In a case that uses terms that might reasonably lead you to think it was lifted from the script for the next stoner comedy, the U.S. Court of Appeals for the Federal Circuit, in Gadsden Indus. Park, LLC v. United States, No. 18-2132 (Apr. 22, 2020), held that an owner of land on which the byproduct of milling steel was dumped possessed a property interest in some of the “slag,” but not as much of it as the owner claimed. The court also held that the property owner did not introduce evidence of its loss of use of the “kish” or the “scrap.” 

Before we go any further, here’s your daily dose of learning:

Slag, a byproduct of steel manufacturing, is “a non-ferrous material that separates during smelting.” Gadsden Indus. Park, LLC v. United States, 138 Fed. Cl. 79, 92 (2018) (Decision). Kish is “a ferrous byproduct of a blast furnace operation in various sizes that has economic value.” Id. at 94. Scrap refers to “metal of various sizes that may or may not be ferrous, but that can be either recycled into steel manufacturing or sold for other purposes. It is typically finished steel product . . . and is thus not a byproduct.” Id. at 92.

Slip op. at 2. (See, that’s what we love about being a lawyer: if you’re doing this right, you learn something new every day.)  

Here’s the quick story. The owner bought some of a steel mill’s assets in bankruptcy. Those assets included piles of some of the aforementioned slag, kish, and scrap. EPA later determined that the piles were leaching contaminants. And you know what that means: remediation. We won’t go into the details (see slip op. at 4-5 if you want those), but the long and the short of it is the EPA reduced the size of some of the piles and left others in place. The owner sued for a taking of the kish, slag, and scrap the EPA recovered from the site. 

After trial, the Court of Federal Claims concluded: 

GIP purchased kish, assorted scrap, and 420,000 cubic yards of slag at the bankruptcy auction,” that “each material was present on the Eastern Excluded Property[,] and that it was used or sold by EPA.” Decision, 138 Fed. Cl. at 90. Additionally, the trial court held that the EPA’s remediation project effected a compensable taking of GIP’s slag, scrap, and kish. Id. Accordingly, the trial court awarded GIP $755,494 for the EPA’s taking of 92,500 cubic yards of slag. Id. at 100.

Slip op. at 8. 

Both sides appealed to the Federal Circuit: the EPA argued that it didn’t owe anything for the slag it took. The owner argued that the CFC should have awarded it more for the slag taking, and should not have awarded it $0 for the kish and scrap.  

The Federal Circuit concluded that the owner should have received nothing (you get nothing!) for the slag taking, and vacated the award of compensation. The owner did not have a compensable property interest in the entire pile of slag. In its contract to buy the steel mill’s assets, the owner purchased 420,000 cubic yards of slag (420? See, we told you this was right out of a stoner movie.). And even after the EPA took some of the slag, it left more than 420k cy in the pile. And there was no impediment to the owner using whatever slag remains:

Because GIP has no claim to any particular subset of slag on the Eastern Excluded Property and the trial court erred in finding that the EPA somehow prevented GIP from recovering its full allotment of slag, GIP cannot establish a cognizable property interest in the slag that the EPA recovered. Accordingly, we vacate the trial court’s award of damages for 92,500 cubic yards of slag.

Slip op. at 14. In short, the owner bargained for 420k cy of slag, and it still has 420k cy of slag. 

The Federal Circuit also rejected the owner’s argument that after having determined the EPA took the kish and scrap, the CFC “was duty-bound to fashion an appropriate damage award.” Slip op. at 14. On that, the Federal Circuit held: 

We hold that the trial court in a takings case is not obligated to fashion its own award when a plaintiff has not provided evidence sufficient to determine just compensation with reasonable certainty.

Slip op. at 14. 

So despite winning some — but not all — compensation in the CFC, the owner walked away from the Federal Circuit with nothing. Nothing! 

Gadsden Industrial Park, LLC v. United States, No. 18-2132 (Fed. Cir. Apr. 22, 2020)