When contamination is discovered during condemnation of a property through eminent domain, legal questions arise as to whether the cost of remediating that contamination should be deducted from the just compensation awarded the property owner. Valuation questions arise as well. What kind of cleanup, if any, would the local market demand? What kind of discounts, if any, would the local market impose on a sale of the subject property as contaminated? As remediated? As unimpaired? While these are all interesting questions, it is important to first separate the legal challenges from the valuation challenges.
Legally, the question of whether contamination may be considered during eminent domain proceedings depends to a great extent on state law, much of which is still uncertain. State laws differ on this question of inclusion or exclusion of the costs of remediation when determining just compensation.