A win for all
Missouri's new eminent domain law strikes a balance between property rights and growth

by Bob McEowen

State Sen. Chris Koster speaks during a signing ceremony for House Bill 1944, Missouri’s new eminent domain law. Koster guided the bill through Senate revisions. Standing with Koster are the bill’s author, Rep. Steve Hobbs (at left), and Gov. Matt Blunt.

“ . . . nor shall any person . . . be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

So many TV characters have refused to testify by invoking the Fifth Amendment to the Constitution it’s easy to forget this single paragraph provides other protections, as well. Even if we don’t know where in the Bill of Rights private property rights are stated, most Americans hold the concept sacred.

And yet, throughout our history, exceptions have been made to this basic right. Whether for building highways or constructing dams, private property has been taken in the interest of the public good through the power of “eminent domain,” a term with roots in the inherent power of kings.

What justifies a public taking of private land has long been a topic of debate. In Missouri, the issue may finally find clarity, thanks to new legislation that provides protections for property owners while still permitting projects of true public benefit to move forward.

“Balance is the key to this whole thing,” says Rep. Steve Hobbs of Mexico, Mo., who crafted House Bill No. 1944, a comprehensive reform of the state’s eminent domain laws. “What we tried to find is that balance where landowners’ rights are protected and yet we can still provide for the basic needs of the people.”

Key provisions of the new law, signed by Gov. Matt Blunt on July 13, include:

• Eminent domain cannot be used solely for the purpose of economic development.

• Condemning entities must pay 25 percent above market value for homes taken by eminent domain. Farms held by the same family for 50 years or more are valued at 150 percent.

• Farmland can not be declared “blighted” in order to justify the use of eminent domain.

• A landowner’s Bill of Rights is established and an office of ombudsman is created.

The legislation is the result of more than four years of heated debate. Spurred by anger over what some groups felt was unfair taking of private land for the Katy Trail, lawmakers took up the issue.

In 2003, the House Interim Committee on Eminent Domain heard testimony about transportation officials refusing to negotiate for land acquisitions in good faith. It learned of instances when developers, aided by local governments, literally bulldozed private businesses to make way for more profitable enterprises. In one case, an entire neighborhood of well-kept homes was declared blighted so a shopping complex could be built.

Althought electric cooperatives prefer to obtain land for projects (such as the New Madrid Power Plant shown here) from willing sellers, occassionally condemnation is necessary. In acquiring land for a proposed power plant near Norborne all but 80 acres of the 1,800 acres needed were acquired through voluntary transactions. (Photo by Associated Electric Cooperative).

The Castle Coalition, a Virginia-based property rights advocacy group, declared Missouri to have “one of the worst records in eminent domain abuse in the country.” Still, the Missouri General Assembly was unable to make headway on the issue.

That all changed in June of 2005 when the U.S. Supreme Court ruled that the city of New London, Conn., did not overstep its authority when it took the homes of nine residents who refused to sell their properties to make way for an ambitious economic development project.

Kelo v. City of New London (download decision) stirred a passionate reaction nationwide. The highest court in the land seemed to be saying that no one’s property was safe if a city or a developer saw a more profitable use.

Justice Sandra Day O’Conner said as much in her dissenting opinion. “The specter of condemnation hangs over all property,” she wrote. “Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”

While siding with developers, the court left the door open for states to limit the power of eminent domain. That’s just what Missouri lawmakers needed to finally advance reform.

“It took the Kelo decision and the firestorm of outcry from the people that finally brought the development community to the table,” Hobbs says.

Rep. Steve Hobbs of Mexico crafted Missouri's new eminent domain law and guided it through the legislative process. (Photo courtesy of Tim Bommel/Missouri House of Representatives.)

In response to the Kelo decision, Gov. Blunt appointed a task force to study the issue. The task force made 18 recommendations, 16 of which were adopted in some form in the legislation Rep. Hobbs brought to the House floor.

Emotions ran high throughout the process. On the surface, no group wanted to stand for the forced taking of private property. But some groups, electric utilities among them, found themselves in the position of defending the use of eminent domain to achieve public ends.

