Monday, June 27, 2016

Condemning Easements on a Conservation Easement in Kentucky

A unpublished Kentucky case on conservation easements highlights a bunch of things I have been grappling with lately. Thought I'd check in with our readers to see if anyone else has thoughts on Crain v. Hardin County Water District No.2, 2016 WL 3453206, Court of Appeals of Kentucky, June 17, 2016 (unpublished, not to be cited).

The Crains own a 270-acre farm in Hardin County, Kentucky. It has been in the family for generations. In 2004, the Crains conveyed an agricultural conservation easement (ACE) to the Purchase of Agricultural Conservation Easement Cooperation, which is part of the Kentucky Department of Agriculture. In 2013, the Water District decided to build a sewage line through the Crains' property (to facilitate development of a nearby industrial site. The parties were unable to negotiate a price for either fee simple purchase of the area needed or of an easement. The District began the eminent domain process, and through it we learn a few interesting things about CEs.

  • Subsurface Land Uses: When the Crains and the District were still in negotiation phase, the Crains expressed concern that a planned pump station would conflict with the ACE. In response, the District agreed not to place any air release valves or any above-ground facilities on the Crains’ property. This brings to mind a discussion I have been in lately with a few people about subsurface disturbance and CEs. Do we automatically assume that all subsurface use of the land is consistent with ACE? Should we take into account likelihood of associated problems like subsidence or leaks? Do we feel less nervous about sewage lines than we might feel about oil or gas lines? Could a landowner or CE holder ever object to subsurface development?
  • Condemnation not interfering the CE: There have been many discussions in the land trust community about how eminent domain and CEs. Usually these conversations are dominated by issues of calculating compensation assuming that the exercise of eminent domain on the land will remove the CE. Here, the District contended that the proposed acquisition of utility easement would not interfere with the ACE, whose restrictions would still govern. Indeed, both the state agency holding the ACE and the District agreed that the utility easement would be secondary to the ACE.
  • Condemnation in Kentucky: Here, the state CE statute specifically considers eminent domain (a rarity) and explains that certain categories of use are inconsistent with restricted agricultural land. “Landfills, sewage treatment plants and other public service facilities” shall not be located on such lands. But, installation of utility lines (including sewer lines) is specifically permitted. The court found that this was a sewer line and clearly permitted.
  • Standing: Here, neither the state agency holding the Agricultural Conservation Easement nor the third party enforcer (the United States Department of Agriculture) challenged the utility easement condemnation process. The landowner argued that the utility easement would be inconsistent with the ACE but the trial court held that the Crains did not have standing to assert the position. The idea seems to be that only a CE holder or someone with an established third party enforcement right have standing to make a challenge based on the CE, not the landowner. While the Court of Appeals does not clearly state that landowners do not have the authority to enforce CEs, it doesn’t examine the CE document to see whether a utility easement would be consistent with it. Presumably this is because the District and holder agreed that the utility easement would play second fiddle.
  • Prior Public Use Doctrine: Now, this is a fun one and an argument I had not contemplated before. The prior public use “doctrine provides that land devoted to a public use may not be taken for another public use under the power of eminent domain” in Kentucky. The Crains argued that the ACE was a prior public use, but the court did not agree. Quoting an earlier case, the court explained that just because the public receives some benefit from the land, it doesn’t “mean that the land is being used for a public purpose.” Crain at 4 (quoting Kipling v. City of White Plains, 80 S.W.3d 776 (Ky.App. 2001)). Neither this property covered by an ACE nor the Kipling property that was in an agricultural district had enough of a link to public use. BUT might the answer be different if it was an exacted CE? What if the CE under threat of eminent domain was set aside to satisfy requirements of the Clean Water Act or even just a local development law? Would it change the level of public use? I believe habitat and wetlands easements would easily meet this test. Perhaps a fun tool in the arsenal, but a circumstance that will seldom arise.

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