Oregon's Eminent Domain Laws and Property Rights

The following responses are intended to provide general information about eminent domain laws in the featured state. Such information does not constitute legal advice. Anyone interested in learning more about eminent domain law and the impact it may have on a given set of facts should consult with an OCA attorney or another attorney experienced in handling eminent domain cases.

• Who Can Exercise Eminent Domain Laws?

  An agency or entity can only take private land for public use when the Oregon legislature specifically grants the authority to do so. Bridal Veil Lumbering Co. v. Johnson, 30 Or. 205, 208, 46 P. 790 (1896); GTE NW, Inc. v. Pub. Util. Comm’n of Oregon, 320 Or. 458, 466, 900 P.2d 495 (1995), cert. denied, 517 U.S. 1155 (1996). Many public bodies, quasi-public bodies, and private corporations have been granted authority to exercise eminent domain through statutes and home-rule charter, including the state and its various state agencies and departments, cities, counties, municipalities, port authorities, irrigation districts, railroads and railway companies, electric companies, gas companies, school districts, community college districts, transit districts, metropolitan service districts, people’s utility districts, pipeline companies, sanitary districts and authorities, water control districts, drainage districts and authorities, water control companies, service districts, and utility cooperatives.
  
  The authority to condemn is typically found in the statutes related to the particular agency or company type rather than in Oregon’s eminent domain code (Oregon’s eminent domain code, found in ORS Chapter 35, instead sets forth the procedures for condemning property). Because a public or private entity may only condemn if that authority has been specifically delegated to it by the Oregon legislature, a property owner whose land is being condemned should confirm such delegation at the outset of any condemnation case to determine whether the agency or entity attempting to exercise eminent domain powers actually has the lawful authority to do so.

• What Are the Legal Requirements for Exercising the Power?

  Under Oregon law, private property can only be condemned for the public use and benefit, and cannot be condemned if the condemnor intends to convey all or part of the property to a private third party. In any condemnation, just compensation must be paid for all property taken. Procedurally, Oregon requires condemnors to appraise the property and to make a formal offer to the property owner to purchase the property. This offer is typically accompanied by the condemnor’s appraisal. The condemnor must then allow the property owner at least 40 days to consider the offer prior to filing condemnation proceedings.
  
  To learn more about the procedural aspects of eminent domain cases in Oregon, look to Chapter 35 of the Oregon Revised Statutes.

• What Limitations or Defenses Exist?

  The grounds for challenging the right to condemn are quite limited under Oregon law. The condemning authority will typically make a formal finding that its project is a public use and that the particular properties to be acquired are necessary for the project. That finding is given significant deference by Oregon courts. Occasionally, defenses can be raised as to (a) whether a proper public use exists for the condemnation, (b) whether the prerequisite legal authority is present, or (c) whether required procedural steps were taken. If a challenge can be brought, the Court will review the submitted evidence and rule on the defenses in a proceeding prior to the trial to determine just compensation.
  
  As noted, deference is typically given to a condemnor’s decision to condemn, unless the agency has committed fraud, acted in bad faith, or has abused its discretion. In the absence of fraud, bad faith, or the abuse of discretion, the Court will presume that a condemnor’s ordinance or resolution establishes the public necessity of the proposed use; the property is necessary for the project; and that the proposed use, improvement, or project is planned and located in a manner that is the “most compatible with the greatest public good and the least private injury.” ORS 35.235(2).

• What Constitutes a Public Purpose?

  Like the United States Constitution, Oregon’s Constitution limits the use of eminent domain to projects that constitute a “public use.” Oregon courts have defined “public use” broadly to include any use affecting the general public (even if the use is only be a small part of a community) rather than benefiting particular individuals. Public uses generally include highways, roads, parks, schools, and other improvements that serve the public benefit.
  
  As discussed above, following the United States Supreme Court’s decision in Kelo, Oregon voters passed a ballot measure that prohibited the government from condemning property of one private property owner on behalf of another private property owner (a common approach to economic redevelopment). However, the uses for which an agency can condemn property are still very broad, and may include some economic development projects. If a property owner’s property is being condemned for economic development, the question of public purpose deserves close and careful analysis.

