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How to protect your business

Whether you see it coming, or it comes out of the blue, the request (or demand) by a pipeline company or utility company seeking an easement across your farm land is typically an unwelcome and unwanted intrusion. So, what can a landowner do? Unfortunately, the power of eminent domain is significant but it still helps to understand the process.

By statute, various governmental and quasi-governmental agencies have been granted the power of eminent domain. These agencies have the authority to acquire easements for power lines, pipelines, gas mains, fiber optic cable and other similar systems.

An agency with eminent domain authority has the right, through court proceedings, to acquire property from a landowner, including easements, for a public purpose. The landowner is entitled to be paid the fair market value of the property, as well as severance damages (the decrease in fair market value of the remaining land caused by the taking). In most instances, the landowner has little ability to prevent or redirect the project.

The decision by the agency to pursue eminent domain is made at a public meeting. An affected landowner often has some forewarning of the possibility that the agency may want to acquire an easement on their property. Consider attending the public meeting to learn about the project and to provide input. The agency has a great deal of discretion in selecting the location of its project, but public input can, on occasion, have an impact on the final outcome.

Once the agency decides to proceed with its project, but prior to initiating an eminent domain court proceeding, the agency must contact each landowner and make a good faith effort to negotiate the purchase of the easement interest.

The negotiation process typically involves back-and-forth discussions over a period of several months.

Oftentimes, the agency has a written appraisal prepared in advance of the negotiations, to provide a baseline for the negotiations. It is suggested the landowner request a copy of the agency’s appraisal and reviews it carefully. The landowner can have an appraisal prepared as well.

Unfortunately, appraisals can be costly— in the thousands of dollars. If the value of the easement is relatively low, the landowner cannot justify the expense of having its own appraisal. A group of landowners may want to share the cost of having an appraisal prepared. In the absence of an appraisal, communication among the landowners in the project can be most helpful.

In most instances, the agency and landowner reach a settlement and the process ends with the payment of money and signing of documents to grant the easement. However, if the negotiations reach impasse, the agency can then file an action in the local county court. The court will select three local appraisers (usually local real estate agents) who will meet soon thereafter in a fairly informal setting and consider the evidence presented by the agency and the landowner. The county court appraisers render their decision (their determination of the value of the property taken) within 10 days. That decision is final unless an appeal is made by the agency or the landowner.

Any appeal of the county court appraisers’ decision must be filed in the District Court within 30 days after their decision. Once appealed to the District Court, the matter is tried as any other civil case, without reference to what the county court appraisers decided. Either party may request a jury. The District Court decision is subject to further appeal by either party to the Nebraska Court of Appeals.

It is important to understand that the agency can acquire the easement immediately after the county court appraisers render their decision by paying the awarded amount into court. Title passes at that time. The only issue on appeal to the District Court is the amount of dollars to be paid.

This is only a general overview of the eminent domain process and there can be many nuances in any eminent domain proceeding. If the value of the easement to be acquired by the agency is significant, the landowner should consult with an attorney with experience in eminent domain matters.

About the Author

Michael Sullivan
Sullivan Shoemaker PC., LLO

Michael is one of Sullivan Shoemaker's attorneys to be formally recognized as an outstanding lawyer by his peers. He lives in Hastings and practices throughout Nebraska. He deals with real estate law, estate planning and business planning, including corporations and LLCs.

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