Farmers, Ranchers and Owners of Agribusinesses

Across the country, family farms, ranches and agricultural businesses are threatened by eminent domain. Eminent domain is the power to take – or “condemn” – privately-owned property for a public purpose provided that “just compensation” is paid to the owner for the property taken. The power to condemn private property for public use is rather broad and is granted to government agencies at the federal, state, and local levels as well as to public utilities, railroads and select private companies providing public services.

Eminent domain power can be used to acquire the land needed to complete the construction of public infrastructure projects such as highways, pipelines, transmission lines, schools and parks. Landowners whose property is acquired are entitled to just compensation for the property taken or damaged.

In eminent domain, condemned property is to be valued according to its “highest and best use” – its most financially profitable use – which is not necessarily its current use nor the use for which it may be zoned. Often agricultural land may have a higher value if considered for a different use, such as commercial. Additionally, for farmers, ranchers and owners of agricultural land and businesses there are unique concerns regarding not only the land and improvements that might be acquired by eminent domain but also the damages to any remaining property and costs associated with curing or correcting any negative impacts the taking may have on the remaining property. Improvements such as buildings, fencing, irrigation, and natural tree or vegetation barriers as well as access to and navigation around the property are aspects that may be negatively affected by an eminent domain taking and for which the owner may be entitled compensation.

Case Studies – Acquisition of Agricultural and Ranch Properties by Eminent Domain

Case Study #1 – Whole Take of Family Farm Owned for More Than 100 Years

The State Department of Transportation (DOT) and local county proposed the joint construction of a new highway extension that would connect a county route with the expressway. The approved route required the taking of a 15-acre family farm located within the county’s portion of the project. The farm property had been in the family since 1904 and originally served as the family home until the death of the family patriarch in the 1960s. After negotiations with the family heirs failed, the county initiated condemnation proceedings and took possession of the property. At trial, the property owners asked the jury to value the property at a higher market value than agricultural land would command. The owners argued that the property’s highest and best use was mixed-use commercial based upon a history of development in the area. The jury agreed and awarded the owners the full amount of the value their appraiser testified to at trial. Following the trial, the property owners through their attorney requested the trial judge to award additional compensation for “heritage value” – a financial benefit established by that state’s legislature which awards an additional 50% above the just compensation in condemnation cases when the property has been owned by the same family for over 50 years. In this case, the amount of heritage value amounted to $650,000. The trial judge also awarded interest of over $150,000 for the time that had lapsed between the physical taking of the property and the trial verdict.

Case Study #2 – Partial Taking of Farm, Ranch and Rural Properties for Transmission Line Easements

A merchant transmission line approached numerous private ranch, farm and rural property owners in the Northwestern United States to negotiate the purchase of easement rights. Many landowners were familiar with this process having negotiated pipeline and power line easements with other utilities and agreed to sell the energy company easement rights. A handful of owners attempted to negotiate a relocation of the route and flexibility in other provisions of the easements. These landowners were especially concerned about the degradation of wetlands and prairies and disturbance of significant historic and cultural landmarks located on their properties as well as disruption to their farm and ranch business. Because the landowners were unable to reach agreements with the energy company, the company filed an eminent domain lawsuit to condemn the easements. The landowners responded by asking the District Court to dismiss the complaint on the grounds that the merchant transmission line – a private corporation rather than a public utility – lacked the authority to exercise the power of eminent domain. The Court ruled in favor of the landowners and dismissed the condemnation complaints on the basis that the transmission line company did not have legislative authority for its desire to acquire land using the power of eminent domain. The company appealed while the state legislature introduced a bill granting eminent domain power to private utilities. With the assistance of their eminent domain attorney, the landowners continued to fight the transmission line. In the end, the two sides were able to reach agreements including relocation of the route to avoid impacting the wetlands, prairie and historical landmarks and revisions to certain provisions of the easements as well as payment of just compensation and attorneys’ fees to the landowners.