“For the Department of Transportation, for the rail industry, for the pipeline industry, for the utility industry, there are times that we have to utilize the power of eminent domain,” says Chris Cariker, executive vice-president of KAMO Power, which transmits wholesale electricity to eight southwest Missouri electric distribution cooperatives and nine others in Oklahoma. “For rural Missouri, it’s essential for continued growth.”

Member-owned electric cooperatives are in a unique position in the eminent domain debate. Because most of their members are landowners, co-ops — and the directors elected to oversee them — are sympathetic to concerns about unfair taking of private property. Still, they have an obligation to provide electric service to members.

In most cases, co-ops are able to acquire land through voluntary transactions. In fact, the use of eminent domain is rare among electric cooperatives. It is never used to build distribution lines and employed only as a last resort when building power plants or transmission lines. As Associated Electric Cooperative acquired more than 1,800 acres of land for a proposed power plant near Norborne, the threat of condemnation arose over only one 80-acre parcel. The rest of the land was purchased from willing sellers.

Missouri Sen. Christ Koster, center, meets with lobbyists for the Association of Missouri Electric Cooperatives following the passage of House Bill 1944. During a difficult stage of the legislative process Koster brought representatives of groups interested in eminent domain into his office during a marathon weekend session, which allowed these groups to state their positions. Shown at left is Daniel Graves, a legislative representative for AMEC and, at right, Mary Scruggs, the association's legislative services manager.

The responsible use of eminent domain to build infrastructure has long been recognized. While blasting the majority view in the Kelo case, Justice O’Conner acknowledged the legitimate use of eminent domain by utilities. The Castle Coalition said the same thing in testimony before the General Assembly.

For this reason, Missouri’s electric co-ops initially sought to be excluded from new restrictions on eminent domain. The lawmakers were determined, though, to write a law that addressed all aspects of the practice in Missouri and no group was left out of the negotiations.

That does not mean, however, that everyone was happy with the legislation. “I think everybody felt that there were issues in the bill that didn’t sit well with their particular industries,” says Sen. Chris Koster of Harrisonville, who was charged with moving the House bill through the Senate.

On one of the last weekends of the legislative session, Koster brought representatives of the various factions into his office and gave them a chance to air their concerns. Through this process, a consensus emerged. The final bill was a compromise in the truest sense.

“My definition of a perfect bill is one where you make everybody a little bit mad. I think we can safely say we did that,” says Hobbs. “Everybody gave a little on this bill.”

Electric cooperatives headed off overly burdensome restrictions on their condemnation authority — as well as efforts to eliminate the power altogether — but accepted new notification and negotiation requirements in the interest of supporting private property rights.

In the end, concessions made by utilities are small compared to the gains in private property protection the bill provides, KAMO’s Cariker says.

“I think it was a win-win. We brought more protection to landowners and made sure that the utilities, with some extra effort, can go ahead and continue to do the things we need to do.”

Missouri Gov. Matt Blunt shakes hands with Barry Hart, executive vice-president of the Association of Missouri Electric Cooperatives, after signing House Bill 1944. Electric cooperatives were just one of many groups affected by the new legislation, widely viewed as a compromise bill that balances the needs of all groups while still protecting property rights.

Property owners are the real winners, though. Missouri lawmakers have made it less likely that a situation like the Kelo case will happen here.

Moreover, the homestead value and heritage farm provisions of Missouri’s law establish new solutions that could influence how eminent domain legislation is drafted elsewhere.

“I think there’s some concepts in this bill that take the notions of fairness in the eminent domain environment to a new level,” Koster says. “My belief is that, over time, other states are going to recognize that.”

Charles Kruse, who heads the Missouri Farm Bureau, one of the main proponents of eminent domain reform in Missouri, agrees.

“I believe this bill is a model bill, almost, for other states to take a look at,” Kruse says. “It provides a significant protection for people’s property and yet at the same time acknowledges that there are legitimate needs for eminent domain.”