Eminent Domain In The Wake Of Natural Disasters

Article, Law360February 2018

Legal / Corporate consulting / Disputes

Briggs Stahl discusses the possible use of eminent domain after or in advance of natural disasters in Law360.

As appeared in Law360, February 9, 2018.

By: Briggs Stahl

In the past few years we have seen a variety of disasters — both natural and man-made — wreak havoc on our infrastructure and strain catastrophe response capabilities. Hurricanes, historic floods, wildfires and mudslides have hit the country’s infrastructure particularly hard. Given the increased frequency and severity of these types of events in many locations, increased infrastructure planning and development is critical.

In the wake of natural disasters, state and municipal leaders are faced with the need for immediate repairs and remediation. But once the basic clean-up is completed, many begin to consider permanent solutions to the damage and preventative solutions to reduce potential future impact.

Following a disaster, once the immediate needs to protect life and ensure safety are met, one of the next steps is to reestablish access for residents. The initial focus is on clearing and repairing the roadway, rebuilding bridges and getting traffic back to normal. Often this is a temporary fix, completed quickly to reopen the road. But beyond the quick fix, what are the opportunities for a state or municipality and, more importantly, what are the implications if eminent domain is used?

Permanent Solutions

When states or municipalities begin thinking about rebuilding permanent infrastructure, there are a number of considerations that must be made. How long will the temporary fix last? Can we rebuild the road exactly as it was? Is this an opportunity to make improvements?

To illustrate, let’s look at an example from a few years ago. In September 2013, Colorado experienced heavy rains and catastrophic flooding that damaged 486 miles of state highways and 120 bridges, especially through canyons. After the floodwaters receded, the initial focus was on reestablishing access for residents. However, when designing the permanent fix, engineers and officials worked on assigning new design standards for roads, balancing new stream flow with long-term river management.

In one canyon, the permanent solution required reinforcing the new river channel and shifting the road away from the water by 5 to 50 feet, mostly by carving into canyon walls. Moving the roadway necessitated the use of eminent domain to take the land needed to ensure the safety of the roadway. In this example, the takes included undeveloped area of both public lands and private property. The taking of private property can carry a constitutional requirement to compensate the land owner for real estate damages. These damages are often calculated by a real estate appraiser.

If the permanent fix had affected businesses, the condemning authority would have not only needed to pay the real estate damages, they would have also been required to pay the business damages or relocation expenses. It is important to note that compensation due to owners will ultimately depend on individual state statutes or constitutions.

In states that require payment for business damages, a business damages expert can prove very useful. Business damages experts calculate the impact a take will have on each individual business effected. They can be brought in once the take has been determined, if a dispute arises regarding the damage amount. Or, a business damages expert can work jointly with planners and engineers to determine a take and develop or negotiate a cure for each affected business before design plans are finalized to limit potential damages. Any proposed take can result in a number of business and land owners who will potentially need to be compensated. By working with a business damages expert early in the process, officials can plan a project more efficiently and possibly reduce the amount of business damage caused.

When Code Changes the Cure

Sometimes, creating a permanent fix is not so straightforward. New construction, and sometimes even repairs, can require the project / development to comply with current building and safety codes or design standards. In these situations, the best option for a cure may not be the standard approach, but might require some creative thinking.

Not every disaster is caused by nature — sometimes it can be man-made. Let’s look at another example. In March 2017, a massive fire caused a bridge on Interstate 85 (I-85) in Atlanta to collapse. The fire, said by the Atlanta Fire Department as having been “maliciously set,” started in a state-owned storage area under the highway bridge which contained high-density polyethylene (HDPE) piping. The presence of the HDPE pipes caused the fire to burn hotter than usual, leading to a collapse of the bridge. In the end, three sections of both northbound and southbound I-85 had to be replaced.

Now, in this example, the storage area under the bridge was state-owned. But let’s assume for a moment that this storage space was owned by a manufacturer of HDPE piping, whose use had been previously allowed and “grandfathered in” under prior rules. In the wake of this infrastructure collapse, the state may decide that storing HDPE piping under a main thoroughfare is not safe or no longer within code. They could use an eminent domain “take” to claim that piece of land and use it for the reconstruction of the bridge. This take would likely cause business damages to the manufacturer, resulting in another situation in which a business damages expert would be utilized.

In this scenario, a business damages expert would evaluate the damages caused by the take, and work with the planners, engineers and business owner to develop a cure — whether that means simply paying out the business damage caused or, as seen in other scenarios, purchasing a different piece of land and building a new storage facility.

After a disaster, either natural or man-made, the permanent solution may take some time to develop, but if it is planned carefully, the business damages caused by eminent domain actions can be potentially reduced or limited.

Preventative Solutions

Eminent domain can also be used in the development of preventative solutions to aid states and municipalities in the event of future catastrophe events. With the increase in frequency and severity of natural disasters, state and local authorities are looking at preventative measures that can be taken in order to improve safety, efficiency and durability. Some of these solutions may be about moving people, and some may be focused on preventing or reducing the impact of the event.

In the immediate preparation for an intense storm or other emergency, a city or state’s first thoughts typically turn toward the preservation of life and getting people out of harm’s way. Several state and municipal leaders are looking to learn from past experience (at home or that of their neighbors), and are making future plans for emergency preparedness and response. In some cases, they are deciding to allocate funds towards widening or improving roadways to facilitate a large evacuation. This might result in eminent domain actions, depending on the plan and design the improvements take.

In an effort to limit population density in high-risk areas, some city or state officials may turn to inverse condemnation. Similar to eminent domain actions, inverse condemnation may require compensation for owners for real estate and/or business damages incurred. However, inverse condemnation differs from eminent domain in that it is more often used to limit the use of land, rather than actually taking the property. This may be done through a deprivation of access, removal of ground support or as a regulatory action (such as a zoning change) to make the property unusable for its intended purpose. Following an active catastrophe season, a city may seek to limit the number of new residents moving into a high-risk area with limited evacuation routes. They could consider using inverse condemnation to limit a new condominium development to 40 units instead of the planned 100 units by restricting the height of the building. In this examples, the case could require at least two court appearances; first, for a judge to determine liability, and second, for a jury to determine compensation for real estate and business damages, again, depending on state requirements.

Examining preventative solutions to limit the impact of catastrophic events and natural disasters, some states and municipalities in coastal areas may also consider using eminent domain takes to increase or reinforce sea walls or levees. As with any take under an eminent domain action, real estate and/or business damages would be required to be paid according to state regulation. The advantage of considering a take for a preventative solution is that the developers and condemning authority are often afforded the luxury of time to plan and design a project to reduce future damages to owners.

With the proposed increases in infrastructure spending at a federal level, eminent domain actions are expected to increase. The proposed funding would allow governmental bodies to put more resources into planning for prevention, and more fully examine permanent solutions for the country’s aging infrastructure.

With the luxury of time, officials can work with a wide host of experts, including a business damages expert, to develop creative solutions for projects that limit the amount of real estate or business damages incurred as a result of eminent domain actions.

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Briggs P. Stahl is a partner at RGL Forensics in Tampa, Florida.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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