inversecondemnation.com

9th Cir: Courts Have No Jurisdiction To Review Discretionary Decision To Not Issue Permit

In a 2-1 decision (en banc next?) in a case we've been following with some interest in which a Marin County oyster farming operation in the National Seashore sued the Interior Department for its decision to not renew the farm's permit, in this opinion, a Ninth Circuit panel held that courts have jurisdiction only to review the limited question of whether the Department understood its authority to renew or not renew the permit. The majority held that the statute pretty much gives the Department total discretion whether or not to do so, and thus the courts could not review its decision that wilderness legislation prohibited any extension of the permit.

In the majority's words, "[t]he choice was the Secretary's to make." Slip op. at 27 (footnote omitted). 

The panel held that the farm was unlikely to prevail on the merits, and thus affirmed the District Court's refusal to issue an injunction.

More here from the San Francisco Chronicle.

Drakes Bay Oyster Co. v. Jewell, No. 13-15227 (9th Cir. Sep. 3, 2013)

Fla App: "Pregnant Pig" Constitutional Amendment Took Farmer's Property

 

Did you know that in 2002, the voters of Florida adopted a "pregnant pig" amendment to the state's constitution? Well, neither did we. The amendment, effective in 2008, makes it unlawful for "any person to confine a pig during pregnancy in an enclosure, or to tether a pig during pregnancy, on a firm in such a way that she is prevented from turning around freely."

Farmer Basford's pig farm used such "gestation crates," and he was forced by the amendment to go out of business. He tried other things like peanut farming, but those didn't work, so in 2010, he filed an inverse condemnation claim and a claim under Florida's Bert Harris Act, arguing that the pig amendment deprived him of all economically viable use of his far. The trial court dismissed the Bert Harris Act claim, and after a trial, held that he was entitled to $505,000 in compensation for a Penn Central taking. 

In State of Florida v. Basford, No. 1D12-4106 (July 24, 2013), the Court of Appeal affirmed. The court rejected the State's argument that the claim was filed too late and was barred by the four-year statute of limitations. Even though the voters adopted the pig amendment in 2002, it was not effective until 2008, and Basford filed his claim in 2010.

The more interesting part of the opinion starts on page 7, the court's review of the trial court's Penn Central analysis. Both courts correctly recognized that analysis under Penn Central is not a matter of categorical rules, but rather is fact-intensive and must "take into consideration everything." Slip op. at 8. The court of appeal deferred to the trial court's factual determinations:

Although the Amendment only restricted the use of gestation crates, a fact which the trial court acknowledged, the court found that the other improvements were functionally integrated with the crates. The State does not challenge this finding on appeal either. As such, we are bound by the trial court’s factual findings as to the value, or lack thereof, of Appellee’s improvements as a result of the Amendment and, therefore, affirm the Final Judgment.

Slip op. at 9-10.

One judge dissented, asserting that the breeding barn rendered illegal by the pig amendment was only one small part of Basford's farm, which in turn was only a small part of his property, and that the loss of the barn was not enough to support a takings claim. He asserted that the court must take into account plaintiff's entire property, and not just the barn.

More here (along with the inevitable bad pun headline) from a Florida paper.

State of Florida v. Basford, No. 1D12-4106 (Fla. App. July 24, 2013)

Video Link Friday: California Raisins, Underwater Mortgages

More about Horne v. USDA. More here, from Reason (who produced the video).

 

Here's the Complaint in the case mentioned.

Cert Denied In Western Water Rights Case

The Supreme Court has denied cert in Estate of Hage v. United States, No. 12-918 (cert. petition filed Jan. 17, 2013).

That's the case in which the Federal Circuit held that a 22-year old takings case was not ripe because even though the agency denied Hage's every application for a grazing permit, it might issue a special use permit that might allow the use of the water he alleges was taken. The issue in the case was whether it is a taking for the government to cut off physical access to a property owner's vested right to use water. The Court of Federal Claims awarded $4.2 million in just compensation for the taking of Hage's water rights. But the Federal Circuit reversed because the case was not ripe.

In a different phase of the case, the U.S. District Court for the District of Nevada recently held that the government's suing Hage's estate for trespass for allegedly grazing its cattle on federal land without authorization "shocks the conscience," and is a due process violation. But that ruling had no direct relationship to the compensation case.

Upcoming ABA CLE: "Supreme Court Takings - A First Look At Koontz And Horne"

Mark your calendars for July 12, 2013 for our CLE teleconference on "Supreme Court Takings: A First Look at Koontz and Horne," sponsored by the ABA's State and Local Government Law Section. We'll start at 1:00 pm ET (Noon CT, 11:00 am MT, 10:00 am PT, 7:00 am HT). Here's the program description:

In the 2012 term, the U.S. Supreme Court heard arguments on two regulatory takings cases, Koontz v. St Johns River Water Management District, and Horne v. U.S. Department of Agriculture. Join our panel of legal scholars and expert practitioners for the first analysis of these cases, and how the Court's rulings on land use exactions (Koontz), and jurisdiction (Horne) will impact your practice.

We've assembled a great faculty with a mix of expert scholars and practitioners: Professor Michael McConnell (arguing counsel in Horne), Professor David Callies, W. Andrew Gowder, and Michael Kamprath. I will be moderating and asking some questions of our panelists as we talk raisins, exactions, jurisdiction, and all of the other things these two cases mean. 

Yes, we know the Koontz opinion has not yet been issued. But it will be by July 12. So hold the date on your calendar -- we don't have all the details yet, but will post them as soon as they are available. In the meantime, you can register here.

Unanimous SCOTUS: There's More To The Takings Clause Than Just "Just Compensation"

Having now had a chance to review in detail the U.S. Supreme Court's unanimous opinion in Horne v. U.S. Dep't of Agriculture, No. 12-123 (June 10, 2013), we were struck by how at least one of the reactions to the decision painted it as a "narrow, specialized ruling" that's more of a one-off, than a case with lasting impact. Maybe this is a natural result of the case being argued last of the three takings cases the Court considered this term. Or because it involves what Justice Kagan characterized at oral arguments as possibly "the world's most outdated law." Or because there are several very high-profile cases on the Court's docket that everyone's anticipating. Or maybe just because it's about raisins.

California raisins. 

But we respectfully dissent from the viewpoint that sees Horne as the least important and interesting of the 2013 Takings trilogy, or a case that's just about raisins and obscure, labyrinthian federal regulatory schemes. On the contrary, we think it's a very important case, and here's why.

Let's start with what we think is the critical "take away" from Justice Thomas's opinion for the Court: a "takings" claim can be more than simply a claim for "just compensation." The main thrust of the Ninth Circuit's decision and the USDA's arguments in the Supreme Court was that the Hornes could not raise their affirmative defense that the USDA is prohibited from imposing the fines and penalties under the Agricultural Marketing Agreement Act of 1937 because doing so would violate the Takings Clause. As we noted in our preview of the case, it has become increasingly common to assume that the only remedy for a "takings" claim is the payment of just compensation. Horne instructs otherwise.

The Ninth Circuit concluded it lacked jurisdiction over this defense because "takings" claims seek to recover compensation, and the only court with jurisdiction to enter an award of just compensation against the federal government is the Court of Federal Claims. In the Ninth Circuit's and the government's view, the ripeness rules of Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985) meant the takings defense was premature, and  the only procedure available was for the Hornes to pay the fines and penalties in the district court enforcement action, and then file a separate takings lawsuit in the CFC to get the money back, even if that meant the Horne's check to pay the penalties and the government's check for just compensation would figuratively cross in the mail.

The Court rejected the argument and this redundant process, holding that the Hornes could raise the takings defense in the district court.  The AMAA contains a "comprehensive remedial scheme" which allows handlers to raise -- indeed, it may require them to raise --  any challenge to a marketing order in the district court challenge to the administrative determination:

Pursuant to §§608c(15)(A)–(B), a handler may file with the Secretary a direct challenge to a marketing order and its applicability to him. We have held that "any handler" subject to a marketing order must raise any challenges to the order, including constitutional challenges, in administrative proceedings. See United States v. Ruzicka, 329 U. S. 287, 294 (1946). Once the Secretary issues a ruling, the federal district court where the "handler is an inhabitant, or has his principal place of business" is "vested with jurisdiction . . . to review [the] ruling." 8 §608c(15)(B). These statutory provisions afford handlers a ready avenue to bring takings claim against the USDA. We thus conclude that the AMAA withdraws Tucker Act jurisdiction over petitioners’ takings claim. Petitioners (as handlers) have no alternative remedy, and their takings claim was not "premature" when presented to the Ninth Circuit.

Slip op. at 13-14 (emphasis added) (footnote omitted).

We emphasize the "must raise" language because we think that it really isn't an option. If you have takings arguments and are on the business end of an enforcement action, you really better raise them in the district court, or risk losing them. Because under preclusion principles, if you have claim and don't raise it, you well may be barred from raising it in a subsequent proceeding in the CFC. So here's what we suggest you consider: make your takings defenses in the district court, file your lawsuit in the CFC for just compensation to prevent the statute of limitations from running on you, then ask to stay the CFC action while you litigate the takings issues in district court. The CFC action may eventually be moot (i.e., if you win the district court claim, you'd have no need to pursue compensation, and conversely, if you were to lose your district court takings claim, you would be barred by issue preclusion from relitigating it), but given the state of takings law these days and the propensity for the lower courts to misunderstand things, it's better to preserve all of your options. See also slip op. at 13-15, where the Court held that in the AMAA, Congress "withdrew" Tucker Act jurisdiction. 

[Update: thanks to an astute reader for pointing out something we should have: you should file your CFC action first, before asserting your takings defense in the district court, to avoid the Tohono trap and the "has pending" language in 28 U.S.C. § 1500. We should have pointed this out since we filed a brief in Tohono on this very point. By the way, did you read our disclaimer?]

Thus, we think that Horne clarifies another unanimous Supreme Court takings opinion, Lingle v. Chevron USA, Inc., 844 U.S. 528 (2005), which concluded that takings actions are "designed not to limit the governmental interference with property rights per se, but rather to secure compensation in the event of an otherwise proper interference amounting to a taking." Id. at 536 (citing First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 314, 315 (1987) (emphasis original)). After Lingle, we heard more and more the idea that the Fifth Amendment only requires compensation when the government has taken property (either affirmatively, or de facto), which ignored the fact that it also is an affirmative limitation on the power of the government to undertake actions that take property without first condemning and paying compensation. 

Horne's conclusion is really nothing new, because the district courts and regional circuits have long considered "takings" issues, just not cases in which compensation is sought as a remedy. See, e.g., Kaiser Aetna v. United States, 444 U.S. 164 (1979) (property owner raised argument in district court and Ninth Circuit that the imposition of a navigational servitude on a private marina would be a taking, and could not be accomplished unless the government first condemned and paid compensation).The Court in that case agreed, and wasn't bothered by the fact that the owner did not seek compensation. See id. at 180 ("if the Government wishes to make what was formerly Kuapa Pond into a public aquatic park after petitioners have proceeded as far as they have here, it may not, without invoking its eminent domain power and paying just compensation, require them to allow free access to the dredged pond"). But even though this is what we always believed the state of affairs was, it is nice to see a unanimous Supreme Court agree. 

The Court ended the opinion by holding that that under the rationale of the plurality opinion in Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), in the AMAA, Congress withdrew Tucker Act jurisdiction over the takings claim, freeing up those like the Hornes who are on the target end of similar regulatory schemes to object on takings grounds. The AMAA is a comprehensive statutory scheme (if you're in doubt see here) that "does not bar handlers from raising constitutional defesnese to the USDA's enforcement action." Slip op. at 14.

Finally some other thoughts:

• What was the property alleged to have been taken? This was a point of confusion sowed by the government and its amici (the raisins? the money?) which the Court resolved in the first page: "Petitioners sought judicial reivew, claiming that the monetary sanctions were an unconstitutional taking of private property." Slip op. at 1. The Court assumed that money is property, or at least didn't say it wasn't. Does this tell us something about how the Court might rule in Koontz?

• It looks like the Court -- or at least some of the Justices, and certainly the Chief Justice -- is losing patience with arguments in these cases where it looks like the government is playing games. At oral argument, the Chief pointedly questioned the government's counsel, and appeared irritated at its tactics ("I have to say -- I think it comes with less than good grace for you to criticize the other side for not having raised a particular argument."). Arguments designed to avoid the merits of takings cases that are too clever by half may work in certain lower courts, but perhaps the Supreme Court is growing tired of them, especially when they come from the Ninth Circuit, and particularly from judges known for their agendas. Two takings cases against the federal government this term, and both have been unanimous. Think that's mere happenstance?

• What to make of footnote 3, in which the Court wrote: "The Hornes wrote the Secretary and to the RAC in 2002 setting out their grievances: "[W]e are growers that will pack and market our raisins. We reserve our rights under the Constitution of the United States . . . [T]he Marketing Order Regulating Raisins has become a tool for grower bankruptcy, poverty, and involuntary servitude. The Marketing Order Regulating Raisins is a complete failure for growers, handlers, and the USDA . . . [W]e will not relinquish ownership of our crop. We put forth the money and effort to grow it, not the Raisin Administrative Committee. This is America, not a communist state.” App. to Pet. for Cert. 60a." Slip op. at 5 n.3. We wonder which Justice stuck that note there.

• While the Court neither revisited nor expressly revised Williamson County, it may be open to doing so in another case, as four Justices noted in their concurring opinion in San Remo.

As noted by Lyle Denniston in his SCOTUSblog summary "Opinion recap: Much more than raisins?," "reading between the lines" of Horne "would seem to be a signal that a wide array of businessess that live under government regulatory regimes will be able to bring constitutional 'takings' claims in response to the assessment of fines or civil penalties for disobeying those regimes." We also think that in addition to waiting for the enforcement action, a property owner may intstitute an affirmative declaratory action to resolve the issue, if the situation is concrete enought to present a case and controversy.

We shall see whether the lower courts see this clearly, or, like some courts' reaction to the Court's unanimous Arkansas Game and Fish ruling, look for ways to read Horne as narrowly as possible.

Libertarian Nightmare: SCOTUS's Description Of Raisin Death Panel

So we're reviewing today's Supreme Court opinion in Horne v. U S. Dep't of Agriculture, No. 12-123 (June 10, 2013), and we come across the Court's description of the raisin marketing program, the New Deal-era federal statute and related regulations that determine how and when raisins are marketed and sold.

The Court's description of the program is a libertarian's nightmare, and reminds us that if these are the regulations that govern the growing and selling of raisins (and a wide variety of other agricultural products, see n.1 on page 3), now we are beginning to see why some decry the regulations that are being promulaged for nationalized health care:

The AMAA {Agricultural Marketing Agreement Act of 1937] does not directly regulate the “producer[s]”who grow agricultural commodities, §608c(13)(B); it only regulates “handlers,” which the AMAA defines as “processors, associations of producers, and others engaged in the handling” of covered agricultural commodities. §608c(1). Handlers who violate the Secretary’s marketing orders may be subject to civil and criminal penalties. §§608a(5),608a(6), and 608c(14).

The Secretary promulgated a marketing order for California raisins in 1949. See 14 Fed. Reg. 5136 (codified, as amended, at 7 CFR pt. 989 (2013)). In particular, “[t]he Raisin Marketing Order, like other fruit and vegetable orders adopted under the AMAA, [sought] to stabilize producer returns by limiting the quantity of raisins sold by handlers in the domestic competitive market.” Lion Raisins, Inc. v. United States, 416 F.3d 1356, 1359 (CA Fed. 2005). The Marketing Order defines a raisin “handler” as “(a) [a]ny processor or packer; (b) [a]ny person who places . . . raisins in the current of commerce fromwithin [California] to any point outside thereof; (c) [a]ny person who delivers off-grade raisins . . . into any eligible non-normal outlet; or (d) [a]ny person who blends raisins [subject to certain exceptions].” 7 CFR §989.15.

The Marketing Order also established the Raisin Administrative Committee (RAC), which consists of 47 members, with 35 representing producers, ten representing handlers, one representing the cooperative bargaining associations, and one member of the public. See §989.26.The Marketing Order authorizes the RAC to recommend setting up annual reserve pools of raisins that are not to be sold on the open domestic market. See 7 U.S.C. § 608c(6)(E); 7 CFR §§989.54(d) and 989.65. Each year, the RAC reviews crop yield, inventories, and shipments and makes recommendations to the Secretary whether or not there should be a reserve pool. §989.54. If the RAC recommends a reserve pool, it also recommends what portion of that year’s production should be included in the pool(“reserve-tonnage”). The rest of that year’s production remains available for sale on the open market (“free tonnage”). §§989.54(d), (a). The Secretary approves the recommendation if he determines that the recommendation would “effectuate the declared policy of the Act.” §989.55. The reserve-tonnage, calculated as a percentage of a producer’s crop, varies from year to year.

Under the Marketing Order’s reserve requirements, a producer is only paid for the free-tonnage raisins. §989.65. The reserve-tonnage raisins, on the other hand, must beheld by the handler in segregated bins “for the account” of the RAC. §989.66(f). The RAC may then sell the reserve tonnage raisins to handlers for resale in overseas markets, or may alternatively direct that they be sold or given at no cost to secondary, noncompetitive domestic markets, such as school lunch programs. §989.67(b). The reserve pool sales proceeds are used to finance the RAC’s administrative costs. §989.53(a). In the event that there are any remaining funds, the producers receive a pro rata share. 7 U.S.C. § 608c(6)(E); 7 CFR §989.66(h). As a result, even though producers do not receive payment for reserve tonnage raisins at the time of delivery to a handler, they retain a limited interest in the net proceeds of the RAC’sdisposition of the reserve pool.

Handlers have other duties beyond managing the RAC’s reserve pool. The Marketing Order requires them to file certain reports with the RAC, such as reports concerning the quantity of raisins that they hold or acquire. §989.73.They are also required to allow the RAC access to their premises, raisins, and business records to verify the accuracy of the handlers’ reports, §989.77, to obtain inspections of raisins acquired, §989.58(d), and to pay certain assessments, §989.80, which help cover the RAC’s administrative costs. A handler who violates any provision of the Order or its implementing regulations is subject to a civil penalty of up to $1,100 per day. 7 U. S. C. §608c(14)(B); 7 CFR §3.91(b)(1)(vii). A handler who does not comply with the reserve requirement must “compensate the [RAC] for the amount of the loss resulting from his failure to . . . deliver” the requisite raisins.§989.166(c).

