Originally Posted by
MikeMpls
My recollection (but I can't find the citation for it) is that compensation is also not mandatory when the bump is made for safety reasons (e.g. overweight conditions). Overweight conditions can come up at the last minute due to temperature, weather patterns, need to carry more fuel to reach alternate airports, etc.
You are right that compensation is only required for overbooking, not for a reduction of capacity because of an aircraft swap or other operational reasons.
Here is a good summary of the rules, although it doesn't mention the exception. I was pretty sure an older version did, but not positive.
Here is a cached page from Google that does, read section 250.6.