Sunday, December 11, 2011

Bradley/Carson Amendment 2: More Smoke and Mirrors

In a brazen breach of public trust, the Senate Judiciary Committee approved the Bradley/Carson amendment by a 4-0 vote on December 8, 2011.  You may listen to Senator Carson presenting the bill and discussing it afterwards here.

The earlier guest blog in this series of two looked at the legislation proposed by Senators Bradley and Carson to replace HB648.  The prior blog examined the key provisions of the Bradley/Carson amendment – a prohibition on certain eminent domain threats, and a requirement for landowners to be offered a minimum of two times appraised value – and found that these parts of the bill are illusory and offer no real protections to landowners.

This guest blog continues to scrutinize Bradley/Carson and looks at four other proposals in the bill.  Do they help landowners in any significant way?  Do the provisions make any sense?
No, and no again.
Landowner purchase option
The bill tries to address what happens if a transmission line project like Northern Pass successfully seizes land from a property owner by eminent domain, but then the project languishes and doesn’t get built. (This is what happened when Pfizer pulled out of New London in the Kelo debacle.)
The right solution is obvious.  If the project doesn’t get built, landowners should automatically get their land back.  And the transmission line developer should get part of its money back – the purchase price  it paid the landowner for the forced taking, less the losses, costs, expenses and damages suffered by the landowner.  The landowner should be put back, as nearly as possible, in the same position as if the bad dream of eminent domain hadn’t come to real life.
But Bradley/Carson, written by two Senators who proudly shill for Northern Pass, looks at it differently.  Under B/C, landowners do not automatically get their land back.  Instead, they have only an “option.”  And the option is not simply to “unwind” the eminent domain and get the land back for what was paid.  Nope, more tricks.  The option is to buy back the land from the transmission line developer at the then-current market value. 
This is ridiculously unfair.  First, as we all know, apart from times of bubble bursts, land values tend to go up over time, so landowners will most likely need to pay more to buy back their land than they received as part of the eminent domain seizure.  Sound fair to you? 