Slip op. at 2-5 (footnote omitted). To summarize (if we can):

• The distinction between "producer" and "handler" was initially so confusing that at oral arguments, various Justices referred to the program as "an old Abbott and Costello movie," and "the world's most outdated law," and even arguing counsel got mixed up whether his clients were one or the other.

• The marketing order was promulgated in 1949. That's 64 years ago, folks.

• There's a 35-member Committee established to determine the yearly reserve tonnages. Thirty-five members. That's not a committee, that's practically a symphony orchestra.

• The set asides for the two years at issue in the Horne case were 47% and 30% of a producer's crop. 

• Raisin producers must hold reserve-tonnage raisins in separate bins for the Committee.

• Proceeds from the sale of these raisins are used to fund the Committee.

• Raisin handlers must file reports about the quality of the raisins they either hold or acquire, and their facilities and records are open to inspection by the Committee, and to pay assessments which help cover the Committee's costs.

• There are large daily penalties for not complying.

Raisin death panel, indeed!

SCOTUS: Property Owner Can Raise(in) A Takings Defense

Looks like the Supreme Court tackled the easier of the two remaining takings cases first. This morning, the Court issued a unanimous opinion, authored by Justice Thomas, reversing the Ninth Circuit and holding that federal courts have jurisdiction to hear a property owner's defense in a case where the agency has imposed or seeks to impose a fine, that doing so would be a taking. Horne v. U.S. Dep't of Agriculture, No. 12-123 (June 10, 2013).

Yes, this is the California raisin case, for those of you who have been following along. The Court held that the takings defense was properly raised by the Hornes in their capacity as raisin "handlers."

We're reviewing the opinion now, and will have some further thoughts once we do. We predicted the Court would overturn the Ninth Circuit, but it looks like we were off the mark when we guessed that it might turn on a purely procedural issue. But the result is the same: remand to the Ninth Circuit for a decision on the merits. Whether this means en banc review, or a revival of the Ninth Circuit's first opinion holding there was no taking, remains to be seen.

That makes two unanimous takings opinions from the Court this term, both in favor of the property owners, and against the federal government. What does this tell you?

Horne v. U.S. Dep't of Agriculture, No. 12-123 (June 10, 2013)

Final Brief In Western Water Rights Takings Case

Here's the Reply Brief, filed by the petitioner/property owner in Estate of Hage v. United States, No. 12-918 (cert. petition filed Jan. 17, 2013).

That's the case in which the Federal Circuit held that a 22-year old takings case was not ripe because even though the agency denied Hage's every application for a grazing permit, it might issue a special use permit that might allow the use of the water he alleges was taken. 

The issue in the case is whether it is a taking for the government to cut off physical access to a property owner's vested right to use water. The Court of Federal Claims awarded $4.2 million in just compensation for the taking of Hage's water rights. But the Federal Circuit reversed because the case was not ripe.

Here is the cert petition, here's the federal government's BIO, and here are the amicus briefs supporting the petition. The Court's docket report indicates the case is up for consideration at the June 13, 2013 conference, so stay tuned.

Petitioner's] Reply Brief, Estate of Hage v. United States, No. 12-918 (May 24, 2013)

Losing One Of The Good Guys

The Washington Post reports that "Bob Fletcher, who saved farms of interned Japanese Americans, dies at 101," and tells one small and little-known part of America's internent of Japanese Americans during the Second World War. 

Once the evacuation was ordered and the internments began, Fletcher "quit his job [as a state agricultural inspector] and went to work saving farms" owned by three Sacramento-area families. He worked the land, and paid the mortgages and taxes. Unlike many of their neighbors, these families' farms were there when they were released. Many Japanese American families (including ours, on mom's side of the family, who lost their Sacramento-area farm) lost everything when they were transported to the camps, because unlike the farms that Fletcher saved, theirs were gone when they returned, lost to squatters, the banks, or the tax man.

For more on the legal aspects of the internment, see "Unfinished Business: The Case for Supreme Court Repudiation of the Japanese American Internment Cases" by Professor Peter Irons.

A Visit To Drake's Bay Oyster Farm, Epicenter Of A California Food Fight

When we originally posted about Drake's Bay Oyster Co. v. Salazar, No. 13-15227, an appeal now awaiting the Ninth Circuit's ruling (oral argument video here, key briefs here), we knew further research on the issue was in order, perhaps by making a site visit. Yesterday, we had the opportunity to do just that, and ascertain for ourselves whether there's room in the environmental community for what appears to be a pretty "green" business. As some of you know, I've been waylaid for the past few weeks, and it was the first day in many that I felt up to taking a field trip.

So off to Drake's Bay it was. Following are some photos, as well as a short video showing the processing line, and a longer video with background on the issues. 

Here is our initial post on the case with the complaint, and our follow up (about one of the amicus briefs filed by parties with impeccable environmental credentials). For a more personal side to this story, read this op-ed in today's Marin Independent Journal by one of the farm's long-time employees.

The small farm is tucked into a corner of one of the fingers of Drake's Estero.

The operation is pretty modest: a landing for the boat, a processing line,
a retail counter, and a couple of residences.

 

View towards the mouth of the Estero.

Baskets of harvested oysters.

 

Bird's-eye view of the Estero and beyond, from Mt. Vision Road.

 

The road to Pt. Reyes is lined with these signs.

The irony. Unfortunately, a bridge en route to the farm now
bears "environmental" graffiti as well.

 

Here's a short video of the processing line.
The only sound you hear is the wind, which is pretty loud. We lowered the volume on this video about 90%, which gives you an idea of the actual volume. High-definition video here.

The Framing of an Oyster Farm - Drake's Bay Oyster Company from A Visual Record on Vimeo.

An excellent video linked from the Oysterzone blog
(which also has posted all of the legal briefs in this case).

Oral Argument Video In Ninth Circuit Oyster Beef

Here's the video of today's Ninth Circuit oral arguments in Drake's Bay Oyster Co. v. Jewell, the case about an oyster farm in Marin County's Point Reyes National Seashore, and Interior Secretary Ken Salazar's decision to not renew its license. The Ninth Circuit has posted the briefs of the parties and amici here.

Here's our initial post on the case, and here's our follow up (about one of the amicus briefs).

Here's a plain language preview of the issues and the arguments. 

Predictions? It seems to us that two of the judges are skeptical of the farm's arguments, and one may be inclined to agree, but there was nothing we saw on the video that would lead us to think the outcome is obvious.

Cal App Affirms Penn Central Temporary Regulatory Taking

Here's the opinion of the California Court of Appeal (1st District) in an appeal we've been following, Lockaway Storage v. County of Alameda, No. A30874 (May 9, 2013), affirming that the County of Alameda is liable for a temporary regulatory taking under Penn Central, and awarding the property owners nearly three-quarters of a million in attorney fees.

The entire opinion is worth reviewing, but here's the short story. Lockaway purchased agriculturally-zoned land in the East Bay area for use as a boat and RV storage facility, an alternate conditional use in ag-zoned land. For over a decade, the property had been used as such pursuant to a series of Conditional Use Permits. In 2000, however, the voters of the county approved an initiative which prohibited the development of storage facilties, unless approved by public vote. The ordinance contained a provision allowing "minimum development" if the prohibition would deprive an owner of its statutory or constitutional rights. It also contained a provision exempting existing developments, and parcels that have received "all necessary discretionary County and other approvals and permits" (in other words, those developments that have "vested").

When Lockaway applied for a new CUP, the County denied it because Lockaway had not obtained a building permit and started construction prior to the effective date of the initiative ordinance. After exhausting administrative remedies, Lockaway sued in California state court for a writ of mandate allowing it to proceed with development, and for inverse condemnation and civil rights violations. The Superior Court issued the writ, because the development was "squarely under the protections" of the vested exemption even though a building permit had not issued, because a building permit is ministerial and not "discretionary." Thus, Lockaway was allowed to proceed with development. After a trial on the damages for the temporary taking, the court held that under Penn Central, the Superior Court held "the County's regulatory action had a 'substantial, negative economic impact' on Lockaway's use of the property, had 'materially interfered with Plaintiffs' distinct, investment-backed expectations,' and that its conduct could not be justified as a normal regulatory mistake." Slip op. at 8. The court issued a verdict for $504,175 in lost profits, $324,954 in increased construction costs due to the 30-month delay in construction, and prejudgment interest. It also awarded $703,760 in attorney fees plus a 1.25 multiplier for a total award of $879,700.

The Court of Appeal affirmed the entire judgment. The most interesting part of the opinion begins at page 20. The court reviewed the three-part Penn Central test, rejected the County's argument that the right test is Landgate Inc. v. California Coastal Comm'n, 17 Cal. 4th 1006 (1998), and held that although the initiative did not render Lockaway's property worthless, it did deprive it of a "return on investment that it 'reasonably expected from the intended use.'" Slip op. at 23. The court also affirmed the "investment-backed expectation" prong, because Lockaway "purchased the property only after the County expressly confirmed that Lockaway could rely on the 1999 CUP to develop a storage facility." Slip op. at 24. Finally, the County's "showstopping U-turn" (first working with Lockaway to further its development plans, and then doing an about-face) satisfied the "character of the government action" factor:

On appeal, the County contends there is insufficient evidence to support the trial court's findings regarding the character of its regulatory action. We disagree. The following pertinent facts are supported by substantial evidence. The County did not take any action to shut down the Lockaway project in December 2000 when Measure D went into effect. Instead, it encouraged Lockaway to continue its development efforts for 18 months. Then, in September 2002 the County changed its position and announced that the project had been doomed since December 2000 because Lockaway had not obtained all permits and commenced construction before Measure D‟s effective date. In taking this new stand, the County refused to even consider whether Section 22 exempted the Lockaway project.

Slip op. at 25. The court concluded the County's behavior was "manifestly unreasonable."

Read the entire opinion for the details. Congratulations to colleague Timothy Kassouni on the win. 

Lockaway Storage v. County of Alameda, No. A30874 (Cal. App. May 9, 2013)

Who's On First And Subject To "The World's Most Outdated Law?" - Supreme Court Oral Arguments In Horne v. USDA

Our read of the transcript of the oral arguments in Horne v. United States Dep't of Agriculture, No. 12-123, leads us to believe that despite its complexities -- Justice Kagan characterized the USDA raisin regulations that form the background of the case as "the world's most outdated law" and Justice Scalia called it "a crazy statute" -- it might be resolved on a straightforward principle of appellate procedure. But more about that below.

Who's On First, Raisin Producers On Second?

First, we turn to what was the day's Most Quotable Moment when, after a series of questions by Justices Sotomayor, Scalia, Kennedy, Ginsburg, and Alito to the petitioners' advocate Michael McConnell which revealed the Justices' confusion about whether his clients were raisin "handlers" or raisin "producers" -- and responses from Mr. McConnell that showed even he had difficulty keeping the labels straight -- Justice Breyer asked:

I'm just trying to get to what you're arguing about. And I might be off base by now. I feel like handlers, purchasers, raisins, like an old Abbott and Costello movie. I just want to see if I'm right. Tell me. Just say you're wrong and I don't go into it further.

Tr. at 19. But he followed that lighthearted pop culture reference with what is perhaps the most accurate summary of the issues in a case that has seemed to perplex commentators because even though the issue before the Court is fairly straightforward, it must be viewed though the opaque wrapper of the USDA's confounding raisin regulations:  

There -- there are some people, they've been -- they are either -- they have some raisins, all right. And these particular people, whom the Department has said have acquired the raisins, it said they acquired the raisins. And so they're there with some raisins, and then the Government says: Do this thing with your raisins. And they don't want to do it, so they don't. They don't do it even though the law says do it.

And then they say the law is unconstitutional and, moreover, you fined us a huge amount of money and we don't want to pay it because the law is unconstitutional, and we consider that money to be paid. Call it a fine, call it what you want. We consider we shouldn't have paid it and now we want it back and we want compensation and we think it's a taking and where do we go. Can't we make that argument in the Ninth Circuit? It's something like that; isn't that what we're arguing about?

Tr. at 19-20.

Constitutional Remedies and Constitutional Defenses

Mr. McConnell agreed that Justice Breyer's formulation of the issue was "almost exactly right," with the one exception that his clients argued they should not have to pay the fine, and should be able to raise the unconstitutionality of the regulations as a defense to the USDA's attempt to assess it. He then pointed out the key detail that lies at the analytical heart of the case: an action to recover just compensation in the Court of Federal Claims should not be considered the exclusive route to raise a takings claim as the USDA has argued (and that might not even be available to parties such as the Hornes, because a Tucker Act lawsuit is predicated on the taking already having been inflicted on the property owner). Mr. McConnell argued that it makes no sense to require a district court to impose a government action that the Hornes argue is a taking simply to ripen a CFC claim for compensation. To do so, he asserted, would be "pointless." Tr. at 21. 

Mr. McConnell focused on two cases, Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), and Missouri Pacific Ry. Co. v. Nebraska, 164 U.S. 403 (1896) to make his point that the two levies by the USDA could be challenged as a taking. Eastern Enterprises addressed the part of the fine that represented the monetary equivalent of the raisins the USDA claims the Hornes should have given up, while Missouri Pacific addressed the penalty -- because each case concluded that a property owner could challenge a government action because it "would be a taking" if the owner were required to comply. Tr. at 22.

Our Old Friend Kaiser Aetna

As we noted in our preview, this is another way of articulating the notion that compensation is not the sole remedy under the Takings Clause, an idea my law firm colleagues have been articulating well before I went to law school, as exemplified by cases such as Kaiser Aetna v. United States, 444 U.S. 164 (1979), in which on behalf of the property owner they raised as a defense the argument that the imposition of a navigational servitude on what it believed was a private marina would be a taking, and could not be accomplished unless the government first condemned and paid for it. That case began when the Corps of Engineers instituted an action in the district court seeking a declaratory judgment that the marina was publicly navigable and an injunction prohibiting the owner from excluding the boating public. The owner asserted that to allow public navigation would be a taking, and did not seek compensation. See United States v. Kaiser Aetna, 408 F. Supp. 42 (D. Haw. 1976). Eventually, the Supreme Court agreed. Kaiser Aetna, 444 U.S. at 180 ("if the Government wishes to make what was formerly Kuapa Pond into a public aquatic park after petitioners have proceeded as far as they have here, it may not, without invoking its eminent domain power and paying just compensation, require them to allow free access to the dredged pond"). 

A Remand in the Works?

Mr. McConnell ended his argument by answering Justice Ginsburg's question of what, if anything, was left for the Ninth Circuit to do were the Supreme Court to agree with the Hornes and send the case back, given that the Ninth Circuit, it its first opinion, reached the merits of the takings defense and ruled against them before it did a 180 and concluded it had no jurisdiction. Mr. McConnell responded that all they want is a chance to go back to the Ninth Circuit and get en banc review on the merits, a process they were undertaking when the USDA claimed that the CFC was the exclusive forum in which to raise takings issues, and that the issue was a "jurisdictional" bar to the Ninth Circuit considering the merits.

About that Remand...

Up next was Joseph Palmore, the Assistant to the Solicitor General who argued the case for the USDA, who started where we suspected he might, by trying to tie the issues in this case to those in Koontz v. St Johns River Water Mgmt Dist., No. 11-1447. But when he attempted to harken back to Justice Sotomayor's initial questioning of Mr. McConnell (a series of questions about which of the petitioner's legal entities owned the raisins at issue, and what property was being taken), Justice Kagan interrupted to ask the type of question that can make an appellate advocate squirm unless they have anticipated the question and have an answer at the ready:

Mr. Palmore, before you do that, haven't you conceded the point that this is not jurisdictional?

Tr at 27. To that question, Mr. Palmore provided a candid answer that may have given the Court all it needs to resolve this case in favor of the Hornes on narrow grounds:

MR. PALMORE: We agree that the failure to go to the Court of Claims is not properly viewed as a jurisdictional defect. We did invoke Ninth Circuit precedent below stating that it was jurisdictional. And some of this cases -- this Court's cases put it in ripeness terms, which is an Article III concept. So there has been confusion -

That piqued Chief Justice Roberts' interest enough for him to ask his first question of the day:

CHIEF JUSTICE ROBERTS: When did you first raise the argument that it was jurisdictional?

MR. PALMORE: In our opposition to the rehearing petition.

CHIEF JUSTICE ROBERTS: And now you are - now you are changing back again and saying it's not?

MR. PALMORE: There was Ninth Circuit precedent holding that it was jurisdictional, and we relied on that and there is certainly language from this Court -

CHIEF JUSTICE ROBERTS: You relied on that when you got to rehearing. You didn't rely on that before you went before the Ninth Circuit, right?

MR. PALMORE: That's correct.

We think -- we think this is properly viewed as a substantive defect in the claim, so in a sense the Ninth Circuit in its initial panel decision ruled for the Government on a substantive defect one, there's no taking. And what it did on rehearing in our view, although it attached the wrong label to it, it substantively was correct in concluding that there was substantive defect number two -

At which point Justice Kagan reenterd the fray asking once again about "conceding" the issue because it had been waived (or, more accurately, "forfeited") by the USDA's failure to raise it earlier in the courts below:

JUSTICE KAGAN: But Mr. Palmore, if you are conceding now that this is not jurisdictional, it seems to me that your Tucker Act argument as a substantive argument, I mean, has been waived. You didn't raise that argument until the rehearing petition.

MR. PALMORE: That would certainly be something that -- that the Ninth Circuit could consider in the event there were a remand here. But the Ninth Circuit did decide it. The substance of its bottom line conclusion was correct and all of its analysis was correct. It simply used the wrong words, so we think it is here.

All this talk of remand was like blood in the water to Justice Scalia, who went in for the kill:

JUSTICE SCALIA: I'm really confused. You are saying there ought to be a remand here because the question is not jurisdictional, which is just what your friend says, right?

