What? Another homage to Joe Sax?

Posted on October 22, 2014 by Jeffrey Haynes

Yes, and here’s why:  Joseph Sax’s writings remain as fresh today as when they were published. This blog — in noting his death earlier this year — described Sax’s revival of the public trust doctrine, for which he is justly famous. But some of Sax’s other studies stay relevant, and not only to the generation of environmental lawyers he taught at the University of Michigan Law School and at the University of California Berkeley School of Law.

Sax’s career focused not on the intricacies of pollution control statutes, but on the broader issues of allocation and management of scarce resources. The idea that public trust resources ought not to be diverted from public use, discussed in this blog, is the beginning. Citing Sax, the California Supreme Court in the Mono Lake decision injected public trust concepts into California prior appropriation doctrine.  As noted recently in this blog, California water allocation law continues to slouch toward the present. These issues show why Sax enjoyed teaching water law.

Sax delighted in challenging conventional views. In an early article, he exploded the myth, exemplified by supporters’ confidence in the National Environmental Policy Act, of “the redemptive quality of procedural reform.”  In 2002, he spoke at the University of Michigan about the Great Lakes. The assembled faithful expected him to reinforce their view that not one drop of water should leave the Great Lakes basin. Instead, to their dismay, he demonstrated why water allocation decisions should be based on an evaluation of alternatives, even if that meant water withdrawals from the Great Lakes. Some of the water allocation issues among riparian states that he explores in that speech were recently heard by the Supreme Court in Kansas v. Nebraska, concerning interpretation of an interstate water allocation formula, and will be considered in Mississippi v. Tennessee, which concerns pumping underground water across state borders.

One of the foundations of environmental law is the takings clause. Sax’s 1964 article, Takings and the Police Power, often cited by the Supreme Court, deserves re-reading for its lucid and compact analysis. Following the Lucas v. South Carolina Coastal Council decision, Sax imaginatively proposed an economy of nature underlying the market economy while criticizing the majority opinion in Lucas for being the outlier in takings law that we now know it to be. But Sax sympathized with the unfairness of takings law on property owners. Recently he noted that the Supreme Court has exhausted its efforts to develop a coherent takings theory. But, he said, that fact brings no solace to a late-in-the-game developer who, denied permits by a municipality that gave away the entire increment of infrastructure amenities to earlier-in-time developers, unfairly receives no compensation.

Management of public lands is a large part of environmental law. As we learned at the 2014 annual meeting, this College is embarking on a new initiative for East Africa community land use and natural resources rights. The underpinnings for such policies are found in Sax’s 1980 book Mountains Without Handrails, which proves the preservationist’s view of national park management. But management of private land adjacent to parks is equally important, as Sax explored in Helpless Giants: The National Parks and Regulation of Private Land. Sax was inspired to write this article when, after hard hiking through rhododendron “hells” in the Great Smoky Mountains National Park rising to the Appalachian Trail, he was surprised to see a luxury hotel — located on private land adjacent to the park — thrusting up beyond a forested ridge of the park.

Sax’s foray into the community values inhering in public and private art collections, Playing Darts with a Rembrandt, is echoed in the recent debate over whether the collection of the Detroit Institute of Arts should be sold to pay the city’s creditors. Although disclaiming an exact fit with the public trust doctrine, the Michigan Attorney General opined that the DIA held the art as a charitable trust for the public.

Sax received many awards and much praise. His extensive scholarship was reviewed by his peers in a 1998 Ecology Law Quarterly symposium introduced by ACOEL Fellow Richard Lazarus. He received the Asahi Blue Planet Prize in part for drafting the Michigan Environmental Protection Act, the citizen-suit statute discussed here. If these recognitions do not convince you, reading Sax in the original should persuade you of the continuing relevance of his scholarship.

