Taking of Contaminated Property Actions: Formulating Your Trial Strategy

Preliminary background work and analysis should be undertaken. A preliminary litigation plan developed on available information should be developed, then revised as motions and discovery narrow or expand the issues. Damages and valuation issues may include cost recovery or environmental liability, or those factors may be removed from the eminent domain forum.

A. Document Review

• Research the site history:
  • Trace ownership and operation history
  • Review any pre-existing tax valuations, appraisals, environmental assessments.
• Search government agency files (from federal, state, and local agencies with environmental reporting and safety functions) for violation notices, reports or actions.
• Look for any inventory site improvements (asbestos materials, underground storage tanks and pipe locations, retention ponds, etc.).
• Obtain Environmental Impact Statements filed by the condemning agency on the proposed project.

All of this information will be useful in the event a liability issue arises, either in a related or subsequent cost recovery or cleanup action, or if evidence of third party liability is offered to minimize offsets against the owner. In addition, in order to present evidence of the effect of the contamination on the highest and best use or the market price, a thorough understanding of nature and extent of contamination will be critical.

B. Determine the Scope of Claim and Additional Parties

• Investigate pending and potential environmental enforcement actions (note: if no actions are pending, it would be prudent to approach the appropriate agencies for “comfort,” or no further action letters).
• Identify potential third-party claimants.
• Identify potentially responsible parties for any hazardous substances.
• Quantify cleanup costs. Preliminary estimate adjustments to price that a buyer or seller would make for cleanup costs, unknown liabilities, and additional insurance costs.

C. Locate, Consult, and Designate Fact and Expert Witnesses

The core of the eminent domain case rests on the appraiser, supported by the varying professionals at the disposal of the litigants to enhance the evidence. Since commercial practices drives the contaminated property marketplace, some of the best experts and valuation evidence may come from industry representatives, rather than forensic consultants.

The experts and litigation team should determine the facts surrounding comparable sales of contaminated properties, if those are to be utilized. Comparable remediation projects and associated costs may be relevant. In looking at comparables, determine:

• Types of contaminants involved
• Level of compliance required
• Highest and best use of property
• Necessity and reasonableness of the costs
• Potential reimbursement from third parties, insurance, or government funds
• Impact of all above factors on price, if any

More information about the book Current Condemnation Law: Takings, Compensation, and Benefits, Second Edition

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