MR. PALMORE: Well, the Ninth Circuit -

JUSTICE SCALIA: So the two of you are in agreement it ought to go back to the Ninth Circuit, they should do it on the merits, and -- and if that's wrong, we can review that.

MR. PALMORE: If that happens, of course, as Justice Ginsburg pointed out, the consequence for us is they reinstate the prior panel opinion, in which -

JUSTICE SCALIA: That may well be, but -

MR. PALMORE: I'm not going to resist too strenuously that kind of remand, but they did decide it. And moreover, they decided something separate, which is at JA-305 they said something different, which is the kind of threshold defect in the takings claim turning on raisins, which is there is a capacity problem.

Tr. at 27-29. We suspect that the concession was enough to provide the Court with a way to solve this case without wading into the whole "producer" versus "handler" question and answering what was taken and when, issues that no Justice truly seemed eager to grapple with. Game over, man, game over.

With that, Mr. Palmore returned to his argument about "handlers" versus "producers," which prompted Justice Scalia to respond with the second Quotable Moment of the day:

JUSTICE SCALIA: Yes, but part of that penalty was, you know, your raisins or your life, right? I mean, it was --

  (Laughter.)

JUSTICE SCALIA: -- you don't have to pay the penalty if you give us the raisins.

Tr. at 31.

"What a pity he ain't a prig!"

Mr. Palmer, perhaps sensing that he was on the back side of a downhill argument, attempted to paint the Hornes as artful dodgers, out to game the system by adopting "a business model that was an intentional, willful attempt to evade regulatory requirements in order to secure an unfair competitive advantage." Tr. at 30. But when Justice Alito asked whether this was all stuff the Ninth Circuit should decide, Mr. Palmore again mentioned the R-word:

MR. PALMORE: That was certainly not decided below, so a remand -- to the extent that this was preserved, a remand would be possible outcome there. We think, though, that that claim suffers from separate -separate threshold defects.

Tr. at 33. After some back-and-forth about Apfel, Justice Breyer returned to his earlier theme and challenged Mr. Palmore to contradict his "feeling this is somehow not a fight fit for the Court of Claims" was wrong:

JUSTICE BREYER: Fine. So they're making that kind of constitutional claim. Now, I would think if all you told me was that and I knew nothing about all these statutes, I would say that's the kind of claim that should be made in a Federal district court, period, not the Court of Claims. Because their government isn't going to compensate them for anything. That's against the whole point of the program.

Either this program is valid or it isn't. And if it isn't, some authoritative set of courts should tell us that. So I have a feeling this is somehow not a right fit with the Court of Claims.
Now, you explain to me why that purely instinctive feeling at this point is completely wrong.

Tr. at 36-37. Mr. Palmore responded by arguing that the availability of just compensation for a taking wasn't simply a remedies problem, but was a "constitutional condition," and "[a]s long as there's just compensation, there simply is no violation." Tr. at 37. (Barista's note: Williamson County rears its ugly head again.)

Justice Kennedy then returned to an earlier thread about the issue before the Court:

JUSTICE KENNEDY: I thought that what we were going to decide was whether or not, assuming you can go to the Court of Claims, you must go to the Court of Claims, can you prefer to wait, have a penalty assessed against you and say this is unconstitutional, it's a taking. Your position is you can't say that. don't understand why. Other than, if you want to talk about Williamson and so forth, we can get into that.

Tr. at. 42.

The R-Word Again

Mr. Palmore's argument time began winding down and the Justices again returned to the question of remand, Justice Alito asking whether the USDA would be entitled to win again in the Ninth Circuit based on the reasoning in the panel's original opinion, and Justice Kagan asking whether there would be anything wrong with this disposition:

JUSTICE KAGAN: Mr. Palmore, what would be wrong -- would anything be wrong -- with a -- with a disposition of this Court that went something like this: Everybody agrees that this is not a jurisdictional issue, including the Government, so they got that wrong.

Now, as to this whole business about the Tucker Act and whether the Tucker Act provides a remedy, the Government only started talking about that in a petition for rehearing en banc, and the Government can't do that. You know, it can't introduce an argument like this in a petition for rehearing en banc. So that's waived.

And now, the Ninth Circuit can go and try to figure out whether this marketing order is a taking or it's just the world's most outdated law.

  (Laughter.)

Tr. at 48-49. This portion of the arguments ended with questions by Justice Breyer about whether as "producers" the Hornes had standing to raise the takings issues as "handlers," before Chief Justice Roberts once again showed irritation with the way the government was arguing the case:

CHIEF JUSTICE ROBERTS: I have to say -- I think it comes with less than good grace for you to criticize the other side for not having raised a particular argument. But I do want to clarify that you have no objection at this point for reversing the Ninth Circuit on the ground that they erred in saying that this -- they should have dismissed on jurisdictional grounds.

Tr. at 53. To which Mr. Palmore responded that he would not "resist that too strenuously ... [b]ut yes, we -- we frankly acknowledge and we acknowledged in our brief that we did not -- we did not suggest below that this was a jurisdictional defect," altough he expressly noted that "[o]ur position is that we're not acquiescing in a -- in remand."

In his short rebuttal, Mr. McConnell returned to the lecturn to emphasize again that the issue is is not "jurisdictional" and that his clients have standing, and the arguments ended quickly.

But the case seemed to be over, but for the shouting.

Predictions?

We're predicting a narrow ruling from the Court vacating the Ninth Circuit's amended opinion, holding that the issue is not "jurisdictional," and sending the case back to the Ninth Circuit for further consideration of the Hornes' request for en banc review. The multiple concessions from USDA's counsel are probably going to be too much to overcome, and a narrow remand would allow the Court to resolve the case without getting too far into the weeds about "handlers" and "producers," issues that no Justice seemed ready to tackle, and without getting into the merits of the takings issue.

Will we see another unanimous takings decision from the Court? Stay tuned.

Horne v. USDA Oral Argument Transcipt

Here's the transcript from today's Supreme Court oral arguments in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012).

Here's a recap of the arguments from Lyle Dennison at SCOTUSblog: "If only it were simple..."

Transcript, Horne v. USDA, No. 12-123 (Mar. 20, 2013)

Reply Brief In California Raisin Takings Case (Argued Today): Don't Confuse Constitutional Rights With Remedies

Here's the Reply Brief in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012), the case asking whether in an enforcement action by the USDA, California raisin farmers can raise the defense that the requirement they turn over to the government a certain percentage of their yearly crop would be a taking.

The brief responds to the USDA's brief, and argues that the issue before the Court is not "jurisdictional," which means it could be raised any time, much like the USDA did here, even after the Ninth Circuit issued its opinion. Rather, this is a choice of remedies ripeness question subject to "forfeiture." Barista's note: we're happy to see what is commonly referred to as "waiver" (a knowing and intentional relinquishment of a known right) properly labeled as "forefeiture" (relinquishment of a right by operation of law), because in civil litigation when you don't raise issues you could have, you lose them even if you don't intend to. The brief argues that every case from Williamson County to Stop the Beach Renourishment has treated "takings clause ripeness as non-jurisdictional." Br. at 5.

The Reply focuses on Eastern Enterprises v. Apfel, 524 U.S. 498 (1998) -- a case sure to get Justice Kennedy's attention because he provided the fifth vote for the property owner, but argued the case was one of Due Process, not Takings -- arguing that a takings claim should be able to be raised as a defense when the regulatory scheme being challenged does not provide for compensation:

But the government nowhere cites any case for the novel proposition that Congress would want to establish such a "one-bite" regime. It makes no sense to have the question of which court should hear a takings claim depend on a factor as difficult to ascertain as whether the Executive Branch would abandon its enforcement of the law in response to a just compensation award. That is no doubt why cases addressing takings claims on the merits have given no weight to the fact that the Executive Branch had the authority to stop the taking. See, e.g., Kaiser Aetna v. United States, 444 U.S. 164, 168-169 (1979) (government initiated enforcement action for public access to property); Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 585 (1952) (property seizure based on unilateral executive order). In these cases, federal courts simply reached the merits of the takings claim upon concluding that the underlying regime made no provision for just compensation, rather than requiring a party to proceed to the claims court to determine whether compensation was available there.

Br. at 8.

Finally, the reply argues that a defendant in an enforcement action may raise a takings defense because the USDA's argument that the availability of the Tucker Act avoids the constitutional violation "confuses constitutional rights with remedies." Br. at 13.

More, after today's oral arguments.

Reply Brief for Petitioners, Horne v. United States Dep't of Agriculture, No. 12-123 (Mar. 13, 2013)

More California Raisin Takings Case Previews

Yesterday, we posted our thoughts about the upcoming (March 20) Supreme Court oral arguments in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012), the case asking whether in an enforcement action by the USDA, California raisin farmers can raise the defense that the requirement they turn over to the government a certain percentage of their yearly crop would be a taking.

Here are a few more perspectives on the arguments:

• Supreme Court will divine the legal stakes in California raisin wars - Michael Doyle at McClachy: "Dissident California raisin growers will soon get their day in the Supreme Court sun, with a case that’s juicier than it seems. Libertarians are weighing in. So, from the other side, is Sun-Maid, the largest single marketer of raisins in the world. Texas is siding with the dissidents, as is the U.S. Chamber of Commerce.Add it up and the case with roots in raisin-rich Fresno County will put the nine Supreme Court justices on the spot Wednesday morning. The eventual outcome will have consequences well beyond the vineyard and the packing shed."

• Argument preview: A vintage "takings" case - Lyle Denniston at SCOTUSblog: "This is another of those cases before the Court where the outcome may follow quite easily from the Court’s choice of which of two different theoretical boxes is the right one for this dispute.   If it sees the case as a controversy over the government’s use of a “bait-and-switch” strategy to thwart a serious challenge to its marketing program enforcement, the growers could be well on their way to winning."

• Can the government take a raisin? Farmer challenges Depression-era law - Jeremy Jacobs at Greenwire: "Echeverria, the Vermont Law School professor, said this case is unique because, technically, Horne can't argue that anything was taken since he didn't turn over raisins. Instead, he contends the fines are a taking. Typically, takings cases arise when the government takes the first step, but Horne is contending that he should be able to act first in refusing to comply with the raisin order because he maintains the program is a taking. Echeverria said that line of reasoning could theoretically be used as a defense against almost any environmental statute or regulation where the government requires something of a property owner, such as not filling in a wetland for development. 'If the Hornes are right,' he said, 'it would encourage widespread violations of the law.'"

We'll post the transcript when available.

Horne v. USDA Oral Argument Preview: Is It The Takings Clause, Or Only The Just Compensation Clause?

Koontz Sets The Stage

The apparent sticking point during the January oral arguments in n Koontz v. St Johns River Water Mgmt Dist., No. 11-1447 (cert. granted Oct. 5, 2012), came to light via Justice Scalia's questioning of the property owner's counsel about whether anything had been "taken" when a property owner refused to accept a development permit conditioned on him paying for improvements to public land miles away from his property, because doing so would violate the unconstitutional conditions doctrine of Nollan/Dolan. For how could the owner claim that his property was taken when he didn't accept the permit? The issue was succintly stated by Justice Kagan when she asked point-blank, "where is the taking?" (see p. 11 of the Koontz transcript).

We're still waiting for the opinion in that case so don't have the Court's answer just yet, but Part II of the Koontz debate will likely be taking place on Wednesday, March 20, 2013, when the Court is scheduled to hear oral arguments in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012), the third takings case to be argued this term.

In Horne, the Court is reviewing the Ninth Circuit's opinion which concluded that the court lacked jurisdiction to consider a takings defense raised by raisin farmers who asserted they did not qualify as "raisin handlers" under federal regulations, and could not be required to "reserve" (donate) 47% of their crop to the government because it would be a physical taking. The Ninth Circuit concluded it lacked jurisdiction because the farmers could seek just compensation in a Tucker Act claim in the Court of Federal Claims. "Takings" cases, in the Ninth Circuit's view, are about recovering just compensation and thus must be brought in the CFC if the amount sought is in excess of $10,000.

Some background before we return to that concept.

Raisin Handlers vs. Raisin Producers

This case involves much more than $10,000. For the 2003 and 2004 crop years, the USDA brought an enforcement action against the Hornes seeking to recover the monetary value of raisins they did not turn over to the government under the "marketing order" program, New Deal-era regulations designed to stabilize the raisin market. The Hornes believed they set up their business so they qualified as raisin "producers" and thus were not required to reserve any portion of their crop.

The USDA disagreed and pursued them for $483,843 for the value of the raisin crop they should have set aside, plus $200,000 in civil penalties. In the enforcement action, the Hornes asserted they were not "handlers" and didn't need to reserve any raisins, but even if they were, to impose the reserve requirement would be a prohibited physical taking of their raisins under Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) and Kaiser Aetna v. United States, 444 U.S. 164 (1979). After a losing appeal through the USDA's administrative process, the Hornes also lost in the District Court which ruled against them on all counts.

Ninth Circuit Round I: It's Their Market, You Just Participate In It

The Ninth Circuit affirmed, holding that the reserve requirement was not a taking because the raisin farmers could have avoided the confiscatory regulations by choosing to not enter the raisin market. The panel acknowledged the Hornes' "logic has some understandable appeal" because raisins are property, and they are being taken, but held there was no taking because "their argument rests on a fundamental misunderstanding of the nature of property rights and instead clings to a phrase divorced from context." The court recognized that a simple physical appropriation of raisins would be a taking. "No one suggests the government could come onto the Hornes' farm uninvited and walk off with forty-seven percent of their crops without offering just compensation, even if the seizure itself were justified."

But the reserve requirement in the USDA marketing orders are not the same thing as a direct seizure according to the court, and the regulations were merely the price that raisin farmers have to pay if they want to participate in the raisin market:

Far from compelling a physical taking of the Hornes' tangible property, the Raisin Marketing Order applies to the Hornes only insofar as they voluntarily choose to send their raisins into the stream of interstate commerce. Simply put, it is a use restriction, not a direct appropriation. The Secretary of Agriculture did not authorize a forced seizure of forty-seven percent of the Hornes' 2002-03 crops and thirty percent of their 2003-04 crops, but rather imposed a condition on the Hornes use of their crops by regulating their sale. As we explained in a similar context over seventy years ago, the Raisin Marketing Order "contains no absolute requirement of the delivery of [reserve-tonnage raisins] to the [RAC]" but rather only "a conditional one." Wallace v. Hudson-Duncan & Co., 98 F.2d 985, 989 (9th Cir. 1938) (rejecting a takings challenge to a reserve requirement under the walnut marketing order).

Relying on the rationale of Yee v. City of Escondido, 503 U.S. 519 (1992), the court viewed the raisin sale business as voluntary. In Yee, the Supreme Court upheld a mobile home rent control ordinance against a physical takings challenge, since the landowners were not required to use their property as a mobile home park, and thus the occupation of the land was not required by the government. Same for the raisin industry; no one is forcing the Hornes to participate: "[t]heir argument is founded on an erroneous belief that they have a property right to 'market their [raisins] free of regulatory controls.'" 

The court distinguished the ability to sell personal property such as raisins, from the right to develop real property (as in Nollan and Dolan, two cases where the government was prohibited from conditioning the right to build on the owner's agreement to surrender the right to compensation). The government's power to regulate commerce "ought to put a property owner on notice 'of the possiblity that new regulation might even render his property economically worthless (at least if the property's only economically productive use is sale or manufacture for sale)'." Thus, personal property is apparently different than real property, and the right to sell personal property is subject to the government's power to regulate the market (even to the point of requiring raisin producers to surrender their right to compensation for reserved raisins).

Ninth Circuit Round II: A New Gloss On The Old Tucker Act Shuffle

The Hornes sought rehearing and in response, the USDA for the first time asserted that the takings defense was not ripe, and the District Court and the Ninth Circuit couldn't even consider the argument. In an amended opinion, the Ninth Circuit agreed, holding that the exclusive forum for considering takings claims -- even those raised defensively -- is a CFC claim for compensation under the Tucker Act. The Ninth Circuit dismissed the Hornes' takings defense for lack of jurisdiction, effectively telling the farmers that they could not object to the imposition of fines, but must pay and then file a claim for just compensation in the CFC to get the money back. Oddly, the Ninth Circuit didn't wipe out the earlier opinion and substitute an order dismissing the case. It left intact the substantive decision over which it had just ruled it had no jursidiction. 

Old takings hands will recognize the Ninth Circuit's ruling as the latest incarnation of the Tucker Act Shuffle, which is like Williamson County ripeness writ small for takings claims against the federal government. Under that theory -- in which district courts only deal with the validity of the regulations and do not consider takings claims, leaving those exclusively to the CFC -- a property owner must either lose in the District Court, or concede the validity of the regulation at issue, and only then be able to pursue the CFC case for compensation. In these situations, the property owner's check to the government paying a fine and the government's just compensation check to the property owner for a taking could literally cross in the mail.

Cert Review

Just a few weeks after the Court granted cert in Koontz, it did the same in Horne, agreeing to consider two Questions Presented: 

1.  Whether a party may raise the Takings Clause as a defense to enjoin a "direct transfer of funds mandated by the Government." Eastern Enterprises v. Apfel, 524 U.S. 498, 521 (1998) (plurality; quotation marks omitted).

2.  Whether the federal courts have jurisdiction over petitioners’ takings claim, where petitioners, as "handlers" of raisins under the Raisin Marketing Order, 7 C.F.R. Part 989, are statutorily required to exhaust all claims and defenses in administrative proceedings with exclusive jurisdiction for review in federal district court.

The petitioners' merits brief argued that ripeness prohibits a plaintiff from bringing a claim only where it seeks "anticipatory relief against government action that has not yet taken place," and "does not apply when a party seeks to interpose a constitutional defense to an enforcement action brought by the government at the time and in the forum of the government’s own choosing."

The USDA's merits brief countered that the Hornes only have standing to assert the takings defense as "producers," but the USDA's order was imposed on them "only as handlers." Moreover, claims under the "Just Compensation Clause" must be brought in the CFC, and cannot be raised in the District Courts, even defensively.

