Category: Michigan Eminent Domain

Balancing Federalism and Claims of Federal Control of Private Property


Rick Hills and Ilya Somin, two of the most respected Property Professors in the country, raise an interesting conflict as to whether the federal courts are the proper forum for the determination of state acquisitions utilizing the power of eminent domain.

Given this author, Alan Ackerman, as a Michigan and Florida practitioner, one should understand that given the Hathcock decision reversing Poletown and noted in Kelo leads this author to believe a position that the States may control property rights activities within the jurisdiction provides the stronger legal basis.

Realistically, the Fourteen Amendment was enacted to supply protection from state abuse. The abuse related to any rights of property, often decided in such cases as state mis-regulation of railroads in California in the 1880’s and extended out to the irrationality of Lochner years later.

The reality of the situation is one in which States clearly have an opportunity to self-regulate via constitutional amendment or legislative action. The potential to limit the Police Power to only non-economic activities is one which a state may retain. Ilya Somin provides a rational argument supporting the protection being one that is in the federal jurisdiction. However, this writer has a sense that federalism allows States to be the “test tubes” for activity in all the States because the Public Use is subservient to the Police Power because the police power is reserved to the States under the Reserved Powers Clause of the Tenth Amendment.   But possibly the right to property use is a federally protected right even though property regulation has always been within the exclusive province of the State.

The two articles are included this and the next blog posting.  Below is the Rick Hills discussion.  Ilya Somin’s will be in the next blog.

When governments regulate private property, there is always a risk of abuse and corruption.

When courts try to eliminate such governmental abuses, there is always the risk of judges creating clumsy, ill-fitting rules that make effective, publicly interested government impossible. There is no perfect way to eliminate either risk: The choice is always a matter of selecting the lesser of two evils.

Federal courts’ enforcement of federal constitutional doctrines to limit state and local governments’ power over land, however, is strong medicine, often more dangerous than the disease it purports to cure. When it comes to curbing abusive use of zoning and eminent domain, the best rule of thumb is to leave the solution to the states.

There is no doubt that state and local governments have, at best, a mixed record when it comes to controlling land. Critics who call for courts to curb governmental power frequently cite Poletown, the Detroit neighborhood condemned by the City of Detroit in 1981 to make room for a General Motors factory. Thousands of residents were displaced and churches and stores destroyed to cajole GM into creating 6,000 factory jobs that never materialized. More generally, there is always the risk that, due to inattentive voters, democratic processes will fail to protect private property from well-connected insiders who exploit public power for private gain.

But state and local political processes, while imperfect, also contain the resources to curb such abuses. Poletown is now a byword for eminent domain abuse. The Michigan Supreme Court, elected by Michigan voters, construed the state constitution to limit the use of eminent domain for economic development. Voters also amended their constitution in 2004 to impose even more stringent limits, and the Michigan legislature enacted statutory protections like awarding condemnees attorneys’ fees and requiring high evidentiary standards before land can be condemned to eliminate purported blight.”


Ohio Trial Courts Again Deal With Rights of Entry for Nexus

Nexus desires to survey property that the company desires to acquire. There is little choice but for the oil pipeline companies to move forward unless the companies know what kind of soils will be dealt with. Challenges of environmental hazards, especially wetlands, rivers and the like, make it mandatory for the pipeline companies to assess what effects will occur on the environment from the pipeline.

A number of Ohio trial courts have already granted temporary restraining orders in favor of the pipeline company. One very well can expect this to continue.

The real issue is whether compensation must be made as part of the entry. In many states, the requirement may be one in which the compensation estimate for the entry must be made prior to the filing of a complaint for entry.

On Monday, attorneys for the gas company argued that Ohio law allows them to go onto private property to conduct surveys whether the property owners want them there or not. Medina County Prosecutor Dean Holman has already issued an opinion believing that the surveyors are committing criminal trespass if they enter property where they are not welcome. Attorneys for the project say that is not consistent with opinions in other courts across the state.

“We believe that under Ohio law we have the right to enter your property and it’s not a criminal trespass,” said attorney Jim Hughes.

Hughes is seeking an injunction against the property owners who are turning away surveyors for the project. He argued the company is not seeking to acquire property for the pipeline, only to survey the properties along the route where the pipeline is proposed for “native species, geological formations, cultural artifacts and environmental issues, such as wetlands,” said Hughes.

An attorney for property owners argued that they have rights too.

“A private property owner ought to be able to look at a gas company representative and decide whether they want to allow the survey or not and if I’m paying my mortgage payment and I’m paying my real estate taxes I would expect that I could say no I don’t want you to do this,” said Greg Huber.

Attorneys for the Nexus project also claim that the company will be irreparably harmed if the project is not completed by November 2017.