Don’t Even Try to Bring THAT Kind of Regulatory Takings Case

Posted on May 16, 2014 by Margaret (Peggy) N. Strand

In 2012 and 2013, the Supreme Court issued several decisions recognizing claims for regulatory takings that observers believed might indicate a shift toward greater protection of private property rights. In Arkansas Game and Fish Comm’n v. United States, 568 U.S. ___ (No. 11-597, Dec. 4, 2012), the Supreme Court upheld a claim for a temporary taking based on flooding associated with a Corps of Engineers project, discussed here. And in Horne v. Department of Agriculture, 569 U.S. ___ (No. 12-123, June 10, 2013), under very unusual circumstances, the Supreme Court allowed the takings claim to be presented as a defense to government regulatory action. The 2013 decision in Koontz v. St. Johns River Water Management District, 570 U.S. ___ (No. 11-1447, June 25, 2013), concerned mitigation requirements associated with land development in Florida, discussed here and here. Shift in judicial approach to greater protection of property rights? Maybe not. 

During the same time period, the Court of Appeals for the Federal Circuit held that a landowner could not claim a taking arising out of denial by the Corps of an application for approval of a wetland mitigation bank. Hearts Bluff Game Ranch, Inc. v. United States, 669 F.3d 1326 (Fed. Cir. 2012). This lesser-known decision addresses a fundamental aspect of takings law — what is the property interest that is protected by the takings clause? Apparently it matters whether you have a permit denial (and can seek compensation) or a denial of a government approval of a benefit (which confers no compensable property right). 

A wetlands mitigation bank is a property where wetlands have been enhanced or restored or otherwise improved. The mitigation bank credits generated by those efforts are available as compensatory mitigation for impacts authorized under Corps permits issued under Section 404 of the Clean Water Act. Unlike dredge or fill of wetlands or streams that require a Section 404 permit, the mitigation bank is not approved by permit. Rather, under regulations, the mitigation bank is reviewed by the Corps, EPA and other federal and state agencies, known as the Interagency Review Team (IRT). Subject to IRT review, the Corps and the mitigation banker sign a Mitigation Banking Instrument (MBI) that approves the mitigation bank. The MBI contains terms such as the size and nature of the wetland enhancement or restoration that will occur on the bank property. The MBI also establishes the credits for the bank, i.e., the marketable element that can be sold to a wetland permit applicant who needs to provide compensatory mitigation. 

Despite this seemingly complicated process, the situation can be simplified in this way:  Mr. Black, owner of Blackacre, wants to fill wetlands on his property to build homes. Mr. Black must obtain a Section 404 permit from the Corps and likely will need mitigation to offset what he fills. Ms. White, owner of Whiteacre, wants to restore and enhance wetlands on her property, and use that enhancement as a basis to offer credits for wetland compensation to those who need to mitigate their impacts to wetlands, like Mr. Black. Ms. White needs to go through the mitigation banking regulatory process for her approvals. Her MBI will authorize the planned “ecological development” of her property. 

Comparing the Hearts Bluff decision to more standard regulatory takings law, if Mr. Black’s application for a permit is denied, he may be able to sue the United States for compensation for the taking of his property. If Ms. White’s application for approval of the mitigation bank is denied, the Federal Circuit says she has no compensable property interest. 

Hearts Bluff sought approval for a 4000 acre mitigation bank in Texas. The land was located where the planned Marvin Nichols Reservoir might be sited, a proposed reservoir that has a long history in Texas. Hearts Bluff also sued in state court. After consulting with the state and evaluating the potential site, the Corps denied the application for mitigation bank approval, citing reasons that do not appear in the takings decisions. 

Any regulatory takings claim faces a number of hurdles. What is unusual about Hearts Bluff is that the court held that the company had no “cognizable property interest.” 

The Federal Circuit focused on its two-part test for evaluating takings claims.  “First, as a threshold matter, the court determines whether the claimant has identified a cognizable Fifth Amendment property interest that is asserted to be the subject of the taking. . . .Second, if the court concludes that a cognizable property interest exists, it determines whether that property interest was ‘taken.’” Id. at 1329. The court stopped at step one, finding that there was no property interest. 

The court adopted the government’s position that Hearts Bluff “was never entitled to operate a mitigation bank solely by virtue of its ownership of the land and that it did not have a property right in access to the mitigation banking program because the program is entirely a creature of the government and subject to pervasive and discretionary government control.” Id. at 1330. The mitigation banking program, said the court, “is run exclusively by the Corps, subject to its pervasive control, and no landowner can develop a mitigation bank absent Corps approval. Mitigation banking in its entirety would not exist without the enabling government regulations. Under our precedent, therefore, the Corps’ discretionary denial of access into the Corps program cannot be a cognizable property interest.” Id. at 1331.  