A number of amicus briefs were submitted. The brief filed by Texas supporting the Hornes is here. The brief supporting the Hornes filed by the Cato Institute, the NFIB, the Center for Constitutional Jurisprudence, and the Reason Foundation is here. Also supporting the Hornes are the U.S. Chamber of Commerce (here), and five constitutional law scholars (here). The USDA is supported with an amicus brief from the International Municipal Lawyers
Assoociation (here), and by a brief filed by Sun-Maid Raisins (here).

Koontz Continued?

The reason we began this post with a reference to the arguments in Koontz is that we're predicting that the questions that dogged the property owner's counsel in that case will continue to interest the Court here. In Justice Kagan's words, "where is the taking?" In Koontz, the Justices seemed hung up on the semantics of what was alleged to have been taken -- was it the permit, the property owner's right to develop his land, or the cash that was "suggested" he donate to improve the government's land? In Horne, the USDA has taken a similar approach, arguing that the Hornes have not identified what property has been taken -- is it the raisins they were required to turn over, the cash they must pay as a penalty for not doins so, or their right to sell their raisins? Hopefully, counsel for the Hornes will use the oral arguments to clarify that issue, for if the Court can identify "the taking," then the Hornes will have gone a long way to convincing it that they should be able to raise it as a defense.

"Takings" Or "Just Compensation?" -- A Remedies Question

This lead us to what we believe is the issue at the heart of the case: whether the Fifth Amendment contains a "Takings" Clause, or only a "Just Compensation" Clause. The focus of the analysis in regulatory takings law recently, especially after Lingle v. Chevron USA, Inc., 544 U.S. 528 (2005), has been whether a government action is the functional equivalent of an exercise of eminent domain. In many regulatory takings and inverse cases, the usual remedy being sought -- just like in most eminent domain cases -- is the recovery of just compensation. But that's only part of the equation, and there's no reason that after-the-fact compensation is the exclusive remedy under the Fifth Amendment.

The USDA's brief carefully labels it the "Just Compensation Clause" as if that were the only remedy available to a property owner objecting to what it believes is unconstitutional action by the government. But that's never been the case, and property owners have the ablity to challenge an action because it would be a taking if the government were to do it, even if they do not pursue compensation. For example, in Kaiser Aetna, the property owner was not seeking compensation, but only a declaratory judgment that were the Corps of Engineers to impose a navigational servitude on the private marina, it would be a taking. The Court agreed, holding that "if the Government wishes to make what was formerly Kuapa Pond into a public aquatic park after petitioners have proceeded as far as they have here, it may not, without invoking its eminent domain power and paying just compensation, require them to allow free access to the dredged pond." Kaiser Aetna, 444 U.S. at 180. In Loretto, the property owner was not only seeking compensation but an injunction. In Nollan, the property owner sought a writ of mandate ordering the offending condition struck from the permit, and not compensation.  

The USDA’s argument is based on the idea that a court does not have the power to stop the agency action that is claimed to be a taking. In other words, a court cannot tell the USDA that it can’t impose reserve requirement (or the fines) on the Hornes because to do so would be a taking. Instead, the Hornes must either reserve the raisins or pay the fine and then seek "reimbursement" by way of an action in the CFC. This doesn’t make much sense, and it is a duplication of legal process and a waste of time to shuttle back and forth from a District Court to the CFC when the same issues are at stake. Indeed, where fines are at issue, the USDA’s "pay-first-then-sue-for-reimbursement" theory reeks of inefficiency and needless process.

If a majority of the Court is inclined to rule in the Hornes' favor, it can limit its ruling by issuing a narrow opinion that deals only with their ability to defend against the USDA, and offering no opinion on the merits of the takings defense. Doing so should allay the fears expressed by the USDA and its amici that a ruling in favor of the Hornes will open the floodgates to courts invalidating vast segments of the regulatory state under the Takings Clause.

Predictions

We're not going to predict the outcome, at least not yet. But we do offer these prognostications: as in Koontz, Justice Scalia may be the key. If he's convinced that the Hornes can articulate where's the taking, it doesn't seem like a stretch to conclude they can raise that claim defensively. And Scalia has shown an ability to get other Justices to join him in takings cases. Justice Breyer will probably talk about the Penn Central test, as he always seems to, and Justice Kennedy will likely do likewise about Due Process. As for the others, we don't expect them to cross the usual lines in takings cases. And, of course, Justice Thomas won't ask anything (we end on an easy one).

More to follow after the arguments on Wednesday.

Food Fight: Environmentalist Top Chef Supports Oyster Farmer Against Other Enviros In Ninth Circuit

Undercutting the trope that the lawsuit by a Marin County, California oyster farm to keep operating is all a right-wing plot (see also this story), famed Berkeley chef and food guru Alice Waters has asked the Ninth Circuit to file an amicus brief in support of Drakes Bay Oyster Company in its appeal of the District Court's denial of its request for a preliminary injunction. As we noted here, the Secretary of the Interior denied the Company's efforts to renew its license for its decades-old farming operation in the Point Reyes National Seashore. The Ninth Circuit has issued an injunction pending appeal, and ordered expedited calendaring.

Joining Waters on the brief is another nearby oyster farmer (located on private land), a San Francisco restaurant, the California Farm Bureau and two county farm bureaus, and "Food Democracy Now," "Marin Organic," and the "Alliance For Local Sustainable Agriculture."

The point of the brief is to repudiate the notion expressed by what the brief calls "traditional conservationists and wilderness advocates" that a human or commercial presence in the area is repugnant. A fine example of that appears in a quote in this story on the case from the San Francisco Chronicle: 

Conservation groups were pleased [with Interior's decision to shut down the farm]. The ruling "affirms that our national parks will be safe from privatization schemes, and that special places like Drakes Estero will rise above attempts to hijack Americans' wilderness," said Neal Desai of the National Parks Conservation Association.

We're not sure how an operation that has been there since the 1930's -- well before the existence of the National Seashore -- can be considered "hijacking" of wilderness or a "privatization scheme," but there you have a reflection of a certain mindset in a tidy little quote. As a reminder we provide the above video, a classic bit from The Matrix wherein the bad guy expresses this thoughts on humans and the environment.

Waters' amicus brief begins:

There is no single voice that can speak for the "public interest" in keeping the Drakes Bay Oyster Company [Oyster Farm or DBOC] open until the Secretary of the Department of the Interior’s [DOI] Order to close can be reviewed.

Closing the Oyster Farm would have a broad, negative and immediate impact, on the local economy and the sustainable agriculture and food industry in the San Francisco Bay Area, on the school children of the workers who live in the housing units onsite, and, in the longer term, on food security and the U.S. balance of trade. Closing down the oyster farm in Drakes Estero, which has existed since the early 1930s, would be inconsistent with the best thinking of the modern environmental movement and further tear at the fabric of an historic rural community that the Point Reyes National Seashore [Seashore] was created to help preserve.

On the other hand, the sounds of motorcycles racing by Drakes Estero on the adjacent highway will not cease if the Oyster Farm is closed. The ranches that surround Drakes Estero will remain in the area zoned "pastoral" right up to its shoreline. California’s retained fishing and mineral rights in Drakes Estero will still exist. Closing down the Oyster Farm would simply be a mark in the “win column” for the National Park Service [NPS] and other traditional conservationists, wilderness advocates stuck in an archaic and discredited preservationist paradigm, whose apparent aim is to convert Drakes Estero to titular wilderness status at any cost.

Br. at 1-2 (emphasis original). Pages 10-14 detail how "the environmental movement is evolving ... to become more 'people friendly and to deal with 'working landscapes,' including fisheries." The brief is also worth reading for its history of shellfish farming in California and the impacts, vel non, of oyster cultivation on the environment.

[Proposed] Amici Curiae Brief of Alice Waters, et al., Drakes Bay Oyster Company v. Salazar, No. 13-15227 (...

Response Briefs On Impact Of SCOTUS Flood Takings Opinion

Earlier, we posted the initial briefs in Big Oak Farms, Inc. v. United States, a case now pending in the Court of Federal Claims. Or, more correctly, perhaps being revived in the CFC because it was dismissed earlier.

The property owner in Big Oak Farms is seeking compensation for the flooding of its land in 2011 after the Corps of Engineers blew up a levee on the Mississippi River in order to, in the plaintiff's words, "sacrifice Plaintiffs' land to superimposed water, sand, and gravel in order to benefit the public diverting high water away from other personal and real properties in and around Cairo, Illinois." Video here.

The Big Oak Farms briefs were the first briefs filed in which the parties attempted to apply the Supreme Court's ruling in Arkansas Game and Fish Comm'n v. United States, No. 11-597 (Dec. 4, 2012). These were filed even before the parties in Arkansas Game filed their briefs on the effect of the Supreme Court's decision on their case.

In Arkansas Game, the Supreme Court rejected a per se rule of no liability for government-induced flooding. Following the ruling, the CFC said it would reconsider its dismissal of Big Oak Farms because the dismissal was based on the now-vacated Federal Circuit decision in Arkansas Game. The CFC invited briefing on what the Supreme Court meant when it held that courts must "weigh carefully the relevant factors and circumstances" presented in a flooding case, and apply a Penn Central-esque list of "factors" to determine whether there's been a taking:

• "[T]ime is indeed a factor in determining the existence vel non of a compensable taking."

• Was the flooding "temporary and unplanned" and a result of "exigent circumstances?"

• "[T]he degree to which the invasion is intended or is the foreseeable result of authorized government action.

• "The character of the land at issue and the owner’s 'reasonable investment-backed expectations' regarding the land’s use - had the area been flooded before, and if so, was the flooding comparable to the government-caused flooding?

• The "severity of the interference," and whether the flooding was a single act, or part of a series (a "sufficient number and for a sufficient time may prove [a taking]").

Each side filed their initial briefs and now have filed their answering briefs. Here is the property owner's response brief, and here is the response brief of the federal government.

We'll have more when the CFC issues its ruling.

Plaintiffs' Response to the Government's Memorandum of Law on the Impact of the Supreme Court's Decision in...

The Government's Response Brief Regarding Impact of Arkansas Game & Fish Commission v. United States on...

Podcast And Video: The PLDC And Property Rights In Hawaii - A Panel Discussion

(We're not sure who captured and posted the above video -- wasn't us -- but to whomever did so, thank you.)

Earlier this week, our colleague Mark M. Murakami spoke at the University of Hawaii Law School on a panel about "The PLDC and Property Rights in Hawaii." PLDC refers to the Public Land Development Corporation, a state agency created in 2011 to develop state-owned lands, primarily in concert with private entities. Since its formation, the PLDC has become highly controversial, and the Hawaii Senate recently voted to repeal it.

Joining Mark on the panel were Professor Shelley Saxer (Pepperdine); Marti Townsend, Executive Director of the Outdoor Circle; and Chris Lee, State House of Representatives member.

In the event you don't want to view the entire session, we've put Mark's remarks and his responses to audience questions in a separate (high-quality) audio file, which you can steam or download here (59 minute/28mb mp3): 

The PLDC and Property Rights in Hawaii 2-26-2013

To save on your local drive, right click on the above and choose "Save link as" or similar.

Guest Post: Status Of Appeal Of Land Use Commission’s Koa Ridge Approval

Last year, the Hawaii Land Use Commission granted district boundary amendment effecting the reclassification of land from the “agricultural” district to the “urban” district for Castle & Cooke Homes' proposed Koa Ridge development, sited on agricultural land on the island of Oahu. Under Hawaii’s statewide zoning, a "boundary amendment" is a reclassification of land, similar to a rezoning at the county level. The Hawaii Chapter of the Sierra Club filed an agency appeal challenging the boundary amendment in state court under the Administrative Procedures Act. 

Our friend Paul Schwind -- who has guest blogged here on many occasions before on this case, the rail, and others -- attended the agency appeal hearing at circuit court, and his report follows.

It's good that Paul has stepped up. We haven't been commenting on this case because we've got a stake in the game (our partner Greg Kugle is lead counsel for one of the parties).  Since we're involved in this case, our usual disclaimer is probably more applicable than usual: these aren't our words, our thoughts, or those of our clients.

We're not sure if we have formally introduced Paul to our audience before, but in the event we haven't, here is more about him. Paul is an old hand in Hawaii land use and agricultural policy. Before he was called to the Bar in 2001, Paul was Chief Planner for the Hawaii Department of Agriculture for 15 years. Then, after graduating law school (from our alma mater the University of Hawaii), he served for four years he was Director of Research and Legal Affairs for the Land Use Research Foundation in Hawaii. In both positions he was heavily involved with Important Agricultural Land issues, including the enactment of the IAL legislation referred to in his post below. He has experienced the IAL conversation from the government, private sector, and legal perspectives. Paul had a life before the law, and has a Ph.D. from the University of Chicago.

Here's his write up of the latest.

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Status of Appeal of Land Use Commission's Koa Ridge Approval

by Paul J. Schwind*

In keeping with a long tradition in Hawaii that land use cases are litigated in court on procedural rather than substantive grounds, the agency appeal in Sierra Club, Hawaii Chapter et al. v. Castle & Cooke Homes Hawaii et al., No. 1CC-12-1-001999 (Haw. 1st Cir. 2012) was decided based on whether the appeal met the statutory tests for appeal under the Administrative Procedures Act, rather than on public policy grounds. Appellant Sierra Club Hawaii Chapter had earlier been granted intervenor status during the Land Use Commission’s (LUC) quasi-judicial hearings on developer Castle & Cooke Homes’ petition for district boundary amendment from agricultural to urban for its property at Koa Ridge on Oahu.

On July 20, 2012, Sierra Club appealed of the LUC’s decision and order granting the land use reclassification. On February 15, 2013, Circuit Judge Rhonda Nishimura heard argument on the appeal, and issued her ruling orally. The written Order will be drafted by counsel for the lead prevailing party (Castle & Cooke Homes).

Judge Nishimura began by asking Eric Seitz, Esq. (counsel for the Sierra Club) which of the LUC findings of fact and conclusions of law were in error, as a basis for vacating the decision and order. He responded "all of them." The judge then asked Mr. Seitz whether designation of important agricultural land (IAL) was not before the court. He answered "yes" (i.e., designation of IAL was not the issue).

With the foregoing established on the record, Mr. Seitz began by stating that this is a case of first impression, in that it requires interpretation of Article XI, Section 3 of the Hawaii State Constitution, which requires that important agricultural lands be identified, conserved, and protected:

Section 3.  The State shall conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands. The legislature shall provide standards and criteria to accomplish the foregoing.

Lands identified by the State as important agricultural lands needed to fulfill the purposes above shall not be reclassified by the State or rezoned by its political subdivisions without meeting the standards and criteria established by the legislature and approved by a two-thirds vote of the body responsible for the reclassification or rezoning action.

Haw. Const. art. XI, § 3. Mr. Seitz conceded that the Sierra Club has no standing to reclassify land, but argued that the LUC members take an oath to follow the state constitution, and therefore cannot ignore Art. XI sec. 3 and its derivative statutory provisions. He acknowledged that the Hawaii Supreme Court has ruled that the constitutional provision is not self-executing. See Save Sunset Beach Coalition v. City and County of Honolulu, 102 Haw. 465, 78 P.3d 1 (2003) (until legislative standards and criteria are adopted, the constitutional section is legally inoperative). But standards and criteria both for identification and for reclassification and rezoning of IAL were in fact enacted by the Hawaii Legislature in 2005. See Haw. Rev. Stat. §§ 205-44, 205-50.

Since legislatively-enacted standards and criteria are now in place, Mr. Seitz argued that the LUC cannot now say that these standards and criteria are themselves inoperative just because the LUC has thus far failed to promulgate implementing administrative rules, and because the City and County of Honolulu has only begun the process of actually mapping IAL pursuant to Haw. Rev. Stat. § 205-47. The lands to be mapped by the City are then to be designated as IAL by the LUC pursuant to § 205-49. Note:  the only explicit reference to administrative rules in chapter 205 part III is in § 205-45 relating to petitions for IAL designation by farmers or landowners, and that provision is discretionary, not mandatory. See Haw. Rev. Stat. § 205-45 (a) (k).

So can – and should – the LUC go forward or not, given that legislative standards and criteria for IAL are in place, rules are not explicitly required for reclassification of IAL, but actual maps of designated IAL are not yet available?

Judge Nishimura asked whether anything exists that does set forth the procedure the LUC should follow in this case. Mr. Seitz responded, no, but it’s implied. That is, the LUC should refuse to reclassify IAL until both rules and maps are in place. The LUC ignored what he described as the constitutional mandate to "wait." He added that other findings of the LUC – such as the existence of other IAL (besides the subject property) that could be farmed – are purely hypothetical, as such "other" lands have no infrastructure for agriculture and have never been farmed.

Judge Nishimura then asked whether there was expert testimony during the LUC hearings in this case. Mr. Seitz responded that the testimony was exhaustive, and the LUC was entitled to make credibility determinations, but they deferred critical issues to other agencies down the road, such as whether the need for the project outweighs the need to conserve and protect IAL. He added that the record does not justify the "destruction of IAL forever." Aloun Farms (currently on the subject property) "cut their own deal" for relocation, but there are no other productive alternative lands sitting around where relocation of agricultural production would be viable. Mr. Seitz went out of his way to emphasize that Castle & Cooke has asked for designation of some of its other lands as IAL. They are a responsible developer, but even the most responsible developer is bound by the constitutional mandate and should not be allowed to develop IAL.

Wyeth Matsubara, Esq. (co-counsel for Castle & Cooke Homes) argued that the appeal filed in this case is more a weighing of constitutional requirements than an appeal of findings of fact and conclusions of law, as allowed by Haw. Rev. Stat. § 91-14. Judge Nishimura noted that an issue on the record was the weighing of housing need versus the availability of alternative agricultural lands. Mr. Matsubara continued that the LUC is required to act, and that there was uncontroverted testimony on the record that suitable alternative agricultural lands were offered by the developer to their tenant, Aloun Farms. There was also ample uncontroverted  testimony as to the need for urban growth, and as to Castle & Cooke Homes’ mitigating measures in this case.

