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______________ Eminent Domain, Condemning Real Property In Federal Court; A Wisconsin Perspective

______________ Eminent Domain, Condemning Real Property In Federal Court; A Wisconsin Perspective. Robert W. Roth Attorney at Law. How come Wisconsin? “It’s a nice place to dig!”. Major Private Enterprise Federally Empowered Condemnors at work on infrastructure “upgrades”

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______________ Eminent Domain, Condemning Real Property In Federal Court; A Wisconsin Perspective

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  1. ______________Eminent Domain,Condemning Real PropertyIn Federal Court;A Wisconsin Perspective Robert W. Roth Attorney at Law

  2. How come Wisconsin?“It’s a nice place to dig!” • Major Private Enterprise Federally Empowered Condemnors at work on infrastructure “upgrades” • Enbridge Petroleum Lines, Western WI • ONEOK, new high pressure natural gas lines, Illinois to Green Bay • Interstate Electrical Transmission Grid activity, IA, IL, & WI.

  3. Sovereign Power • Taking of Property for Public Use; • The Government’s Power of Eminent Domain is paramount to all Private Rights in real property and is limited only by constitutional or statutory provisions. • Albert Hansen Lumber v. United States of America, 261 US 581, 587 (1923)_____________

  4. Federal Law • Power of Eminent Domain not dependant upon a grant of right in US Constitution. • Attributable to sovereignty, limited and conditioned by the just compensation clause of the the 5th Amendment • No taking except it be for a public use, and only after due process and just compensation

  5. Wisconsin State Law • WI Constitution, Art. 1 Section 13: Private property for public use. The property of no person shall be taken for public use without just compensation therefore. • Chapter 32, WI Statutes • Significant Procedural Rights Afforded • Good Faith Bargaining Requirements by Condemnor at all stages of proceedings • Formal action commenced by issuance of a Jurisdictional Offer 32.05 & 32.06 WI Stats. • Right of Landowner to be “made whole,” s.32.28 Stats, e.g., recover litigation expenses.

  6. So What is “Federal Jurisdiction? • The Power to Regulate Interstate Commerce gives original Jurisdiction to the Federal Court System. Article 1, Section 8, Clause 3, US Constitution • That system is separate and apart from the Courts of the State of Wisconsin and have their own procedural and often substantive law. • In general, Federal Law is superior to state law, but not always.

  7. Federal Condemnation Support System • Federal Energy Regulatory Commission • Executive Branch of Government • Original Jurisdiction over “Rate & Route” • DNR & Ag Dept rolled into one: Inspection System • Dept. of Transportation; Office of Pipeline Safety-by way of example. • Standards and Inspections only.

  8. Federal Condemnation Support System # 2 • National Gas Act • 15USC s717(f) • There is no national electrical grid act, yet. • Authority to Condemn: • FERC • Issues Certificate of Public Convenience and Necessity • Activity is similar to the Public Service Commission process • Land Owner Intervener option. • Route disputes outside District Court Jurisdiction

  9. Condemnation of Property, Federal Style • Rule 71.1 FRCP (Federal Rules of Civil Procedure) effective Dec 1, 2007. • One Stop Shopping for the Condemnor • In Rem Action! • Against the real estate, not the owner. • Rule 71.1 FRCP “had a uniquely checkered history. It received more attention from the Advisory Committee, over a longer period, than any of the other Rules of Civil Procedure” in the Federal Courts. (Federal Practice and Procedure, Wright Miller and Marcus, Section 3041, West Publishing, 1997)

  10. Rule 71.1 Overview • Condemnor may join all of the separate property owners’ parcels in a single action. • Whether owned by the same person or sought for the same use. Fed R. Civ. P. 71.1(b) • The condemnor begins the process by first securing a Certificate of Convenience and Need from FERC and commencing an action in the US District Court where all or substantially all of the real property is located.

  11. Rule 71.1 Overview 2 • The Rule contains no express requirement that: • The Condemnor meet or confer with the landowner about anything prior to commencement of the action. • FERC Certificates routinely contain provisions that urge the Condemnor to seek timely and fair settlements with landowners, but this executive branch edict has no binding effect on the Federal Courts. • There is no requirement to obtain an appraisal, or pay for a landowner’s appraisal. • There is no right to a Jury Trial! • Court Discretion to use Jury or three member commission with the powers of a Special Master, Fed R. Civ. P. 53(c), 71.1 (h) & see specifically, Guardian Pipeline Company, LLC v. 295.49 Acres of Land Case No 1:08-cv-00028-WCG, E. Dist. WI. Decision 11 Apr 08.

