Duke, Dominion, electric co-ops back DOT in easement dispute

Duke Energy, Dominion Energy, and the North Carolina Electric Membership Corporation are supporting the state Department of Transportation in a Mecklenburg County easement dispute.

The electricity providers filed a joint request Monday at the North Carolina Court of Appeals. They want to submit an amicus, or friend-of-the-court, brief in the case DOT v. Indian Trail Plaza.

The department warned in a court filing this month that the case could have “immense” consequences and subject taxpayers to “billions of dollars in liability.”

“As private utilities and cooperatives with the authority to take permanent utility easements under North Carolina law, Proposed Amici have an interest in ensuring that North Carolina courts interpret easements correctly and strike the appropriate balance between the private and public interests at stake when a condemnor takes an easement for the public good,” according to the energy providers’ court filing. “In particular, Proposed Amici have a strong interest in ensuring that easements are interpreted in a way that gives full meaning and effect to the easements’ plain language and that just compensation is correctly determined for utility easements like the one at issue in this appeal. This includes ensuring that compensation is determined by market realities, and not legal fictions and presumptions.”

A trial court’s ruling in the Indian Trail Plaza case raises concerns for the electricity providers. “[B]ecause improvements in utility infrastructure will be critical to North Carolina’s economic development in the coming years, Proposed Amici have a strong interest in making the Court aware of the possibility that, if affirmed, orders like one below could make providing such improvements more expensive,” according to the court filing. “This, in turn, could lead to increased costs to citizens across the state, either in the form of higher taxes or increased utility rates.”

The trial court order has “potential unintended effects” on “public work projects across the state,” the electricity providers argued. “Rising utility costs are a mounting concern across the state, and Proposed Amici have an interest in ensuring that the Court is aware of the risk that orders like the one below would only increase those costs. And that is because orders like the one below threaten to turn limited utility easements into a windfall for a small group of property owners, imposed at substantial cost to the public and to an infrastructure system already straining against demand.”

The court issued an order Monday granting an amicus request from University of North Carolina law school professor John Orth, a state constitutional scholar. He has taught property law classes since 1978. Orth co-authored a 2013 edition of a book on the North Carolina Constitution with current state Supreme Court Chief Justice Paul Newby.

“Professor Orth is interested in this case because the trial court’s ruling implicates a fundamental distinction in North Carolina property law and the law of eminent domain: the distinction between a fee simple taking and the taking of an easement,” according to Orth’s brief. “The trial court’s [o]rder … collapses this crucial distinction in a manner likely to cause confusion for practitioners of property law and the law of eminent domain in North Carolina.”

DOT condemned 0.14 acres of a vacant, undeveloped 4-acre property owned by Indian Trail Plaza in 2024. Plans called for the condemned property along an adjoining road to be used for new lanes and space for a U-turn.

Indian Trail Plaza responded that the taking affected the value of the entire property. A trial judge agreed and ruled against DOT.

“To build and maintain our State’s extensive network of roads and highways, the Department takes certain easements on private property adjoining public roadways. These easements are everywhere,” wrote DOT’s lawyers in an Appeals Court brief filed Monday. “They typically cover a narrow slice of land along the roadway and allow the Department to install and maintain utility infrastructure — such as electric, gas, and water lines.”

“The Department commonly assigns these easement rights to public utility companies, which use the easements to develop critical infrastructure, enhancing the value and usefulness of private property along the roadways,” the department’s court filing continued. “Without the easements, highway construction and access to utilities would slow to a crawl, significantly damaging our State’s overall economy.”

“Until recently, the Department’s process for taking these easements was uncontroversial,” DOT’s lawyers argued. “The Department would offer landowners fair compensation based on the modest burden the easements place on their property rights within the easement areas. Landowners usually accepted these offers, recognizing that the easements have no material adverse impact on their property’s value. Many landowners also recognized that, without access to utilities like water and electricity, their properties would be useless.”

“Recently, however, some landowners have sought to upend this settled process by claiming that these routine easements completely destroy their properties’ value,” the court filing continued. “They have therefore demanded that the Department pay them the full fee-simple value of their entire properties merely for taking the right to install and maintain utilities over a narrow strip of land along the roadway. Remarkably, many trial courts have accepted this novel theory.”

DOT emphasized that the Indian Trail Plaza dispute involved “less than 3.5%” of the total property. The department allocated $118,525 to cover just compensation for the easement.

“ITP asked the trial court to determine the nature and extent of the taking, urging it to conclude that the easement ‘effectively terminated’ ITP’s property rights. The trial court agreed, believing that the easement could theoretically allow the Department and its assignees to install utilities in the easement areas that block ITP from accessing its property,” the department’s brief explained.

“That conclusion was wrong,” DOT argued, citing four reasons. First, the easement’s “plain language” preserved the property owner’s right of access. Second, “background principles of law” would bar DOT from blocking access. Third, the legislature has directed that just compensation must be based “on the taking’s actual effect on the property’s fair-market value.”

“Here, the record establishes that the Department’s utility easements have no appreciable effect on a property’s fair-market value,” according to the department’s brief. “The trial court ignored this evidence, construing the easement as destroying ITP’s property rights as a matter of law. This approach will prevent the jury from hearing evidence on the taking’s effect in the real world. It therefore guarantees that the jury’s just-compensation award will not be based on the standard for calculating just compensation established by the General Assembly.”

Fourth, if DOT attempted to block access to the property, that would amount to a second taking. “At that point, the landowner would be entitled to a new award of just compensation,” the department’s lawyers wrote.

DOT argues that the plaintiffs’ lawyers “have consistently urged courts to interpret the Department’s easements expansively, aggressively resisting any judicial ruling that would limit the easements’ scope.”

“At first blush, this posture might appear paradoxical,” the brief continued. “If they were really concerned with protecting their property rights, why would landowners demand that courts impose greater burdens on those rights? But ITP knows that the Department does not actually use the easements in the ways they claim to fear.”

“Indeed, ITP cannot identify a single time that the Department has ever used an easement to completely block a landowner’s access,” DOT lawyers argued. “ITP also knows that the easements do not actually harm its property’s market value. Countless properties with identical easements are bought and sold every day at full, fair-market value.”

“By using the courts to foist property rights on the Department that it does not want and will not use, ITP seeks an unwarranted windfall at the taxpayer’s expense,” department lawyers wrote. “If successful, the consequences of this gambit will be immense. The Department has thousands of similar easements. If the decision below is affirmed, the Department could face billions of dollars in liability for unused and unwanted property rights.”

“The prospect of such liability would require the Department to alter fundamentally the way it builds and maintains our State’s roads,” DOT warned. “Those changes would, at minimum, cause years of delays on roadbuilding projects in our fast-growing State.”

“Duke, Dominion, electric co-ops back DOT in easement dispute” was originally published on www.carolinajournal.com.