Opinion ID: 1698690
Heading Depth: 1
Heading Rank: 9

Heading: Per Acre v. Per Rod

Text: In the concurring opinion of Judge Shortess in Hill, he noted that lower courts are without guidance as to whether to use the per acreage or the per rod method of valuation. He concluded that there is a split in the circuits. The first and fourth circuits are more in line with the per-rod theory, while the third circuit seems to be more favorable to the per-acre theory ... I think it is time to unconditionally rule that the per-rod theory is the favored one, especially on land that is already burdened with multiple pipeline servitudes. During oral argument, Exxon conceded that it is well accepted in the pipeline community that negotiations for servitudes are often couched in terms of rods. Exxon further explained that the per rod valuation is based on an arbitrary price which the pipeline company would be willing to pay rather than litigating the case. Exxon stated that the price pipeline companies traditionally offer are often higher than that which the landowner is due. A rod, by definition, is nothing more than a line between two points, but as such it has no width. The per rod comparables appear to show the value of the property as impacted by the expropriation itself, which is in stark contrast to existing expropriation law. Rods standing alone fail to consider many important attributes which insure proper valuation of land. As stated above, a landowner may be compensated $100 per rod for his property because his servitude was the last remaining parcel needed by a company. By contrast, the same landowner may only be paid $15 per rod because his is the first parcel purchased. Attempting to derive a system to value pipeline servitudes by rods would lead to higher and unfair valuation of property. While this court recognizes the concern posed by the landowners and Judge Shortess regarding the per rod valuation, we find that the use of the per rod method would be in derogation of the Louisiana Constitution. Art. I, Section 4 states that a property owner is to be compensated for loss caused by the expropriation. If we are to allow the per rod method, landowners would receive more than the full extent of his loss, they would receive compensation far greater than due. Clearly, this is not what is intended by the constitution. As Judge Parro explained in his dissent in Hill: Expropriation exists in our Constitution because the public recognizes that some private property rights must give way for the public good, provided the private property owner is fully and fairly compensated for his loss. The radically new valuation method approved by the majority in this case will add incalculable costs to the public when these expenses are passed on in the prices of oil, natural gas, electricity, water, and other utilities. Thus, the public will suffer, while a few property owners will reap a windfall, simply because they fortuitously own property within the shortest and most efficient routes for the transport of these necessities. The benefits of expropriation intended for the public good will be severely curtailed by this valuation approach. Hill, 763 So.2d at 161. In keeping with the constitutional mandate of compensating a landowner for the loss sustained as a result of the expropriation, we hold that the per rod valuation is not a proper method of determining value in expropriation proceedings in a court action.