  12. Rule 71.1 Overview 3 • The Rule has no fee shifting provisions in the Federal Practice allowing the landowner to recover expenses or attorneys fees from the condemnor. • There is no requirement to obtain an appraisal, or pay for a landowner’s appraisal. • There is no right to a Jury Trial! • Court Discretion to use Jury or three member commission with the powers of a Special Master, Fed R. Civ. P. 53(c), 71.1 (h) & see specifically, Guardian Pipeline Company, LLC v. 295.49 Acres of Land Case No 1:08-cv-00028-WCG, E. Dist. WI. Decision 11 Apr 08.

  13. Claims handled in the Federal Court Condemnation Proceeding? • Separate actions in the District Courts or more likely the US Court of Claims need to be started for ancillary damage matters. • No basis for counterclaims in Federal Condemnation Proceedings. US v. 38.60 Acres of Land 625 F.2d 196, C.A. 8th, (1980) • Damages to remainder of land because of condemnor spreading debris is OUTSIDE the jurisdiction of the District Court having jurisdiction over the condemnation matter • Distinguish all this from loss of fair market value or damages to the part taken, either permanently or temporarily. • US v. 79.20 Acres of Land, 710 F.2d 1352, C.A. 8th (1983)

  14. Good Faith, “We don’t need no (!)#&%#@% Good Faith!” • In Wisconsin, Good faith negotiation by the Condemnor, given the truly disparate differences in bargaining position between the Government/Government Agents and a landowner, is a public policy, statutorily based, substantive right. • Kultgen v. Mueller 88 N.W.2d 687 (Wis 1958) & Warehouse II, LLC v. Dept of Transp. 715 N.W2d 213 (Wis 2006)

  15. Guardian Pipeline Company, LLC v. 295.49 Acres of Land Case No 1:08-cv-00028-WCG E. Dist. WI. Decision 11 Apr 08. • The substantive law of the forum state should apply “in applying the amount of compensation due.” Columbia Gas Transmission Company v. Exclusive Natural Gas Storage Easement, 962 F2d 1192 (6th Cir. 1992) • “…Columbia Gas stands for the proposition that, whichever procedure is used [commission or jury], it is the substantive law of the state in which the property is located that provides the measure of damages. Decision, 11 Apr 08, p. 26

  16. Guardian Pipeline Company, LLC v. 295.49 Acres of Land Case No 1:08-cv-00028-WCG E. Dist. WI. Decision 11 Apr 08. • Warehouse II: In the Wisconsin Courts, failure to negotiate in good faith is a jurisdictional defect. • “The plain language of the National Gas Act does not require a showing that the holder of a FERC certificate engaged in good-faith negotiations in an attempt to acquire the subject property as a prerequisite to exercising its power of eminent domain.” Decision 11 Apr 08, p. 34-35

  17. And having Said All this: A word about Inverse Condemnation, Regulatory Takings • Inverse Condemnation under Chapter 32, section 32.10. • Part of the integrated rights afforded to Landowners • Court decisions grant 32.28 Litigation expenses. • Includes regulatory takings

  18. Having Said All this: Inverse Condemnation, Regulatory Takings #2 • Rule 71.1 applies only to Eminent Domain proceedings, period. • 42 U.S.C. 1983 Governs for inverse takings • s1983 is an Action at Law within the meaning of the Seventh Amendment, so there is a right to jury trial. • Same result regarding any and all regulatory takings

  19. The Role of the Appraiser in the Federal Proceeding • Might not show up at all until after the case is commenced and a Rule 26 order has issued to direct exchange of expert witness reports. • Landowners may use the services of an appraiser to determine FMV loss, as there will likely be no appraisal from the condemnor at the negotiating “phase” of the case.

  20. The Role of the Appraiser in the Federal Proceeding • There is no “full narrative appraisal” requirement in the Federal Practice. • USPAP standards may apply • Rule 26 and Daubert Standards. • Role of the Court in Expert Witness “Gate keeping.” • But this may be contra to the “simplified” proceedings contemplated in Rule 71.1

  21. The Role of the Appraiser in the Federal Proceeding • Scope of Engagement • May be different at different points in the case • Methodology • Unclear if Wisconsin Case Law experiences and references will be useful guides. • The use of The Uniform Standards for Federal Land Acquisition; the “Yellow Book” • Recent Amendments and Changes have occurred.

  22. Thank you!Questions and Discussion262-523-8000rroth@nprclaw.com

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