The Cause of Liberty at Virginia's General Assembly Part 4

This is the fourth in a series of posts that I’ve decided to do as a post-session look at the bills considered by Virginia’s General Assembly.  For now I’m focusing on bills that passed both the House of Delegates and the Senate.  At some later point I might also write about bills that were considered, but did not pass.  In my last post in this series (found here) I wrote about a bill that affects the process of involuntary commitment.  This post will look at HB 1035 which dealt with eminent domain.

HB 1035 Eminent domain; definitions of lost access and lost profits, determining compensation.
Eminent domain; lost profits and access.  Provides definitions for the terms "lost profits" and "lost access" and how to determine the amount of just compensation, which includes lost profits and lost access resulting from the taking, that must be paid for property taken by eminent domain. The bill has a contingent effective date of January 1, 2013, provided that the voters approve an amendment to Section 11 of Article I of the Constitution of Virginia at the 2012 November election. This bill incorporates HB 597 and is identical to SB 437.

Full text of bill available here.

Chief patron: Delegate Johnny S. Joannou (D) - House District 79

Co-patrons:  Delegate Mark L. Cole (R) - House District 88; Delegate Anne B. Crockett-Stark (R) - House District 6; Delegate John M. O'Bannon, III (R) - House District 73; Delegate R. Lee Ware, Jr. (R) - House District 65; Delegate Thomas C. Wright, Jr. (R) - House District 61

Passed the House of Delegates 77-22 (77-19 after Senate amendments).  Passed the Senate 24-16.  Signed by Governor McDonnell on April 9.

Eminent domain “is an action of the state to seize a citizen's private property, expropriate property, or seize a citizen's rights in property with due monetary compensation, but without the owner's consent.”  The Fifth Amendment to the United States Constitution provides that “private property be taken for public use, without just compensation.”  The Constitution of Virginia similarly says that “the General Assembly shall not pass any law . . . whereby private property shall be taken or damaged for public uses, without just compensation.”  In my post discussing HR 5, I pointed out that Virginians will have the option this fall to decide whether to define “public use” in the Constitution rather than leave it up to the General Assembly to define that term.

This bill focuses on some different aspects of the eminent domain issue.  If the constitutional amendment is successful, this bill will provide statutory definitions for the terms “lost access” and “lost profits.” From the bill:

"Lost access" means a material impairment of direct access to property, a portion of which has been taken or damaged as set out in subsection B of § 25.1-230.1. This definition of the term "lost access" shall not diminish any existing right or remedy, and shall not create any new right or remedy other than to allow the body determining just compensation to consider a change in access in awarding just compensation.

"Lost profits" means a loss of business profits, subject to adjustment using generally accepted accounting principles consistently applied, from a business or farm operation for a period not to exceed three years from the date of valuation that is suffered as a result of a taking of the property on which the business or farm operation is located, provided (i) the business is owned by the owner of the property taken, or by a tenant whose leasehold interest grants the tenant exclusive possession of substantially all the property taken, or (ii) the farm operation is operated by the owner of the property taken, or by a tenant using for a farm operation the property taken, to the extent that the loss is determined and proven pursuant to subsection C of § 25.1-230.1. This definition of the term "lost profits" shall not create any new right or remedy or diminish any existing right or remedy other than to allow the body determining just compensation to consider lost profits in awarding just compensation if a person asserts a right to lost profits as an element of damage in a claim for compensation.

Later sections of the bill delineate what factors may be considered in determining what compensation must be made to landowners.  For instance, the bill provides that “The body determining just compensation shall include in its determination of damage to the residue any loss in market value of the remaining property from lost access caused by the taking or damaging of the property.”  On the other hand, the bill also seems to have some provisions that would reduce an award of just compensation in some situations:

The body determining just compensation may not consider an injury or benefit that the property owner experiences in common with the general community, including off-site circuity of travel and diversion of traffic, arising from an exercise of the police power. The body determining just compensation shall ensure that any compensation awarded for lost access shall not be duplicated in the compensation otherwise awarded to the owner of the property taken or damaged.

The next section of the bill sets up the process by which the owner of a business or farm operation must prove the amount of loss with “reasonable certainty.”  Each of the following conditions must be met:

1. The loss cannot be reasonably prevented by a relocation of the business or farm operation, or by taking steps and adopting procedures that a reasonably prudent person would take and adopt;

2. The loss will not be included in relocation assistance provided pursuant to Chapter 4 (§ 25.1-400 et seq.);

3. Compensation for the loss will not be duplicated in the compensation otherwise awarded to the owner of the property taken or damaged; and

4. The loss shall be determined in accordance with generally accepted accounting principles applied on a consistent basis.

Failure to prove any one of those would appear to deny a property owner any recovery for loss of access or loss of profits.  The first of those is somewhat troubling given that it subjugates the right of an individual to use his property as he sees fit to what another hypothetical “reasonably prudent person” would do.  Granted, the “reasonably prudent person” is a well-known and accepted standard  in the law (especially in the case of tort law).  Nevertheless, it is a concept that is almost completely irrelevant to the full protection of property rights.  What someone else might do with the property is irrelevant.  The only thing that should matter (if we are serious about protecting property rights to the utmost) is what this property owner wants to do with this property that belongs to him now.

There have been a good number of eminent domain reforms since the Supreme Court’s infamous Kelo decision some seven years ago.  I think this bill is a step in the right direction of limiting the power of the government to infringe on property rights and I’m glad that the Governor has made it the law in our Commonwealth.  There are, however, areas that could be improved upon in this legislation and hopefully future sessions of the General Assembly will take up where this bill leaves off and insure that the liberty to use one’s property free from the threat of the government taking it is protected to the fullest extent possible.

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