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DECEMBER 2003
Friedenburg v. New York Dep't. of Envtl. Conservation
2002 WL 32310111 (N.Y. App. Div. Nov. 24, 2003)
A New York appellate court dealt a blow to the state's wetlands
protection efforts last month, ignoring the state's arguments
on relevant parcel and background principles to hold that
development restrictions on a tidal wetland in the Village
of Southampton worked a taking under the Penn Central balancing
test.
Gwendoline Londino purchased four waterfront lots with a
single deed in 1962 for $121,830. Two of the lots were sold
for development in 1966 for $165,000 and the third lot was
sold in 1990 for $660,000. The owners sought a permit to build
a single family home on the remaining 2.5 acres, but the state
denied the request, finding that the project's sewage system
would release effluent containing pathogenic bacteria into
Shinnecock Bay and nearby wetlands. Londino's estate challenged
the permit denial as a taking.
After rejecting a categorical taking under Lucas,
the court focused its attention on what it called a "near
total or substantial decrease in value" of the remaining
land and the fact that the property was purchased prior to
enactment of the regulations. But the court failed to even
acknowledge the state's argument that the 2.5 acres was one
of four lots originally purchased for investment, and that
the land had already returned $825,000 through the sale of
the first three lots. What's more, the court declined to address
the state's assertion that the regulation was not a taking
due to background principles of state law regarding nuisance
and public trust. In awarding compensation, the court cited
the Federal Circuit's decision in Florida Rock to support
its conclusion that there was no reciprocity of advantage
or shared benefit that justified the regulation.
The state is considering an appeal to New York's high court,
and we will keep you apprised of any further developments.
NOVEMBER 2003
Battle Lines Drawn in Public Use Debate
City of Las Vegas Downtown Redev. Agency v. Pappas,
76 P.3d 1 (Nev. Sept. 8, 2003)
Municipalities have successfully used the eminent domain
power to achieve community redevelopment goals since the U.S.
Supreme Court approved the practice in the 1954 case of Berman
v. Parker, but recently libertarian groups and property
rights advocates have begun arguing in court that many redevelopment
plans do not satisfy the Constitution's public use requirement.
The war on eminent domain is being waged primarily by the
libertarian Institute for Justice, which earlier this year
issued a report, Public Power, Private Gain (http://www.castlecoalition.org)
that argues that many community redevelopment programs amount
to an impermissible compelled transfer of property between
private parties. The group is bringing cases around the country
designed to test the limits of the public use doctrine by
pitting sympathetic homeowners with well-kept properties against
the efforts of municipalities to redevelop older and sometimes
blighted neighborhoods.
In City of Las Vegas Downtown Redevelopment Agency v.
Pappas, the Nevada Supreme Court rejected the Institute's
argument as amicus curiae that condemnation of the landowners'
property to permit a partnership of casinos to build a parking
garage was not an appropriate public use. The garage, which
would serve both the casinos and a new pedestrian mall and
tourist attraction, was part of a major development project
intended to revitalize a long-blighted area of downtown Las
Vegas. The court held that public ownership of the garage
is not a prerequisite for public use and that "so long
as a redevelopment plan, or any individual redevelopment project,
bears a rational relationship to the eradication of physical,
social or economic blight, it serves a public purpose within
the power of eminent domain."
The property owners and interest group amici intend
to seek review of the Pappas ruling by the U.S. Supreme
Court and are reportedly hoping for a "landmark decision"
on what constitutes a public use. We doubt very much that
the court will even hear their case. But given the time and
money the Institute is devoting to this topic, government
attorneys would be well advised to keep an eye on this issue.
OCTOBER 2003
Courts Consider Takings Challenges to California Hotel
Ordinances
California cities in the San Francisco Bay area have tried
to address blight, staggering home prices, and lack of affordable
housing by imposing maintenance and other restrictions on
hotels, particularly those that offer rooms for long-term
rent. These provisions are under attack in the courts, but
a recent Ninth Circuit decision rejecting a takings claim
against the City of Oakland provides a welcome boost to these
planning efforts.
