December 2006

Just in case you were wondering whether Hawaii water rights issues were matters of federal or state law, the Hawaii Supreme Court has provided the answer. 

In Maui Tomorrow v. State of Hawaii, 110 Haw. 234, 131 P.3d 517 (Apr. 5, 2006), the court held that prevailing on a state law water rights claim in state court does not entitle the victor to federal civil rights attorneys fees. 

That conclusion may seem a touch obvious, one might think, but despite a rather clever and “tenuous” argument by the party seeking to fee-shift, the court correctly determined that issues of water rights and the common law public trust were matters of state law.  Disclosure: I represented the Hawaii Farm Bureau Federation, one of the prevailing parties in this appeal.

The appeal arose when the owner of a private water transport system on Maui sought a long term lease from the State Board of Land and Natural Resources, allowing the use of surface water originating in state-owned land.  Several individuals and organizations intervened in the administrative process, alleging that the lease would interfere with their preexisting water rights, rights as Native Hawaiians, and rights under Hawaii’s public trust in water, and that before entering into a lease, the agency must undertake an environmental assessment under the  Hawaii Environmental Policy Act, Haw. Rev. Stat. ch. 343.

The agency rejected the claims, and the intervenors appealed to state court, adding a claim for due process violations.  The trial court ruled against the intervenors and in favor of the state on the due process claims, for the intervenors on the EA and public trust claims, and remanded the case back to the agency.  After judgment was entered, the intervenors sought nearly a quarter of a million dollars in attorneys fee under the federal fee-shifting statute, 42 U.S.C. § 1988.  That statute allows a party who prevails on a federal civil rights claim (42 U.S.C. § 1983) to make the loser pay attorneys fees.  The trial court denied the motion and the intervenors appealed.

The Supreme Court held that despite characterizing their water rights and public trust claims as claims under the law admitting Hawaii as the 50th state (the Admission Act), the claims made by the intervenors were, in reality, arguments under state law. The court compared the claims actually made by the intervenors to the claims theintervenors said they made, and found no federal civil rights claim was present, much less a federal claim on which the intervenors prevailed.  The court characterized the request for attorneys fees as “tenuous,”but refused to impose Rule 11 sanctions for a frivolous argument.

    
Continue Reading ▪ 2006 Land Use in Review: Hawaii Water Law is Not a Federal Case

A touch of self-promotion.  In February 2006, the University of Hawaii Law Review published an article written by me and my Damon Key colleagues Ken Kupchak and Greg Kugle. 

The title “Arrow of Time: Vested Rights, Zoning Estoppel, and Development Agreements in Hawaii” pretty much sums up the contents.  The article seeks to answer the question: can the government change its mind after it gives a property owner the “green light” to develop?

Details, including how to obtain a copy, here.Continue Reading ▪ 2006 Land Use in Review: What to do if the Government Changes its Mind

City & County of Honolulu v. Sherman, 110 Haw. 39, 129 P.3d 542 (Feb. 28, 2006), is the latest chapter in the use of eminent domain to effect “land reform” in Hawaii.

I.  Background

The story begins long ago when the Hawaii legislatureenacted the statutethat was challenged and sustained in HawaiiHous. Auth. v. Midkiff, 467 U.S. 229 (1984).  Finding thatthe economic ills purportedly caused by the concentrated ownership of privatesingle-family residential property in Hawaii,Haw. Rev. Stat. ch. 516 allowed homeowner/lessees to petition the HawaiiHousing Authority to exercise eminent domain on the homeowner’s behalf andcondemn the fee simple interest underneath their homes from the lessor, andtransfer it to the lessee upon payment of just compensation.

After that statute was upheld by the U.S.Supreme Court against a Fifth Amendment public use challenge in Midkiff,and under the Hawaii Constitution’s public use clause by the Hawaii SupremeCourt in Hawaii Hous. Auth.

Continue Reading ▪ 2006 Land Use in Review: Land Reform Revisited

When is the “earliest practical time” to prepare an environmental assessment under Hawaii’s environmental statutes? 

In Sierra Club v. State of Hawaii Office of Planning, 109 Haw. 411, 126 P.3d 1089 (Jan. 27, 2006), the court determined if and when an environmental assessment is required during the boundary amendment process.

The property owner asked the State Land Use Commission to amend the land use classification from “agricultural” to “urban” to permit it to develop the “Koa Ridge” project in central Oahu.  This procedure, known as a “boundary amendment,” is required by Hawaii’s top-down system of land use, under which the State classifies all land into one of four categories: agricultural, conservation, rural, or urban.  Only then are the counties permitted to separately zone the land classified as urban.  The “boundary amendment” process, despite its unusual moniker, is similar to a rezoning. 

