ELR Citation: ELR 20117
No(s). 83-1170 (U.S. Dec 4, 1984)

The court holds that when the United States condemns a public landfill that a municipality is obliged to replace, the Fifth Amendment does not require that the United States pay the cost of acquiring a substitute, so long as the market value of the condemned property is ascertainable and there is no showing of manifest injustice. The normal measure of just compensation is fair market value; that is, the price a willing buyer will pay a willing seller. Since testimony at the trial established that a robust market for landfill properties exists, the fair market value of the property at issue is readily ascertainable and normally no exception to the measure would be called for.

The Court goes on to examine the central issue of whether a different standard for just compensation applies to the municipality because it is a public property owner. Though the text of the Fifth Amendment refers only to compensation for "private property," the term encompasses the property of state and local governments when it is condemned by the federal government. The "substitute facilities doctrine" has sprung from a dictum in Brown v. United States. Brown, however, merely indicates that the federal government could have provided the city with a substitute landfill instead of a money payment. Nothing in that case implies a duty to provide a money payment in excess of fair market value—such as the cost of the replacement landfill argued for here. The city's legal obligation to replace the landfill does not change the result; that obligation is not more compelling than the necessity for an individual to replace his condemned home. Awarding replacement cost would tend to give the city a windfall, since a new facility is likely to be more valuable to the city than the condemned one. Attempting to reduce the chance of windfall by discounting the cost of the substitute facility would add uncertainty and complexity to the valuation process without necessarily increasing fairness. Finally, finding a federal obligation to pay for a substitute facility would violate the principle that just compensation need not include subjective values of the property owner.

In a brief concurring opinion in which Justice Powell joined, Justice O'Connor emphasized that the Fifth Amendment requires a made-whole remedy; had the city proved a significant difference between fair market value of the condemned property and the value of an equivalent facility, the result might have been different.

Counsel for Petitioners
Joshua I. Schwartz
Solicitor General's Office
Department of Justice, Washington DC 20530
(202) 633-2217

Counsel for Respondents
H. Lewis Nichols
Saner, Jack & Sallinger
1200 Republic Bank Bldg., Dallas TX 75201
(214) 742-5464

Justice Stevens, Justice O'Connor, with whom Justice Powell joins concurring.