“That is a critical date, they will lose several million dollars per month that it is not online after 2017, their construction cost will go up and their reputation within the industry will be made,” argued Hughes.

Tax Cuts For Oil Drilling In Michigan


With the March passage of a tax cut for oil drilling, the prospect of further mineral removal in the State is increased. While there may be those who think nothing should be taken out of the ground, the reality is that Michigan is still in a position of cost competition with other jurisdictions.

Carbon dioxide is one of the alternatives in fracking. The downside of carbon dioxide is that the wells will no longer be available for gas storage in future years. However, the utilization of carbon dioxide removes the product as a negative force in the general environment.

“Under House Bill 4885, sponsored by state Rep. Aric Nesbitt, companies that use an enhanced method of extracting oil, also called enhanced oil recovery (EOR), will benefit from reduced taxes. Under this bill, EOR projects will be taxed at a 4% severance rate, rather than 6.6% for oil and 5% for natural gas, as has been the case under Michigan’s Severance Tax Act.

The method uses CO2, which is injected into depleted oil and natural gas wells to push the once-unattainable oil toward other wells where it may be pumped to the surface. It offers the environmental benefit of permanently trapping the CO2underground.”

Michigan Supreme Court Finding That Public Pension Plans Are Not A Property Right Has Important Relevance to Municipal Bankruptcy

In the recent Michigan Supreme Court decision opposing the changes to the Michigan pension system for teachers, the Supreme Court has found that “just compensation” is not to apply.

This likely will mean that in the case of a future community bankruptcy in Michigan, the pension will not be a protected property right in Federal Court, as claimed by pensioners in the recent City of Detroit bankruptcy.

One can foresee the application of this case in other states, such as Illinois, which is underwater due to the community pension obligations.

Justice Stephen Markman, writing for the court, rejected unions leaders’ contention that the law unconstitutionally impaired employment contracts between workers and their school districts and resulted in private property being taken without just compensation.

The increased salary deductions are not mandatory, and the employees were given a choice, he said.



Ugh, Eminent Domain Alone Will Not Revive Detroit


For twenty-six years, the City of Detroit utilized eminent domain as an economic development tool. John Mogk writes about the successes of GM Hamtramck and Chrysler Jefferson Avenue North as clear examples of the benefits of public acquisition of private property.

There seems to be a failure in the Crain’s opinion here on two counts. First, the projects were not always so beneficial, and only inflation and other failures of the City administration makes those projects “good” now. Second, people did get hurt despite studies prepared years after with an incomplete response from the then residents of the Poletown community. Finally, one only needs to look at what is going on in downtown Detroit now. Without eminent domain, redevelopment is occurring every day. Detroit’s downtown never had this rebirth during the whole period of this acquisition for private gain is how public policy did occur from 1978 through 2003.

Detroit does not have the ability to quickly assemble land in large enough tracts to support major projects. The last two auto plants built in the city — the GM Hamtramck and Chrysler Jefferson Avenue North assembly plants — each required more than 450 acres and the use of eminent domain to acquire their sites. However, the use of eminent domain for economic development is no longer available in Michigan. The state constitution was amended in 2006 to prohibit its use for economic development, no matter how beneficial the projects might be for alleviating unemployment, rebuilding the city’s economy and increasing the tax base.

While eminent domain can still be used to eliminate blight, the term is narrowly defined, requires a high level of proof and must be demonstrated separately on each parcel to be taken. Large development sites are required to be assembled by separately negotiating the purchase of hundreds and often thousands of parcels, making site preparation costly, time consuming and practically impossible. Moreover, interspersed properties that are not blighted and held by speculators or absentee landlords can stop any future project.

When Is A Song A Song? Rover Reroute


ET Rover maintains it will eliminate 110 miles of a proposed pipeline. In a recent Livingston Daily article, a local resident notes that ET Rover could still “expand their capacity” by providing a “loop” pipeline around the existing pipeline.

Owners should review the original easement documents to determine limitations on pipe expansion created by the easement itself as well as the original MPSC delegation.

So that takes us back to the original route but without new pipe through most of Livingston County and to the east. On the surface that sounds really good, but it is still clouded by the fact that ET Rover could still “expand their capacity” by installing a “loop” pipeline along the existing line. Their statement which says they have no plans to do so “at this time” makes many of us uneasy. As Jeff Insko says in his “Line 6B Citizens’ Blog,” “Landowners along the Vector line are now, as a friend of ours put it, living with a second shoe dangling over their heads, waiting to drop.”

The four Sierra Clubs in southeast Michigan plan to continue to oppose the pipeline by holding a series of meetings with federal legislators. Our hope is to present information to them that would certainly not have been suggested by the pipeline companies.