4.5. Project Influence. At times, the market value of the property being acquired may be affected, positively or negatively, by the very project prompting the government’s acquisition. This project influence on value is potentially problematic in federal acquisitions because “to permit compensation to be either reduced or increased because of an alteration in market value attributable to the project itself would not lead to the ‘just compensation’ that the Constitution requires.”658 The Supreme Court has ruled that in fairness, the United States cannot be charged for value it created in constructing the government project for which the property is being acquired. Similarly, an owner cannot be penalized for any diminution in value due to that very government project.659 Accordingly, in valuations for just compensation purposes, once a property is “within the scope” of the government project, all project influence on the property’s market value must be disregarded.660

The scope of the project rule excluding project influence is “one of the secondary rules refining the concept of market value as the basic measurement of compensation so that injustice does not result . . . .”661 The rule functions to adjust, limit, or exclude certain evidence from consideration to ensure the appraisal does not unfairly reflect any change in market value caused by the government project for which the property is acquired, or by the likelihood the property would be acquired for such public project.662 Proper application of the scope of the project rule requires careful legal and factual analysis of the government project and its influence on market value.663 Legal instruction is required, as the scope of the project rule raises questions of law “which limit[ ] the factors necessary to the determination of ‘just compensation’”664 and go beyond the appraiser’s function of assessing the government project’s influence, if any, on market value.665 

The mere existence of a government project does not automatically invoke the scope of the project rule; it merely marks the beginning of a complex legal and factual inquiry to determine whether the evidence warrants application of the rule.666 In a scope of the project rule inquiry, legal determinations will be required regarding: (1) the date as of which the property was probably within the scope of the project; 667 (2) whether application of the scope of the project rule is warranted;668 and (3) if so, how to apply the scope of the project rule to ensure a just result.669 146