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.
