good may well be the most detested of government powers. But it also has proved undeniably crucial to our success.

Every time we flick a light switch, electricity flows across a power grid built using eminent domain. Likewise, we have eminent domain to thank for the majority of our roads, bridges, water and sewer systems, telephone and cable wires, gas pipelines and airports.

It is an ideological myth that eminent domain was ever limited to pure government uses. Long before our Revolution, grist mills were so essential to frontier survival that they were permitted to seize land for their dams. In the early 1800s, New Hampshire realized its rocky soil and harsh climate could never compete with the agricultural powers of the south. But, we had another resource in abundance; great rivers. So, the Legislature granted private companies the ability to use eminent domain to harness the immense power of our water by building dams to power mills. For generations, the mills provided the jobs that built our roads, schools and houses of worship. Now those old mills are finding new lives.

Later, railroads were built across our state and country by private companies using eminent domain. As a result, New Hampshire products discovered new markets. And, in return, we gained access to goods that otherwise were just rumors. Travel to and from other regions, tediously impractical before, became commonplace. Telegraph and telephone lines soon followed. Now, fiber optic cables lay beneath the tracks. Our society and economy has been profoundly transformed by each new technology.

The Mount Washington Auto Road celebrated its 150th birthday last year. The Auto Road continues to draw tens of thousands of visitors to the Mount Washington region and is the center of a vibrant, diverse set of events each year. It was built by a private company using the power of eminent domain. The genius of our Constitution is not that it eliminated eminent domain. Rather, for the first time in history, it protected individual landowners from bearing the burden alone. It required they be paid just compensation and receive due process. We have spent the last two and a quarter centuries struggling to figure out exactly how to accomplish that assignment.

Although the American psyche responds viscerally to the notion of eminent domain, the power of government to take private property to benefit the greater good has played a critical role in the development of this nation (see sidebar).

Recent events, however, have created the need to update the legal process of taking property by eminent domain – a process that has served us well for nearly 30 years – to ensure landowners aren’t unfairly penalized while cases are pending. Although many agencies have improved their approaches, their efforts are being undercut by the realities of modern projects, budget austerity and judicial misunderstanding.

Enlightened government agencies understand that due process and just compensation are not mere formalities to be complied with, but opportunities to be embraced. This is because nothing is more corrosive to public confidence in government than bitterness bred from rendering a citizen impotent and frustrated.

But the current process, which has provided landowners and agencies alike with a reasonably efficient means for being heard, is on the precipice of becoming a tedious war of attrition that few landowners can hope to survive. The landowner didn’t ask for his land to be taken. At a minimum, the eminent domain process shouldn’t inflict further damage by being unconscionably protracted, exorbitantly expensive and tone deaf.

Because of ever increasing complexity, financial issues and regulatory burdens, public projects have become unbearably drawn out, often decades long. Land acquisitions for the Conway Bypass, for example, were authorized in 1992 and are still not complete. Approved in 2002, the massive I-93 Project might be buying properties for another decade. These are not unique situations in today’s world.

During the interim between approval and actual property purchase, design changes and modifications inevitably occur. Landowners cannot be certain of the exact impacts on them, much less the compensation to be paid, until the government is finally ready to purchase the property.

Throughout this period, a landowner’s options are limited. The lingering cloud of eminent domain is likely to scare away potential buyers or significantly reduce a sale price. An owner’s ability to relocate is limited. Investing in expansions or improvements is also financially unjustifiable since recovering the full investment is unlikely. Landowners are effectively frozen in place, maybe for decades. This is not what anyone had in mind.

So far, attempts to address this concern have proved unsatisfactory. Some agencies consider requests for "early acquisitions." But, landowners may be required to give up rights in return, such as the ability to challenge the taking, or to show a unique "hardship." Additionally, funding is usually stretched thin, so not all requests can be accommodated.

Several years ago, the Legislature required that agencies offer to purchase the land within a "reasonable time." Unfortunately, what is reasonable is in the eye of the beholder. Project delays can usually be rationally explained. More importantly, the reality is that the agency isn’t going to abandon a major project partway through. It will just hold a reauthorization vote. A more significant consequence than that is necessary to protect against unreasonable delays.

Then, the real odyssey begins when the land is finally taken. First, the case is heard by the Board of Tax and Land Appeals (BTLA). Either party may appeal from the BTLA’s decision to superior court for a jury trial, de novo. For many years, the BTLA process has successfully offered a prompt, inexpensive, and less formal means to resolve most eminent domain disputes. Landowners could present their case at a hearing within seven or eight months. It served a precious purpose; the landowner’s case was meaningfully and quickly heard.

Through no fault of the BTLA, budget cuts, staff reductions and an increased workload have conspired to compromise these benefits. Compensation hearings are now commonly scheduled more than a year from when the land is taken. It could be nearly a year and a half before a contested case reaches the superior court. To a landowner, the additional time is an eternity. And, formality has inevitably crept into the process. Now, it is a rare landowner indeed that is bold enough to arrive unarmed; with no lawyer or appraiser.

Because they are curiously indifferent to eminent domain, the new superior court PAD rules compound the problem. Unlike typical plaintiffs, eminent domain parties have only 30 days to appeal from the BTLA’s order. Because BTLA decisions have a tendency to change the landscape, it is not uncommon for a party to file a timely appeal to preserve its rights while weighing the ramifications of the decision. Under the PAD rules, an appeal will immediately trigger a costly sprint to meet the new disclosure requirements, with absurdly little time to obtain revised reports or evidence.

Mystifyingly, the PAD rules mandate additional mediation as well. Isn’t this the role the BTLA process already more effectively fills? By the time an eminent domain case reaches the courts, negotiations have been going on for years. Perhaps after a landowner has lived under the threat of eminent domain for a decade, spent another year or more incurring the cost and expense of a BTLA hearing, expended yet more resources in an unnecessary dash to meet the disclosure deadlines, adding yet another impediment before trial is not wise. Sometimes when we take property against a citizen’s wishes, a decision by 12 other citizens is the only solace that suffices.

Mark P Hodgdon, of the Law Office of Mark P. Hodgdon in Concord, represented the state in eminent domain cases as a former senior assistant attorney general and now represents landowners. He has practiced eminent domain law extensively for 25 years.

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