In Hotel & Motel Association of Oakland v. City of
Oakland, 344 F.3d 959 (9th Cir. Sept. 17, 2003), the Ninth
Circuit held that Oakland's maintenance and habitability requirements
substantially advance a legitimate government interest in
preserving housing stock and reducing crime and safety concerns
associated with run-down properties. The court rejected as
unripe a facial takings claim because the association never
pursued compensation through state courts or administrative
procedures. The court also rejected the association's due
process and equal protection challenges.
This support by the Ninth Circuit for Oakland's law will
hopefully mean victory for another hotel ordinance case percolating
through the courts. In San Remo Hotel v. City & County
of San Francisco, 41 P.3d. 87 (Cal. 2002), the California
Supreme Court gave local governments a major victory in 2001,
when it upheld laws restricting the conversion of hotel-based
affordable housing to other uses and broadly affirmed the
right of governments to impose impact fees and other mitigation
measures on new development. Now the Ninth Circuit must decide
whether to permit San Remo to bring a takings claim in federal
court despite having unsuccessfully pursued an identical claim
in state court.
The San Remo appeal follows on the heels of a troubling
Second Circuit ruling in Santini v. Connecticut Hazardous
Waste Management Service (our
Sept. 2003 Feature Case), which allows takings claimants
to avoid claim and issue preclusion altogether by reserving
their federal takings claims when first litigating in state
court. The Ninth Circuit's decision thus could be critical
to ensuring that takings claimants cannot get a second bite
at the takings apple and burden municipalities by refiling
identical claims in federal court. CRC will soon file a brief
in San Remo, and we'll keep you apprised of developments.
SEPTEMBER 2003
Court Rules for Landowner in "Unique" Precondemnation
Case
In Johnson v. City of Minneapolis, 667 N.W.2d 109
(Minn. 2003), the Minnesota Supreme Court awarded landowners
$4.3 million last month due to precondemnation activities
by Minneapolis that left the claimants' properties in limbo
for more than seven years.
In 1983, the city adopted a redevelopment plan for three blocks
of downtown Minneapolis. In 1987, the city informed landowners
in the district that their properties were likely to be condemned
for the project. In part due to the mayor's vocal opposition,
the project developer was unableto secure tenants or win approval
of its designs. The project fell through in 1989. The city
reportedly waited until 1993 to inform the property owners
that their properties would not be condemned.
The Minnesota Supreme Court ruled that the state's takings
clause required compensation. Noting the general rule that
precondemnation activities do not work a taking, the court
held that an abuse of the power of eminent domain may rise
to a taking "when that abuse is specifically directed
against a particular parcel." The decision is troubling
to the extent it portends greater scrutiny of precondemnation
conduct, but local officials can take some comfort from the
court's repeated statements that its decision is limited to
the "unique" facts of the case. It remains to be
seen whether the limitation holds.
AUGUST 2003
The Federal Circuit's Treatment of Economic Impact
Coming months should bring clarification as to how the Federal
Circuit will consider the economic impact portion of Penn
Central's multi-factor test.
Earlier this year, the Federal Circuit made clear that, in
accordance with Tahoe-Sierra, it would apply Penn
Central to any takings claim that does not involve a 100
percent devaluation of the claimant's land. See Cooley
v. United States (Fed. Cir. April 1, 2003) (Lucas
per se rule inapplicable to a 98.8 percent loss in value).
Just last week, the United States (supported by a CRC amicus
brief) filed its opening brief with the Federal Circuit in
Rose Acre Farms, where the trial court ruled that federal
protections against Salmonella food poisoning worked
a taking even though the claimant's value loss was only 10-25
percent (depending on the definition of the relevant parcel).
Also pending before the Federal Circuit is American Pelagic
Fishing Co. v. United States, an appeal of a trial court
ruling that federal legislation revoking fishing permits constituted
a temporary taking of a fishing trawler. The case raises important
issues regarding how to gauge economic impact and economically
viable use when addressing restrictions that allegedly deny
profitable use on a temporary basis.
We expect rulings in these cases from the Federal Circuit
in the first half of next year.
