September 09, 2013 Articles

Fear-Based Damage Claims in Electric-Transmission Condemnation Trials

Trial strategies for addressing claims based on public fear of high-voltage lines.

By Sam Meziani – September 9, 2013

High-voltage transmission lines have proliferated across the country, pushed by population growth, increasing consumer electrical use, and a trending public preference for wind energy generated far from urban centers. With new lines come new right-of-way demands and, inevitably, the use of eminent domain to secure that right-of-way. In condemnation proceedings, landowners seeking to maximize their recovery may seek to persuade juries that the general public fears that high-voltage power lines will harm human health, thereby decreasing market values and increasing just compensation. Most courts recognize that the balance of the scientific research does not support a claim that transmission lines actually cause adverse health effects. Nonetheless, most courts will admit evidence of public fear to ensure the landowner receives just compensation for any genuine decrease in market value. In light of this reality, this article presents trial strategies for addressing fear-based damage claims in condemnation cases.

A 345,000-volt or 500,000-volt transmission line typically consists of a single-pole or lattice structure, up to 190 feet tall, and spaced between 1,000 and 1,500 feet apart. The easements are typically 150 to 250 feet wide with the power poles located in the center. Depending on elevation and other factors, the structures can be visible from far outside the easement. Because the test for just compensation is based on the fair-market-value difference after the taking, see, e.g., Olsen v. United States, 292 U.S. 246, 255 (1934), landowners claim that buyers often refuse to purchase property encumbered by or near a transmission line, and when they are willing to purchase, it is only for a substantially reduced price. But it can be difficult for landowners to quantify the effects of a transmission line on market value. Where good comparable sales are not available, or where they do not demonstrate a significant value difference, landowners may claim an additional basis for market damage: People will not buy land or homes near a high-voltage transmission line because they fear the electromagnetic fields (EMFs) created by operation of the line will harm human health. Broad-based claims about what the buying public will or will not do, and the “public perceptions” of EMFs in the market place, can be difficult to quantify and present at trial in a persuasive manner. The best trial strategy is to present direct evidence of market sales near transmission lines in a compelling visual form.

In most jurisdictions, evidence that the public fears EMFs will be admissible as long as the evidence is linked to market value. Some older cases that antedate the EMF controversy exclude all evidence of fear-related damages to market value as too speculative. See, e.g.,Cent. Ill. Light Co. v. Nierstheimer, 185 N.E.2d 841, 844 (Ill. 1962) (trial judge should not have considered testimony of general risk of power lines including risk that lines “might snap”). Other older decisions require a showing that the fear is “reasonable” as a foundation to admitting evidence of fear-related diminution in value. See, e .g.Nichols on Eminent Domain § G26.04[3][a] (setting forth different approaches on the admissibility of EMF evidence). However, the modern trend and majority rule, termed the “regardless of reasonableness approach,” is to admit evidence of public fear of EMFs without any proof that the fear is reasonable. See, e.g., San Diego Gas & Elec. Co. v. Daley,253 Cal. Rptr. 144, 152(Cal. Ct. App. 1988) (reasonableness is not a factor that need be considered in determining whether the fear of the danger existed and would affect market); Florida Power & Light Co. v. Jennings, 518 So. 2d 895, 897 (Fla. 1987) (the public’s fear is a factor that may be relevant to the issue of just compensation and may be used as a basis for an expert’s valuation opinion regardless of whether this fear is objectively reasonable); W. Farmers Elec. Co-op. v. Enis,993 P.2d 787, 793 (Okla. Civ. App. 1999) (landowners may establish public fear based on newspaper articles and other publications). Because the purpose of a condemnation case is to award just compensation based on market value, these courts reason that any genuine decrease in market value is admissible and compensable even if it is based on an irrational factor.

