Pennichuck Corporation and its subsidiaries are a privately held utility company that provides public water supply services to about 35,000 customers in the Nashua area and surrounding towns. In 2002, Pennichuck reached agreement with a Pennsylvania utility company that would have resulted in the merger of Pennichuck with the out-of-state company and the movement of control of the company to Pennsylvania.
City officials in Nashua objected to the prospect of water services being provided by an out-of-state utility and commenced action pursuant to RSA 38 to take the water supply assets of Pennichuck by eminent domain.
The eminent domain process set forth in RSA 38 is complex and requires action by the local governing body, as well as ratification of that action by the voters. Once the voters of Nashua ratified the action of its board of alderman, the out-of-state utility withdrew its offer to acquire the Pennichuck assets, and the current owners of Pennichuck lost the economic gain that would have accrued to them as a result of the merger.
Pennichuck sued the city, alleging that the eminent domain process of RSA 38 resulted in a taking of its property without compensation in violation of the state constitution. Its theory was that the mere commencement of eminent domain proceedings placed the company under a cloud of uncertainty, prevented it from operating its business in any normal fashion and ultimately resulted in a reduction of the value of the company. This reduction in value was argued to be an “inverse condemnation.”
In Burrows v. Keene, 121 N.H. 590 (1981), the New Hampshire Supreme Court held that the adoption of an “arbitrary or unreasonable restriction which substantially deprives the owner of the economically viable use of his property in order to benefit the public in some way constitutes a taking within the meaning of the New Hampshire constitution.”
In the Pennichuck case, the Court held that the mere commencement of eminent domain proceedings did not result in an “inverse condemnation” because every property owner in the state is subjected to this same possibility as a condition of owning property. While it acknowledged that the company was affected by the proceedings, it refused to hold that the procedure itself was constitutionally defective.
The company also argued that the city had failed to properly follow the statutory procedure and that additional proceedings in the Public Utility Commission should be voided. The Court found that the city had proceeded as required and that the case was properly before the Public Utility Commission for resolution.