Commentary & Articles

by Mark Wasser, December 2010

When a public agency uses eminent domain to acquire additional right-of-way along an existing road, the acquisition is often of relatively minor significance to the property owner and usually presents a simple appraisal issue. This is not true if the right-of-way being acquired belongs to a dairy.

Dairies are among the most regulated businesses in our society. Everything from the size of the dairy to the number of cows in the dairy’s herd to the discharge of the dairy’s waste water is regulated by multiple governmental agencies. Typically the county, the State of California and the regional air quality agency all issue permits. The county often issues a permit that specifies the number of acres included in the dairy and limits the number of cows in the dairy’s herd. The State gets involved in regulating herd size, as well, and also specifies the amount of waste water that can be discharged from the dairy. And, the air quality agency regulates the dairy’s emissions. All the permits are tied to the number of acres in the dairy.

The taking of just a narrow strip of land for road right-of-way can reduce the dairy’s acreage below what is required by the dairy’s permits. This can raise difficult questions about whether the dairy can maintain its existing herd and whether it still owns enough land to absorb its waste water. Depending on the answers to those questions, a small right-of-way acquisition can trigger large valuation issues. If the taking will require the dairy to reduce its herd size or place the dairy out of compliance with its waste water discharge permit, just compensation for the taking is likely to be much more than the value of the narrow strip of land being taken.

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