Eminent Domain vs. Surface Rights

smileyhouston · Tar Sands Joined: Feb 26, 2008 Posts: 46 Location: Houston

Curious, I'm outlining a program with a few companies that will encompass this topic. As someone pointed out, many of you are in this industry. What are your thoughts?

One quote I saw:

“I’m devastated,” he said. “It’s un-American. Private companies shouldn’t be able to take land by eminent domain just so they can make more money for themselves. It makes me sick.”

Yet with demand increasing... what should be the choices?

Alex Smiley Maddox

worldenergysource.com

joeltrout

Another issue that you might want to add to your project is the forgotten mineral owner. Many people forget owning mineral rights also includes surface-access rights that cannot be taken away without the mineral owners consent. Though it happens often that surface development doesn't include the mineral owner thus condemning the mineral interest. Then lawsuits are easily won by the mineral owner and hefty settlements are made. The company I work for owns over 400,000 acres of mineral rights and deal with various types of surface development including eminent domain. It can be a problem but can also be very profitable.

joeltrout
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pup55 · Expert Joined: May 26, 2004 Posts: 3595

What a great topic. So many questions.

a. What are your rights to live in your little house on the prairie when Exxon owns the oil underneath it?

b. What are your rights to own your little house on your trailer lot in hillbilly territory when WalMart wants to build a supercenter on it? What if it's the government and they want to flood your land and build a lake for other hillbillies to go bass fishing?

c. What are your rights to live in a "cozy rustic shack", as defined by you, but an "eyesore" as defined by your local county commission?

d. If Toyota decides to build a million square foot manufacturing plant down the lonely country road where you live, do you have any recourse?

e. If you decide to erect a solar array on your house in suburbia, what are your rights to tell the local homeowners association to shove it when they complain because you did not get it "approved"?

f. If you decide to go off the grid, what are your rights to sell your home, given that it might not pass inspection? What are your rights to accumulate "humanure" on your property?

In most of these questions, the problem can be solved with some amount of money. If Exxon drives a truckload of money up to your back door and dumps it in, most people, even the more cantankerous and stubborn, will see the light and move on.

But if they are too cheap, and want to get something for nothing, that is where the problem comes in.

In a lot of these little places out in Texas, the mineral rights and the surface rights have been separated from one another for decades, and for the most part, the people know it. That does not tick them off any less, though.

Kingcoal

I think it's a local issue, between you and city hall. I recall a Supreme Court ruling on it a couple years ago regarding the rights of the local municipality to condemn your property so a developer can complete their shopping mall. According to the Constitution, the only entity who can relieve you of your life, liberty or property is a judge and they have to uphold the Constitution. I believe that their decision was that as long as “just compensation” was provided, the locals can pave right over any area they want.

It kind of brings out the fact that there really is no absolute private ownership of property, just freehold ownership. I am periodically harassed by my local municipality for cleaning my sidewalk and trimming my trees. I have restrictions on what I can use my property for and need permission anytime I want to construct anything and I live in a single family house on 1/3 of an acre. In fact, I want to sell my house and move into a nice apartment for those very reasons, though my wife doesn't want to do that. IMO, owning property is much more of a liability than anything else. Property owners are little more than caretakers/investors. If your property appreciates in value, you can sell it and make money, but that's pretty much it. Not many other advantages especially considering the current real estate market. I want to become a blissful idiot like the rest of them and just let all that responsibility be on someone else’s shoulders.
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bshirt · Heavy Crude Joined: Dec 23, 2006 Posts: 446

Chesire · Heavy Crude Joined: Jul 13, 2007 Posts: 267

Wait until the food price shock this year hits. Along with the property value deflation. Even the lamestream media is predicting a 25 % property value drop. So roughly 9 million local employees will be getting the /boot sometime next year unless towns and cities jack property taxes and locale fees to adjust for that.

How long is it going to be before people figure out that an empty lot will save them money on property taxes. All thos abandoned houses will be found with a garden hose running at the highest point after a few weeks or go up in flames.

