Eminent Domain Damages: Mineral Rights

Another issue that doesn’t frequently arise, but is prevalent enough to warrant discussing in our blog is how the presence of mineral rights on a property will affect the amount of just compensation owed to a property owner.  The minerals present can range from sand or gravel to oil or gas.  Under the rules of eminent domain law, if a property owner has mineral rights on their property, those rights must be considered when determining just compensation.

When determining the amount of just compensation owed to a property owner in this situation, the classic before and after valuation should be used.  In the before and after scenario, an appraiser will determine the value of the property with all of the mineral rights in place prior to the taking.  They would then determine the value of the remaining property with any impairment in mineral rights as a result of the taking.

We have typically found that the condemning authority tries to ignore the impact that their taking has on the loss of mineral rights, and therefore, we frequently find that a property owner is justified in pursuing a claim for additional just compensation under the rules of eminent domain law.   I call this scenario to your attention so that if you are faced with this situation and the condemning authority tells you that mineral rights and loss of mineral rights is not a factor to be considered in the calculation of just compensation you will know that that statement by the condemning authorities is not true.

I’d like to give you an example of a case we handled in the past and several examples of mineral rights eminent domain cases we’re currently handling.  One of our previous mineral rights cases pertained to the loss of gravel.  In this case, we used the before and after rule to determine the value of the land with the amount of aggregates prior to the taking, and then determined the value of the land after the taking with the reduced amount of aggregates.  The condemning authority did not consider the loss of aggregates when calculating just compensation and therefore, this property owner had a valid claim for pursuing a significant amount of additional just compensation.

We are currently working on several unique cases in Oklahoma and Alaska that both pertain to natural gas storage facilities.  In these eminent domain cases, the natural gas has already been extracted from the land and the utility company is attempting to acquire the depleted reservoir to use as a storage facility in order to inject natural gas for extraction at a later date.  The utility companies are only offering low land values for easement rights across the surface of the land.  The proper methodology is determining the amount of natural gas storage the property owner has on the property and then determining its value.  In a future blog post, we’ll discuss valuing an underground storage facility in more detail.

Quantifying the direct damages and severance damages resulting from an eminent domain taking is the most critical aspect of any eminent domain case.  Because of this, it is imperative that you work with an experienced eminent domain attorney who can accurately assess your damages and select and guide the appropriate appraiser for your case.  Learn more about selecting an appraiser.