The court relied on precedent where the claimant owned property but not the particular right to use the property as it asserted. For example, in Air Pegasus of D.C., Inc. v. United States, 424 F.3d 1206 (Fed. Cir. 2005), the court had held that a helicopter operator had no takings claim when a federal “flight restriction” essentially destroyed its business. There are not many cases in this area, and many of them deal with personal property, rather than real property. These decisions do not turn on the distinction between a government permit and a government benefit, but rather delve into whether the claimant’s property carried with it the right to pursue the particular “end goal.”

In short, while Hearts Bluff certainly owned the real property, its ability to “develop” it as a mitigation bank was not a “right” that could be taken by the Corps’ denial of its application. It was not such a right because the government essentially created the end use (mitigation banking). 

It’s been a long time since my law school days, but the “bundle of sticks” that I was taught constitute real property rights should include the right to seek governmental approval for the owner’s preferred uses, regardless of whether the government program is new, old, established by regulations, or described in a statute.  The government does not always commit a taking by denying such uses, but it is troubling that property rights should depend on which government program is involved.

Finding Common Ground

Posted on August 1, 2013 by Irma S. Russell

Last month’s decision by the U.S. Supreme Court in Koontz v. St. Johns River Water Management District has been the subject of intense dialogue among ACOEL members and environmental lawyers around the country. The Court’s holding that the Water District violated the Fifth Amendment just compensation clause extended the Nollan and Dolan standard to the context of denial of a permit application and raised the need for land use agreements that achieve acceptable results for all involved – a tall order.

A recently published book provides a resource for lawyers and students working in the land use arena. Land In Conflict: Managing and Resolving Land Use Disputes (Lincoln Institute, 2013) by Sean Nolon, Ona Ferguson, and Patrick Field, focuses on land use disputes over the full range of zoning, planning, and development and provides a primer for professionals on all sides of land use issues, including local planners, proponents of projects, developers and their financiers. Parties involved in land use permitting can draw on the book to consider how their conduct and orientation facilitate (or, perhaps, impair) the ability of the parties to find common ground. This book provides insights regarding the public’s right to access to information about land use projects. Both proponents and opponents to projects will gain ideas from this book on interacting effectively, whether this is in the filing process of proposing or opposing a project before a local board or department with land use authority. The orientation of this work is to focus on reconciling the interests of all legitimate stakeholders in the hope of producing, as the authors note, more durable outcomes than typically achieved in the adjudicatory approach. This mutual-gains approach has wider application than land use. It is guided by principles that move decision making away from the impasse of rights rhetoric toward decisions that seek the best alternatives for all stakeholders.

Taking the Fifth on the Fifth’s Taking Clause

Posted on June 26, 2013 by Robert M Olian

…nor shall private property be taken for public use, without just compensation.

Everyone understands the Fifth Amendment’s takings clause to mean, at a minimum, the government cannot force the transfer of private property to the government even for a manifestly governmental purpose (e.g. a highway right of way, or a new airport runway), without compensating the property owner.

Tuesday’s Supreme Court decision in Koontz v. St. John’s River Water Management District is the latest in a series of Supreme Court rulings to extend the protections of the Takings Clause beyond the obvious governmental requisitioning of private property. That’s “latest,” not “last”.

Nollan v. California Coastal Commission (1987) and Dolan v. City of Tigard (1994), combine to set forth the Court’s requirements for an “essential nexus” and “rough proportionality” between conditions on land use development and the government’s underlying objectives in the permit scheme to which the property owner is subjected. Absent either nexus or proportionality, a taking has occurred, and the Takings Clause requires that the property owner get “just compensation.” So far, so good.