When it gets worse and the local Fedstapo demands taxes in whatever form. Have a little bucket or five with something in it that will make their day interesting . Laughing

smileyhouston · Tar Sands Joined: Feb 26, 2008 Posts: 46 Location: Houston

Speaking of food prices, I'm sure that most of you are aware of ethanol being responsible for that. As the stock feed price goes up for corn, so does dairy, beef and products within that domain.

RdSnt

I travel quite a bit in the US and have had the topic of Eminent Domain voluntarily brought up by many people, including taxi drivers.
Without exception they expressed outrage that theirs, or someone they know, property was going to be stolen. There was a great deal of anger in the sentiments.
Eminent Domain is seen as "royalty" stealing the land of the subjugated for the benefit of the privileged rich.
I've never seen a case where the "owner" was fairly compensated.
Certainly when land is confiscated by an oil company the "fair market value" that is assessed has nothing to do with the actual value of the property to the oil company.
The use of Eminent Domain is inherently a corrupt practice. If an oil company wished to actually act in the free market they so vigorously defend then they would purchase property on the open market and pay a true market price.
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Tyler_JC

The problem with "just compensation" is that it accounts for market value but not sentimental value.

There is an ownership bias in play here.

If I buy a baseball ticket to the World Series for $100, I could turn around and sell it for $500 the day of the game. But I won't do it.

And yet I wouldn't have paid even $200 for the ticket back when I bought it, let alone $500.

It's the same with housing. The market value of my house is, say, $500,000 but I wouldn't move for less than a million.

If I was willing to move for $500,000, I would have already done it. Right?
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smileyhouston · Tar Sands Joined: Feb 26, 2008 Posts: 46 Location: Houston

One issue is the demand is increasing, so pipeline from Canada is running in issues to build pipelines across farmers land.

Another is with NG, industries are starting to look into these outlets which fall on peoples 'private' property.

What arguments are there from both sides, and valid point on owners being compensated.

What about mineral rights vs. water rights? I've heard this come up a couple of times also.

smallpoxgirl · Moderator Joined: Nov 08, 2004 Posts: 5212

Property rights are a joke. Politicians can and will steal anything you own. They may or may not decide to give it to their criminal accomplices in industry and there is not a blessed thing you can do about it. They have a variety of terms for it: taxation, forfeiture, eminent domain, it's all just a bunch of fancy lawyer double talk for thieving.
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smileyhouston · Tar Sands Joined: Feb 26, 2008 Posts: 46 Location: Houston

so what solutions do you suggest?

BigTex

Smiley, you are raising two issues so far.

The first issue, eminent domain, is a local political issue. Whoever controls the local political apparatus will be the one who is able to use the eminent domain device to their benefit. This is one more reason to remain active in local politics and one more thing to be mindful of when purchasing property.

Is it "right" for the state to take private property for a public good? Sometimes it is. Private property rights that are never subordinate to public needs lead to absurd results. It's just a matter of balance, common sense, and trying to minimize the influence of private interests billing themselves as a public good. For example, access to clean drinking water is not the same as access to cheap crap at a Walmart.

The second issue is easements, rights of way, and similar partial "takings" necessary to facilitate public goods that require the partial use of private property.

These topics cannot be treated in any detail in this kind of setting, but for each there are well-developed bodies of law that usually provide good outcomes. The right way to think about them, IMO, is to understand that there must be a BALANCE between public and private interests. Either extreme leads to bad results.

For example, what value is there in private property rights if there is no state apparatus to protect those rights? But a state apparatus to protect property rights requires a funding method in the form of taxes that dilutes the property owner's "bundle" of rights.

There could never be absolute private ownership of property. Sooner or later Mother Nature always shows up and evicts the arrogant squatters.
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steam_cannon · Expert Joined: Dec 28, 2006 Posts: 2425 Location: MA

steam_cannon · Expert Joined: Dec 28, 2006 Posts: 2425 Location: MA

This is a pretty good topic. For example subsurface rights are a big
issue in Pennsylvania where sometimes people have to do a lot of
research before buying a property. The property under the land might
be owned by a coal company or was owned. They mine out the
coal and your house shifts a foot down on one side or old mines
collapse and you're living in a hole... Rolling Eyes