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By Elizabeth Dietzmann
In the first part of this commentary, I talked about STEP/STEG
system easements—what they are, issues of ownership,
and appropriate legal language. Typically, easements for STEP/STEG
systems (or STEP systems, for brevity) are more complicated
than "big-pipe" sewer easements for at least two
related reasons. One, the components of a STEP system likely
will be located in a homeowner's yard. This isn't
much of a problem in new developments, but replacement projects
are another matter. Typically they're paid for with
state and federal funds that are loaned to a governmental
entity, such as a town or water district. That creates complication
No. 2: The funding agency will require mandatory connections,
which will in turn necessitate STEP easements from each homeowner.
Mandatory connections have always been a source of controversy
in any type of public sewer project. For a number of sound
reasons, the lending agency wants to make sure that all the
people within the project area connect to the system. Requiring
people to connect means that you know exactly how many users
there will be. That allows you to design the treatment capacity
to serve the actual number of users, which in turn allows
you to calculate the cost of construction, which allows you
to determine user fees, which allows you to make sure that
the project will generate sufficient user fees to cover the
debt service, O&M, and capital replacement costs.
Nevertheless, many projects have failed or run into expensive
legal battles over the issue of mandatory connections. People
just don't like being told they must connect to sewer.
(Granted, this is usually not an issue inside city limits).
In a system using STEP collection, this means in its simplest
form that all homeowners within the project area will be required
to have the on-lot STEP components installed in their yards.
This is not a problem if they agree to sign an easement that
is written like the one discussed in part one of this article.
But what if they refuse?
The prevailing view of state and federal funding agencies
(US Department of Agriculture, Community Development Block
Grant programs) has been that in exchange for receiving that
grant or loan, the public entity is expected to exercise the
right of eminent domain and condemn the necessary property
in order to comply with the mandatory connection requirement.
While this may work just fine with collection lines lying
along the front of a homeowner's property, it becomes
a potential legal nightmare when you are talking about condemning
the middle of someone's backyard. That is the real question
here: Can a public entity use eminent domain to enforce a
mandatory connection policy by condemning the area needed
to install STEP collection in the homeowner's yard?
It is my opinion that the answer may be no, and that the
power of eminent domain may not work on STEP systems. This
is especially true after the decision in the case of Kelo
v. City of New London, which held that local governments can
seize private property for economic development. The ruling
has created a backlash among state legislatures and land rights
advocates alike.
Now for a quick lesson on the power of eminent domain so
that we can track how it may affect STEP systems. We are talking
about the Fifth Amendment, which provides, among other things,
that no private property shall be taken for public use without
just compensation. This is commonly referred to by lawyers
as the Takings Clause to the Fifth Amendment. The issue in
many condemnation cases is compensation, but in the Kelo case
the key issue is public use. What constitutes public use?
The fact was that, historically speaking, there was a common
understanding among local governments and ordinary citizens
that eminent domain would only be used for projects that would
be owned and open to the public, such as roads or public buildings.
Then, in 1954, the Supreme Court handed down a decision
in Berman v. Parker, 348, which upheld the constitutionality
of urban renewal and basically changed the meaning of "public
use." After that, it was generally understood that "public
use" had come to be interpreted to mean "public
purpose," and that for the most part this was left up
to the state legislatures to decide. In fact, since then the
Supreme Court has had a fairly long-standing policy of allowing
deference to legislatures in this area. If a state chose to
define "public purpose" more restrictively, that
was the state's business. Some states did, Connecticut
being one of them.
Under Connecticut law, condemnation for the sake of economic
development was an acceptable public purpose, and the City
of New London decided to use power of eminent domain to take
property from a number of landowners (homes, apartments, shops)
and turn it over to a private development authority. To the
surprise of many, the Supreme Court agreed with the city and
held by a 6-5 decision that the plan to redevelop the area
unquestionably served a public purpose and that it satisfied
the Takings Clause.
This has stirred up a hornet's nest of controversy,
with watchdog groups closely scrutinizing state condemnation
laws and legislative candidates promising "reforms"
on both sides of the issue. The underlying issue in Kelo was
whether or not the state could condemn property for the benefit
of private parties—the developers.
But what if the taking has the opposite effect? What if
it transfers ownership of land in the middle of someone's
backyard to a government entity for the sole purpose of forcing
that person to accept wastewater service? What if condemnation
is used to enforce a mandatory connection requirement that
may not even be necessary for the project to succeed as a
whole? I have not found a case in which condemnation has been
used to seize the land necessary for installation of the on-lot
STEP components. Of course, it will depend on how the state
statutes define "public purpose," but in its simplest
sense it seems illogical to argue that taking the land for
the on-lot STEP components would serve a public purpose when
the only person who would be using that portion of the system
is the homeowner himself.
Contrast this with possible condemnation of the land needed
to run the collection main, probably located along the front
of the homeowner's property and clearly used by the
public as a whole. Of course, it may be possible to argue
that condemning a portion of a homeowner's backyard
is a taking for the public use because the financial viability
of the entire project may depend on the total number of connections
(the reasoning behind mandatory connections). But each condemnation
case is heard separately, so it is hard to imagine that one
less connection would have that much impact.
I suppose some creative attorney could argue that installing
wastewater infrastructure is a form of economic development
because property values will increase, new homes might be
built, and new businesses might follow the sewer lines. That
seems extreme, though. We are still looking at part of one
guy's backyard here. As Justice O'Connor noted
in her dissent, "public use" has a long-standing,
straightforward definition—the government may transfer
private property to public ownership for things such as roads,
hospitals and military bases. And the aftermath of the Kelo
case all but guaranteed that state condemnation statutes will
come under extremely close scrutiny.
Even if the answer is yes, and taking a portion of someone's
backyard is a public purpose, then the issue of compensation
comes up. Remember that no private property shall be taken
for public use without just compensation? Well, compensation
can become an incredibly complicated issue when you are looking
at trying to figure out the value of a chunk of land out of
the middle of someone's backyard. I have talked with
several appraisers who do this kind of work, and they are
all at a loss. By comparison, taking a whole parcel of land
or a strip of land is relatively simple for the purposes of
calculating the compensation.
Then there are the silly issues like maintenance of that
small parcel of land once it is no longer owned by the homeowner—who
mows it? And the reality is that even if condemnation is legal
and can be used to seize the small parcels of land needed
for on-lot STEP components, few government entities relish
the thought of sending armed officers onto a homeowners'
property to guard the backhoe operator who is trying to set
that new STEP tank in the ground. And, rest assured, there
will always be that one guy who refuses to sign the easement.
Ironically, this homeowner will usually agree to grant the
easement for the connection line, therefore allowing the project
to proceed; he just will not agree to sign an easement for
the on-lot STEP components.
I don't know where the answers lie to this muddled
mess. But just be aware that the costs of protracted legal
battles over condemnation probably need to be weighed against
the savings derived from using STEP collection. The real change
needs to come from the funding agencies, who need to seriously
re-think their policy on mandatory connections.
ELIZABETH M. DIETZMANN is an attorney in Rolla, MO. Write
to her at edietzmann@earthlink.net
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- January/February 2006
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