The Sierra Club and others intervened in the petition process, arguing that before the LUC was permitted to grant the boundary amendment, the agency must have completed an Environmental Assessment under the Hawaii Environmental Policy Act, Haw. Rev. Stat. ch. 343 to determine whether a full-blown Environmental Impact Statement was required.  Section 343-5 of HEPA requires an agency to undertake an EA if an applicant proposes the “use of state lands.” 

The intervenors claimed that the Koa Ridge project would do so because it contemplated construction of a sewage and water lines which would require tunneling under state-owned land.  The landowner agreed that an EA was required, but argued it could be accomplished later because section 343-5 requires only that the agency prepare the EA “at the earliest practical time.”  The landowner asserted it was too early in the process to accurately set out the possible environmental impacts since the project at the boundary amendment stage was preliminary and conceptual, and the end product might be different. 

The court disagreed, holding that because environmental information is important, such information must be provided sooner rather than later, since a later determination may make the final decision fait accompli because the agency may be less inclined to disapprove a request further down the path after more time and money are spent:

We agree with the reasoning of Citizens [for Prot. of N. Kohala Coastline v. County of Hawaii, 91 Haw. 94, 979 P.2d 1120 (1999)] that early environmental assessment comports with the purpose of HEPA to alert decision-makers early in the development process because, “[a]fter major investment of both time and money, it is likely that more environmental harm will be tolerated.”

The court did not address what would happen if, as the landowner predicted, the scope of the project was altered in the future, either on the landowner’s initiative, or in response to a requirement from the LUC, which has the discretion to impose conditions on boundary amendments.  Under the court’s reasoning — environmental information is “important,” and care must be taken to insure that the agency’s decision to approve is not a foregone conclusion — it is not difficult to imagine that yet another EA could be required.   

    
Continue Reading ▪ 2006 Land Use in Review: Environmental Assessments, Early and Probably Often

When a statute or ordinance states that an agency “shall” do something, but because of practical limitations or longstanding practice the agency does something else, what will a court do about it?

Leslie v. Board of Appeals, County of Hawaii, 109 Haw. 384, 126 P.3d 1071 (Jan. 25, 2006) involved the meaning of the word “shall” in statutes and regulations and how statutory language may or may not be affected by how the government implements the law.  The decision also involved the meaning of the term “development within the SMA” as used in Hawaii’s Coastal Zone Management Act.

Continue Reading ▪ 2006 Land Use in Review: Depends What the Meaning of “Shall” Is

Both eminent domain and property taxes are hot topics of the moment. 

Eminent domain because the recent approval by the Honolulu city council of the multibillion dollar mass transit project will require the taking of private property.  Home and business owners are rightly concerned about their options if the transit system, where ever it is eventually located, will run through or near their property. 

Property taxes are in the headlines because in Honolulu, property values, according to the City, rose an average of 15% since last year, and property tax bills are expected to increase accordingly.  Also, in February 2007, the Hawaii Supreme Court will hear arguments in an appeal on how the counties structure their property tax systems that may have lasting impact statewide.

These two issues intersect in an obscure statute that property owners who are contemplating appealing their tax assements should know about.  Generally, in eminent…

Continue Reading ▪ Property Taxes and Eminent Domain

Camel1 Is it just me, or is Honolulu’s proposed rail system — whoops, sorry, “fixed guideway” — beginning to look like the camel in the timeworn cliche?  The city council has approved a transit system, while leaving decisions about the actual location of the route, and whether the system will be rail or something else, until later (but the tax to pay for a portion of the $4B+ cost will be charged starting 1/1/2007). 

On Friday, the council first delayed the final vote on the transit system’s footprint in order to consider adding another section, then reconsidered the delay and decided it would vote, then voted 7-2 in favor of the system, whatever it might be.  The delay was suggested in order to consider adding another section to the line, which would have resulted in the need to take even more private property by eminent domain. 

While there may…

Continue Reading ▪ A Camel is a Horse Designed by Committee

As reported here, and blogged about here, Susette Kelo, the lead petitioner in 2005’s infamous Kelo case, has sent a holiday greeting card to her tormentors that is anything but friendly: 

The text, accompanying a sparkling, snowy image of Kelo’s iconic pink house in the Fort Trumbull neighborhood, reads, in its entirety:

Here is my house that you did take
From me to you, this spell I make
Your houses, your homes
Your family, your friends
May they live in misery
That never ends.
I curse you all
May you rot in hell
To each of you
I send this spell
For the rest of your lives
I wish you ill
I send this now
By the power of will

The recipients, “some 30 or so current and former members of the City Council and New London Development Corp.” had varying reactions, from calling it “childish” because the…

Continue Reading ▪ Should Property Owners be Grateful Their Property is Condemned?

While much of the public’s attention on the Honolulu City Council’s upcoming vote on the proposed mass transit system focuses on the choice between rail or bus, and the location of the route, another issue — eminent domain — is beginning to surface. 

