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Guest Post - Kady Valois, "How The West Was Won: Easements!"

Today's post is by our Pacific Legal Foundation colleague Kady Valois, writing about a recent Federal Circuit Rails-to-Trails takings case, Behrens v. United States, No. 22-1277 (Feb. 13, 2023).

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How The West Was Won: Easements!

by Kady Valois

There’s a saying that the west was won by pioneers, settlers, and adventurers.

And while that may be somewhat accurate, what’s clearer still is that the west -- at least the west we know today -- was built and developed because of railroads. We owe a lot to railroads because this nation was built by the coal engines that carried steel, food, and people to areas never previously explored by Americans. Many of these railroads were built on easements or rights-of-way on private property, subject to the fee owner's reversionary interest: should the easement ever not be used for railway purposes, the property is supposed to revert to the landowner. 

And as with most things, technology advances and what once was cutting-edge or even common becomes outdated. So it seems with railroads. While they still serve a function, rail transportation is not as widespread as in decades or centuries past. But as rail lines are abandoned, in their stead has grown a movement to transform these former railway easements into public recreational trails. Congress even got behind the rails-to-trails movement, and adopted a statute that interferes with the state-law reversionary process.

Typically, when a railroad wishes to relinquish control over a railroad corridor, it must seek permission from the federal Surface Transportation Board to abandon the corridor. Interested parties may intervene and propose to "railbank" the corridor, that is, preserve it for future use. An intervenor must be willing "to assume full responsibility for [m]anaging the right-of-way; [a]ny legal liability arising out of the transfer of use of the right-of-way . . .; and [t]he payment of any and all taxes . . . [on] the right-of-way." See 49 C.F.R. § 1152.29(a).

So let's say the STB agrees, and instead of reverting to the property owner, the easement is designated for use as a recreational trail. The courts have long concluded that the issuance by the STB of a Notice of Interim Trail Use results in a taking for which the United States is liable (after all, absent the federal Rails-to-Trails Act, the easement would have reverted to the owner, and for that, the owner is owed just compensation).

Much of the rails-to-trails litigation in the Court of Federal Claims and the Federal Circuit involve questions about the scope of the grant of these easements. After all, if the federal government can show that recreational trail use is not inconsistent with the terms of the original grant of easement, then voila! ... no reversion, no taking.

That was the dispute in Behrens. The Federal Circuit examined the abandonment of a 144.3-mile corridor previously used by the St. Louis, Kansas City, and Chicago Railroad Company in the 1900s. Here, unlike the usual situation, most of the deeds conveying the easements more than a century ago "did not state a limitation of the grant to use for railroad purposes." Slip op. at 5. The successor-in-interest to the railroad sought the STB's approval to discontinue service and consummate abandonment of the easement. NITU followed, as did an agreement for the Missouri Department of Natural Resources to operate and maintain a recreational path on the easement. CFC takings claim followed.

Plaintiffs moved for summary judgment on liability, asserting that the railroad originally acquired mere easements, pursuant to Missouri law; that the railroad’s easements were limited to railroad purposes; and that the conversion of the easements for a public recreational trail was beyond the scope of easements, and thus constituted a taking. The government then cross-moved for summary judgment on the ground that the deeds granted an easement broad enough to allow for interim trail use and railbanking.

Slip op. at 6-7.

The CFC held that under a Missouri easement statute, the easements contemplated interim trail uses and thus, no taking.

The Federal Circuit disagreed. The court started with the Missouri easement statute, which gives railroads power:

[t]o take and hold such voluntary grants of real estate and other property as shall be made to it to aid in the construction, maintenance and accommodation of its railroads; but the real estate received by voluntary grant shall be held and used for the purpose of such grant only....

Slip op. at 9.

The government pointed to the statute and argued that it does not define the scope of the granted easements, and the court needed to look for the intent of the grantor as evidenced by the language of the grant. Here, the government argued (as noted above), "the deeds themselves contain no language stating a limitation of the grant to a specified purpose." Slip op. at 10.

The Federal Circuit rejected that conclusion because the Missouri Constitution states that properties taken by a railroad by eminent domain are presumed taken "for railroad purposes." See slip op. at 11 (citing Mo. Const. art. I, § 26). The Court acknowledged that state limitation by finding that the property’s acquisition for anything other than railroad use would fall outside the scope of the recorded easement. Thus, the government’s attempt to use the now defunct railroad for an interim trail or rail bank was unconstitutional – which is this author’s opinion was the right conclusion.