Sarah Hirakami, Esq. argued for the LUC that nothing in Act 183 requires the LUC to act sua sponte to designate IAL. See Haw. Rev. Stat. § 205-49(a). The LUC must first receive maps from the counties, with recommendations from the Department of Agriculture (DOA) and the Office of Planning (OP). Judge Nishimura added that under § 205-44.5, the DOA and the Department of Land and Natural Resources (DLNR) were to identify public lands for designation as IAL, by the end of 2009. The LUC can also act to designate these public lands only after it receives the maps from DOA and DLNR. Ms. Hirakami continued that the DOA did not oppose the district boundary amendment petition in this case, and because the LUC imposed conditions on the boundary amendment, only the LUC has jurisdiction to revert the reclassification. Determination of the credibility of witness testimony is also for the LUC, not the court. Ultimately, the LUC must show that its decision and order is supported by the facts on the record.

Dawn Takeuchi, Esq. argued for the City and County of Honolulu that the City may employ the urban growth boundaries in its Sustainable Community Plans as part of the IAL designation process. See Haw. Rev. Stat. §§ 205-44(c)(6) (IAL designation must be consistent with county plans). See also City Council Resolution 12-23 CD1, FD1 (Feb. 15, 2012).  Accordingly, it is unlikely that the subject property would be designated IAL by the City.

Bryan Yee, Esq. argued for the State of Hawaii Office of Planning that although a two-thirds affirmative vote of the LUC is required to reclassify designated IAL, the land of the subject property has not been so designated yet. And the replacement land offered to Aloun Farms does have water infrastructure.

In rebuttal, Mr. Seitz responded that mitigation of Aloun Farms is not at issue here, since they were taken care of. The issue is the preservation of IAL for the long-term agricultural productivity of Hawaii.  The long-term agricultural sustainability of this State was the obvious objective of the framers of the constitutional amendment and, later, the Legislature.  No one else in this proceeding is concerned about that. Even the DOA, which is mandated (§ 205-44.5) to identify public lands that are IAL, hasn’t done it. But there is the City Council resolution, supra, that asks the City to move more rapidly to identify IAL, including lands within the urban growth boundary.

Judge Nishimura then announced her ruling as soon as the parties concluded their oral arguments. She stated that the court is constrained by the record on appeal and therefore cannot grant injunctive relief, as the appellant apparently had requested. Reversion of the LUC decision and order based on policy grounds is also not for the court. The court is limited to deciding whether the decision and order of the LUC is consistent with its findings of fact and conclusions of law, and whether these were arbitrary and capricious. There was no challenge in the record on appeal to the credibility of witnesses, nor was there evidence in the record contrary to the findings of fact and conclusions of law enunciated by the LUC.  Accordingly, the LUC’s decision and order is affirmed, and the appeal is dismissed.

The take-away from this proceeding? Notwithstanding the elegant and articulate passion of appellant’s counsel, you win or lose depending on whether you can raise objections to the decision below within the jurisdiction of the appellate court. In this case, the bottom line seems to be that despite all the constitutional and statutory policy in place, no important agricultural lands have yet been officially mapped and designated pursuant to Act 183.  Absent that result, it is difficult if not impossible to overturn a land use district boundary amendment as contrary to such a designation, when it does not yet exist. The Sierra Club’s appeal may be prescient, but it does not, and cannot yet, lead to a dispositive ruling grounded in the constitutional requirement to conserve and protect important agricultural lands. 

Next stop, the Court of Appeals?

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*voluntarily inactive member of the Hawaii Bar

Portland: Planning Utopia Or Hipster Paradise?

Having recently attended the 7th International Conference of the Academic Association on Planning, Law, and Property Rights in Portland, Oregon, we offer this irreverent view of that city's culture, "Insufferable Portland," by Mark Hemingway at the Weekly Standard. The landscape he portrays should be familiar to anyone who knows Portland, Berkeley, the Upper West Side, Santa Monica, Boulder, Chapel Hill, or Ann Arbor. Some highlights:

Case in point: One of the most commented-on sketches from the show [Portlandia] is a scene from the first episode in which Armisen and Brownstein are sitting in a restaurant. After asking their waitress a series of absurd questions about whether the chicken they are about to eat is local​—​"the chicken is a heritage breed, woodland raised chicken that’s been fed a diet of sheep’s milk, soy, and hazelnuts. .  .  . His name was Colin, here are his papers"​—​the couple ends up leaving the restaurant and driving to the farm to see the environment where the chicken was raised in order to assuage their guilt about eating it.

Hemingway's piece is not limited to skewering Portland's culture, but includes a look at the city's (and the state's) vaunted land use planning:

Things began to unravel in 1973, when the Oregon legislature required cities in the state to set development boundaries with the goal of preserving farmland from "leapfrog development"​—​that is, new subdivisions not adjacent to established developments. Portland became the first major city with an "urban growth boundary."

This fact opened up a world of possibilities that are still being inflicted upon us. "Urban planners have long believed in a land-use-transportation connection that would allow them to manipulate one through the other," writes Cato Institute senior fellow Randal O’Toole in a damning policy paper on the failure of Portland’s growth policies. "So Portland plans land uses to try to reduce the amount of driving people do while it plans transportation to try to slow the conversion of rural land to urban purposes."

In the same vein, at the conference, John Charles from the Cascade Policy Institute gave an eye-opening presentation on "Transit-Oriented Development as a Growth Management Tool in Portland: Comparing the Vision with Reality," about whether TOD has lived up to its promise. We won't attempt to paraphrase his findings, but let's just say that in some cases it has not, and "TOD" and "smart growth" are not the be-all-end-all solution to traffic and population issues.

For a view less tongue-in-cheek's than Hemingway's of Oregon's land use planning program, see The Quiet Revolution Goes West: The Oregon Planning Program 1961-2011, 45 John Marshall L. Rev. 357 (2012), authored by our ABA colleague Edward Sullivan.

"Sun Maid Girl" Files Amicus Brief In California Raisin Takings Case

Update January 20, 2015: here are links to the most recent reports and the cert-stage briefs in the second go-round for the case: Horne II "The World's Most Outdated Law" Crahses Headlong Into Takings. 

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It's not really the "Sun-Maid Girl," but rather the organization the trademark now represents, Sun-Maid Growers of California., who filed this amicus brief supporting the U.S.D.A. in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012).

The brief makes one main point: the Hornes, as raisin "handlers" cannot assert a takings defense because they didn't have title to the raisins they claimed were taken, and thus lack standing:

Petitioners indisputably have no standing to assert a Takings defense to avoid civil liability, as handlers, for failing to set aside as reserve tonnage the raisins produced by other producers, because as handlers petitioners never took title to raisins produced by other producers subject to the reserve tonnage requirement. Instead, the marketing order transferred title directly from the producers to the Raisin Administrative Committee. If petitioners had complied with the reserve tonnage requirement with respect to the raisins produced by other producers, those producers, to the extent that petitioners' compliance with the marketing order would have effected a compensable "taking," would have been required to bring a claim in the Court of Federal Claims under the Tucker Act, 28 U.S.C. § 1491(a)(1).

Brief. at 6 (citation omitted).

Oh, we just can't wait for the oral arguments in this case.

In a footnote, the brief argues that the case could be dismissed as improvidently granted. See Brief at 7 n.3.

The petitioners' brief is here. The amicus brief filed by Texas is here. The brief filed by the Cato Institute, the NFIB, the Center for Constitutional Jurisprudence, and the Reason Foundation is here. The brief by the U.S. Chamber of Commerce is here. The amici brief by five constitutional law scholars is here. The USDA's merits brief is here. The amicus brief of the International Municipal Lawyers Assocation is here. The case is scheduled for argument on March 20, 2013.

Brief of Sun-Maid Growers of California as Amicus Curiae in Support of Respondent, No. 12-123 (Feb. 21, 201...

Fed Cir Doesn't Show Jerry McGuire The Money: Property Owner Required To Pursue "Ambiguous and Informal" Permit Procedure

Update: Gideon Kanner's thoughts on the case here.

As we mentioned in this post about earlier proceedings in the case, when the plaintiff/property owner's name is "Jerry McGuire" and he is asserting a claim for compensation, it's inevitable that we all make reference to the "show me the money" catchphrase from Jerry Maguire, the 1996 Cameron Crowe film. So we have.

With that out of the way, let's get to the Federal Circuit's opinion in Maguire v. United States, No. 2012-5073 (Feb. 20, 2013), in which the court held that McGuire's takings claim was not ripe and he had no "property" that was taken.

First, the facts. McGuire leased farmland from an Arizona indian tribe, administered by the Bureau of Indian Affairs. The BIA removed a bridge that connected two of the parcels over a canal, which effectively landlocked one of the parcels. The bridge was not on the leased property, but was within a right of way owned by the BIA. Once the agency announced its plans to remove the bridge, McGuire and the agency had some discussions regarding the possibility of him replacing it, but the end result was that the BIA deemed his efforts "insufficient" and eventually removed the bridge. Without access to the parcel on the other side of the canal, McGuire's efforts to farm it were fruitless, and after several months he stopped making lease payments. He ended up in Bankruptcy Court after seeking Chapter 11 protection.

McGuire did "not claim that removal of the bridge was itself a taking, but rather that the BIA’s alleged refusal to authorize replacement of the bridge was a taking of his property rights." Slip op. at 2. To conclude that McGuire's case became a "complex procedural history," slip op. at 5, may be an understatement, since it began in tribal court, then progressed to federal bankruptcy court which after a trial awarded him $1.132 million in compensation for his inverse condemnation claim, and ultimately wound its way to the Federal Circuit after stops in the U.S. District Court, the Ninth Circuit, and the Court of Federal Claims.

Although the bankruptcy court awarded McGuire just compensation, the district court rejected the claim because it was not ripe because he did not avail himself of the permit process, and that '[t]he fact that the permit process was nebulous d[id] not amount to a denial of a permit.'" Slip op. at 6. The Ninth Circuit held that neither the bankruptcy court nor the district court had jurisdiction to hear the takings claim, since it belonged exclusively in the CFC. Even though it lacked jurisdiction, however, the Ninth Circuit issued a ruling on the ripeness claim as a "courtesy" to the CFC, concluding that the case was ripe because McGuire had "sufficiently complied with the permitting system as practiced by the [government]." Since the BIA's did not have a formal process, and McGuire had done everything reasonably within his power to get permission to rebuild a bridge, the CFC should not dismiss. The Ninth Circuit transferred to the CFC.

There, faced with another motion by the BIA that the case was not ripe, the CFC agreed that it would not have concluded that the takings claim was ripe, but held that it was bound by the Ninth Circuit's decision as law of the case. The CFC also rejected the BIA's motion for summary judgment on the merits, concluding that issues of fact required a trial. A bench trial in the CFC resulted in two rulings. First, the case was ripe under the law of the case doctrine. Second, on the merits, the CFC held that McGuire did not have a property interest in the removed bridge, and therefore did not have a takings claim. McGuire appealed to the Federal Circuit.

On ripeness, the court held that it and the CFC were not bound by the Ninth Circuit's ruling, "because the Ninth Circuit lacked authority to decided the question, which was a prudential inquiry not necessary to the transfer decision." Slip op. at 8. The court's analysis mostly focused on the language and meaning of the transfer statute, 28 U.S.C. § 1631, and concluded that there was "no question" that the district court and the Ninth Circuit did not have subject matter jurisdiction over McGuire's claim for compensation. Thus, that court's ripeness analysis was merely "prudential" and not binding on the CFC or the Federal Circuit.

The Federal Circuit therefore revisited the ripeness issue, and concluded that McGuire did not obtain a "final decision" from the BIA regarding how it would (or would not) be allowed to develop his property. The court held there was a permitting process "available" that might have resulted in McGuire being able to replace the removed bridge. The court found it of little import that the process was "informal rather than formal" --

Although the government never provided McGuire with a written form listing the requirements of a written submission, a permitting process existed. McGuire was referred to the process of § 171.9 on numerous occasions, and he was told to submit written plans with specifications. Thus the process, albeit informal, required something in writing from McGuire.

The informal nature of the procedures does not allow McGuire to escape the exhaustion requirement.

Slip op. at 13 (citing Estate of Hage v. United States, 687 F.3d 1281, 1290 (Fed. Cir 2012)). The court rejected McGuire's argument that he informally complied with this informal process, and that he did not show that further requests would be futile:

In sum, McGuire had a burden to pursue the available administrative remedies, and to secure a final decision from the agency. He failed to do so. McGuire’s claim thus fails for lack of ripeness.

Slip op. at 17.

Next, the Federal Circuit held that even if ripe, McGuire's takings claim failed because he did not show he had a property interest in replacing the bridge:

Here, McGuire presents several theories as to why he had a cognizable property interest. He argues that he had a property interest because (1) the CRIT lease provided him with access rights to the bridge; (2) BIA regulations conferred rights allowing him to replace the bridge; (3) he had an easement by necessity in the bridge; and (4) his investment-backed expectations created a property interest in accessing the bridge.

Slip op. at 18. The court rejected each in turn. Id. at 19-23.

Thus, the end result (assuming there's not a cert petition) of this odyssey is that McGuire has been through six courts, two trials and two appeals, and years of litigation, only to be told "you're too early." Yeah, the process for McGuire to request to rebuild the bridge is so informal that even the BIA doesn't seem to understand what the process is, but hey, he still has to take a run at it. It seems to us that the burden should be on the agency, not the property owner, to show that there exists an obvious, clear, and formalized process to ask permission to rebuild. Otherwise, administrative approvals become a game much like those of which the Supreme Court disapproved of in Del Monte Dunes.

It's the BIA's own procedures -- shouldn't it know it and be able to tell McGuire what it is?

Maguire v. United States, No. 12-5073 (Feb. 20, 2013) 

IMLA Amicus Brief In California Raisin Takings Case: Tucker Act Is Exclusive Method Of Raising Takings Arguments

Here's the amicus brief filed today on behalf of the International Municipal Lawyers Association in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012). The brief argues:

Petitioners have needlessly complicated the vindication of their asserted rights under the Takings Clause of the Fifth Amendment by failing to file a straightforward claim for just compensation in the U.S. Court of Federal Claims. Petitioners have long participated in the raisin industry marketing program which they now believe results in a taking. Thus, they could easily have filed a claim for just compensation in the U.S. Court of Federal Claims based on this asserted taking. Instead, petitioners decided to disregard federal law requiring that they participate in the program and now seek to invoke the Takings Clause to defend against the sanctions imposed as a result of their illegal action.

This effort should fail for three independent reasons. First, because the purpose of the Takings Clause is to provide compensation for takings, rather to stop takings from occurring, it would contradict the purpose and function of the Takings Clause to allow a party who has defied federal law and thereby blocked implementation of a federal program to defend his or her action by invoking the Takings Clause. Second, government seizures of private property for law enforcement purposes, such as forfeitures, are outside the scope of the Takings Clause. Third, government-imposed mandates to pay money in general, including but not limited to the kinds of monetary sanctions at issue in this case, are outside the scope of the Takings Clause.

Br. at 1-2.

The petitioners' brief is here. The amicus brief filed by Texas is here. The brief filed by the Cato Institute, the NFIB, the Center for Constitutional Jurisprudence, and the Reason Foundation is here. The brief by the U.S. Chamber of Commerce is here. The amici brief by five constitutional law scholars is here. The USDA's merits brief is here.

The case is scheduled for argument on March 20, 2013.

Brief of Amicus Curiae International Municipal Lawyers Association in Support of Respondent, Horne v. Unite...

PLF's Jim Burling To Discuss Property Rights And The Environment At U.H. Law School

Mark your calendars: on Thursday, February 21, 2013, James Burling, director of the Pacific Legal Foundation and principal attorney at PLF's Property Rights practice group and U. Hawaii lawprof Maxine Burkett will discuss "Do Property Rights Matter When The Environment Is Going To Hell In A Handbasket?"

The forum -- presented by the Environmental Law Program and the Federalist Society -- will begin at 12:15 p.m. in CR1. Light refreshments will be served. Please RSVP to [email protected].

More below.

Do Property Rights Matter When the Environment is Going to Hell in a Handbasket?

Government Brief In California Raisin Takings Case

Here's the SG's merits brief in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012),

In Horne, the question is whether farmers who assert that an agricultural regulations known as "marketing orders," by which they are forced to surrender large percentages of their raisin crops to the USDA without payment or else face massive fines, can raise the argument that to do so would be a taking when defending against the fine, or if their only option is to pay the fine and file a lawsuit in the Court of Federal Claims to recover just compensation. The Ninth Circuit held the District Court had no jurisdiction to hear the takings defense, and the only option was new litigation instituted by the Hornes in the CFC to get the fine back.

The SG's brief argues the Hornes do not have standing to assert a takings defense:

The government agrees that this dedicated judicial-review provision would supplant Tucker Act jurisdiction for a takings claim asserted by a handler in its capacity as a handler. But this is not such a case.

Petitioners allege that the reserve requirement unlawfully takes raisins they produced without just compensation. They have standing to raise that claim only in their capacity as producers who own those raisins allegedly taken. Yet the payment order they challenge here was imposed on petitioners only as handlers. To be sure, petitioners acted as both producers and handlers, but they cannot manufacture standing or a right of action Under 7 U.S.C. 608c(14) for themselves—and give themselves avenues for judicial review not available to other producers—by engaging in a producer-handler "shell game" (J.A.45).

Br. at 17-18. The brief also speaks to the "Just Compensation" Clause and not the "Takings" Clause, to imply that the Hornes are seeking compensation when they are not (they are defending against the imposition of a fine by asserting to impose it would be a taking).

We'll post any amici briefs supporting the USDA as they are filed.

The petitioners' brief is here. The amicus brief filed by Texas is here. The brief filed by the Cato Institute, the NFIB, the Center for Constitutional Jurisprudence, and the Reason Foundation is here. The brief by the U.S. Chamber of Commerce is here. The amici brief by five constitutional law scholars is here.

The case is scheduled for argument on March 20, 2013.

