JEFFERSON CITY — A proposed $20 million project to ship crude oil from North Dakota down the Mississippi River is unlikely to go forward as a result of a Missouri Supreme Court ruling Tuesday blocking the use of eminent domain by a port authority.
The state's highest court ruled that the Southeast Missouri Regional Port Authority cannot condemn 30 acres of private land in Scott County, because it produced no justification for taking the land other than economic development. The ruling was the first by the state Supreme Court applying a 2006 Missouri law that barred condemnations "for solely economic development purposes."
The port authority had resorted to eminent domain after failing to agree on a purchase price for some hilly land along Mississippi River. Port authority officials had hoped to lease the land to a company that would build large storage tanks. The intent was to provide a place to hold crude oil shipped by train from North Dakota until it could be loaded onto barges for a further southward journey, said Dan Overbey, the executive director of the port authority.
The $20 million project also would have included the construction of a rail line loop on existing port authority property that would have been large enough to handle the long oil trains, he said. All told, the project could have employed 30 to 40 people, Overbey said.
As a result of the court ruling, "I don't think that project is going to work," he said. "That will mean there are jobs and investment that will not occur."
In a unanimous decision, the Missouri Supreme Court said the port authority's action violated a 2006 Missouri law barring eminent domain solely for economic development. That law defined economic development as using the property to "provide an increase in the tax base, tax revenues, employment, and general economic health."
Missouri was one of many states that toughened its restrictions on eminent domain after a 2005 U.S. Supreme Court ruling upheld the taking of private property through eminent domain for economic redevelopment.
In this particular case, "the Port Authority's desire to promote economic development undergirds all of its actions in this condemnation," Judge Zel Fischer wrote in the Supreme Court decision.
The legal challenge to the condemnation proceedings was brought by Velma Jackson and Alicia Seabaugh on behalf of the Lambert Family Trust. After negotiations to sell their land failed, the port authority filed a condemnation suit in Scott County Circuit Court and prevailed. Tuesday's Supreme Court decision blocked that condemnation from occurring.
An attorney for the landowners said the state Supreme Court ruling ensures that the 2006 law is meaningful.
"If by saying this is not for economic development, it's for the purpose of improving river commerce, if those types of euphemisms are allowed ... then the statute might as well not exist," said St. Louis attorney Mark Arnold. "The court was willing to look through the rhetoric and look at the reality of what was going on here."
A separate Missouri law gives port authorities a purpose of promoting development and encouraging private capital investment.
As a result of the 2006 law limiting condemnations, the legislature "made it difficult —if not impossible —for the Port Authority to advance its purposes through the use of eminent domain," Fischer said in Tuesday's ruling.
Overbey said the decision could have implications for the growth and expansion of all Missouri ports along the Mississippi and Missouri rivers.
"It really does limit you once you build a port," he said. "You can't really hop, skip and jump around to expand the port. If you have someone and they don't want to sell ... it leaves you with few alternatives."