The only question left was whether under Missouri property law, use as a recreational trail -- for such things as walking, hiking, cycling, picnicking, frisbee playing -- are railroad purposes. (What do they think this is, New York or something?) Short answer, no. Nor is railbanking:

Under Missouri law, establishing a nature trail for the purpose of keeping the corridor intact for future rail service is not considered a railroad purpose if there is no evidence that such future use is realistic. In Boyles, the court rejected the argument that “because one of the purposes of the trail is to keep the existing corridor intact for transportation needs that may occur in the future, such as reactivated rail service, [the easement’s] proposed use [as a trail] is for railroad purposes.” Boyles, 981 S.W.2d at 649. The Boyles court found that this argument “ha[d] no merit” because “[t]he undisputed evidence, including the removal of the bridges, ties, and rail by [the railroad company], showed that no such [future railroad] use is realistic.” Id. at 649–50. The court also noted that “[t]he proposed development of a hiking, biking, cross-country skiing, and nature trail is completely unrelated to the operation of a railway and consistent only with an intent to wholly and permanently cease railway operations.” Id. at 650 (citation omitted). Thus, in Missouri, trail use with the purported but speculative purpose of preserving the right-of-way for purported but speculative purpose of preserving the right-of-way for future railroad use does not fall within the scope of an easement ranted for railroad purposes. Here, there is no evidence that future rail use is realistic.

Slip op. at 12-13.

The court concluded by holding that "the easements granted to the railroad were not broad enough to encompass interim trail use or railbanking[.]" Slip op. at 16.

Reversed and remanded.

Behrens v. United States, No. 22-1277 (Fed. Cir. Feb. 13, 2023)

IRWA's Summary Of Major Eminent Domain Cases & Legislation (June-Dec 2022)

The International Right of Way Association's Real Estate Law Committee produces twice-a-year reports "which contain summaries of eminent domain decisions and legislation within the United States."

And what is really nice is that they make the report available.

Here's the latest.

We're posting it here because we're one of the co-authors. Hat tip to our co-authors Brad Kuhn, Jillian Friess Leivas, and Ajay Gajaria.

The report is short, and doesn't contain a lot of fluff. Just what you wanted.

CAFED: Commercial Fishing In The U.S. Exclusive Economic Zone Is A Govt-Granted Privilege, Not A Property Right

We thought this fellow has "authority over all fish."

By statute (the Magnuson-Stevens Act), the feds claim the sovereign right to exclusive fishery management and "authority over all fish" in the U.S. Exclusive Economic Zone, a zone "extending 200 nautical miles from the baseline[.]"

The question facing the U.S. Court of Appeals for the Federal Circuit in Fisherman's Finest, Inc. v. United States, No. 21-2326 (Feb. 8, 2023) was whether having licensed via regulation quota-based access to, and commercial fishing in, the EEZ in the Bering Sea, the ability of licensees to continue to fish at previous levels was a compensable property right.

The regs are quite complex -- see pages 4-6 of the slip opinion for the court's summary of the regulatory-speak requirements and limitations -- and dictate the type and amount of fish which may be caught, and the type of vessel that may be employed in the catch. The Magnusun-Stevens Act reflects Congress' intent to not confer any kind of right, title, or interest in these fishing licenses, and are, apparently, completely revocable.

The plaintiffs here were building a replacement vessel ("America's Finest") and intended to transfer an already-held license from an existing vessel to the new one. So far, so good. But then the shipbuilder informed the plaintiffs that foreign steel was used in the construction of the replacement vessel. Oooh. Turns out there's a "built in the USA" requirement, and "America's Finest" wasn't exactly America's finest, if you get our drift. Meaning that the new boat couldn't be used in the EEZ and the license could not transfer.

That wasn't the end of the story. The shipbuilder "lobbied Congress for a waiver to the 'built in the United States' requirement for America’s Finest, J.A. 83 ¶ 44, and Congress subsequently passed the Frank LoBiondo Coast Guard Authorization Act of 2018, Pub. L. No. 115-282, 132 Stat. 4192 (Coast Guard Act)." And guess what? Congress granted a waiver "so that America's Finest could harvest and process fish in the Management Area." Slip op. at 7.

But the waiver came with a catch (ha ha). The Act limited the amount of a certain type of fish that the vessels, including America's Finest, could harvest. These for some unexplained reason are known as "sideboards." Next stop, the Court of Federal Claims, where the complaint alleged "that the Coast Guard Act’s sideboards amounted to an unlawful, uncompensated taking that (1) deprived FFI of the full scope of its rights under its endorsements, licenses, and permits; and (2) devalued its vessels." Slip op. at 8. Case dismissed for failure to state a claim.

The Federal Circuit affirmed the dismissal - no property interest, no taking:

Our precedent establishes that fishing permits and licenses issued pursuant to the Magnuson–Stevens Act are revocable privileges, rather than compensable property interests, see Conti, 291 F.3d at 1341–42, and there is no inherent, cognizable property interest in the use of vessels for fishing within the EEZ[.]

Slip op. at 9.