The facts in Koontz are to some extent irrelevant; indeed the Court’s opinion expressly disowned any determination of the merits of his particular claim for compensation. Depending on whose brief you read, Koontz wanted to develop some wetlands property but the Water Management District refused to approve his project as proposed and put forth some mitigation options that were either “extortionate demands” or “helpful suggestions”, one of which consisted of Koontz spending money to improve public lands remote from his own property. Koontz took umbrage and sued under Florida state law.  The trial court found for Koontz on the basis of Nollan-Dolan, and the intermediate state appellate court affirmed.

The Florida Supreme Court reversed for two reasons: first, it held the Nollan-Dolan standard does not apply to denial of a permit; and second, it held the standard does not apply to a requirement for the payment of money, as opposed to the impairment of a specific piece of property.

Every Justice agreed that the Florida Supreme Court got the first part wrong; that is, they all agreed the Takings Clause applies to permit denials as well as permit approvals. The majority and dissent parted ways with respect to the second question, however, with the majority again holding that Florida got it wrong and that excluding monetary exactions would allow permitting agencies to improperly circumvent the Nollan-Dolan requirements.

Now, one can agree or disagree with the majority, but the decision hardly shocks the conscience. What the decision holds is far less important than what remains to be decided in future cases:

1.    How concrete and specific must a demanded concession be to give rise to liability under Nollan and Dolan?
2.    What happens if a permitting authority merely says, “Denied, come back with something better,” and makes no other demand?
3.    Where will the line be drawn to prevent countless local land use decisions from becoming federal cases?

On these points, the majority took the Fifth.

They Were Paying Attention in Math Class

Posted on April 9, 2013 by Brian Rosenthal

Late last year, the United States Supreme Court used a mathematical hypothesis to solve a takings question involving environmental damage.  Remember the transitive property of equality?      

                                                A=C,  B=C, so A=B [and =C]

The Court summarized its opinion by noting: 

a government-induced flooding can constitute a [compensable] taking (A=C);
a temporary act can be a compensable taking  (B=C); so
a government-induced flooding even as a temporary act (A=B) may be a compensable taking [=C].

In takings analysis, flooding cases hold no special exempt footing.  Floodings need not be permanent or inevitable to result in a constitutional taking.  Seasonal, recurring flooding (similar to a repetitive flight overhead that interrupts a property’s intended use) can be a taking based on the facts and circumstances, like time and degree of interference, character of the land, reasonable investment-backed expectations and foreseeability.  See Arkansas Game and Fish Commission v. United States.

Taking vs. Tort: Supreme Court's Upcoming Review of Arkansas Flooding Case

Posted on July 13, 2012 by Stephen Bruckner

The United States Supreme Court recently granted certiorari to the first environmental case it will review during the 2012-2013 term.  The case, Arkansas Game & Fish Commission v. United States, raises the question of whether flooding caused by the Army Corps of Engineers temporary increase in releases from an upstream dam constitutes a taking under the Fifth Amendment or is a potential common law tort.  The Court will examine whether physical intrusions onto private property must be permanent in order to be a taking and whether the government's intent plays a role in the analysis under the Takings Clause.

The case arises from damage to oak trees in a wildlife refuge that the Arkansas Game and Fish Commission alleges occurred due to the Corps of Engineers temporary deviations from the Clearwater Dam's 1953 water management plan.  These deviations took place between 1993 and 2000.  The Arkansas Game and Fish Commission alleged that the deviations caused increased flooding which damaged the root systems of the oak trees and killed many of them.

The United States Court of Federal Claims found that the government had engaged in an unconstitutional taking and awarded $5 million in damages to the Game and Fish Commission. 

In a split decision, the United States Court of Appeals for the Federal Circuit reversed the decision of the Court of Claims.  The Federal Circuit ruled that the Corps of Engineers' increase in upstream releases could not constitute a taking because the deviation policy was only temporary.  The court reasoned that in order to be considered a taking, flooding would have to be the result of a permanent change in the Corps of Engineers' water management plan.  The court found that, at most, the flooding created possible tort liability. In dissent, Judge Newman observed that the flooding led to permanent damage to the timber and the property in the wildlife refuge and reasoned that such permanent loss constitutes a taking under the Fifth Amendment of the Constitution.

Arkansas Game and Fish Commission's petition for certiorari was granted by the Supreme Court in April of this year, and the case is set to be argued in the Court's 2012-2013 term.