ELR Citation: ELR 21448
No(s). 456-84L (Fed. Cl. Jul 16, 1997)

The court holds that landowners are not entitled to compensation from the United States for well easements and access corridors constructed on their property by the U.S. Environmental Protection Agency (EPA). The court first rejects landowners' argument that the court erred in the liability phase of the trial by holding that the government's actions fell within the nuisance exception and thus was not a regulatory taking. The plume of contaminated groundwater under the property constituted a nuisance that needed to be abated. The landowners had a duty to provide access to their property for the abatement of a public nuisance. The court next rejects landowners' argument that the court's allowance of special benefits evidence during the damages phase of the trial was a punitive measure. The court allowed special benefits evidence to indicate that the same tests and analyses of the groundwater contamination undertaken by a private party as part of a plan of development would have cost at least $100,000. The quantification of the enhancement in value to the property was left for the damages phase of the trial. The court next rejects landowners' argument that the law of the case requires all expert appraisers testifying about the impact of the easements to have experience appraising the impact of monitoring wells. The court, in a footnote to an earlier related opinion, did not set a rigid "gold standard" for evaluating expert appraisers. The footnote simply noted the reasons the court relied on a report. The footnote is not the law of the case because it was eliminated from the opinion when the court issued an amended order.

The court next relies on the government's expert to hold that the damages to the landowners' property were $2,878. The government's expert developed an unimpaired value for the entire property using comparable sales of properties having no contamination, and assigned a value of 25 percent of fee value to the easements and then determined the impaired value of the easement. The court rejects the damage assessment of $1.055 million offered by landowner's expert. That expert characterized EPA's easements as exclusive use despite the court's previous finding that the wells would not interfere with the subject property's day-to-day use. In addition, the total square-foot area calculation of the easements by landowners' expert was 10,000 square-feet larger than the easement area calculated by a licensed land surveyor. The miscalculation inflated the values of the easements. The court next holds that it may consider contamination stigma when evaluating the fair market value of landowners' property. Under California law, reputation and history can have a significant effect on value. The court rejects landowners' contention that California law does not recognize a cognizable means of diminishing property. The court also rejects testimony by their expert that the groundwater contamination had no impact on the value of the subject property damages. The court further holds that no severance damages exist due to the taking of the well easements and access corridors. The existing wells could be relocated and capped and could be planned to coincide with parking lots or landscaped areas. The court rejects the government's argument that the monitoring wells caused the perception that the subject property was contaminated. The court previously found that the value of the landowners' property was reduced by the contamination rather than by the actions pursuant to the access order. The court further holds that a calculation of special benefits is unnecessary. The government calculated a $524,000 special benefit to the landowners. Their expert assumed that they received a $100,000 special benefit when EPA conducted a $100,000 Phase II study at the property. Finally, the court holds that no compensation is due the landowners. Whether the court uses the impaired or unimpaired value of the monitoring well easements determined by the government's expert or the value determined by landowners' expert, the special benefits outweigh any damage from the limited property interest needed to conduct the EPA activities.

[A previous decision in this litigation is published at 27 ELR 20342.]

Counsel for Plaintiffs
Paul R. Hamilton
Hamilton & Samuels
100 Bayview Cir., Newport Beach CA 92660
(714) 721-7200

Counsel for Defendant
David F. Shuey
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000