ITC’S NEW SPIN ON OLD SALAMI TACTICS

ITC has suggested that a property owner can avoid an immediate condemnation if ITC is allowed to remove certain trees.  However, ITC has not promised to avoid ever condemning.  ITC cannot avoid eventually condemning the property because it must expand upon the property rights it currently enjoys in order to comply with federal regulations.  If ITC removes the trees now, as a result of a voluntarily grant provided by the property owner, ITC will avoid paying significant just compensation for those trees when it eventually condemns. This is called a “salami tactic.”

“Salami tactics” is one of the more colorful phrases used in condemnation law.  The term was actually used by the United States Supreme Court (“SCOTUS”) in a 1973 decision. 

Salami tactics generally reference a divide and conquer strategy.  When applied in a condemnation case, it indicates that the agency is attempting to pay less than it is required by dividing the parts from the whole in a piecemeal manner.  In the SCOTUS case, the government condemned property surrounding a railroad, including buildings constructed by a tenant whose lease expired in seven years.  The government argued that the tenant was only allowed to seek just compensation for the use of the buildings during the balance of the lease term after removing the buildings and recovering their salvage value.  SCOTUS recognized that the tenant “could have sold the leasehold at a price that would have reflected the continued ability of the buyer to use the improvements over their useful life. [The tenant] had an unbroken succession of leases since [53 years before the taking], and it was in the interest of the railroad, as fee owner, to continue leasing the property, with its grain elevator facilities, in order to promote grain shipments over its lines. In a free market, [the tenant] would hardly have sold the leasehold to a purchaser who paid only for the use of the facilities over the remainder of the lease term, with [the tenant] retaining the right thereafter to remove the facilities -- in effect, the right of salvage.”  The government attempted to refute the argument that the lease would likely be renewed by asserting that it “could purchase the fee and wait until the expiration of the lease term to take possession of the land” without paying the true value of the buildings.  SCOTUS rejected that argument.  While the tenant “bore the risk that the railroad would change its plans, [it] should not be forced to bear the risk that the Government would condemn the fee and change its use. Where multiple properties or property interests are condemned for a particular public project, the Government must pay pre-existing market value for each. Neither the Government nor the condemnee may take advantage of ‘an alteration in market value attributable to the project itself.’ … [I]t would be unjust to allow the Government to use ‘salami tactics’ to reduce the amount of one property owner's compensation by first acquiring an adjoining piece of property or another interest in the same property from another property owner.”  Almota Farmers Elevator & Warehouse Co v United States, 409 US 470 (1973).

According to a 1952 Time Magazine article (found through the wonders of Wikipedia), the term “salami tactics” was coined by the leader of the Hungarian Communist Party in the 1940s when describing how they were able to seize control of the country.  The non-Communist parties were destroyed by "cutting them off like slices of salami."  By portraying his opponents as fascists, he was able to get the opposition to slice off its right wing, then its centrists, then the left wingers, until only those willing to collaborate with the Communists remained in power.

I will leave it to the readers of this blog to evaluate whether SCOTUS took into account the etymology of the term “salami tactics” when applying it to the government’s failed attempt to trammel upon sacred rights guaranteed by the Fifth Amendment of the United States Constitution by avoiding payment of full just compensation.

ITC is clearly employing salami tactics.  Even the real estate appraisers it employs recognize that the loss of trees that provide privacy, shade and a natural beauty amenity to residential homes reduces the value of those homes.  ITC first made a “sucker offer,” (my term not SCOTUS’), seeking to obtain an easement allowing clear-cutting of all trees, bushes and shrubs within the encumbered area in exchange for a payment that was calculated by ignoring the impact of the easement on the home.  After scaring the property owners with that offer, ITC offered to enter into an agreement that would result in the removal of certain trees without the imposition of a permanent easement.  However, ITC refused to confirm that the agreement would preclude a future condemnation.  ITC cannot agree to forego a future acquisition because it must expand upon the property rights originally obtained by Detroit Edison in the 1920s in order to comply with federal regulations.  But if the trees are removed voluntarily now, when ITC condemns later, the just compensation that it will offer will be dramatically reduced because the trees are already gone.  If the “salami” consists of the owners’ right to just compensation, ITC wants the owners to give away a large slice of their salami either for free or at a dramatic discount now before it returns to take the rest later.

ITC’s new salami tactics demonstrate exactly why it is necessary to consult with an attorney experienced in representing property owners in condemnation cases when confronted by a proposed acquisition.  Please feel free to contact me if ITC or any other agency seeks to acquire property rights from you.