Typically, in California eminent domain cases, fair market value is determined
by a variety of factors, primarily through the analysis of comparable
sales or an income capitalization approach. However, relevant market data
is not always available. In such cases, the law allows compensation to
be determined by other methods that yield a just and equitable valuation.
When the Central Valley Gas Storage v. Southam decision was appealed, it
was explained when this method of valuation can be used, in addition to
any limits an appraiser might encounter. In the case, Central Valley operated
a reservoir for the storage and withdrawal of natural gas. With the approval
of the California Public Utilities Commission, Central Valley took eminent
domain action to acquire Southam’s underground gas storage rights
on 80 acres of land. A dispute arose when both parties disagreed on the
method of valuation.
- Central Valley sought to value the land using market data involving similar
transactions, based on the number of surface acres the landowners held
within storage boundaries.
- Southam sought to value it based on the volume of gas in the storage reservoir.
Central Valley argued that valuing the land based on the volume of gas
storage was improper given the speculative nature of it, which the trial
court agreed with. Southam appealed, claiming the approach was proper
and there are no true comparables when it comes to dealing with underground
storage reservoirs. The decision allows for the valuation of underground
rights based on surface acres with the existence of supporting market data.
San Diego Eminent Domain Lawyers
At Allen, Semelsberger & Kaelin LLP, we are here to help protect your
property, your company, and your best interests in any
eminent domain case. Over the years, our lawyers have been selected for numerous awards
and have successfully obtained excellent results on behalf of our clients.
Contact us today at (888) 998-2031 to schedule a free case evaluation.