• How is Just Compensation Determined?

  The major focus of most eminent domain cases is in Oregon is obtaining just compensation for the property owner. Just compensation includes the fair market value of the property taken (or the fair market value of that which the owner has been deprived of by reason of the acquisition of the owner’s property). When an entire parcel of property is taken, just compensation is the fair market value of the parcel plus any improvements (to the extent the improvements enhance the value of the land). See State by and through State Highway Comm’n v. Superbilt Mfg. Co., 204 Or. 393, 412, 281 P.2d 707 (1955); State by and through State Highway Comm’n v. Anderson, 234 Or. 328, 331, 381 P.2d 707 (1963). For partial takings, just compensation includes both the value of the portion of the property condemned and any reduction in the fair market value of the owner’s remaining property caused by the taking. See State by and through Dep’t of Transp. v. Lundberg, 312 Or. 568, 574, 825 P.2d 641, cert. denied, 506 U.S. 975 (1992); State by and through State Highway Comm’n v. Hooper, 259 Or. 555, 560, 488 P.2d 421 (1971).
  
  Just compensation also requires that the property be valued at its highest and best use, which is not always the current use of the property. See Lundberg and Superbilt, supra. If just compensation cannot be agreed to by the condemnor and the owner, it will be determined at trial by a jury.

• How Is Fair Market Value Defined?

  In Oregon, “[f]air market value is defined as the amount of money the property would bring if it were offered for sale by one who desire, but was not obliged, to sell and was purchased by one who was willing, but not obliged, to buy.” State by and through Dep’t of Transp. v. Lundberg, 312 Or. 538, 574, 825 P.2d 641, cert. denied, 506 U.S. 975 (1992). 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.” State by and through State Highway Comm’n v. Superbilt Mfg. Co., 204 Or. 393, 412, 281 P.2d 707 (1955).
  
  The date the property is valued is either the date the condemnation complaint is filed or the date that the condemnor takes possession of the property, whichever is earlier. Because fair market value is often driven by both the date of value applied and the highest and best use of the property, both elements play an important role and impact the fair market value determination. Generally, the property’s fair market value is the subject of opinion testimony by expert qualified real estate appraisers, although a non-corporate owner is typically allowed to testify as to the value of the property being taken. Appraisers can use a combination of different valuation approaches to determine the fair market value of the property, including comparable sales, income, and cost approaches.

• What About Recovering Damages to Remaining Property?

  When a condemnor takes only a portion of the property (or less than the fee interest), just compensation will be paid both for the property actually taken and for the reduction in the fair market value of the owner’s remaining property caused by the taking. This is known as severance damage. However, property owners should understand that other common damages are not compensable, including (a) government activities that are considered a use of the government’s police power (e.g., regulating traffic lanes and speed, parking regulations, access restrictions, and changes in the highway system resulting in reduced or increased volume of traffic), (b) business losses or lost profits resulting from interference, interruption, or restriction in the operation of the business, (c) temporary inconvenience during construction of a public project, (d) remote or speculative damages, and (e) consequential damages related to a public project where no taking of the owner’s land actually occurs. Note, however, that a property owner who must move from their property as a direct result of the project may be able to recover some of its costs associated with moving, under an agency’s relocation assistance program.

• Is the Landowner Entitled to Recover Reasonable Attorney Fees? Expert Fees? Litigation Costs?

  In Oregon, an owner is often able to recover its cost and expenses, including appraisal costs and expert fees incurred in preparing and conducting the defense of a condemnation action. ORS 35.335. In addition, in many circumstances, the owner can be reimbursed for its reasonable attorney fees. ORS 35.346(7). By statute, the property owner will be reimbursed for its reasonable attorney fees when: (1) the amount of the final just compensation determined by the court or jury exceeds the highest written offer submitted by the condemnor to the owner prior to filing the condemnation action; (2) the court determines that the first written offer made to the owner prior to the condemnation action was not a good-faith offer of an amount reasonably believed by the condemnor to be just compensation; or (3) the condemnor abandons the condemnation action once filed but prior to final adjudication, the action is dismissed or terminated, or the condemnor elects to not take the property up to 60 days after the verdict. ORS 35.346(7) and ORS 35.335.