Section 41 Contamination

• Library: Condemnation Practice 2009

The valuation of environmentally contaminated property in condemnation proceedings raises a number of difficult issues, primarily whether evidence relating to the environmental contamination and potential remediation costs is admissible at the damages trial and the weight to be accorded that evidence. Missouri has not yet addressed these issues. Others states have reached divergent decisions. Some courts have excluded this evidence, holding that the property owner should not be penalized for environmental conditions without the safeguards attendant to an adjudication of liability under environmental laws. Other states allow the condemnor to introduce evidence of the contaminated nature of the property and the costs of remediation on the ground that this evidence is relevant to the fair market value of the property. The latter approach is generally recognized as the majority view. See 7A Nichols, Eminent Domain§ G13B.03[1], at 52 (3^rd ed.).

The two approaches are illustrated by decisions from Illinois and Connecticut. In Department of Transportation ex rel. People v. Parr, 633 N.E.2d 19 (Ill. App. Ct. 1994), the Illinois court of appeals held that environmental remediation costs are not admissible in eminent domain proceedings to determine the fair market value of the property. That holding was based, in part, on an Illinois statute that allowed the admission of evidence relating to illegal “conditions” on property. The court determined that remediation costs do not constitute a condition on the property, but rather relate to the costs of providing a remedy for an alleged condition. Id. at 22. The court, therefore, held that Illinois law did not permit the admission of environmental remediation costs unless the trial court had found the presence of an underlying illegal condition to justify these costs. Id.

The Illinois court further stated that even if proper under the state statute, admission of the evidence would violate the procedural due process rights of the owners of condemned property. Id. at 22. “We determine that the costs’ admission in a condemnation proceeding without the procedural safeguards provided in the Environmental Protection Act would permit IDOT to circumvent the procedures established by the legislature and the Environmental Protection Agency for recovering environmental remediation costs.” Id.

The Supreme Court of Connecticut reached the opposite conclusion in Northeast Ct. Economic Alliance, Inc. v. ATC Partnership, 776 A.2d 1068 (Conn. 2001). The court held that the trial...