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At the heart of many disputes over new energy infrastructure projects in the Dakotas and elsewhere is the legal process of eminent domain—taking private land for the public good.
If energy created in one place is to be put to use in another, project developers have to build a connection in some way. And they often don’t own the land between the two. Eminent domain is necessary to make the projects happen.
But as technologies, energy sources and ways of doing business have changed, the laws that govern eminent domain have remained basically the same.
“Some of these laws are 100 years old, when mining was a big deal in the Black Hills,” and private entities could stake a claim on public grounds, said Sioux Falls attorney Mark Meierhenry, a self-proclaimed “landowners’ advocate” who served as South Dakota’s attorney general in the 1970s and 1980s.
A law intended for the good of all
The concept of eminent domain has been around for centuries. It originated in feudal times, when the king or queen owned everything and granted permission to commoners to profit from the land for a pittance—or, in modern days, a tax.
The Magna Carta, signed 800 years ago, declared that the English government could no longer take property from private citizens without payment. In the United States, that came to mean that the power of eminent domain could not be exercised without “just compensation,” which Meierhenry said equates to “fair market value.”
“The Revolutionary War was in part fought (because) the founders of our country believed very, very strongly in the fact that the government was there to help citizens, not to take their property,” he said.
In modern America, eminent domain has been used to construct projects ranging from railways to interstate highways and electrical high-line wires to oil pipelines to water mains. In some of those cases—such as the interstate system—the projects have been government-funded and government-owned. For the most part, they were accepted, though not necessarily welcomed.
“Everybody recognized that the interstate highways are a very important part of our national infrastructure, but nobody wanted it to come through their farm,” said Bill Taylor, an attorney from Sioux Falls, S.D., who has worked on both sides of eminent domain cases.
In other instances—such as electrical companies and water suppliers—the lines are privately owned, but pricing and regulation has been set by the public (through the Public Utilities Commission).
“Very few of us are going to quarrel to bring water to our neighbors,” Meierhenry said, “or to get rural electric or telephone lines.”
Public projects don’t always mean public use
When the people benefiting aren’t neighbors—such as in the case of oil pipelines that merely run through states like South Dakota, carrying crude oil from Point A to Point B—the “public good” component is a bit foggier to some landowners.
“Generally a ‘public utility’ is open to the public,” Meierhenry said. “It’s clear that no one in South Dakota is going to use the pipeline.” But, under law, it is considered a “common carrier,” because it transports oil to a place where it can be accessed and used.
So, does a pipeline fit the definition of a “public utility” in South Dakota? Meierhenry argues that it does not, and so the right of eminent domain shouldn’t apply.
“Pipelines are private, moneymaking operations,” he said. “Why should a landowner be forced to be partners with oil men or wind energy men? Shouldn’t we have free choice?”
Judges and juries have rarely seen it that way. Very few cases exist in which private landowners have successfully refuted the government’s attempt at granting a project the right of eminent domain.
“As long as it’s a public purpose, as defined by the (governing body), once they declare it’s in the public interest to recover this property, the theory is that the ‘king,’ so to speak, still has the power to take it away,” Meierhenry said. “The citizen has no right to stop the government from doing it.”
The rules of eminent domain, he said, “favor the taker, not the landowner,” something that goes back to the original purpose of the laws.
“Historically, we were building roads and we were building public things that all of us could use,” he said. “So, the rules were set up so that the government really gets the land pretty cheap.”
But Meierhenry said there is a difference in granting use of one’s land to the government for “just compensation” in order to build truly public infrastructure, as compared to doing so for a private company to make a profit without the landowner receiving a piece of that profit.
“They underpay for the rights and they force South Dakotans to be partners in their business, but they don’t get equal payment as a partner. You can’t build a … pipeline without land—yet they don’t have to negotiate for (one of) the most valuable parts,” he said. “It’s a three-legged stool. To build a pipeline, you need supply, you need demand, and you need a route.”
And only one of those legs has been cut short, according to Meierhenry.
“The pipeline people get market prices when it goes in, and the refiners pay market prices when it goes out, and yet we have allowed these pipeline companies to say to the landowners, ‘We’re going to give you a pittance for your part of our moneymaking project,’” he said. “Our South Dakota legislature has stuck it to these landowners. The wrong people are getting the advantage of the power of the government.”
Pipeline developers argue that, whether or not the project profits the companies, it is in the national interest to build pipelines to transport oil. Keystone XL developer TransCanada, for example, says on its website: “This pipeline is a critical infrastructure project for the energy security of the United States and for strengthening the American economy.”
Without the power of eminent domain, Taylor said, “It’s difficult to construct cross-country projects. One person in the middle … can stop the whole project.”
But just what makes a project “for the good of the public” and worthy of executing the power of eminent domain?
“You could look at it from the bigger picture. We need petroleum to run America. We all need it to run our cars,” Meierhenry said. “Are these pipelines in the public’s best interest? As a nation, no doubt about it. As a state, I don’t know.”
Ongoing national debates suggest there is more doubt about whether pipelines are in the national interest than Meierhenry allows—for example, some in the Keystone XL opposition argue that it’s in the long-term interest of the United States to keep that oil on the ground to prevent catastrophic climate change, or that U.S. groundwater shouldn’t be risked to transport Canadian crude.
But, in the event that the national compelling interest is clear for all concerned, Taylor says the course of action is also clear.
If we are operating under the assumption that we are “one nation, under God, indivisible, with liberty and justice for all,” the premise that national and state interests can conflict is false, according to Taylor.
“My view is that the good of the state and the nation are inseparable. … There can never be a conflict between the best interest of the nation and the best interest of the state,” he said. “Individual interest has to give way to the greater good. Otherwise, we wouldn’t have been able to build this great nation.”
Still, Meierhenry said work must be done to make catering to the needs of the nation more palatable to landowners in the Dakotas.
“Am I landowners’ advocate? You bet. Do I think our eminent domain laws are skewed in favor of big, out-of-state interests? Absolutely,” he said. “We have very, very poor legislation controlling eminent domain. It should be revisited to protect South Dakota citizens, but right now, our legislature—urged on by lobbyists and energy interests—has permitted these private companies who are making fortunes using South Dakota landowners’ property to use methods that in my mind should only be reserved for the government, where we all benefit from it.”
For more articles related to a Promising Outlook on Local Energy see:
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