Cleaning Up Condemnation Proceedings: Legislative and Judicial Solutions to the Dilemma of Admitting Contamination Evidence

J. D. Candidate, The University of Iowa College of Law, 2008; B.B.A., B.S.S.W., Texas Christian University, 2004. I would like to thank the editors and student writers of the Iowa Law Review for their valuable time and effort on this piece. I would also like to thank my family and my fiancé, Nicolas, for their endless love and support.

I. Introduction

The Windham Mills Technology Center in Northeast Connecticut is comprised of renovated factory buildings that once housed The American Thread Company, the largest cotton mill in the world during the early twentieth century.1 The mill finally closed its doors in 1985 after many years of steady decline, leaving behind the dilapidated relics of a once-thriving factory and the stain of hazardous chemicals that had seeped into the soil over its years of operation.2 In an effort to revive the local economy, which had crumbled along with the mill, the city condemned the property and conveyed it to the Windham Mills Development Corporation.3 Before the Corporation could adapt the site for commercial use, however, it required extensive environmental remediation.4 This became a major issue in determining how to value the property in the condemnation trial.5 The presence of contamination complicated the process of determining what constituted just compensation for the owner of the property.6

Traditionally, just compensation for the exercise of eminent domain is some measure of market value for the property.7 In the case of contaminated properties, market value is complicated by the costs of cleaning up the property for the intended use and the possibility of subsequent cost-recovery actions against the condemnee. Finding just compensation for contaminated properties presents the decisionmaker8 with two undesirable alternatives: admit evidence of contamination to reduce the condemnation award at the risk of imposing double liability for cleanup costs,9 or withhold the evidence of contamination and compensate the landowner as if the property were remediated at the risk of overcompensating the landowner at the expense of taxpayers.10

The Connecticut Supreme Court addressed this issue when evaluating just compensation for the landowner in the condemnation of The American Thread Company's dilapidated cotton mill. In Northeast Ct. Economic Alliance, Inc. v. ATC Partnership,11 the court held that contamination evidence must be admitted, thereby reducing the compensation awarded to the landowner.12The Connecticut approach falls in line with the majority of states that have considered this issue.13 However, many state courts and legislatures are split between this approach and its alternatives, and there is a substantial body of authority defending or disparaging each alternative.14

The divide in authority is likely to grow as courts see an increasing number of contaminated properties subjected to eminent domain proceedings, in part because the growing national interest in urban renewal has created a greater demand for the redevelopment of stagnant, often contaminated, urban properties. Many of these properties are relics of the industrial age and exist today only as scars on city landscapes. Entrepreneurs are taking advantage of the opportunities to redevelop these properties into uses that are profitable and beneficial for the public.15 The Windham Mills Technology Center development on the former site of the American Thread Company is just one example of an industrial relic being transformed into modern use. 16

In light of the conflicting authority on the question of whether to admit contamination evidence and the importance of this issue in urban revitalization, this Note analyzes the issues involved and concludes that legislatures and courts can best address the dilemma of admitting contamination evidence in different ways. Part II begins this discussion with some background in the traditional principles of eminent domain and just compensation. Part III examines how compensation for contaminated properties is not well-aligned with traditional principles of just compensation and examines the current split in authority regarding the admissibility of contamination and remediation evidence. Part III introduces the double-liability problem, which occurs when a condemnation award to a landowner is reduced due to the presence of contamination and that landowner is subsequently held responsible for cleanup costs in a cost- recovery proceeding. Finally, Part IV suggests possible legislative and judicial solutions to the dilemma of admitting contamination evidence and avoiding the double-liability problem.

Ultimately, this Note concludes that legislative bodies can achieve the best solution through legislation expressly allowing the admission of contamination evidence in a condemnation...

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