Brief for the Respondent, Horne v. U.S. Dep't of Agriculture, No. 12-123 (Feb. 12, 2013)

Wednesday Round-Up: Grand Central, Oysters No More, And Originalist Takings

What we're reading today:

• Grand Central Station and The Takings Clause - from the Constitutional Law Prof Blog, a link to a WNYC/NPR podcast about Grand Central Terminal and the Penn Central takings case. Worth listening, if only to hear the money quote near the end: "you see New Yorkers all the time staking claim in this building, pointing up at cerulean blue sky saying 'hey, this belongs to us.'" Yes, we guess it does. And you know what? You didn't pay for it.

• Another one about the 100th anniversary of Grand Central: Gideon Kanner writes Calling All Grand Central Junkies!, linking to the NY Times's republication of its 1913 special celebrating the opening of the terminal.

• In that vein, a snarky commentary about the wonders of Pennsylvania Station. Who needs a cerulean blue sky?

• In what reads more like a redeveloper's press release, the Washington Post reports about the Skyland Shopping Center project -- a series of cases that generated more heat than light -- in Skyland Shopping Center re-development will come at a price. The narrative of the story is those darn property owners made it really difficult for the D.C. mayor's pet project to evict the existing property owners and tenants from the site and put in a Wal-Mart. "Skyland's developers, selected in May 2002, have spent $3 million of their own money[.]" The horror!

• Remember that case we posted about a few weeks ago about an oyster farming operation in a Marin County, California National Seashore? Well, the other shoe has dropped. The court has denied the company's request for a preliminary injunction allowing the farm to remain open while the issues are litigated. See this story from the San Francisco Chronicle, and this story from the Santa Rosa Press Democrat for more, including this quote from a spokesman for the "National Parks Conservation Association," that the decision "affirms that our national parks will be safe from privatization schemes, and that special places like Drakes Estero will rise above attempts to hijack Americans' wilderness." We're not sure how an operation that was there prior to the existence of the National Seashore can be considered "hijacking" of wilderness or a "privatization scheme," but there you have a reflection of a certain mindset in a tidy little quote.

• "Screwed by the Town" - When land use codes kill free speech - from J. David Breemer at PLF's Liberty Blog. In the Fourth Circuit, painting a motto on your house could be a violation of local sign and zoning ordinances, the First Amendment notwithstanding.

• From the Legal Planet blog, If the Constitution is Dead, where does that leave Takings? A critique of the originalist theory of construction.

Final Amicus Brief In Cal Raisin Takings Case: Property Owner Can Raise Equitable Takings Defense

Here's what we think is the final top-side amicus brief in Horne v. United States Dep't of Agriculture, No. 12-122 (cert. granted. Nov. 20, 2012), supporting the petitioner/property owner. Filed by the Chamber of Commerce of the United States, the brief argues that where "the government requires a direct transfer of funds, and where a party seeks equitable relief in resisting application of that statute in an enforcement action, that party need not seek 'compensation' in a duplicative second lawsuit under the Tucker Act." Br. at 5.

In Horne, the question is whether farmers who assert that an agricultural regulations known as "marketing orders," by which they are forced to surrender large percentages of their raisin crops to the USDA without payment or else face massive fines, can raise the argument that to do so would be a taking when defending against the fine, or if their only option is to pay the fine and file a lawsuit in the Court of Federal Claims to recover just compensation. The Ninth Circuit held the District Court had no jurisdiction to hear the takings defense, and the only option was new litigation instituted by the Hornes in the CFC to get the fine back. The Chamber's brief argues:

the Ninth Circuit’s rule should be rejected because it would substantially burden Fifth Amendment rights—not only in terms of the cost and delay of bringing a second lawsuit, but also by undermining the likelihood of success on a takings defense by requiring piecemeal and repetitive litigation, which is disfavored throughout American law.

Br. at 8.

The petitioners' brief is here. The amicus brief filed by Texas is here. The brief filed by the Cato Institute, the NFIB, the Center for Constitutional Jurisprudence, and the Reason Foundation is here. The amici brief by five constitutional law scholars is here.

We'll post the USDA's brief and any amici in support when the come in. The case is scheduled for argument on March 20, 2013.

Brief for the Chamber of Commerce of the United States of America as Amicus Curiae in Support of Petitioner...

Texas' Amicus Brief In California Raisin Takings Case: Y'all Don't Need To Make This So Complicated

We're used to knee-jerk reactions by state and local governments to takings claims: whatever the circumstances, the property owner is wrong, and loses. So it's nice to see a brief where a state government stakes out a more objective position.

Texas has filed an amicus brief in Horne v. United States Dep't of Agriculture, No. 12-122 (cert. granted. Nov. 20, 2012), in support of the petitioner/property owner. In Horne, the question is whether farmers who assert that an agricultural regulations known as "marketing orders," by which they are forced to surrender large percentages of their raisin crops to the USDA without payment or else face massive fines, can raise the argument that to do so would be a taking when defending against the fine, or if their only option is to pay the fine and file a lawsuit in the Court of Federal Claims to recover just compensation. The Ninth Circuit held the District Court had no jurisdiction to hear the takings defense, and the only option was new litigation instituted by the Hornes in the CFC to get the fine back.

Texas' brief doesn't take any position on the underlying substantive issue of whether this is a taking, but argues that takings claims should be handled efficiently, with an eye to actually resolving the case, not "maximizing the government's flexibility to avoid challenges to marketing orders." That's a welcome change in tone from most government amicus briefs:

Like the United States, the State of Texas maintains a comprehensive regulatory scheme that covers a broad spectrum of industries and individuals. Also like the federal government, Texas frequently confronts claims by regulated entities seeking just compensation when state administrative agencies take private property for public use. The Texas regulatory scheme demonstrates that takings claims, whether raised affirmatively or defensively,
do not require complex bifurcated procedures, as takings claims in Texas are resolved in a single proceeding with other challenges to administrative action. Resolving all claims in a single proceeding serves the interests of the government and of regulated entities by promoting efficient and final resolution of administrative claims.

Br. at 2-3. The brief makes two arguments.

First, the express terms of the USDA regulations allow farmers such as the Hornes to challenge marketing orders, and thus they possess the right to challenge the orders in the administrative process, and part of the right to challenge is the ability to raise the takings claim. Congress intended the challenge process to "establish an 'equitable and expeditious procedure for testing the validity of order, without hampering the Government's power to enforce compliance with their terms.'" Br. at 7 (quoting Block v. Community Nutrition Inst., 467 U.S. 340, 348 (1984)). The Ninth Circuit's conclusion results in a process that is neither equitable nor expeditious:

The only apparent purpose served by respondent’s interpretation of the Act is to perpetuate a heads-I-win-tails-you-lose procedural matrix that preserves the government’s ability to frustrate challenges to marketing orders. Whatever short-term tactical advantage this may provide cannot justify the cost to handlers and to the integrity of the statutory enforcement scheme.

Br. at 7-8.

Second, Texas' brief points out its own procedures that allow landowners to raise takings claims without a two-court shuffle, and argues that "[a]djudicating takings defenses in a single proceeding makes sense for all concerned" --

The State has no interest in discovering long after the fact that agency action caused a taking that now requires unanticipated retrospective compensation. Far better to know, as soon as possible, all costs for the State associated with contemplated agency action. The same is true for the party subject to a taking, who is best served by a prompt decision, whether it results in compensation, invalidation of the underlying regulatory action, or conclusive denial of the claim.

Br. at 11-12. This, the brief concludes, is a "sensible" process.

Can't say we disagree.

Brief of the State of Texas as Amicus Curiae in Support of Petitioners, Horne v. USDA, No. 12-123 (Jan. 16...

More From U.H. Lawprof On 1993-2010 HAWSCT's "Appalling" Record On Property Rights

Here's a follow-up to our recent post about the U. Hawaii Law Review article authored by lawprof David Callies which summarizes the land use and property decisions of the Hawaii Supreme Court during the tenure of now-retired Chief Justice Ronald Moon. You know, the article setting out the stunning success rates of certain parties in the court, which chides the Justices for their often-lengthy opinions, and labels the Moon Court's record on property rights "appalling." Download the article here.

Today's Honolulu Star-Advertiser has a follow-up interview with Professor Callies, most of which is behind a paywall. But if you don't have an e-subscription (a real deal for those with mainland zip codes, by the way), here are the choice parts:

• "Callies says he isn't against planning in general, but thinks there must be legitimate police powers involved for the right of development to be abrogated."

• "QUESTION: A recent law review article of yours came to the strongly worded conclusion that, overall, the Hawaii Supreme Court's record on preserving private property rights guaranteed in the U.S. Constitution has been "appalling." Why did you come to that conclusion? ANSWER: It struck me sort of anecdotally that the cases seem to be largely favoring groups like the Sierra Club, Earthjustice, Hawaii's Thousand Friends and so forth that generally sue when development permits are granted almost anywhere. So I asked a couple of my research assistants to do a survey, and they came out with the figures that over 80 percent of the cases that the state Supreme Court decides find against either the county or the state or the landowner -- whomever the decision-maker is and who owns the property. And in a substantial number of those cases -- I think in the neighborhood of 70 percent -- it overturned the Intermediate Court of Appeals."

• "Q: Why is that a disturbing trend? A: Well, the U.S. Constitution protects the right to use property unless there are police-power reasons not to. And in Hawaii sometimes we get the impression that it's the other way around. But it's not. The right to use property is a right that the Supreme Court has held to be virtually co-terminus with other rights, a civil right. So if you can't ground it in police power, then you can't regulate it. Development of land is not a privilege, it's a right. And so, if that's the case, for the (Hawaii) Supreme Court to find -- over and over again -- that the right does not seem to exist, that strikes me as a lopsided view."

• "Hawaii also goes overboard in the percentage of low- or moderate-income housing it requires. Maui for several years required a 50 percent mandatory workforce housing set-aside, and the state has often been in the 25, 30, 35 percent category. ... But much over 30 percent, it doesn't pencil out. You can't do it."

• "Q: You've written about Hawaii's many layers of land-use controls. How many layers are there? A: Ooooh, there's a bunch -- about eight or nine."

For real entertainment, check out the reader comments at the end of the interview. Which, like many comment sections on the internet, range from reasonable to bizarre to downright racist ("Callies is a Caucasian, Chicago born and raised foreigner who can go back to the land of overbuilt skyscrapers, ghettos and murder capital of America. Why is he even here?"). Oh my. Another comment argues that the delays in development common in Hawaii are not signs that the laws are failing as Professor Callies suggests, but the reverse: that development delay is indication is that Hawaii's laws are working exactly as intended. On that point, the commenter may be right.

Can A Property Owner Raise A Takings Defense? - Petitioners' Brief In California Raisin Case

Here's the petitioners' merits brief in Horne v. United States Dep't of Agriculture, No. 12-122 (cert. granted. Nov. 20, 2012).

That's the case in which the Court is reviewing Horne v. United States Dep't of Agriculture, 673 F.3d 1071 (9th Cir. 2011), in which the Ninth Circuit concluded a takings claim raised as a defense by raisin farmers who qualified as "raisin handlers" under federal regulations and thus were required to "reserve" (donate) 47% of their crop to the government, was not ripe because the farmers could seek just compensation in a Tucker Act claim in the Court of Federal Claims. For the 2003 and 2004 crop years, the USDA government brought an enforcement action against the farmers, seeking to recover the monetary value of raisins they did not turn over to the government.

The Ninth Circuit dismissed the takings claim for lack of jurisdiction, effectively telling the farmers that they could not object to the imposition of fines, but must pay and then file a claim for just compensation in the CFC to get the money back. That opinion replaced an earlier opinion holding that the reserve requirement was not a taking because the raisin farmers could have avoided the confiscatory regulations by choosing to not enter the raisin market.

The farmers' brief presents two questions:

1.  Whether a party may raise the Takings Clause as a defense to enjoin a "direct transfer of funds mandated by the Government." Eastern Enterprises v. Apfel, 524 U.S. 498, 521 (1998) (plurality; quotation marks omitted).

2.  Whether the federal courts have jurisdiction over petitioners’ takings claim, where petitioners, as "handlers" of raisins under the Raisin Marketing Order, 7 C.F.R. Part 989, are statutorily required to exhaust all claims and defenses in administrative proceedings with exclusive jurisdiction for review in federal district court.

This case raises the question of whether the Fifth Amendment contains a "Takings" Clause, or only a "Just Compensation" Clause. The focus of the analysis in regulatory takings law recently, especially after Lingle v. Chevron USA, Inc., 544 U.S. 528 (2005), has been whether a government action is the functional equivalent of an exercise of eminent domain. In many regulatory takings and inverse cases, the usual remedy being sought -- just like in most eminent domain cases -- is the recovery of just compensation. But that's only part of the equation, and there's no reason that after-the-fact compensation is the exclusive remedy under the Fifth Amendment, nor does it bar a litigant from asserting that an action the government has already done violates the Takings Clause. 

The brief argues:

[R]ipeness bars a lawsuit only in cases where the party seeks anticipatory relief against government action that has not yet taken place. It does not apply when a party seeks to interpose a constitutional defense to an enforcement action brought by the government at the time and in the forum of the government’s own choosing.

Recent cases applying a specialized "ripeness" doctrine to takings claims confuse ripeness with equitable principles regarding the propriety of issuing an injunction. A review of the text, structure, and historical interpretation of the Takings Clause confirms that a party can obtain affirmative injunctive relief under the Clause or raise the Clause as a defense. The historical record shows that, from the earliest cases, a party could raise the Takings Clause as a defense to government enforcement action.

Br. at 14-15.

Old takings hands will recognize the Ninth Circuit's ruling as the latest incarnation of the Tucker Act Shuffle, which is like Williamson County writ small for takings claims against the federal government. Under that theory -- in which district courts only deal with the validity of the regulations and do not consider the takings issues, leaving those exclusively to the CFC -- the property owner's check to the government paying a fine and the government's just compensation check to the property owner for a taking could literally cross in the mail. 

The case is scheduled for argument on March 20, 2013. Here's the Court's docket for the case if you want to follow along. There will be more to follow, so stay tuned.

Brief for Petitioners, Horne v. United States Dep't of Agriculture, No. 12-123 (Dec. 9, 2013) 

U.H. Lawprof: HAWSCT's 1993-2010 Record On Private Property Rights "Appalling"

You know how we're always saying that certain parties have an enviable record of success in the Hawaii Supreme Court? Well, now the statistics are official.

The latest edition of the University of Hawaii Law Review published an article by lawprof David Callies summarzing the decisions of the court during the tenure of now-retired Chief Justice Ronald Moon. The article sets forth the stark numbers (83% win rate, 65% reversal of the intermediate appellate court), and contains a sharp comment about the often-lengthy nature of the court's opinions:

Second, the Moon Court decided some of the state’s most important property and related environmental and Native Hawaiian rights cases in favor of the various non-governmental organizations bringing them (Sierra Club, Earthjustice, Hawaii’s Thousand Friends, and the Native Hawaiian Legal Corporation) approximately eighty-two percent of the time, sixty-five percent of which reversed the Intermediate Court of Appeals (ICA). Third, the court increasingly rendered lengthy opinions, many triple the length of those from the Lum Court and often describing the context in which the case arose procedurally even when the process was not an issue. That said, the court certainly set a high bar for thoroughness and explanatory analysis. For example, its decision in Save Sunset Beach Coalition v. City & County of Honolulu is a model of clarity and organization reminiscent of the style of opinions written by retired ICA Judge Walter Heen and retired ICA Chief Judge James Burns.

David L. Callies, Emily Klatt, and Andrew Nelson, The Moon Court, Land Use, and Property: A Survey of Hawai‘i Case Law 1993-2010, 33 U. Haw. L. Rev. 635, 636-37 (2011).

While we recommend you read the entire article, if you don't have time, here's the Conclusion, which shows these statistics have real-world consequences:

In sum, the Moon Court has made many useful contributions to the law of property in Hawai‘i. It has taken care to preserve the rights of landowners to freely use property in the face of private restrictive covenants limiting that use if such covenants are the least bit vague or poorly defined. It has amplified and extended basic principles in the areas of coastal zone management,  condominium, easement, and leasehold law. Its record on preserving private property rights guaranteed by the U.S. Constitution’s Fifth and Fourteenth Amendments in the face of regulatory challenges is, on the other hand, appalling, particularly given the increasing emphasis on preserving such rights in our nation’s highest court. In case after case, the Moon Court has strained to apply general and often vague goals pursued by select interest groups and factions regardless of statutory law to the contrary. The result, coupled with Hawai‘i’s increasingly well-known penchant for lengthy, often decade-long land use permitting processes, is a climate that increasingly discourages both local and foreign investment in land development, because it is widely perceived as too risky for the private sector to undertake. In particular, the effect on the availability of housing that is affordable at any but the most astronomical levels has been great. In short, the Moon Court has made a considerable negative impression on the land development aspect of property law, virtually converting the use of land into a privilege rather than a constitutional right subject only to regulation for the health, safety and welfare of all. Whether that impression becomes indelible is a matter that the Recktenwald Court should address at the earliest opportunity.

Id. at 667-68. Is this part of the reason why Hawaii is the most expensive housing market in the nation?

Friday Round-Up: Flood Takings, Pearl Harbor, Organic Farming

Here's what we're reading today:

• We know you probably read Professor Gideon Kanner's blog daily, but in case you missed his thoughts about the U.S. Supreme Court's opinion in Arkansas Game and Fish Comm'n v. United States, No. 11-597 (Dec. 4, 2012), please read them here. Today's must-read.

• Today is Pearl Harbor day, so we are linking to our in-person report from last year's remembrance ceremony.

• Check out the cert petition in Johnson v. Paynesville Farmers Union Cooperative Oil Co., No. 12678 (Nov. 29, 2012). The question presented is somewhat opaque and we don't think there's much chance that it will grab the Court's attention, but it does involve an interesting issue about pesticide drift and organic certification. The petition challenges the Minnesota Supreme Court's dismissal of an organic farmer's nuisance and negligence per se claims because federal regulations do not regulate pesticide drift. Here's the Court's docket if you want to follow along. 

