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water pipeline, eminent domain, WAWS

North Dakota’s Newest Big Bad Wolf

Throughout history the practice of eminent domain has been abused in the United States.  Abused to the point where the parties taking the land were colloquially referred as the “big bad wolf.” The first big bad wolf was the railroad.

The process was quite simple, the railroad is considered a project for the public good, and if you do not accept what the railroad deems fair compensation, then they will take it by force.

Back then, in what many still considered the Wild West, there was no court system to speak of, so the railroad was given the power by the United States of judge, jury and executioner in seizing private property.  It literally was the wild west because many of the states and cities were not really developed or civilized.

Then the highways came along. So did schools and parks.  By then states, counties and towns were very much established, giving more civility to the eminent domain process.  And like with the railroad, some landowners were just informed that their properties were condemned and they had to go to court for “just compensation.”  No real negotiation, just a land agent informing the landowner of their one choice.

In 1954, the U.S. Supreme Court changed the requirement of “public use” to “public purpose.” That decision changed the interpretation allowing land to end up in the hands of private parties under the auspice of condemnation.  These condemnations were commonly used for dilapidated buildings, run down homes and slummy neighborhoods.

Then in 2005, the U.S. Supreme Court ruled that the city of New London, Conn. (Kelo vs. New London), could use eminent domain to seize homes and properties from landowners that were not in poor condition.  This was all allowed under the notion that economic development was for public good.

After that court case, North Dakota responded by clarifying their state constitution.  According to North Dakota Constitution, “private property shall not be taken or damaged for public use without just compensation having been first made to, or paid into court for the owner, unless the owner chooses to accept annual payments as may be provided for by law.”

Also, the state constitution clarifies that “a public use or a public purpose does not include public benefits of economic development, including an increase in tax base, tax revenues, employment, or general economic health. Private property shall not be taken for the use of, or ownership by, any private individual or entity, unless that property is necessary for conducting a common carrier or utility business.”

First, eminent domain was used to bulldoze slums, then it was blighted parts of town , then not very blighted areas, and now perfectly fine areas, and not just in Connecticut.  This practice is happening all over the United States, including North Dakota.

“It appears to me that eminent domain is being used not the way it was intended but because you have private businesses using it,” attorney Derrick Braaten said. “The legal test for eminent domain is that it has to be for a public purpose in other words have a public benefit and public use.”

Braaten, a partner at Baumstark Braaten Law Partners in Bismarck, ND, has represented landowners who have been impacted by eminent domain.  Braaten’s concerns with eminent domain have increased substantially over the past decade as he has witnessed what he deems an abuse of the government-backed power.

Braaten also has issue with the Western Area Water Supply Authority’s behaviors with eminent domain, which he believes operates in a gray area and are blurring the lines with a public entity.

“We have represented landowners who have been impacted by WAWSA (Western Area Water Supply Authority) and by pipeline development and that sort of development in general in respect to negotiating easements and eminent domain actions,” Braaten said.

Braaten continued saying WAWSA is a tricky situation that has created more questions and concerns because it has become a hybrid of public good and private enterprise.

“WAWS is deemed a government institution or government instrumentality, but it is not being run that way and it is being heavily subsidized,” Braaten said.

In 2011, United States Congressman Kevin Cramer, then Public Service Commissioner, publically stated that WAWSA should be reconsidered and their model should be examined closer.

Back then he said, “Proponents of the plan say it cannot go forward without a guarantee. They also say it is a rare opportunity to get a water project paid for by private industry. If the oil industry is certain to pay the project off, why does it require a guarantee from taxpayers?”

Cramer continued with his questioning of WAWSA’s model.

“Private pipeline companies are already building projects to deliver water from Lake Sakakawea to the oil patch for hydraulic fracturing. The price they are offering is less than the WAWSA needs in order to pay off the state debt. That means either the government project will not be price competitive and taxpayers will be on the hook for a failed business, or the government will undercut the private sector, sending the entrepreneurs packing until the state has a monopoly on water sales in the oil patch. After which the government can charge whatever it wants or needs to cover the debt.”

One of the reasons WAWSA becomes confusing to many is because of the unusual way the state legislature set up the funding and power to sell water to the oil industry for fracking. WAWSA has insisted over and over that all of its behaviors and potential growth should be treated as if the water project is 100% for domestic water needs. This is not the case.

WAWSA is broken into two separate divisions – domestic and industrial.  Yet WAWSA’s approach and justification is always unified under “the good of the public”.

