Eminent Domain Mineral Property Valuations: When Self-Proclaimed “Latitude” Falls Somewhere South of Competence and Ethical Obligations

Mineral property appraisers engaged in eminent domain actions on properties for which mining is the highest and best use must be fully competent in all phases of mineral resource estimation, mine project development, and mine operations (or retain the requisite competent assistance), as well as educated in eminent domain appraisal (USPAP Competency Rule). Failure to ensure such triggers the issue of appraisal competence and demonstrates a flagrant disregard of the myriad code(s) and guidelines to which the appraiser is subject. The cavalier assertion of some vague, undefined “latitude” in the valuation process does not exonerate the appraiser from a disregard of the USPAP Competency Rule. Lack of independence (i.e., “advocacy”) in mineral property appraisal is the usual result of a weak background in mining and/or appraisal theory. While it is readily apparent to those able to recognize it in reports and testimony, judges and juries cannot be expected to detect or recognize purposefully misleading (or even fraudulent) valuation concepts or testimony. Purposeful deception by the appraiser can lead to specious over-compensation of the property owner (thus victimizing the taxpayer); or, a failure to provide appropriate and just compensation to the property owner – yet, the purpose of an eminent domain proceeding is to leave the property owner no richer or poorer as a result of the taking. This paper highlights some of the deceptive practices encountered in litigation settings and raises issues of competency, professional ethics, and the effectiveness of the inherent enforcement capabilities within those institutions awarding professional certifications. INTRODUCTION The practice of eminent domain mineral property appraisal requires (particularly with respect to undeveloped mineral properties) that the appraiser possess the requisite level of competence in all phases of mineral resource estimation, mine project evaluation, mine development, and mine operation (through closure). To the extent the appraiser lacks such competence, it is incumbent on the appraiser not only to divulge this lack of expertise but also to seek competent assistance in the performance of the appraisal. This competence or expertise can only be obtained through a combination of appropriate and relevant technical education and direct mining industry experience. There exist a number of professional certification and/or credentialing authorities that speak to such competency. In a similar manner, eminent domain mineral property appraisal (as the term implies) also requires that the appraiser possess the requisite level of competence in the practice of eminent domain appraisal. This competence or expertise can only be obtained through appropriate and relevant education, direct knowledge of appraisal theory, particularly as it relates to the concept of eminent domain, and licensure.