Utah Legislature Amends Eminent Domain Law
Posted on Aug 6, 2012 in Legal NewsThe 2012 Utah State Legislature has passed the bill known as “Substitute H.B. 74”, which amends the eminent domain provisions of Utah’s Judicial Code to allow the taking of property for certain uses related to oil and gas exploration. This same bill also establishes negotiation and notice requirements that must be fulfilled before an eminent domain action is filed.
The bill was passed to address the Utah Supreme Court’s recent decision in Marion Energy, Inc. vs. KFJ Ranch Partnership, 2011 UT 50, 267 P.3d 863.
Marion Energy, Inc. had leased certain oil and gas deposits beneath land owned by KFJ Ranch Partnership. In order to build a road to access the oil and gas deposits, Marion Energy sought to condemn a portion of KFJ’s land pursuant to Utah Code Ann. § 78B-6-501(6)(a) which authorizes public and private entities to exercise the powers of eminent domain to create “roads . . . to access or facilitate . . . the working of mines, quarries, coal mines, or mineral deposits.”
In Marion Energy, the Utah Supreme Court unanimously held that the term “mineral deposits” was subject to various definitions and that Section 78B-6-501(6)(a) was ambiguous. The majority of the Court strictly construed the ambiguity against Marion Energy, and held that the term “mineral deposits” in Section 78B-6-501(6)(a) did not include oil and gas.
Substitute H.B. 74 amends § 78B-6-501(6)(a) to clearly include allow the exercise of eminent domain powers to create roads to access “mineral deposits including oil, gas.” This change will clarify that roads to access oil and gas deposits can be obtained through eminent domain powers and effectively nullifies the Utah Supreme Court’s decision.
Substitute H.B. 74 also amends Utah Code Ann. § 78B-6-605 by clarifying the steps that must be taken by individuals or entities (other than political subdivisions) seeking to file an eminent domain action in court because the property cannot be acquired in a voluntary transaction.
The amendment requires that, prior to filing such an action, private individuals or entities must first “make a reasonable effort to negotiate with the property owner for the purchase of the property” and must provide the property owner with certain information which include (A) notifying the property owner that he or she is entitled to mediation and arbitration; and (B) providing the property owner with the name and telephone number of the property rights ombudsman. This information must be provided to the property owner no later than fourteen days “before the day on which the person files an eminent domain action.”
Although private entities were arguably required to follow these same requirements before the enactment of Substitute H.B. 74, the pre-amendment version of § 78B-6-605 only expressly referred to governmental entities. The amendments to Section 78B-6-504(2)(a) will help both political subdivisions and private entities understand the actions they each must take before attempting to exercise eminent domain powers.
This article was researched, written and posted by Clark Duellman