“You can still make an argument it is for the greater good, but that doesn’t mean you should be using what I consider a pretty serious exercise of the state’s power of using eminent domain to actually take land from people for the greater good,” Braaten said. “That’s a step beyond saying something is for the greater good when you are actually going to use the state’s power to take property rights from people.”

This is where things get misunderstood, contested and linguistically manipulated.  According to WAWSA, the entire project is for the public good, even the industrial sales that compete with private businesses.  Braaten understands that getting potable water to citizens is a legitimate purpose, however, his concerns fall with the parsing of words and bullish behaviors under the blanket of eminent domain.

“With WAWS I think it is a little bit different because the idea is more related to there being a public utility, so it is more along the lines of we allow the use of eminent domain to run power lines and things like that,” Braaten said. “I think some of the concerns that I have heard from landowners comes from the fact that at this point a lot of this water is being run to well sites for oil and gas production and not to get folks living in the country rural water anymore.”

In the 2016 edition of The Buzz, a newsletter published by WAWSA, it’s main headline read “Easement urgently needed for WAWSA Pipeline Construction.”  The headline clearly conveys a sense of urgency for their project.  Couple this with the consistent phrase “public good,” and you have an excuse for eminent domain.

This becomes a slippery slope for government for a variety of reasons.  Historically eminent domain has been abused due to financial gains, political weaponry and corporate welfare.

There are communities across the nation where council member, legislators and developers have exploited eminent domain for their own private gain.  Often times elected officials, redevelopment boards and contractors either own property that would increase in value due to eminent domain or were the actual contractor in the running for the mega-lucrative projects.

At the end of the day, the use of eminent domain can be used for public good, but also can be used to increase the bottom lines of private and personal interests.

And then there is the added power of “quick take” eminent domain, which gives the state even more power to take property from landowners.

“I take particular objection to the use of what they call ‘quick take’ eminent domain,” Braaten said. “I don’t think quick take eminent domain should exist, period, unless there is an absolute emergency like a flood or something like that.  I think that is being overused and abused.”

Braaten said he is seeing more use of the quick take eminent domain in North Dakota, especially in regards to WAWSA.

“It is such an easy, cheap process for WAWSA and others that creates this perverse incentive because it is easier than talking with the landowner,” Braaten said.

Braaten continues saying his issue with the process is that the landowner may not even know their land has been seized.

“We have one landowner whose first notice that his land had been taken via eminent domain is when they showed up with the heavy equipment on his property,” Braaten said.

This landowner didn’t even have a chance to negotiate before eminent domain occurred.  These actions can take their toll as it creates an environment that forces a landowner to live in fear of having his property taken away. Braaten believes there are a myriad of choices before eminent domain is implemented.

“I think they do have options.  I think the options are to work with the land owners and negotiate,” Braaten said. “Every once and awhile there are a couple landowners who are just done and are not going to allow it. What that usually means is a fairly minor reroute of a pipeline.”

And then there is the issue of compensation for the land.  Private businesses pay a fair market price to access private property, whereas eminent domain allows WAWSA to pay a much lower price.

“I’ve had companies, for example, offering $40,000 for an easement, but then they go into eminent domain and their damage model is only $2,000,” Braaten said. “The amounts being paid for a private easement are many times more than what people are actually getting in eminent domain proceedings. I see that as a serious issue. I think that if it wasn’t so easy and cheap for companies to use eminent domain it wouldn’t look so appealing to them.”

The ND legislative body recently denied SB 2047, which was designed to reign in the authority of water resource boards to exercise the power of “quick take” eminent domain.  Braaten believes this bill is a good start in curtailing abuse with the power of eminent domain, but wishes the ND legislative body would have adopted an amendment to make it apply to WAWSA..

“It (SB 2047) was literally the exact law in Wyoming, which they’ve had on the books for ten years,” Braaten said.  “It provides some additional methodology beyond the traditional appraiser methodology for evaluating damages.”

According to Braaten, Wyoming’s legislature clarified the property owner’s rights and put some different checks and balances on eminent domain abuse.

“Wyoming is light years ahead of us and I think it is primarily a cultural thing. The landowners in Wyoming got a lot angrier a lot faster about eminent domain abuse,” Braaten said. “I think that if the state legislature doesn’t step in it’s going to get worse. And now we are going to have to wait another two years to see how much worse it gets.”

This article is part two of a five part series, click here for the first part – The Rough Waters of Western North Dakota

Jason Spiess writes for The Crude Life. To reach Jason with questions or comments, visit The Crude Life website or email jason@thecrudelife.com.

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