New South Dakota Measure Favors Railroads Over Private Property Rights

Published September 1, 2008

Railroads operating in South Dakota will have an easier time seizing private property under state Senate Bill 174, which became law July 1.

Proponents say the law will improve the state’s bulk commodity transportation system, but opponents say it threatens property rights. Opponents tried to keep the bill from becoming law by forcing a statewide referendum but could not collect the necessary number of signatures to get the measure on the November ballot.

The main beneficiary of the law will be the Dakota, Minnesota & Eastern Railroad Corporation, which last year failed to receive a $2.3 billion federal loan that had been inserted into congressional legislation sponsored by Sen. John Thune (R-South Dakota).

Strong opposition from a variety of taxpayer groups, fiscally conservative lawmakers, and businesses including the Mayo Clinic in Rochester, Minnesota, where a DM&E rail line runs, helped kill the earmark.

Business, Energy, Farm Coalition

A coalition of energy companies, farm organizations, and other business groups had backed Thune’s proposed earmark, which would have funded a project to rebuild 600 miles of track and add 260 new miles of track reaching low-sulfur coal mines in the Powder River Basin of Wyoming.

Many members of the earmark coalition, including the South Dakota Farm Bureau (SDFB), also backed SB 174.

“SDFB supports the upgrading of the DM&E railroad system. We have fallen behind in our state due to lack of infrastructure additions. Farmers, ranchers, and energy companies need this to compete,” said Michael Held, CEO of the South Dakota Farm Bureau, about the new law.

“At the same time,” Held continued, “we respect private property laws in our state, too. Even after the enactment of SB 174, railroads still have the highest standards to meet when using eminent domain.”

‘Quick-Take’ Provisions

That’s not true, an opponent of Thune’s $2.3 billion earmark and of SB 174 said. The taxpayer advocacy organization Citizens Against Government Waste (CAGW) slammed the state bill for giving railroads “quick-take” powers no other private entity in South Dakota enjoys.

If a railroad makes an offer for property and the owner rejects it, the railroad can file a condemnation lawsuit, the new law holds.

Under SB 174, even while a condemnation lawsuit is continuing, private property may be taken “as soon as possible” by posting a bond with the court. Thus a railroad could take private property the same day it files a condemnation lawsuit, according to CAGW.

“SB 174 makes a series of technical changes to existing railroad eminent domain laws that will make the process for seizing private property for commercial use easier for railroad companies, such as the DM&E, which wants to lay new track across privately owned property to access coal fields in Wyoming’s Powder River Basin,” said Paulene Staben, a spokesperson for Citizens Against Government Waste and originator of the petition drive against the measure.

Potential Response

SB 174 was cosponsored by state Rep. H. Paul Dennert (D-Columbia) and state Sen. Tom Hansen (R-Huron).

“This is a good law for the bulk transportation system in South Dakota,” said Hansen. “It’s good even for those who want their property rights protected.”

Property rights advocates disagree strongly and are marshaling forces to revoke the law.

Staben and other members of the Private Property Protection Coalition (P3) had hoped to place on the November ballot a measure to revoke the law through a statewide referendum. But a late start gave them too little time to collect enough signatures to get the measure on the ballot, she said.

John Skorburg ([email protected]) is associate editor of Budget & Tax News and a visiting lecturer at the University of Illinois at Chicago.