Several recent decisions have specifically addressed the impact of electromagnetic fields on the marketplace, often in the context of eminent domain and condemnation proceedings.

In 1987, the Florida Supreme Court observed that "a certain amount of fear and healthy wariness ... strikes us as eminently reasonable." It permitted evidence of marketplace fear to be admitted "without independent proof of reasonableness" (Florida Power and Light Co. v. Jennings). This decision echoed an earlier approach of the Ninth Circuit Federal Court of Appeals in the context of the loading and unloading of munition ships in Hawaii. The question for the ninth circuit simply was whether this fear will "affect the actions of knowledgeable and prudent sellers and purchasers" (United States v. 760.807 Acres of Land).

One year after the Florida decision, the California appellate court allowed evidence of the "calculated diminution" of present market value caused by public fear of electromagnetic radiation (San Diego Gas and Electric Co. v. Daley).

The Kansas Supreme Court followed suit in 1991, saying that "any loss of market value proven with a reasonable degree of probability should be compensated" (Ryan v. Kansas Power and Light Co.).

New York decisions are in accord. Those courts require that a nexus be established between "the market value diminution of the property" and the "particular fear" (Jones v. Power Authority of the State of New York, Criscuola v. Power Authority of the State of New York, Zappavigna v. State of New York and Power Authority of the State of New York). That principle has spawned a recent spate of lawsuits in New York against cellular telephone companies and Amtrak, as well as several inverse condemnation actions (Bolton and Sick 1999, 335; Rikon 1996).

The marketplace fear theory is not without its limitations. First, the United States Supreme Court (Daubert v. Merrill Dow Pharmaceuticals, Inc., General Electric Co. v. Joiner, Kuhmo Tire Co. Ltd. v. Carmichael) and the Seventh Circuit Federal Court of Appeals (Target Marketing Publishing Inc. v. ADVO, Inc.; Minasian v. Standard Chartered Bank, PLC, Rosen v. Ciba-Geigy Corp.; and Lester v. Resolution Trust Corp.), for example, have both signaled their distaste and impatience with so-called "junk science." It is becoming increasingly clear that all is not fair, relevant, material, probative, demonstrably provable, reliable, and admissible under the rubric of science (Hoyt and Aalberts 2001; Schweihls and Reilly 2000; Reeg and Bebaut 1997; Hoyt and Aalberts 1997).

Next, courts and tribunals have shown some conservatism in application of these principles. California will not extend marketplace fear as an element of damages in inverse condemnation cases when the power line was already in existence (San Diego Gas and Electric Co. v. Superior Court; Bolton and Sick 1999, 339). The Illinois Property Tax Appeal Board has rejected pleas based on "proximity to high tension electrical wires" where the subject is actually assessed at a value per square foot lower than values per square foot generated by sales of comparable properties nearby. (See, for example, Schiavone v. DuPage County Board of Review.) Nor will it consider relief when taxpayers fail to produce any market value evidence. (See Louis Garcia, for proximity to oil tanks and wells; Vlastimil John Surak, for high voltage wires and railroad tracks; and William Miller for noxious odors.)

Third, the Fifth Circuit Federal Court of Appeals recognized in 1996 that high voltage wires may "create in the general public fears which make the property less desirable and thus diminish the market value of the property." Although that fear could be considered, it may be "too speculative and conjectural to be submitted" to the trier of fact as a separate item of damages (Bolton and Sick 1999, 340; United States v. 14.38 Acres of Land; United States v. Robinson).

Trends in modern case law consider the question as one of common sense. Several courts have focused on what a reasonably prudent person could be expected to believe and do. This view emphasizes the very nature of the power lines, general public apprehension, practical experience, and a healthy wariness for that which is inherently dangerous. Thus, courts generally are becoming more flexible and admitting testimony of subjective fear in the marketplace.

Implications for Determination of Fair Market Value in Eminent Domain and Condemnation Cases and for Adjudicating Property Tax Appeals

One commentator has succinctly stated:

Real estate professionals continue to conclude that power lines are bad for property values. On the case law front, there is continuing support for the admissibility of expert appraisal evidence based on "fear in the marketplace," but there is growing criticism of testimony deemed to be "junk science." (Bolton and Sick 2000)

Next, appraisal is an art and a behavioral science. There is danger in presuming or assuming anything. Even the existence of marketplace fear must be proven. One must always go to the market for data.

Illinois courts, for example, have a long history of rejecting speculative valuations for real property. (See, for example, State of Illinois v. Illinois Central Railroad, Chicago and Alton Railway Co. v. Staley, Illinois Central Railroad v. City of Chicago, People ex rel. Carr v. Stewart, Dept. of Public Works v. Foreman State Trust and Savings Bank. See also Trunkline Gas Co. v. 0 Bryan, and the cases cited therein, and Application of Rosewell.) Decisions from the District of Columbia, Maine, Oregon, Pennsylvania, New Mexico, and Washington sound similar cautions. (For discussion of several of the Illinois and the other jurisdiction cases, see Jaconetty 1993.)

Finally, there are definitive questions to be answered. First, do electromagnetic fields generated by high-voltage towers and wires adversely influence real property values? On a subjective level, most people believe that they should, do, and will. On an objective level, they may not, or, if they do, it is likely that they affect residential property values only minimally.

Second, is there a medical or scientific basis for the claims of adverse human health effects? Possibly, maybe even probably, depending on which studies, scientific organizations, or researchers appear to have the most compelling data at any given point in time. In the public mind, the threat is very real. Adding to this threat is the nature of the inherently dangerous equipment involved. Regardless of the state of the scientific and medical proof, the general public consensus is that serious health risks exist. There is fear in the marketplace.

Third, is there a direct causal link between either the very existence of the towers and wires (and the alleged human health risks) and real property values? Many (including real estate professionals) believe, or want to believe, so. However, has anyone conclusively and accurately proven, measured, or quantified it?

For real estate appraisers, bank loan officers, assessing officials, researchers, prospective purchasers, condemning authorities, property owners, tax courts, and tribunals, several factual inquiries may be relevant. Were the towers and wires always present or recently constructed? What actual market data exist? Is there a demonstrable difference in sales prices for the properties in the shadow of, adjacent to, or near the electromagnetic fields when compared with other properties more distant? Are there resales? What do those data suggest? Is there a difference in the level of appreciation in property values depending on the distance of real property from the source of the electromagnetic radiation? Is there actual evidence of fear in the marketplace? How has it been manifested? What best establishes the market-subject, peer and comparable sales, or resales? If there is an impact on real property values, how does one accurately measure or quantify it? Does medical and scientific evidence matter at all or only what people believe? Is perception more important than reality?

This article raises many questions. The most compelling may simply be, "Would you want your children playing in the backyard every day under those things?" If your answer is "no," is that conclusion based on what has been proven or what you believe?

Real property valuation systems and appeal processes, as well as the typical case law involving eminent domain and condemnation, are fundamentally market based. They reflect complex interrelationships among subjective belief, objective data, and behavior. Only further market-based and scientific research on this subject can hope to provide more definitive answers to such a complex, emotional issue.