In a story posted here (video included), Honolulu’s mayor acknowledges the impact of the use of eminent domain on property owners in the path of the rail lines, but suggests they “wait and see” before they react:

As the route nears town, more properties will see partial easements along road frontages, in addition to some full buyouts.

“As we come into town, it’s going to be a little tricky,” said Mayor Mufi Hannemann. “We’re going to run into those problems, and rightfully so. We’re going to run into landowners who say, ‘That’s my land. I don’t want it for rail. I’ll take you to court.’ ”

Robert Thomas, a Honolulu eminent domain attorney, says he’s already heard from property owners worried they may be in the way and vowing to fight if so. Governments have power to force sales when owners resist.

“The city has an obligation to the taxpayer to not overpay, so it will generally come in with the lowest possible figure that reason can bear,” Thomas said.

State law provides for a jury trial to settle price disputes.

“I would say to people who may be concerned, we appreciate your concern, but why don’t you just wait to see what actually comes out,” Hannemann said of the pending transit route.

The Mayor correctly points out that very few owners whose property is targeted by condemnation will be happy.  When asked to sacrifice their family home or a lifetime of work establishing a business, a property owner cannot be faulted for objecting.  On that point, the Mayor is 100% correct. 

However, I wish I could agree with the Mayor’s suggestion that potentially affected property owners “wait and see” whether the City is coming after their land, home, or business, and if the City’s initial take-it-or-leave-it offers will adequately compensate those who are forced to give up their property.  History and experience tell us that property owners who do not passively wait for the eminent domain summons to arrive, and who actively question the government’s valuation of their property, are more likely to obtain compensation for their property that they consider just.

    Continue Reading ▪ Eminent Domain and the Holy Rail

Two cert petitions have recently been filed in the US Supreme Court on eminent domain. 

Didden v. Village of Port Chester, is a Kelo follow up.  The case is detailed on the Institute for Justice’s web site, which includes links to the petition and amicus briefs urging granting of the petition.  The Question Presented in the case raises two interesting issues. 

The first is whether Kelo precludes judicial review of public use claims if a condemnation takes place “within an integrated development plan.”  Recall that in Kelo, the majority took great pains to highlight the fact that the condemnation of Mrs. Kelo’s house took place within a detailed and apparently comprehensive plan.  The majority opinion relied on the Rosetta Stone zoning case, Euclid v. Ambler Realty Co., and implied (if not held) that the Kelo taking was just fine because of the detailed process that allegedly preceded it.  Like zoning, it appeared that the majority was trusting the result of the procedures that resulted in a taking simply because it was comprehensive, thus equating public use analysis with substantive due process analysis.  The Questions Presented:

     In Kelo v. City of New London, this Court held that economic development within an integrated development plan was a “public use” under the meaning of the Fifth Amendment to the U.S. Constitution.  Does Kelo therefore completely preclude all claims of private purpose takings within an integrated development plan area, including a claim that eminent domain was used for financial extortion and the purely private financial gain of a single party?

     What limits if any do the Fifth and Fourteenth Amendments to the U.S. Constitution place on demands for cash in exchange for refraining from the use of eminent domain?

The second issue is a convergence of Nollan and Kelo, asking the Court what standards should apply to extortionate demands, backed up by eminent domain, rather than permit denial.  The amicus brief I filed in Kelo anticipated this issue somewhat, since it suggested the Court apply the Nollan-Dolan standard for examining monetary exactions, to public use analysis:

     In undertaking the review of public use issues reserved to the judiciary in Midkiff, 4687 U.S. at 240, this Court should adopt the same heightened scrutiny for exercises of the eminent domain power justified by promises of a better economy as it has established for suspect regulatory takings: a taking justified only by economic development is invalid if it fails to substantially advance a legitimate state interest.

The second eminent domain petition was filed in Detroit International Bridge Co. v. United States.  The Questions Presented in that petition do not involve public use, but rather the other main issue in eminent domain cases, that of Just Compensation:

1.  Whether requiring courts to apply the interest rate set in the Declaration of Taking Act 40 U.S.C. § 3116, to determine the compensation due when the government delays payment of compensation for private property taken under the Act violates the Just Compensation Clause and the separation of powers when applying the statutory interest rate would materially undercompensate the landowner.

2.  Whether a court’s reduction of the amount of compensation paid to a property owner based on the fact that the intended taking had been made public at the time the owner purchased the property contravenes this Court’s repeated holding that the just compensation due to a landowner under the Fifth Amendment is not to be affected by the government’s decision to condemn the property. 

At oral argument in Kelo, several justices, most notably Justice Kennedy expressed their concern that the Court should examine the fairness of the compensation rules in eminent domain, perhaps as a way of counterbalancing the grossly inequitable law that favors the condemnor in public use questions.  We’ll see.

     Continue Reading ▪ Two New Eminent Domain Cert Petitions