It gets worse.  A piece of raw land worth, say, $1,000 an acre becomes an entirely different animal in value terms when it’s assembled together with other parcels to form a transmission line corridor.  It’s sort of like when a new Walmart is built next door to your parents’ farm, and the farm gets rezoned “commercial." Land that was worth $1,000 an acre is suddenly, almost overnight, worth $5,000 an acre or more because of the change in how it can be used. 
So, when our eminent-domain-targeted landowner goes to Northern Pass in five years and says, “I want to exercise that option to buy back my land because you didn’t build your lines," she’ll be told, “sure thing, just pay us the current market value for transmission corridor land."
The price they ask will be astronomically out of reach, because Northern Pass will say the land is valued based on its potential use as a transmission corridor.  They forced the landowner to sell at $1,000 an acre and under B/C they can refuse to let her repurchase for less than $5,000 an acre.  Which means the “purchase option” is illusory – not worth the paper it’s printed on.  (More generally, this also shows how grossly unfair eminent domain valuation is to landowners!)
Let’s look at one more part of the fine print in the “purchase option.”  When do landowners get to try to buy back their land?  A quick read of B/C says, after five years.  But look at the wording.  B/C says the option can be exercised “if, after 5 years, the project for which land or property rights were taken has not commenced.”
Northern Pass will almost certainly take the position, kindly left open for them by Senators Bradley and Carson, that the “project has commenced” if they’ve put a shovel in the ground, or trimmed a few trees, or the like.  In other words, Northern Pass needs to do just a tiny bit of work to keep the option off the table.  This is not an option, it’s a fraud.
Homes and tenants
In a burst of apparent empathy and generosity, the Bradley/Carson amendment offers some modest adjustment payments for homeowners whose properties are taken by eminent domain for transmission lines and for any tenants.  Homeowners would get “reasonable relocation and housing replacement expenses,” capped at 10% of the eminent domain payment, and tenants would get up to one year’s rent.
It’s a nice gesture, but the money pales in comparison to the actual, uncompensated losses that homeowners will suffer if their land is taken.  The problem is that eminent domain payments are set at fair market value -- not the value that homeowners attach to their homes, but fair market value.
What’s the difference?  If a homeowner valued her land at only fair market value (FMV), then, by economic theory, she’d sell it if someone offered her a dollar more than FMV.  If she thought only in FMV terms, she’d always be looking for a buyer, because she’d value the cash amount exactly the same as she values her home.
That’s of course not the way homeowners think.  We don’t check every day on whether we can sell our homes at the current FMV.  Many of us would not sell our homes for twice or even three or four times FMV.  Our own subjective value for things that have life meaning for us is much, much more than FMV.  Think of what price you would ask for your beloved dog or cat, or the photo albums of our families or children, or our favorite old wooden snowshoes.  Our homes are a part of ourselves and how we live, and we think of them emotionally and in terms of our core well-being, not just as dollars and cents.
That’s the huge disconnect in eminent domain.  Northern Pass can try to take our homes for FMV, with no consideration of the much, much higher subjective value we place on them.
Tossing in a few extra nickels of relocation expenses looks pretty on paper but doesn’t change the shocking economic unfairness (and social unfairness) of taking homes people don’t want to sell.
For those who may want to look further, there is a robust body of economic literature on the structural flaw of eminent domain through the failure of FMV to compensate landowners for their actual losses.
Entry onto land
Landowners have been justifiably concerned that Northern Pass or its agents have entered onto their land to conduct inspections and gather data for the planning, design and construction of the transmission lines.  This has been done without the necessary statutory authority. 
RSA 371:2-a clearly says that Northern Pass has no right of entry onto a landowner’s land for these purposes until after a petition for eminent domain has been filed.   The only exception permitting an earlier entry onto an owner’s land is if the “ownership of the land … cannot be ascertained without entry to do survey work.”
The right legislative response to unauthorized entries by Northern Pass or its agents is to put some real teeth into the existing statute.  There should be a requirement to provide landowners with clear, written proof of any claimed authority to enter land.  There should be a steep fine for unauthorized entries.  A pattern of unauthorized entries should summon meaningful enforcement action by the Public Utilities Commission.
The Bradley/Carson amendment purports to address unauthorized entries but of course does none of the necessary things.  Instead, B/C once again seeks to make it look like the bill will help landowners when in fact it only requires trivial and  meaningless  actions – notice by certified mail, which must include the name of the utility, the time and date of the entry, etc.
This legislative non-response to a problem will likely have the effect of telling our court system that the legislature really doesn’t care about protecting landowners from unauthorized entries by Northern Pass or other private utilities.  And that’s probably just what Senators Bradley and Carson intend….
Study committee for landowner “procedural rights”
As a general rule, when you hear some senators propose a “study committee,” you should immediately run to the nearest exit door.  Study committees are usually meant to slow things down, do pretend work, and ultimately paper over an issue the senators are politically scared to address.
This is a classic example.  The authors of this guest blog have met with Senators Bradley and Carson and pointed out to them that the very basic elements of fair process to landowners (a set timetable, appeal rights, etc.) are NOT present in eminent domain proceedings under RSA 371:1, which is the provision that would be used by Northern Pass.
We explained how to fix the problem.  It’s far from rocket science.  Just add a reference in 371:1 to the place in New Hampshire law where the procedural protections for landowners are already clearly set forth – the Eminent Domain Procedure Act.  Landowners should have the same protections when their land is threatened with seizure for a transmission line as they do when it is threatened for a highway.
All Senators Bradley and Carson had to do – if they were serious about giving the basic procedural protections to landowners in the path of Northern Pass – was to insert a few additional words into the B/C amendment referencing the Procedure Act.
But just like the senate in the Star Wars movies, what you see with Senators Bradley and Carson is not what’s really happening.  Their “study committee” for landowner protections pretends that there’s a tough issue out there that’s never been thought about (false!).   And the big pretend lets them delay the process, give more room for Northern Pass to lobby, and set up an ultimate result that benefits Northern Pass at the expense of landowners.
You’re reading it here first.  Any study committee set up under B/C will somehow come to the conclusion that landowners in the way of transmission lines do not deserve the standard protections that existing New Hampshire law gives to landowners in all other cases of eminent domain.  Senators Bradley and Carson hope the Opposition will have lost attention by then.
Our Bradley/Carson analysis, part 2?  Second verse, same as the first. 
The B/C amendment is all about what’s good for Northern Pass.  Senators Bradley and Carson think property owners and the voters of New Hampshire aren’t smart enough to see that we’re getting screwed.
Let’s prove them wrong.