Continuing Efforts to Restrict the Use of Eminent Domain for Utility & Economic Development Purposes
March 14, 2012

Nearly seven years ago the United States Supreme Court held in Kelo v. City of New London that the exercise of state eminent domain power to acquire private property for economic development purposes is a "public purpose" within the meaning of the Fifth Amendment to the U.S. Constitution. The ripples from that decision, which was generally not well-received by private property rights advocates, continue to wash ashore in legislatures across the country.

On March 5, 2012, New Hampshire Governor John Lynch signed into law House Bill 648 which restricts a public utility's ability to request condemnation authority from the New Hampshire Public Utilities Commission (PUC). The law prohibits public utilities from requesting such authority unless the electric transmission project at issue is eligible for regional cost allocation. Various stakeholders supported the legislation as a response in opposition to the proposed Northern Pass Transmission Project - a $1.1 billion, 140 mile long, 300 kV DC transmission line intended to import as much as 1,200 MW of hydroelectricity from Quebec to southern New Hampshire. New Hampshire legislators, however, explained that the bill was needed to make the state's eminent domain laws consistent with the 2006 amendment to the New Hampshire constitution that prohibited the taking of private property "for the purpose of private development or other private use of the property." While the Northern Pass developers have stated publically that they do not expect the new law to adversely impact their ability to acquire the remaining right-of-way, it is clear that the New Hampshire PUC and landowners will be taking a closer look at transmission projects proposed by for-profit electric utilities as well as other takings that are arguably for a private, rather than public, purpose.

At the same time, the "Private Property Rights Protection Act of 2012" (H.R. 1433) continues to work its way through the U.S. Congress. Introduced by Representative James Sensenbrenner (R-WI) in April, 2011, the Act takes a different approach to the use of eminent domain for economic development purposes. The Act prohibits the use of eminent domain to acquire private property for economic development purposes any time within seven years of such taking. The Act defines economic development as the taking of private property from one private person to convey it to another "for commercial enterprise carried on for profit, or to increase tax revenue, tax base, employment, or general economic health." Of particular interest to public utilities, the Act does not prohibit the taking of private property for use by electric, natural gas, telecommunications, water, and wastewater utilities. The Act applies to the federal government, to states that receive federal economic development funds, and to entities to whom such states have delegated eminent domain power. The Act creates a federal cause of action for prohibited takings and authorizes private lawsuits brought by landowners or tenants of property that is subject to taking for alleged economic development purposes. A violation of the Act would render the state ineligible to receive federal economic development funds for two years and would require the state to return or reimburse the federal government for funds previously received and used in violation of the Act. In February, 2012, the Act passed in the House and was introduced in the Senate.

New Hampshire's legislation and H.R. 1433 demonstrate that the repercussions from the 2005 ?Kelo decision continue to be felt around the country. It is likely that there will be continued scrutiny of private property takings by for-profit utilities and by states and other entities involved in economic development projects.

While no similar eminent domain reform legislation has yet been introduced in the Colorado General Assembly this session, we will continue to closely monitor this issue for further developments in Colorado or elsewhere in the Rocky Mountain West. For more information on this and other eminent domain issues, please contact Tom Dougherty at 303-628-9524.

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