JULY 2003
Nevada Court Considers $22 Million Claim While Airline
Safety Hangs in the Balance
The Nevada Supreme Court heard oral arguments June 25 in
County of Clark v. Tien Fu Hsu, a multi-million dollar
takings challenge to safety-related height restrictions imposed
in 1990 to accommodate expansion of the McCarran International
Airport in Las Vegas.
Tien Fu Hsu claimed the value of his property was diminished
after the height restrictions precluded him from building
a 40-story hotel and casino on the property. In 2001, a jury
awarded Hsu $13 million for a per se, physical invasion taking,
but with interest and attorney's fees the verdict is worth
some $22 million. The land is currently used profitably to
support a trailer park. Clark County appealed and argued before
a five-member court last week that the decision be reversed.
Fourteen amicus briefs were reportedly filed in the case,
including one by Community Rights Counsel on behalf of the
American Planning Association and others.
Our sources tell us that at the argument, Justice Nancy Becker
asked the majority of questions and pointed out that a significant
development project could still take place on the parcel even
accounting for the height restrictions. Interestingly, few
of the justices addressed the per se taking issue, which formed
the basis of the district court's ruling. Even the claimant
seemed more focused on a Penn Central analysis, which
given the property's continuing economic value would seem
to preclude a taking.
We'll not attempt to divine the court's thinking, but we
will inform you of the decision, which should be released
early next year.
JUNE 2003
Governor Approves Settlement of Takings Claim
Environmental Groups Criticize $2.7 Million Payoff for Spotted
Owl Protections
Environmental groups are concerned that a recent, controversial
settlement of a takings claim could undermine protections
down the road. On June 26, Washington Gov. Gary Locke approved
a settlement of a dispute between the state and a timber company
over protections for the northern spotted owl. Included in
this year's state budget was a request for $2.7 million to
buy 232 acres from SDS Lumber Company, which sued the state
for compensation for restrictions on timber harvesting on
a portion of its lands. Only five percent of SDS Lumber's
timberlands are affected by the spotted owl protections.
The money funds a settlement reached just two weeks after
the Supreme Court's landmark decision in Tahoe-Sierra Preservation
Council v. Tahoe Regional Planning Agency, which strengthened
the hand of state and local officials faced with takings challenges.
In the wake of Tahoe-Sierra, many environmental groups
hoped the state would pursue the appeal to the state supreme
court and urged the governor to veto the appropriation.
A jury in Klickitat County ordered the government in May
2000 to pay SDS Lumber $2.25 million in compensation for restrictions
imposed by the state Forest Practices Board when two nesting
pairs of owls were found on company lands. The spotted owl
is listed as threatened under the federal Endangered Species
Act. On appeal, numerous environmental, timber, and building
industry groups filed briefs that argued for and against the
state's ability to regulate private lands without incurring
takings liability, but the state-wary of mounting interest
and litigation costs and hoping to avoid an adverse verdict
that could limit future regulatory authority-agreed to settle.
The appropriations request originally required the state
to seek reimbursement from the federal government, and short
of that, to recoup the money from its forest practices budget
or from asset management - i.e. timber sales on the property.
Gov. Locke vetoed this provision and stressed that the settlement
was a "one-time event limited to the facts of this specific
case."
Gov. Locke's decision ends the court fight but sets an unfortunate
benchmark for similar resource protection conflicts in the
state. Our thanks goes to the Georgetown Environmental Law
and Policy Institute, counsel for amici in the case,
for keeping us up-to-date.
UPDATE ON HORIZON
In last month's On the Horizon, we reported on an effort by
the property rights movement to obtain U.S. Supreme Court
review of the New Hampshire Supreme Court's ruling in Torromeo
v. Town of Fremont, which held that takings liability
does not automatically arise whenever a municipality denies
a permit under an ordinance that is subsequently declared
to be void due to a procedural flaw. We are happy to report
that on June 9, the U.S. Supreme Court denied review.
MAY 2003
Compensation for Every Procedural Glitch?
Who in their right mind would argue that taxpayers must compensate
developers under the Takings Clause every time a municipal
ordinance is invalidated due to a minor procedural error?
The leading lights of the so-called property rights movement,
that's who.
