FILED 

November 14, 2017 

released at 3:00 p.m. 

EDYTHE NASH GAISER, CLERK
 

SUPREME COURT OF APPEALS
 

OF WEST VIRGINIA
 

No. 16 -1163 - W.Va. Dep’t of Transp., Div. of Highways v. CDS Family Trust, LLC 

LOUGHRY, Chief Justice, concurring: 

While I agree with the majority’s decision that a new trial was required in this 

matter due to the improperly and heavily-weighted reliance on the market price of potential 

mitigation credits, I find it necessary to write separately to address my additional concern 

that trial courts need to properly marshal evidence that is adduced for purposes of valuing 

wetlands. Other than quoting from the decision in Department of Transportation v. 

Southeast Timberlands, Inc., 589 S.E.2d 575 (Ga. Ct. App. 2004), the majority offers very 

little advice to the trial court for its handling of this case on remand. Accordingly, I wish 

to address certain issues that the trial court may need to consider when quandaries arise with 

regard to the admission of expert testimony on the valuation of the subject land. 

First and foremost, the trial court needs to recognize that, as the majority 

acknowledged, there is no consensus on how to value land when its highest and best use is 

the potential to be utilized as a wetlands mitigation bank. See David M. Keating, MAI, The 

Valuation of Wetlands 37 (2d ed. 2002) (“The total economic value of wetlands is a 

relatively new concept, and scientists are working to formulate methods for estimating such 

values.”). And, as the Division of Highways aptly observes in its reply brief, decisions with 

regard to environmental protection laws are affected bythe political climate as demonstrated 

by the multitude of directives instituted by President Trump since taking office this past 

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January. Included in those policy changes was Executive Order 13,778, “Restoring the Rule 

of Law, Federalism, and Economic Growth by reviewing the ‘Waters of the United States 

Rule.’” That order, signed on February 3, 2017, has potential impact on the value of 

wetlands, and wetlands credits, as it mandates the withdrawal and reconsideration of the 

Clean Water Rule, 80 Fed. Reg. 37054 (June 29, 2015).1 Consequently, the regulations and 

guidelines previously utilized under the Obama administration are now in a state of flux due 

to the vagaries of the regulatory process itself2 and numerous lawsuits instituted to halt such 

changes.3 Given that the wetlands banking mitigation industry is unquestionably dependent 

on the current political climate, the valuation testimony provided below has clearly been 

called into doubt. 

A secondary caution only hinted at by the majority is a need to ensure that the 

valuation is limited to adaptable uses that are “reasonable and probable and not remote or 

speculative.” Southeast Timberlands, 589 S.E.2d at 579 (emphasis supplied). The critical 

valuation for purposes of condemnation is always the market value on the date of taking, and 

yet the expert testimony proffered by CDS was linked to the future application for mitigation 

1

Because the terms “waters of the United States” is undefined in the Clean Water Act, 

33 U.S.C. §§ 1251-1387 (2012), it has been defined by regulation to include wetlands and 

intermittent streams. 

2

Under the subject executive order, the EPA and the Army Corp of Engineers have 

been directed to publish a proposed rule rescinding or revising the Clean Water Rule. 

3

See 40 C.F.R. § 230.93(a); 33 C.F.R. § 332.1(b)(3). 

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credits–something that may or may not transpire. Significantly, at no time prior to the taking 

had any steps been taken to construct a wetlands mitigation bank on the subject property. 

The experts hired by CDS testified solely in terms of the “potential” of the property to be 

developed for such purpose. 

At least one court has ruled that the prospective application for mitigation 

credits has no relevance with regard to the issue of just and adequate compensation. In 

Martha K. Wayt Trust v. City of Cumming, 702 S.E.2d 915 (Ga. Ct. App. 2010), the court 

considered the trial court’s refusal to allow an expert to testify regarding the value of stream 

mitigation credits for purposes of valuing the condemned property. In affirming the trial 

court’s decision, the appellate court reasoned: 

The evidence showed that, at the time of the taking, the 

proposed stream mitigation bank had not yet been created on 

the condemned property, and no stream mitigation credits had 

been awarded in connection with the condemned property. And 

no evidence was presented to show that the proposed future use 

of the property as a stream mitigation bank, or the value of 

stream mitigation credits it might have generated under such 

use, had an effect on its market value on the date of the taking. 

