Legislature needs to curb property seizures

“[N]or shall private property be taken for public use, without just compensation.” — United States Constitution, Amendment V.

Increased intrusion by government into the affairs of private citizens and seizure of private property have become more and more of concern to citizens in recent years.

Court decisions and state laws have often erred on the side of legal plunder of private property and have not protected the interests of the private property owner. As a former Greenfield City Council member, former state senator and now a NineStar board member, my understanding of the complex issues involved in Amendment V have evolved and matured over the years.

This year, the Indiana General Assembly has the opportunity with Senate Bill 309 to right a longtime legal abuse of legal plunder. Legal scholars mostly agree these abuses need to be righted by state, not federal, laws.

Senate Bill 309 would put all other electric utilities in Indiana, including electric cooperatives like NineStar, on the same footing as the 72 municipal electric utilities.

In summary, the municipal electric utility, a governmental entity, could not seize another electric utility’s service territory. Existing territories of all electric utilities would be preserved. The only exception would be by mutual agreement of the utilities involved.

The seizure of a private electric utility by a governmental entity cannot in the truest sense be called eminent domain.

Even with the seizure of private property through eminent domain, the harmed private property owner has legal avenues to challenge and reverse the seizure through the legal system.

More importantly, in eminent domain actions under Article I, Section 21 of the Indiana Constitution, the governmental entity cannot seize private property without demonstrating it is being done for a “public purpose.”

All of this is not true when an electric cooperative or an investor-owned utility’s territory is seized by a municipal electric utility.

A simple petition is filed with the Indiana Utility Regulatory Commission; the commissioners have no power to reverse the service territory seizure by the city or town, and the city does not have to establish that the seizure was for a public purpose.

One has to seriously wonder whether seizing the territory of another utility for the benefit of a government-owned utility really is for a “public purpose.”

How do you determine what is “just compensation” when service territory is seized from an electric or investor-owned electric utility?

Currently, the compensation is an amount for any lines, poles and other infrastructure. Additionally, an amount is included to compensate for a portion of revenue lost for up to five years.

This is a significant issue considering that most annexed territory where the electric territory is seized is basically unimproved and will purposefully stay that way for at least the next five years to avoid compensatory payments.

This is what we call cherry-picking.

Electric cooperatives like NineStar Connect are customer-owned non-profit utilities. Any profit realized during the year is returned to the customer-owners by means of what’s called a capital credit.

NineStar Connect, for example, has returned over $4.1 million in cash to its customer-members over the last 10 years. Conversely, government-owned electric utilities are also non-profit, but they are not obligated to return any profits to their customers.

Since they are privately owned, electric cooperatives pay property taxes, while municipal electric utilities like Greenfield Power and Light do not.

Currently, NineStar is paying nearly $1 million in property taxes a year. It is estimated NineStar would be paying about $240,000 per year more in property taxes to Hancock County governments if more than 5,800 acres of its service territory had not been seized by the City of Greenfield over the past 30 years.

These are dollars that have to be made up by all Hancock County taxpayers in some manner.

Over the past 20 years, the Indiana General Assembly has been aggressive in enacting legislation to protect citizens against government seizure of private property.

In 2006, in response to a U.S. Supreme Court decision favoring government seizure of private property for economic development, the General Assembly made major revisions to Indiana’s condemnation laws, providing more protection for private landowners from the government seizure of their property.

More recently, the General Assembly even said when designating a pipeline easement that the property must be made available for its previous use.

The argument that seizure of private electric utilities’ service territories is being done in the name of economic development isn’t logical. There are hundreds of cities and towns in Indiana that do not own an electric utility.

Many grow and prosper with economic development while being served by electric cooperatives and other private electric utilities.

Many economic development projects in unincorporated areas are flourishing when served by electric cooperatives.

A cooperative approach to economic development, creating a level playing field for all electric utilities and eliminating the practice of legal seizure of private property, will serve all of our citizens better.

Senate Bill 309 will accomplish that.

Beverly Gard served 24 years in the Indiana Senate before retiring in 2012.