• More about the use of eminent domain to seize underwater mortgages, from the San Bernardino Sun, "Arguments over eminent domain mortgage seizure program ramp up for 2013." Looks like Mortgage Resolution Partners is on a media blitz. 

• From the NY Times: "Post-Storm Cost May Force Many From Coast Life." Includes a quote from our colleague Ed Thomas: "Edward Thomas, a longtime FEMA official who is now president of the Natural Hazard Mitigation Association, said raising a structure even higher than the new minimum elevation was the only prudent option. Premiums when the next maps are adopted could be 'absolutely enormous: a doubling or tripling of the rate,' he said." Between climate change regulations and storms, this is shaping up to be a huge issue.

• The price of a four-bedroom, two-bath home in Hawaii? $742,551, the highest in the nation.

What's The Beef In California Oyster Dispute?

We've talked California raisins before, but the latest is about oysters. Specifically, an oyster farm in a Marin County National Seashore, the Drakes Bay Oyster Company.

Interior Secretary Ken Salazar visited the place a couple of weeks ago to see if he would be willing to extend the farm's existing license, which has been in place for decades. No deal, he concluded, despite lobbying efforts on the owner's behalf by powerful U.S. Senator Dianne Feinstein. He ordered the farm to shut down in 90 days. 

When that failed, the next step was federal court, and earlier this week the oyster farmer sued in U.S. District Court in San Francisco. Here's the complaint, if you want to read the details. The claims center on federal environmental laws and the Administrative Procedures Act, but yes, there's the obligatory takings claim, alleging that the order to cease operations was a taking of all economically beneficial use of its immuature oysters in Drakes Bay, and of the leases the farm has with California to use the water bottom.

More on the story from the San Francisco Chronicle, the Santa Rosa Press Democrat ("Oyster farm's closure could lead to higher prices" - ya think?), and the free weekly East Bay Express ("The Real Reasons for Ken Salazar's Decision"). For some entertaining reading, check out the Express's black-helicopter tinged article about the links between the oyster farm and the dreaded Koch Brothers, "Drakes Bay Oyster Company Turns to Koch Brothers-Linked Group." The lede hits just about every red-meat buzzword, and should be enshrined in the "alternative press" hall of fame:

Drakes Bay Oyster Company, which has portrayed itself as a progressive and environmentally sustainable business and has been supported heavily by Democratic US Senator Dianne Feinstein, has joined forces with a secretive group that has ties to the ultra-conservative Koch Brothers and the Republican Party. The secretive group, which calls itself Cause of Action, is leading the legal fight for the oyster company against the Obama administration’s decision late last week to close the oyster farm at Point Reyes National Seashore and create the first marine wilderness on the West Coast.

The farm claims to produce 40% of California's fresh oysters, so perhaps we should plan to do some "research" on this topic down at the local seafood place.

Complaint, Drakes Bay Oyster Co. v Salazar, No. C 12-6134-EDL (Dec. 3, 2012)

Unanimous SCOTUS: Temporary Flooding Could Be A Taking

This just in: the Supreme Court has issued a unanimous opinion (authored by Justice Ginsburg) in Arkansas Game and Fish Comm'n v. United States, No. 11-597 (Dec. 4, 2012), holding that government induced flooding is a taking, even if temporary.

The Court roundly rejected the Federal Circuit's conclusion that flooding caused by the Corps of Engineers water releases from a dam did not result in a taking because it eventually stopped which "at most created tort liablity."

We filed an amicus brief in the case supporting the property owner/petitioner, which argues that as long as the water releases by the Corps "directly and substantially" resulted in damage to petitioner's property (the G&F Commission is seeking compensation only for the loss of its trees), it's a taking for which just compensation is required. Our brief pointed out a somewhat obscure case that sets forth this test (National Bd. of YMCA v. United States, 395 U. S. 85, 93 (1969)), and it looks like the justices picked up on it. We had predicted a property owner victory, "with a minimum six-Justice majority (perhaps more), with a narrowly drawn opinion vacating the Federal Circuit's conclusion that temporary flooding can never be a taking," and a quick review of the opinion reveals that's what we've got.

We rule today, simply and only, that government-induced flooding temporary in duration gains no automatic exemption from Takings Clause inspection. When regulation or temporary physical invasion by government interferes with private property, our decisions recognize, time is indeed a factor in determining the existence vel non of a compensable taking. See Loretto, 458 U. S., at 435, n.12 (temporary physical invasions should be assessed by case-specific factual inquiry); Tahoe-Sierra, 535 U. S., at 342 (duration of regulatory restriction is a factor for court to consider); National Bd. of YMCA v. United States, 395 U. S. 85, 93 (1969) ("temporary, unplanned occupation" of building by troops under exigent circumstances is not a taking).

Slip op. at 14. The Court sent the case back to the Federal Circuit for further consideration.

We'll have a more in-depth report after we review the opinion in detail. But for now, the takeaway is that this is a great win for property owners and their constitutional rights. Congratulations to the G&F Commission and their counsel, as well as all the amici who supported them.

Arkansas Game and Fish Comm'n v. United States, No. 11-597 (Dec. 4, 2012)

Guest Post: Status Of Appeal Of Land Use Commission's Hoopili Approval

Earlier this year, the Hawaii Land Use Commission granted district boundary amendments (Under Hawaii's statewide zoning, a "boundary amendment" is a reclassification of land, similar to a rezoning) effecting the reclassification of land from the "agricultural" district to the "urban" district for Castle & Cooke Homes’ proposed Koa Ridge development, and for Horton-Schuler Homes’ proposed Ho`opili development, both sited on agricultural land on Oahu. The Hawaii chapter of the Sierra Club filed agency appeals in both cases to the Hawaii Circuit Court of the First Circuit (1-CC-12-1-001999 and 1-CC-12-1-002000).

We aren't commenting on these cases because we've got a stake in the game (our partner Greg Kugle is lead counsel for one of the parties), but our old friend Paul Schwind has agreed to pinch hit. He recently attended the first day in court, and his report follows. Since we're involved in this case, our usual disclaimer is probably more applicable than usual: these aren't our words, our thoughts, or those of our clients.

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Status of Sierra Club Hawaii Chapter’s Agency Appeal of Land Use Commission District Boundary Amendment for Horton-Schuler Homes’ Ho`opili Development

by Paul J. Schwind*

In keeping with a long tradition in Hawaii that land use cases are litigated in court on procedural rather than substantive grounds, the opening skirmish in Sierra Club, Hawaii Chapter et al. v. D. R. Horton-Schuler Homes LLC et al. (1CC-12-1-002000; Haw. 1st Cir. 2012) was fought over whether one of the parties’ appeal in the case should be disallowed.  Sierra Club Hawaii Chapter had been granted intervenor status during the Land Use Commission’s (LUC) quasi-judicial hearings on developer Horton-Schuler Homes’ petition for district boundary amendment from agricultural to urban.  

On July 20, 2012, Sierra Club filed an appeal of the LUC’s decision and order granting the land use reclassification, within the 30 days prescribed in the Administrative Procedures Act for requesting judicial review of a contested case administrative hearing (Haw. Rev. Stat. § 91-14). Another intervenor, Friends of Makakilo, filed a "cross-appeal" on August 2, 2012, beyond the statutory deadline for an agency appeal. Horton-Schuler and the LUC moved to dismiss Makakilo’s cross-appeal; the City and County of Honolulu Department of Planning and Permitting (DPP) and the State Office of Planning (OP), respectively, joined in these motions to dismiss. On October 9, Judge Rhonda Nishimura heard argument on the motions and opposition thereto and issued her ruling orally; the written Order drafted by counsel for the lead prevailing party (Horton-Schuler) was filed on November 9.

Judge Nishimura began by setting the context for the parties as the interplay among Hawaii Rules of Civil Procedure (HRCP) Rules 72 and 81 (re appeals to a circuit court), Hawaii Rules of Appellate Procedure (HRAP) Rule 4.1 (re cross-appeals), and pertinent case law. She asked counsel for the parties to address (1) the time limits for cross-appeals, and (2) what is an "aggrieved" party that can claim standing for an appeal.

Sarah Hirakami opened for the LUC by arguing that cross-appeals are not allowed under HRS §91-14. Although Makakilo intervened at the agency level and is an automatic appellee, HRAP Rule 1(b) (re rules not to affect jurisdiction) does not extend the jurisdiction of the circuit court to entertain a cross-appeal in cases such as this. Jurisidiction here is governed by the scope of intervention allowed to parties in an LUC proceeding under the Land Use Law (HRS §205-4(e)) and the right of appeal under HRS §91-14 from the outcome of a proceeding (HRS §205-4(i)).

Gregory Kugle followed for Horton-Schuler by arguing that notwithstanding HRAP Rule 2.1 (re appliability of other court rules in the appellate courts), HRAP itself applies only in the appellate courts (i.e., not in the circuit courts acting on an agency appeal); therefore, cross-appeals are not allowed in the circuit courts. Further, an aggrieved party during an LUC proceeding is limited to the 30-day right of appeal set forth under HRS §205-4(i) and HRS §91-14. Jordan v. Hamada, 643 P.2d 73, 75-76 (Haw. 1982) is directly on point (appellant must be a "person aggrieved" by a decision and order in a contested case, and must have participated in the agency hearing in that case). In the Schuler-Homes LUC docket, Friends of Makakilo was allowed to intervene on five specific issues as a group representing neighborhood interests. Their cross-appeal goes far beyond that into areas in which they have no interest as a "person aggrieved." Judge Nishimura added that for standing to lie, an aggrieved party must be specifically, personally, and adversely affected by the agency decision from which appeal is taken. See, e.g., In re Hawaiian Electric Co., 535 P.2d 1102, 1105 (Haw. 1975).

Linda Paul responded for Friends of Makakilo that cross-appeals are not appeals. Just because HRCP Rule 72 does not mention cross-appeals does not mean they are not allowed. In arguing that cross-appeal is a constitutional right of due process under the separation of powers doctrine, Ms. Paul cited to Alakai na Keiki, Inc. v. Matayoshi, 277 P.3d 988, 1008 (Haw. 2012) (the power to adjudicate disputes is constitutionally conferred upon the courts; accordingly, judicial review is available to resolve a procurement dispute between a vendor and the Department of Education, even where certain "exclusive" judicial powers have been statutorily delegated to the DOE). [Note:  this decision makes no mention of cross-appeals.] She further cited to E & J Lounge Operating Co., Inc. v. Liquor Comm'n of City and County of Honolulu, 189 P.3d 432, 439 and n.14 (Haw. 2008) (intervenors filed a notice of cross-appeal to the Intermediate Court of Appeals following the Liquor Commission’s notice of appeal from the decision and order of the circuit court; pursuant to HRAP Rule 4.1, every other party’s appeal after the first is designated as a cross-appeal).  [Note:  this decision refers to cross-appeals at the appellate level, not in a circuit court.] 

At this point, Judge Nishimura asked, what is the legal basis for cross-appeal under HRS Chapter 91 and the HRCP? Without answering that question, Ms. Paul responded that Makakilo is a "person aggrieved" under the five issues for which they were allowed to intervene; for example, they provided testimony to the LUC as to the personal impact of increased traffic from the development.

In rejoinder, Mr. Kugle referred to Ka Pa`akai o Ka`aina v. Land Use Comm’n, 7 P.3d 1068, 1076 (Haw. 2000), in which several parties each filed timely agency appeals which were then subsequently consolidated by the circuit court; there were no "cross-appeals" at the circuit court level. This court need not reach the "person aggrieved" question, although traffic impact is not personal or specific. Bottom line, Makakilo did not file a timely appeal within the mandatory 30 days.

Judge Nishimura then announced her ruling as soon as the parties concluded their arguments. She granted the motions to dismiss Makakilo’s cross-appeal, reasoning that Makakilo, as an intervenor, had the right to file a timely agency appeal under Chapter 91 but did not do so. Having thus dismissed the cross-appeal, she indicated that the question whether Makakilo had been specifically, personally, and adversely affected (by the LUC decision and order approving Horton-Schuler’s Ho`opili development) did not fall within the ambit of her ruling.

The take-away from this proceeding? If you fail to timely file a pleading in court, it is best not to rely on inapposite case law and avoid answering the judge’s direct question while attempting to justify your lapse of due diligence!

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*voluntarily inactive member of the Hawaii Bar

LA Times On The Raisin Takings Case

More on Horne v. U.S.D.A., No. 12-123 (cert. granted Nov. 20, 2012) from the Los Angeles Times: Supreme Court to hear California raisin growers' case. 

SCOTUS Grants Cert In California Raisins Takings Case

It looks like our crystal balls are working.

Wait, that didn't come out the way we quite intended, so let's rephrase. Recently, we and others suggested paying attention to the property rights cases on the Supreme Court's cert docket, paying particular attention to a case out of the Ninth Circuit, Horne v. United States Dep't of Agriculture, 673 F.3d 1071 (9th Cir. 2011).

In Horne, the Ninth Circuit concluded that the defensive takings claim raised by raisin farmers who qualified as "raisin handlers" under federal regulations and thus were required to "reserve" (donate) 47% of their crop to the government, was not ripe because the farmers could seek just compensation in a Tucker Act claim in the Court of Federal Claims. The court dismissed the case for lack of jurisdiction. That opinion replaced an earlier opinion holding that the reserve requirement was not a taking because the raisin farmers could have avoided the confiscatory regulations by choosing to not enter the raisin market. 

Today, the Court granted cert (see order here).

This makes the third takings case to make it to the Court's merits docket this Term, joining the flood case, Arkansas Game & Fish (already argued), and the money exactions case, Koontz (to be argued in January).

Here's the cert petition in Horne, filed in late July. The Questions Presented:

Under federal regulations, a "handler" of raisins must turn over a percentage of his raisin crop to a federal entity in order to sell the remainder on the open market — often in exchange for no payment or payment below the cost of raisin production. For the 2003 and 2004 crop years, the federal government
brought an enforcement action against petitioners, seeking to recover the monetary value of raisins they did not turn over to the government. Petitioners raised the Takings Clause as a defense. The Ninth Circuit initially rejected petitioners’ takings defense on the merits, but on Petition for Rehearing vacated its prior merits opinion and replaced it with an opinion dismissing the takings defense for lack of jurisdiction. The Questions Presented are:

1. Whether the Ninth Circuit erred in holding, contrary to the decisions of five other Circuit Courts of Appeals, that a party may not raise the Takings Clause as a defense to a "direct transfer of funds mandated by the Government," Eastern Enterprises v. Apfel, 524 U.S. 498, 521 (1998) (plurality), but instead must pay the money and then bring a separate, later claim requesting reimbursement of the money under the Tucker Act in the Court of Federal Claims.

2. Whether the Ninth Circuit erred in holding, contrary to a decision of the Federal Circuit, that it lacked jurisdiction over petitioners’ takings defense, even though petitioners, as "handlers" of raisins under the Raisin Marketing Order, are statutorily required under 7 U.S.C. § 608c(15) to exhaust all claims and defenses in administrative proceedings before the United States Department of Agriculture, with exclusive jurisdiction for review in federal district court.

Here's the Court's docket report.

As we say, stay tuned.

Mark Your Calendars: 10th Hawaii Land Use Law Conference (Jan. 17-18, 2013)

It's back! Time once again for the bi-annual Hawaii Land Use Law Conference, to be held January 17 and 18, 2013 (Thursday and Friday) at the Downtown YWCA (a very convenient venue).

Planning co-chairs Professor David Callies and Ben Kudo have once again assembled a stellar faculty and put together an agenda that covers most topics of interest.

We'll be moderating a panel on "Development Through Exemptions - The Evolution of Reclassifications, Permitting, Land Use & Development in Hawaii: The Unintended Consequences of an Increasingly Complex System of Regulations," featuring panelists Linda L.W. Chow (Deputy Attorney General State of Hawaii), Oswald K. Stender (Office of Hawaiian Affairs), and Kali Watson (Hawaiian Community Development).

Two highlights of the conference:

First, Mike Berger will give the keynote presentation on our favorite topic, regulatory takings: "Taking a Critical Look at 30 Years of the Supreme Court’s Taking Jurisprudence." Mike has taken the lead in most of the important Supreme Court takings decisions during that time frame, and his talk will be worth the price of admission alone.

Second (speaking of "worth the price of admission"), our ABA State and Local Government Law Section colleage Dean Patricia Salkin is returning with an ethics program and her rightly famous "Ethics Jeopardy" game show. Get your yearly MCLE credits all at one time and in one place. We say "worth the price of admission" since you can register for the ethics sessions separately from the other parts of the conference if land use isn't your bag. 

Other topics include transit and land use, burial laws, traditional and customary rights, and agricultural land use issues.

Details, including complete faculty list, the agenda, and registration information here.

As Jack Lord used to say "be there, Aloha."

Hawaii Land Use Law Conference (Jan. 17-18, 2013)

Thursday's Worth Reading List

Here's a few reports worth reading:

• Sixth Circuit Reverses Verdict for Property Owner Against City of Frankenmuth - from Dalton - Tomich's blog, about the recent decision in Loesel v. City of Frankenmuth, No. 10-2354 (6th Cir. Aug. 20, 2012). Anti-big box zoning.

• Lt Gov. Gavin Newsom alleges 'threats' against mortgage plan - the LA Times reports on California's Lieutenant Governor (who just happens to have "some ties to Mortgage Resolution Partners" -- the private investment group that promulgated the idea of using eminent domain to seize underwater mortgages), who is calling for an investigation of whether those objecting to the plan are "threatening" local governments. "Newsom's complaint comes after several groups, including the influential Securities Industry and Financial Markets Assn., objected to the eminent domain plan and warned that mortgages could become more expensive for future homeowners living in regions that adopt the plan. The Federal Housing Finance Agency, the independent government regulator that oversees mortgage titans Fannie Mae and Freddie Mac, also expressed worry about the plan. The agency last month said it has 'significant concerns about the use of eminent domain to revise existing financial contracts' and that it 'has determined that action may be necessary.'"

• Can The Neighbors Sue the Family Farm Across the Street? From Appellate Strategist, a preview of an upcoming "right to farm" case in Illinois.