The National Association of Home Builders, supported by
amici Defenders of Property Rights and Pacific Legal Foundation,
has petitioned the U.S. Supreme Court for review of Torromeo
v. Town of Fremont, 813 A.2d 389 (N.H. 2002), where the
New Hampshire Supreme Court rejected takings claims brought
due to a procedural flaw in Fremont's Growth Control Ordinance.
In New Hampshire, a municipality may adopt a growth control
ordinance only if it is supported by a Capital Improvement
Program (CIP) that allows for the orderly construction of
infrastructure projects. In March 1999, Fremont enacted a
Growth Control Ordinance that restricted the number of permits
to be issued for a one-year period, but state courts invalidated
the Ordinance because the 1987 vote on the Town's CIP was
procedurally flawed due to the failure to provide adequate
public notice.
After the Ordinance and CIP were declared void, the Town
issued the permits previously denied under the Ordinance,
but two developers nonetheless sued Fremont for a temporary
taking, arguing that the earlier denials did not substantially
advance any public purpose because the Ordinance was invalid.
A serious question exists as to whether the "substantially
advance" standard is a legitimate test of takings liability.
Moreover, no court has ever adopted the developers' remarkable
theory that a mere procedural defect in a municipal ordinance
automatically gives rise to takings liability regarding every
application denied under the ordinance. If embraced by the
High Court, this theory could federalize procedural challenges
to municipal land use ordinances across the country.
Incredibly, Defenders of Property Rights issued a press release
asserting that the developers were denied all economically
viable use of their land. Wrong. One developer already had
built 22 homes in his 27-lot subdivision. The other had been
issued permits for 5 lots in his 14-lot subdivision, and was
told simply that other permits would not issue until the Ordinance's
one-year window expired in April 2002. Neither situation even
comes close to a denial of all viable use.
We suspect the Court will see through this flapdoodle. We'll
keep readers apprised of the status of the cert. petition
(No. 02-1507).
APRIL 2003
The Kennedy/O'Connor Shuffle
Five years ago, it was conventional wisdom that Justice Kennedy
was the key swing vote in takings cases before the U.S. Supreme
Court. His moderating concurrence in Lucas, his dissent
from the takings ruling in Eastern Enterprises, and
other writings offered hope to public-side litigators that
he would sympathize with their arguments and join Justices
Stevens, Souter, Ginsburg, and Breyer to form a winning majority.
Justice O'Connor, on the other hand, was viewed by many as
entrenched in the claimant's camp, along with the Chief Justice
and Justices Scalia and Thomas. She joined the majority opinions
in Nollan, Lucas, and Dolan without qualification.
She dissented in Keystone, and she wrote separately
in Preseault to emphasize her view that the takings
claims there might have merit. She joined the concurrence
by Justice Scalia in Suitum suggesting that transferable
development credit programs might work a taking. In Parking
Ass'n of Georgia, Inc. v. City of Atlanta, she joined
Justice Thomas in a dissent from a denial of certiorari calling
for consideration of whether Dolan applies to legislatively
imposed fees. And she joined Justice Scalia in a dissent from
a cert. denial in Stevens v. City of Cannon Beach,
which argued that the state court's application of the public
trust doctrine raised serious takings concerns. Such cert.
denial dissents are relatively rare and generally reflect
the conviction of a "true believer."
In view of this history, it was not uncommon for public-side
takings lawyers to talk in terms of "writing to Justice
Kennedy" in the hope of securing a Kennedy-led, pro-government
majority. Although he sometimes is a tough vote for government
counsel to secure, he always seems to be in play. Justice
O'Connor, on the other hand, often seemed out of reach.
The times, they are a-changin'. In Palazzolo, Justice
O'Connor wrote separately to challenge Justice Scalia's assertion
that notice of a land-use restriction at the time of purchase
is irrelevant to takings analysis. In Tahoe, she joined
the majority to reject a takings challenge to protections
for the Lake, an opinion that quoted extensively from her
Palazzolo concurrence. Most recently, in Brown
she provided the fifth vote to reject a takings challenge
to Interest-on-Lawyers'-Trust-Accounts (IOLTA) programs, even
though she joined the Phillips majority in deeming
that interest to be the client's private property.