The Ninth Circuit’s decision in United States v. 87.98 Acres, 530 F.3d 899 (9th Cir. 2008), is a good example of the majority rule. The court noted that claims that EMFs actually cause negative health effects are not scientifically reliable. Nevertheless, the court reasoned that regardless of the science,

evidence of public perceptions of health risks—even irrational public perceptions—may properly establish an impact on market value. If fear of a hazard would affect the price a knowledgeable and prudent buyer would pay to a similarly well-informed seller, diminution in value caused by the fear may be recoverable as part of just compensation.

Id. at 904.

Thus, the court held that “all EMF evidence [must] bear on public perceptions and their market effect.” The court therefore upheld the decision allowing an expert to testify about negative public perceptions of EMFs.

Of course, even in a “majority rule” jurisdiction, not all expert-opinion evidence is created equal. In practice, appraisers are typically allowed to testify about the market generally and state courts can be lenient in admitting opinions that bear on market value.

At the same time, an appraiser’s experience, training, and education consist primarily of the ability to view completed sales in the market, compare those sales to the subject, make appropriate adjustments for differences, and arrive at a well-reasoned valuation opinion. Unlike political or other polling professionals, appraisers may not be genuinely qualified to compile and analyze public-opinion data. See, e.g.City of Santa Fe v. Komis, 845 P.2d 753, 756 (N.M. 1992) (public-opinion poll based on reliable methods admissible to show public fear). Industry standards allow appraisers to conduct interviews, but interviews should supplement, not supplant, market data. The Appraisal Institute sanctions the use of personal interviews but limits their use: “Although data gathered through personal interviews is primary data, the opinions of market participants should not be used as the sole criterion for estimating adjustments or reconciling value ranges if an alternate method that relies on direct evidence of market transactions can be applied.” Appraisal Inst., Appraisal of Real Estate 321 (13th ed. 2008) (emphasis added). Thus, a competent appraisal opinion involving public perceptions of EMFs should be based primarily on market data, not hearsay conversations.

Not surprisingly, juries prefer direct market evidence to show what buyers actually do in the marketplace, over the conclusory opinions of an expert witness based on hearsay conversations or articles on EMFs published in popular media or on the web. A paired-sales analysis of homes in the relevant market comparing sales adjacent to, and away from, a transmission line can demonstrate if proximity to a power line negatively affects value. For example, in the following chart, Sales Nos. 1, 3, and 5 are adjacent to transmission lines. These sales are compared with homes located away from a transmission line.

(Courtesy of J. Philip Cook, MAI.)

A paired-sales analysis that focuses on property as close and as similar as possible to the subject is likely to have a greater influence on the fact finder than testimony from an appraiser or other witness based on isolated interviews or a review of popular media or Internet publications.

In addition to paired-sales analyses, there have been many appraisal studies conducted on the relationship between power lines and land values. A summary of the numerous statistical studies and regression analyses by an expert witness is not, frankly, the most riveting trial testimony. A helpful technique is to summarize and present the results of these studies in graphic form. For example, the following graph summarizes a statistical analysis of property values near transmission lines:

(Courtesy of J. Philip Cook, MAI.)

Other compelling visual examples may include aerial or on-the-ground photographs showing development, or any lack thereof, in areas near transmission lines. In developed areas, photographs of development can be effectively coupled with a paired-sales analysis.

Ultimately, the price a buyer will pay for property with a transmission line is an inherently speculative question. The very test of market value asks the fact finder to decide a hypothetical, namely, the sale price on a specific date assuming a willing buyer and seller, before and after the taking. When a jury panel is instructed to reach a finding on market value, that task is all the more difficult when the jury is presented with the argument that the market is influenced by the public’s fear of EMFs. To resolve these uncertainties and reach a finding, juries need to be presented with evidence of actual market data in a compelling visual form. Visual evidence that explains and gives substance to abstract concepts is often more effective in an EMF case, regardless of the reasonableness of the claim.

 

Keywords: energy litigation, high-voltage transmission lines, EMF, electromagnetic field, eminent domain

 

Sam Meziani is a shareholder with Van Cott, Bagley, Cornwall & McCarthy, P.C., in Salt Lake City, Utah.


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