Federal Circuit: 22-Year Old Takings Case In Which The Landowner Is Already Dead Is Not Ripe

We are at the ABA Annual meeting this week, so don't have a lot of time to keep up a long-distance practice and write up comprehensive blog posts, so we're going to keep it short.

Here's the latest takings decision from the Federal Circuit in a case we've been following, Estate of Hage v. United States, No. 2011-5001 (Fed. Cir. July 26, 2012). The property owners filed their case in 1991 in the Court of Federal Claims seeking compensation for the federal government's taking of water rights in Nevada. In 2008, the CFC ruled in favor of the property owners, but the Federal Circuit reversed on Williamson County grounds because the case wasn't administratively ripe. The federal agency, you see, has not reached a final decision on what the property owners might do with the land, and just might issue a permit (even if other similar permit applications by the owners had all been denied). Is the property owner disappointed by this ruling? Likely not, since Mr. Hage died in 2006.

So there you have it: a 22-year old lawsuit in which the CFC after hearing evidence concluded was a "drama worthy of tragic opera with heroic characters" and awarded $4.2 million in just compensation, and in which the agency denied every application for a grazing permit (and in which the property owner has moved on to his final reward) isn't yet ripe. Why? Because the agency just might issue a special use permit that might allow the use of the water the property owner's estate alleges was taken.

Here's more details, from Pacific Legal Foundation's Liberty Blog.

Estate of Hage v. United States, No. 2011-5001 (Fed. Cir. July 26, 2012)

Trickle-Down Regulation: Environmental Maze Becomes "Stumbling Block" For The Little Guys

There's a feature story in today's Honolulu Star-Advertiser, "Red tape ties up groups' fishpond restorations," about a local caretaker group's frustration with "government rules" they claim are thwarting their efforts to fix up a traditional littoral fishpond.

For those of you not familiar with these centuries-old aquacultural structures designed to catch and raise fish that once dotted the shores of most every Hawaiian island, check out Kaiser Aetna v. United States, 444 U.S. 164 (1979), the U.S. Supreme Court's decision upholding the private nature of these structures. For a slightly more recent case protecting the private status of a  fishpond on Molokai see Boone v. United States, 944 F.2d 1489 (9th Cir. 1991). Disclosure: we represented the property owners in both cases.

The S-A story is mostly behind a paywall, so for those without subscriptions or access to the hard copy, here's the short version: the restoration groups assert that layers of government regulations which result in the need to obtain a slew of permits and permissions are "such a deterrent" to their ability to repair and restore the remaining fishponds. For one Maui fishpond, these regulations include Corps of Engineers approvals, a State Department of Health water quality permit, a State Department of Land and Natural Resources Conservation District Use permit, a State DLNR shoreline certification, a Special Management Area use permit from the County of Maui, a State survey, and a marine archaeological study. It's expensive, time consuming, and discouraging, the groups claim. 

Welcome to my world.

We're not sure why they think they should be exempt from these regulations, although their complaints make sense: "We need to grow food now. … Government needs to figure out how to make it a one-stop shop," the executive director of the group is quoted as saying.

She said government officials need to reorder priorities to enable the restoration of environmentally friendly fishponds.

"I think it's obvious rules and regulations need to change," she said. "I think our government needs to put the environment first."

Yes, but there's the rub, isn't it? Who is to say that what you claim is "green" really isn't somehow affecting the environment, and needs layers of government review to insure it is not detrimental?  The precautionary principle at work: because, you know, you never know. Especially when you are dealing with shorelines, public lands, and public trust resources.

And, under the Hawaii shoreline statutes, there really is no such thing as an absolutely exempt activity, because even those activites that are technically categorically exempt because they will likely have little or no significant effect (building a single family home or an inexpensive project, for example) are really not exempt, since a claim that their "cumulative impact" might cause environmental harm will trigger the need for government reviews. See here and scroll down to (17) if you doubt us.

Thus, even purportedly green activity could be "development" after all, even if it involves a native Hawaiian fishpond.

Sidebar: in the old days, some of these fishponds were built by the local alii "taxing" the entire populace of a district, the "tax" consisting of the command that every man, woman, and child show up at the site on a particular day with the rocks used for construction. The builders of these structures didn't need permits, surveys, or certifications. In those days, it really was good to be the king, but maybe not so good to be everyone else.

Agriculture And Property Rights: Why Hawaii Matters

On Monday, January 9, 2012, I'll be speaking to my American Farm Bureau Federation colleagues, who are in town for the AFBF annual meeting.

The title of my presentation is "Agriculture and Property Rights: Why Hawaii Matters." I'll be talking water rights, GMO, right-to-farm, eminent domain, and other issues to the lawyers who represent farmers and ranchers. I'll record it and post it here on Monday.

Check out the AFBF's annual meeting blog here.

Mark Your Calendars: Hawaii Water Law Conference (Jan. 11, 2012)

We've just finalized the agenda and faculty for the Hawaii Water Law conference, to be held in Honolulu on January 11, 2012. I am the planning co-chair along with Jesse Souki, Director of the State of Hawaii Office of Planning.

In addition to Jesse and me, we've assembled a diverse and talented faculty: UH lawprof David Callies will speak with Elijah Yip (Cades) on the latest developments in water law and public trust litigation. State Water Commissioner Lawrence Miike will update us on the latest goings-on at the Commission. My Damon Key partner Greg Kugle is speaking with Leo Asuncion, the Manager of the Coastal Zone Management Program at the State Office of Planning on coastal issues.

After lunch, we have a special guest, Ed Thomas (a lawyer and President of the National Hazard Mitigation Association, and a nationaly known expert in floodplain management and disaster relief), who will speak with Jesse Souki and Richard Wallsgrove (Starn) about how the law is dealing with "climate change" adaptation. Lisa Bail (Goodsill) and I will speak about federal environmental issues and regulatory jurisdiction, including a summary of the Sackett v. EPA case now pending at the U.S. Supreme Court.

We will end the day with an hour of Hawaii mandatory ethics CLE credits (MCPE), with Carole Richelieu, former Chief Disciplinary Counsel for the State of Hawaii (and me) addressing ethical issues when dealing with agencies and boards.

Here's the complete agenda. Why should you attend?

Water – and water law – is at the core of nearly every issue in Hawaii, an island state. Whether it involves the management of fresh water resources, issues surrounding the shoreline, or how government agencies and private landowners are dealing with the issue of “climate change,” these are issues about which every lawyer, official, and planner should be aware.

It's not too early to sign up. More details to follow as the date draws closer. For you mainland folks, we're covering much more than Hawaii issues, and January is a real good time to come to sunny Honolulu. If you come, I'll even buy you lunch or maybe a cocktail at sunset "Under the Moana banyan tree" as the song goes (and no, that's NOT me).

Contact me or Jesse for more information.

Amicus Briefs In Sackett v. EPA: Judicial Review Of A Claim Of Regulatory Jurisdiction

Last week, the petitioners filed their merits brief in Sackett v. EPA, No. 10-1062, the case in which Idaho property owners are asserting their right to challenge the EPA's assertion that a portion of their land are "wetlands."

A multitude of amicus briefs have been filed to support the Sackett's arguments. We haven't had the time to review each brief yet, but here they are for your review:

• Brief of the Chamber of Commerce of the United States of America as Amicus Curiae in Support of Petitioners

• Brief of Amicus Curiae Institute for Justice in Support of Petitioners

• Brief of Amici Curiae Wet Weather Partership, South Carolina Water Quality Association, North Carolina Water Quality Association, West Virginia Municipal Water Quality Association, Virginia Association of Municipal Wastewater Agencies, National Association of Clean Water Agencies, and City of New York in Support of Petitioners

• Brief of Amci Curiae National Association of Home Builders, the Real Estate Roundatable and National Apartment Association in Support of the Petitioners

• Brief of American Petroleum Institute, American Road & Transportation Buildiers Association, Building Owners and Managers Association International, CropLife America, The Fertilizer Institute, Foundation for Environmental and Economic Progress, International Council of Shopping Centers, National Association of Real Estate Investment Trusts, National Association of REALTORS, National Mining Association, National Multi Housing Council, and Utility Water Act Group as Amici Curiae in Support of Petitioners

• Brief Amicus Curiae of Center for Constitutional Jurisprudence and National Federation of Independent Business Small Business Legal Center in Support of Petitioners

• Brief Amicus Curiae of National Association of Manufacturers in Support of Petitioners

• Brief of the American Farm Bureau Federation, National Council of Farmer Cooperatives, National Cattlemen's Beef Association, and Public Lands Council as Amici Curiae Supporting Petitioners

• Brief Amicus Curiae The Competitive Enterprise Institute in Support of Petitioners

That's a lot of reading. Here's the Court's docket report.

New Law Blog To Follow: Ferae Naturae

One of the very first things we addressed in the first year Property class (wonderfully taught by Allen Smith, visiting from Michigan Law) was the ownership of animals: when do wild animals become someone's "property?" And the very first Latin phrase we incorporated into our new legal lexicon was ferae naturae, the law of wild animals.

In that vein, we introduce you to Ferae Naturae, a new law blog (to us, at least) on the law of animals, wild and otherwise. The blog is authored by our ABA State and Local Government Law colleague Amy Lavine, and although she posts on a wider scope of issues than the property law aspects of wild animals, it's still an informative and worthwhile read.

Recent posts include "How to fight criminal charges when you get caught with a crocodile in your bathtub," "Raccoons are not 'cuddly little animals'" (we'll second that thought), Conservation group allowed to challenge water rights allocation in Montana," and "Kitten piercing = animal cruelty" (you know you're going to read that one).

We're adding it to our blogroll, and respectfully suggest you do the same.

9th Cir: California Raisins Were Not Taken

California, if you weren't already aware, produces raisins. Lots of raisins. It accounts for 99.5% of the U.S. crop and 40% of the world crop.

Since the 1920's, supply has exceeded demand by 30 to 50 percent. Since the 1940's, the USDA has regulated the raisin industry to even out the fluctuation in supplies and prices by creating "annual reserve pools" that remove extra raisins from the market. Those regulations, in the form of "marketing orders," require raisin "handlers" (those who process and pack agricultural goods for distribution) to set aside a certain percentage of raisins from the domestic open market, upon pain of civil and criminal penalties if they do not. The reserve raisins can only be sold for resale in export or secondary markets, with the proceeds used to pay for administration of the regulatory program (naturally), and any balance being distributed among raisin "producers."

In Horne v. U.S. Dep't of Agriculture, No. 10-15270 (July 25, 2011), the U.S. Court of Appeals for the Ninth Circuit dealt with raisin farmers' claims that these regulations worked a taking of their property. Their first claim was that because they altered the nature of their business, they were no longer "handlers," but had become "producers," and were not subject to the reserve requirement. Read pages 9466 to 9467 if you are interested why the court concluded they qualify as "handlers," and were required to fork over between 30% and 47% of their crop to the reserve.

The more interesting part of the opinion is the court's treatment of their takings claim. The plaintiffs asserted that the reserve requirement was a physical taking of their raisins under Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) and Kaiser Aetna v. United States, 444 U.S. 164 (1979). The Ninth Circuit acknowledged their "logic has some understandable appeal" because raisins are property, and they are being taken," but held there was no taking because "their argument rests on a fundamental misunderstanding of the nature of property rights and instead clings to a phrase divorced from context." Slip op. at 9469. 

The court recognized that a simple physical appropriation would be a taking. "No one suggests the government could come onto the Hornes' farm uninvited and walk off with forty-seven percent of their crops without offering just compensation, even if the seizure itself were justified." Slip op. at 9569-70. But the reserve requirement in the USDA marketing orders are not the same thing:

But a forcible taking is not what the Raisin Marketing Order accomplishes. Far from compelling a physical taking of the Hornes' tangible property, the Raisin Marketing Order applies to the Hornes only insofar as they voluntarily choose to send their raisins into the stream of interstate commerce. Simply put, it is a use restriction, not a direct appropriation. The Secretary of Agriculture did not authorize a forced seizure of forty-seven percent of the Hornes' 2002-03 crops and thirty percent of their 2003-04 crops, but rather imposed a condition on the Hornes use of their crops by regulating their sale. As we explained in a similar context over seventy years ago, the Raisin Marketing Order "contains no absolute requirement of the delivery of [reserve-tonnage raisins] to the [RAC]" but rather only "a conditional one." Wallace v. Hudson-Duncan & Co., 98 F.2d 985, 989 (9th Cir. 1938) (rejecting a takings challenge to a reserve requirement under the walnut marketing order).

Slip op. at 9470 (emphasis original). Relying on the rationale of Yee v. City of Escondido, 503 U.S. 519 (1992), the court viewed the raisin sale business as voluntary. In Yee, the Supreme Court upheld a mobile home rent control ordinance against a physical takings challenge, since the landowners were not required to use their property as a mobile home park, and thus the occupation of the land was not required by the government. Same for the raisin industry; no one is forcing the plaintiffs to participate: "[t]heir argument is founded on an erroneous belief that they have a property right to 'market their [raisins] free of regulatory controls.'" Slip op. at 9472 (quoting Cal-Almond, Inc. v. United States, 30 Fed. Cl. 244, 246 (1994)).

The court distinguished the ability to sell personal property such as raisins, from the right to develop real property (as in Nollan and Dolan, two cases where the government was prohibited from conditioning the right to build on the owner's agreement to surrender the right to compensation). See slip op. at 9473-74. The government's power to regulate commerce "ought to put a property owner on notice 'of the possiblity that new regulation might even render his property economically worthless (at least if the property's only economically productive use is sale or manufacture for sale)'." Slip op. at 9474 (quoting Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1027-28 (1992)). Personal property is different than real property, and the right to sell personal property is subject to the government's power to regulate the market.

We're not sure if this differentiation holds up, or whether it is just another form of the "notice" defense the Court rejected in Palazzolo v. Rhode Island, 533 U.S. 606 (2001) (but which the Ninth Circuit recently upheld in Guggenheim). For example, what if the government adopted a regulation requiring that upon sale of land that's used as rental property, an owner donate a percentage of it to some public purpose? Would the fact that the owner is choosing to sell the land versus develop it a valid distinction, or is there something just fundamentally different about personal property that renders it subject to regulation to the point of nonexistence? It's an interesting question, and we're asking it rather than staking out a position since we haven't quite settled on the answer.

Finally, the court seemed to mix apples and oranges (or should that be raisins and prunes?) when it applied the "economic wipeout" test from Lucas and "parcel-as-a-whole" analysis to the plaintiffs' raisins. The court concluded that the regulations couldn't be a taking because the USDA did not require the plaintiffs to surrender their entire crop. Apparently, the court forgot that the plaintiffs only argued that the regulations resulted in a physical taking, not a Lucas per se taking, or a Penn Central ad hoc regulatory taking. Rather than muddle it up with with fruitless (sorry) analysis of whether the regulations take one raisin or millions, the court should have just stuck to holding that the right to sell raisins in a highly-regulated commercial market is not "property" and it therefore was not taken. That would be better than this confusing and ultimately unnecessary passage, since in physical takings, the Court has noted that it really doesn't matter how much of the property is being taken, or what is left over. See, e.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (the cable box had a minimal footprint).

What really drove the opinion is on page 9475. The USDA regulations actually benefit the plaintiffs economically, by making the market for non-reserve raisins more profitable. It's pretty much the same vibe that drove the Stop the Beach Renourishment case: a court likely won't look kindly upon a takings case where the plaintiffs appears ungrateful for government help, even when they profess not to want it. See this for the vibe reduced to a cartoon.

Thanks to the Constitutional Law Prof Blog for alerting us to this opinion.

"Make Eminent Domain Imminent" - Fidell On Wind Power

Honolulu attorney Jay Fidell (who also produces Think Tech Hawaii) writes a regular column in the Honolulu Star-Advertiser. This week, he focuses on eminent domain in "Governor must insure wind farm moves forward," where he writes about the proposed wind farm on Molokai, and urges the state to use eminent domain aggressively to take the needed land:

When Abercrombie threatened eminent domain against Molokai Ranch, he unleashed the genie, and the possibility of condemnation is now in play. He gave us a glimpse of a powerful solution to our energy security predicament, and we can't let it pass.

In our state of islands, land is scarce, and NIMBY is in every back yard. Large landowners want to hold on to their land in hopes of appreciation and because it's so difficult to find other parcels. So they refuse to sell.

Hawaii has traditionally been reluctant to exercise eminent domain, and big projects have suffered for it. This is a problem for both energy and other things, and we need to get over it. Big projects need big land, and until we can get that land, we'll be hampered in those projects.

The governor needs to get the Big Wind parties in a room and jawbone them into a deal. Failing that, he should do exactly what he threatened — yes, condemnation.

Take heart, governor. Be impatient about clean energy — you have the power. Make eminent domain imminent. Many people will support you in this, and a condemnation will assure progress on wind and other projects. Do it once and things will be easier going forward.

While I often agree with Jay, I can't buy in wholly this time.

First, I can’t say that we’ve "suffered" for being reluctant to condemn property (except, it appears, for residential and condo leaseholds – on that front, we’ve been very un-reluctant to condemn private property). Eminent domain is one of the most powerful attributes of sovereignty, and property owners have little in the way of defenses. It can financially and emotionally destroy homeowners and business owners to have their life’s work taken away. They may get compensated, but we invest our property with quite a bit more than what can be calculated by an appraiser. So I am glad that we exercise it reluctantly here in most cases.

Second, I also can’t agree with the use of eminent domain to favor one vendor over another. The Kelo majority’s willingness to uphold the condemnation in New London was based in large part on the fact that the city had not yet chosen Pfizer as the new owner at the time the city decided to condemn. The Court might have had a different view if, say, the city condemned the property specifically in order to turn it over to Pfizer (rather than to turn it over to a developer, who later turned out to be Pfizer). When the government chooses a preferred beneficiary before it condemns, the taking looks a lot more like the prohibited "A-to-B" taking that the Court professes to frown upon, even after Midkiff and Kelo. The governor picking winners and losers also amounts to unwarranted interference in a process in which the government has little competence. [Disclosure: I have represented the landowner in oher cases.]