Justice O'Connor arguably has supplanted Justice Kennedy
as the key swing vote in takings cases. The common theme in
her rulings appears to be a pragmatic desire to uphold government
action that clearly promotes the public good, a theme reflected
not only in Brown and Tahoe but also in her
dissent in First English, which involved protections
against deadly floods. On the other hand, she has displayed
considerable sympathy for widows-in-wheelchairs claimants
like Mrs. Suitum. Government counsel should keep that in mind
when deciding which takings cases to take up to the High Court.
MARCH 2003
New Takings Bills Threaten State and Local Planning Efforts
State property rights advocates are once again pushing legislation
aimed at curtailing municipal planning efforts and other community
protections. The reprieve Oregon planners won last year when
the state supreme court struck down Measure 7 has proven short
lived. Now lawmakers are pushing House Bill 2137, dubbed "Son
of Measure 7," which would force the government to pay
compensation whenever regulations reduced the fair market
value of a property by more than 10 percent.
Meanwhile, in Idaho, a House committee approved a pair of
property rights bills. House Bill 256 requires state and local
governments to perform a takings impact analysis for all zoning
changes, while House Bill 257 would prevent local governments
from enacting emergency ordinances of more than a year in
duration.
In Florida, municipalities are fighting an amendment to the
Bert J. Harris Jr. Private Property Rights Protection Act,
which would subject local governments to retroactive liability
for takings claims to the date of the Act's passage in 1995.
Since then, some 250 claims have been filed statewide, with
$24.8 million in claims pending in Miami Beach alone.
FEBRUARY 2003
Six States Request Limits on Recent Federalism Jurisprudence
If anyone unequivocally supported the Supreme Court's recent
"federalism" jurisprudence, you'd think it'd be
the states. After all, the Supreme Court inevitably invokes
the "dignity interest" of the states as justification
for its rulings limiting federal constitutional authority.
That is what makes the brief filed by the State of New York
and five other states in Nevada Department of Human Resources
v. Hibbs, No. 01-1368, so interesting. These states argue
that it is critical that state agencies be held liable under
the Family and Medical Leave Act in order to advance important
objectives served by federal law.
FMLA was passed by Congress in 1993. Under the law's "family
medical care provision," all workers, regardless of gender,
are entitled to twelve weeks per year of unpaid leave for
a family emergency. Williams Hibbs, a Nevada state social
worker, has sued Nevada for being denied the full twelve weeks
to care for his ill wife, and then fired.
This case is significant because it brings to the fore the
effort by some Justices to scale back the power of the federal
government when the Justices view those powers as unduly intruding
upon state and local authority. The central question raised
at the Jan. 15 oral argument in Hibbs was whether Congress
acted within its constitutional power when it authorized state
employees to sue a state for damages when the state violates
FMLA. What remains to be seen is whether the court will shift
from its recent rulings holding that Congress does not have
the power to protect state employees against age or disability
discrimination.
JANUARY 2003
Las Vegas Landowners Roll the Dice Once More
On February 10, the Nevada Supreme Court will hear oral argument
in County of Clark v. Tien Fu Hsu, a $22 million takings
challenge to height restrictions on 38 acres of land next
to McCarran International Airport in Las Vegas.
In imposing the height controls, the County did nothing more
than implement the Federal Aviation Administration's minimum
standards designed to avoid catastrophic collisions in the
event of an emergency deviation from normal flight paths.
There is no evidence that any plane will ever invade the claimants'
land, much less that any overflights would be so low and frequent
as to meet the standard for an overflight taking set forth
in Causby and Griggs. And it is undisputed that
the challenged rules do not interfere with the existing, profitable
use of the land as a trailer park. Nevertheless, the state
trial court awarded the claimants $22 million for a per se,
physical-invasion taking.
On appeal, CRC submitted an amicus brief supporting the County
on behalf of the American Planning Association. We hope the
Nevada Supreme Court follows the high court of Texas, which
rejected a similar claim last year in City of Austin v.
Travis County Landfill, 73 S.W. 3d 234 (Tex. 2002). Watch
for a ruling in Clark County later this year.
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