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By R. Scott Barber, Philip J. Swartz and Carol A. Myers 

Eminent domain is the power of any sovereign government to take private property without the consent of the owner. This is a necessary power of government. The power, or rights of people, exceed the power of the individual. An example of this is the need for infrastructure required for society to function, such as highways, bridges, and pipelines.

Condemnation is a term often associated with eminent domain. The distinction is that eminent domain is the power, or right, to take property for public use and necessity; condemnation is the act of doing so.

The first recorded history of the use of eminent domain goes back more than 3,000 years. King Ahab had a palace in Jezrell that was an adjacent to a vineyard owned by Naboth. The king asked Naboth to give him the vineyard with an offer to pay him a fair price or give him a better vineyard, but Naboth said no. The king was so angry and depressed that eventually his wife Jezebel arranged to have Naboth murdered. Then she told Ahab, “Naboth is dead. Now go and take possession of the vineyard which he refused to sell to you.”

There are limitations on the power of eminent domain.

Unlike other countries, the United State of America has placed limitations on the taking of private property for public use and necessity. The limitations are constantly under scrutiny and the law continues to evolve. The four sources of law used when exercising the power of eminent domain are the Constitution, regulations, statutes, and case law.

Federal Constitutional limitations are found in the Fifth and 14th Amendments. The Fifth Amendment to the Constitution, which was a part of the Bill of Rights, contains a listing of personal rights and protections including, “Nor shall private property be taken for public use, without just compensation.” The 14th Amendment was added to the Constitution after the Civil War. Prior to the 14th Amendment, many states limited or deprived their own citizens of rights and protections under the Constitution believing they had the sovereign right to do so: “…nor shall any State deprive any person of life, liberty, or property, without due process of law…”

Each state is different, and each state constitution can place additional limitations on the power of eminent domain.

The Pennsylvania Constitution provides language like the Fifth Amendment: “Nor shall private property be taken or applied to public use, without authority of law and without just compensation being first made or secured.”

The role of regulations is to assist in the implementation of the intent or purpose of legislation. Regulations are intended to comply with the appliable statutes and cover the subject matter in greater detail.

Both federal and state statutes can limit the power of eminent domain. For example, a state cannot acquire more land than is needed to build a project. Prior to passing of the Pennsylvania Eminent Domain Code, Title 26 in 1964, there were 67 different methods of acquiring private property for public use in Pennsylvania, because each of the 67 counties had their own set of regulations.

Ultimately, it is the court that determines just compensation and how the power of eminent domain is applied. This is known as case law. Case law includes decisions written by an appellate court, is the most prolific source of law, and can overturn both statutes and regulations.

The formal condemnation process in compliance with all applicable law in Pennsylvania is accomplished by the filing of a Declaration of Taking under the provisions of the Eminent Domain Code. Except for unique circumstances such as certain Pennsylvania Public Utility Commission (PUC) actions and support coal within the jurisdiction of the Pennsylvania State Mining Commission, the Eminent Domain Code provides the exclusive provisions governing all formal takings in Pennsylvania no matter the agency or government entity. Two types of legal authority are required to file a Declaration of Taking: A condemnor must have both general statutory authorities to exercise the power of condemnation and specific authority to file the Declaration of Taking.

It is imperative that agency employees and those working on behalf of an agency with the power of eminent domain be fully aware and apply the requirements under the federal and state constitutions, regulations, statutes, and case law. There are19 federal agencies such as the Federal Highway Administration (FHWA), Federal Energy Regulatory Commission (FERC), Housing & Urban Development (HUD), Federal Aviation Administration (FAA), and others. States do not inherently have the power of eminent domain. For example, a state department of transportation (DOT) that is funding a project with federal and state funds is required to enter into an oversight agreement every five years with FHWA to give the state DOT the authority to exercise eminent domain, subject to audits by FHWA. Transmission projects for gas pipelines, electrical lines, etc. fall under the PA PUC, but once a transmission project crosses state lines it then falls to the oversight of FERC. Not following the laws, regulations, statutes, and case law can result in the loss of funding for a project and the project not being built.

To recap, eminent domain is the right to acquire private property for a public use, and condemnation is the process. Neither term should raise alarm; in fact agencies want to settle with property owners on an amicable basis and there are times when both the agency and property owner enter into a “friendly condemnation” to meet the timelines to clear a project for construction. The term clear means that an appraisal report was prepared and approved to set a basis for an offer of compensation; an offer must be presented to the property owner, the money has been paid or the amount deposited into court, and the agency has possession of the property so that a contract can be let to a construction company. An average rate for filing a Declaration of Taking on a project is usually 10% or less with many post-condemnation settlements. Certainly, all property owners have remedies under the law.

If you are acquiring property for projects that possess the power of eminent domain, you need to know: which agency has the authority over the project, what are the funding sources; and most importantly, what laws, regulations, statutes, and case laws apply in the jurisdiction of the project.

R. Scott Barber, Philip J. Swartz, and Carol A. Myers

R. Scott Barber, Philip J. Swartz, and Carol A. Myers

Appraisal Review Specialists, LLC (ARS)

Appraisal Review Specialists, LLC (ARS) has been providing Appraisal Review Services as an organization since 1997. They have developed a team of appraisers and Review Appraisers with extensive experience in eminent domain appraisal review. Mr. R. Scott Barber, Partner, previously held the Chair position on the West Virginia Appraiser Licensing and Certification Board and Chair of the West Virginia Standards Committee. Mr. Philip J. Swartz, Partner, is currently one of eight review appraisers in the United States pre-approved for technical review assignments for the USDA/NRCS Programs. Mrs. Carol A. Myers is a certified instructor for the International Right of Way Association; and has authored instructional course materials. For more information, visit www.appraisalreviewspecialists.com.

Featured in Commercial Real Estate Review – Second | Third Quarter 2020