The Basics of Eminent Domain, Inverse Condemnations, and Regulatory Takings

Eminent Domain

  • “Eminent domain” is the power of the government to take property for public use, with the constitutional requirement of providing just compensation to the property owner.
  • “Condemnation” is the act of setting aside or taking property under the power of eminent domain. The right of eminent domain can be exercised only by legislative authority and for a public use or benefit. In Oregon, the state has delegated eminent domain authority to other, mostly entities including counties, cities, transit districts, water districts, ports and airports, utility companies, railroads, and school districts.
  • Frequently, property is condemned for a public infrastructure project including building a new road or modifying/expanding an existing one, installing or replacing utilities such as pipelines, power lines, or constructing new facilities such as power stations, pump stations, or water treatment facilities.
  • “Public use” has been broadly defined as any use affecting the general public.
  • Both the Oregon Constitution and the United States Constitution limit the power of eminent domain by ensuring that private property may not be taken without the payment of just compensation.
  • “Just compensation” is the fair market value of the property taken or the fair market value of that which the owner has been deprived of as a result of the condemnation.
  • “Fair market value” is the amount of money the property would bring if it were offered for sale by one who desired, but was not obliged, to sell and was purchased by one who was willing, but not obliged, to buy. Fair market value is determined by considering all factors “that might fairly be brought forward and reasonably be given substantial weight in negotiations between the owner and a prospective purchaser.”
  • Just compensation requires that the valuation of real property is to be based on its highest and best use, which is the use that will return the greatest economic benefit to the owner.

Inverse Condemnation

  • Inverse condemnation is an action against the government to recover the value of private property that the government has taken without first filing condemnation proceedings. Vokoun v. City of Lake Oswego, 335 Or 19, 26, 56 P3d 396 (2002).
  • When a governmental action causes a physical taking or destruction of real property, the property owner may seek compensation through an inverse condemnation claim.
    • When governmental action results in a permanent physical occupation of property, cases have uniformly held a taking to the extent of the occupation. Ferguson v. City of Mill City, 120 Or App 210, 215, 852 P2d 205 (1993).
    • For there to be a taking, the property must be substantially damaged by the government’s action, and its fair market value permanently reduced as a result. Hawkins v. City of La Grande, 315 Or 57, 843 P2d 400 (1992).

Regulatory Taking

  • Absent a physical taking or occupation of property, when a governmental authority utilizes land use regulations or other administrative limitations on the use of property, such regulations can constitute a compensable taking if the property owner can prove that such governmental choice deprives the owner of all economically feasible use of the property. Boise Cascade Corp v. Board of Forestry, 325 Or 185, 197-98, 935 P2d 411 (1997). If the property owner has “some substantial beneficial use” of the property, then there is no regulatory taking of property. Id.