Id. at 918. Citing Southeast Timberlands, the court reasoned further: 

The fact that the property is merely adaptable to a different use 

is not in itself a sufficient showing in law to consider such 

different use as a basis for compensation. It must be shown that 

such use of the property is so reasonably probable as to have an 

effect on the present value of the land. Even where a different 

use is probable, the jury cannot evaluate the property as though 

the new use were an accomplished fact; the jury can only 

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consider the new use to the extent that it affects the market 

value on the date of taking. 

Id. (quoting Southeast Timberlands, 589 S.E.2d at 580). 

Of further concern is the fact that the experts hired by CDS to inflate the value 

of this property appear somewhat incestuous, relying on each other’s data rather than having 

the necessary expertise to testify independently.4 This should be a warning sign to the trial 

court, when it conducts its gatekeeping function to determine whether such individuals have 

the appropriate expertise to testify on the valuation-related issues. Robert Sokolove, one of 

the three experts relied on by CDS was a Delaware lawyer, whose professional credentials 

reflect zero experience in real estate valuation or appraisal. Mr. Sokolove, a self-described 

“wetland mitigation banker,” testified that the subject land “had a significant opportunity to 

be utilized as a mitigation bank.” What is notable is that his report contained no opinions 

concerning the fair market value of the entire property before taking, the fair market value 

of the property taken, or the value of the residue of the property after the taking. Worse yet, 

is that he failed to rely upon any of the recognized methods of valuing real estate.5 Looking 

solely to his business experience in “get[ting] your values” from the sale of wetlands credits, 

4

Douglas C. Wise, an expert hired by CDS to estimate the total just compensation due 

for the taking and damages to the residue, stated in his report that he merely adopted the 

opinions and conclusions of CDS’ other experts–Mr. Sokolove and RK&K. In reaching his 

conclusion, Mr. Sokolove relied upon the findings of RK&K and Mr. Reel. 

5

Those methods include the sales comparison approach, the cost approach, and the 

income capitalization approach. 

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Mr. Sokolove prognosticated that a willing buyer would pay $3,551,000 for the property at 

issue because he could then resell the mitigation credits for over $5 million later. 

The record in this matter similarly calls into question the expert testimony 

provided by Mr. Wise, another expert hired by CDS.6 While he supplied a figure of 

$5,670,000 as the fair market value of the property before the taking, he failed to employ any 

acceptable approach for arriving at such figure.7 It cannot be overlooked that the singular 

basis for that figure was his reliance on alleged sales of wetlands mitigation credits provided 

to him by Mr. Sokolove. So rather than looking to any comparable sales or any other 

accepted appraisal theory, Mr. Wise simplysubscribed hook, line, and sinker to the valuation 

that Mr. Sokolove provided to him–the lawyer’s guestimate that 349.22 acres would have 

sold for $65,000 per credit acre and $2,042.21 per stream credit if the property had been 

developed into a wetlands mitigation bank. Not only is this credit-based method of 

valuation constructed upon speculation and illusion, but its foundational flaws are glaringly 

apparent. 

The appraisal of wetlands has been recognized as controversial due to the 

differing conclusions that result from each distinct method of valuation. See Keating, supra, 

6

See supra note 4.
 

7

See supra note 5.
 

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at 41. Despite this acknowledgment, in this case the entire valuation was conjured from the 

pen of a lawyer who admitted to making his living as a “wetland mitigation banker.” This 

type of self-serving evidentiary foundation is wholly suspect and should not be permitted 

to suffice on remand. And, as this Court long ago recognized: 

Speculation as to what use may be made of property at some 

future indefinite date is insufficient. . . . Possible uses which are 

so remote and speculative and which would require the 

concurrence of so many extrinsic conditions and happenings as 

to have no perceptible effect upon present market value must be 

excluded from consideration. 

State Road Comm’n v. Penndel Co., 147 W.Va. 505, 511-12, 129 S.E.2d 133, 137 (1963). 

With this additional guidance, I respectfully concur. 

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