property law

Here's an article I recently did for the Connecticut Law Tribune about a novel lawsuit: can the government take through eminent domain certificates that authorize bus companies to operate on certain routes?

Connecticut is no stranger to landmark eminent domain disputes, with the U.S. Supreme Court having ruled in 2005 that the city of New London could shift from one private owner to another in order to further economic development. Nor is the state Department of Transportation any stranger to such proceedings, as the agency often condemns land to make way for public roads.

Now, the Connecticut Appellate Court or the state Supreme Court is going to hear an apparent issue of first impression in condemnation law: can the Department of Transportation use its eminent domain power to take intangible property? In this case, can it withdraw certificates that authorize four bus companies to operate on certain routes?

The state wants to take away certificates for Collins Bus Service Inc., Dattco Inc., Nason Partners Inc., and the New Britain Transportation Co. for routes between Hartford and nearby towns. The court action preceeds the planned opening of the Harford-New Britain busway by just a few months, but state officials say the intent is not to eliminate competition for the busway but to allow competitive bidding for routes used by the four companies.

Counsel for DOT Commissioner James Redeker have successfully argued in Superior Court that the agency has the power to condemn "certificates of public convenience and necessity" that permit private bus companies to operate in certain parts of the state. The bus companies have lodged an appeal with the Appellate Court. Because the ruling would set precedent, the companies have asked the Supreme Court to directly take the case.

Under state law, the DOT can only take "land, buildings, equipment and facilities" under its eminent domain power. Since there is no definition for "facilities" in Chapter 242 of the General Statutes, Judge Trial Referee Joseph Shortall recently cited a 1942 decision from the U.S. Court of Appeals for the Second Circuit noting that "facilities" is an inclusive term "'embracing anything which aids or makes easier the performance of the activities involved in the business of a person or corporation."'

Shortall also cited a definition of facility from Merriam-Webster's Third New International Dictionary as "'something that makes an action, operation or course of conduct easier."'

As a result, Shortall said, in applying the dictionary definition of facility, that the bus certificates qualify as "facilities" that the DOT commissioner is entitled to condemn so long as it will be in the public interest. "Not only do they make the companies' activities in operating a bus service easier; they are essential to those operations," Shortall wrote.

State Control?

Jeffrey Mirman, a partner at Hinckley, Allen & Snyder and counsel for the four bus companies, said that there is "no language in any statute that would suggest that facilities ever have been to held to encompass intangible rights like franchises or certificates."

The bus companies are fighting the use of eminent domain to take their certificates because "ultimately, we believe that the state wants all bus service to be controlled and operated by the state with no private companies" in the municipal transportation sector, Mirman said.

Once the certificates are issued, the government only can only revoke them for "sufficient cause," Mirman argued.

Assistant Attorneys General Alan Ponanski and Charles Walsh said in court papers that the bus companies want the Connecticut judiciary to "declare that the the commissioner lacks the authority to take their certificates … Rather than allow the commissioner to implement legislative policy to develop and improve mass transportation series by taking the certificates and competitively procuring bus service at the best price for the Connecticut taxpayers over the routes covered by those certificates, the bus companies want this court to tie the commissioner's hands and require him to contract with them and subsidize their services infinitely into the future."

Shortall added that interpreting the statute otherwise would limit the DOT's ability to implement the busway. "As long as the companies' franchises remained in their hands, they would continue to hold the exclusive right to provide bus service over the routes in question," he stated.

The court cited two cases from other jurisdictions on whether the term "facilities" in the field of eminent domain law includes the exclusive right to provide services held by a utility company. The Mississippi Supreme Court addressed the issue in a 1973 case and the Tennessee Court of Appeals addressed it in a 1990 case.

Mirman said he thinks the "trial court recognized the decision was a toss-up and could have gone the either way" by permitting a temporary injunction to stay in place until the Appellate or Supreme court can take up the case.