The court rejected the plaintiffs' efforts to distinguish the cases holding that these type of licenses are not property. The plaintiffs argued that Congress amended the Magnuson-Stevens Act after these decisions, and thereby imbued the licenses with the hallmarks of property, arguing they became transferable, exclusive, and irrevocable. Slip op. at 11. Nope, the court held, these things are as they were before: "non-compensable, revocable privileges." Id.

We could go on, but we won't, because the balance of the opinion lays out all the reasons the court concluded that the language of the statute defeated any claim that these licenses were intended to be some kind of vested right:

Here, the Coast Guard and the Fisheries Service issued and approved fishing endorsements, LLP licenses, and A80 QS permits that allowed FFI’s vessels to harvest and process fish from the Management Areas. Without these government-issued privileges, FFI does not have an inherent right to use its vessels to harvest or process fish in the Management Areas, as FFI itself recognizes.

Slip op. at 17.

Contrast this result with the U.S. Supreme Court's decision in an favorite case of ours, Damon v. Territory of Hawaii, 194 U.S. 154 (1904). There, the Court (in a very Holmesian opinion by, well, Justice Holmes), held that certain offshore fishing rights (which the court noted were "somewhat different from those familiar to the common law") were vested rights which qualified as constitutional property:

The right claimed is a right within certain metes and bounds to set apart one species of fish to the owner's sole use, or, alternatively, to put a taboo on all fishing within the limits for certain months, and to receive from all fishermen one-third of the fish taken upon the fishing grounds. A right of this sort is somewhat different from those familiar to the common law, but it seems to be well known to Hawaii, and, if it is established, there is no more theoretical difficulty in regarding it as property and a vested right than there is regarding any ordinary easement or profit a prendre as such. The plaintiff's claim is not to be approached as if it were something anomalous or monstrous, difficult to conceive and more difficult to admit. Moreover, however anomalous it is, if it is sanctioned by legislation, if the statutes have erected it into a property right, property it will be, and there is nothing for the courts to do except to recognize it as a right.

Id. at 158. Unlike the Magnuson-Stevens Act, Hawaii law recognized the right to fish and control use of the offshore fishery, collect tribute, prohibit use, and exclude the unwanted. Meaning it was property.

Fisherman's Finest, Inc. v. United States, No. 21-2326 (Fed. Cir. Feb. 8, 2023)

Ice Ice Baby: A Report From The 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Feb 1-4, 2023, Austin

We were eagerly anticipating 40th American Law Institute-CLE Eminent Domain and Land Valuation Litigation Conference. The 2022 Conference in Scottsdale was one of the first meetings where everyone was back in-person (and was a smashing success), but that conference was early in the game so not everyone could or would attend. But in the past year most of us got back to some semblance of "normal," and the turnout promised to be good.

We had record registrations: with over 300 attendees, faculty, and staff signed up, things were shaping up.

Plus, we were headed to Austin, Texas. The last time we held the Conference there in 2016, we loved it so much it has been in-demand for a return visit. And this year is the debut Conference for some new planning co-chairs for both the main tracks as well as the "Condemnation 101" tracks, so the buzz for the 2023 Austin Conference was building.

But then the weather reminded us that Mother Nature is often the boss. 

Very Icy Austin on Wednesday (Conference Eve).

On Tuesday, one day before the Conference was to get underway, the 2023 Central Texas Ice Storm blew in and things were gonna get (as they say) "challenging."

Austin Airport effectively shut down with few flights in or out. Planes and cancellations stacked up nationwide. And even for those nearby, slick icy roads, and seemingly everything was closed, from gas stations to hotels to restaurants. Widespread power outages. 

Were we ready with Plan B if people couldn't get on-site? Read on.

Unless you are already here or are driving,
you ain't getting to Austin via AUS any time soon, pard.

Even flying from sunny California was a problem.

Ticket agent: Austin flight cancelled. How about flying to Houston and then driving?

Me: Sure, that'll work. Just get me to Texas and I'll figure it out from there.

Improvise, adapt, overcome: planes, trains, and automobiles (and car rentals, and long-distance rideshares, and four-layovers-from-Boise flights). Jacksonville to Austin via Chicago and Nashville.

Although those of us who made it to Austin were receiving widespread reports of people delayed and rerouted, we had only a handful who said they would not be pressing forward to get here. 

When this is what greets you when you arrive
at your conference site...uh oh.

And yes, Austin was cold and icy. Most things shuttered and widespread loss of power. But the Conference venue was up and running, and throughout the day on Wednesday, faculty, staff, and attendees were showing up. Trickling in, but showing up or on the way.

When this is what you see at the United Airlines
luggage counter, you ask yourself:
Can I make my presentation in a t-shirt and sweats? (Yes!)

We had confidence, and were prepared
for everyone to get to Austin.

So the aforementioned Plan B went into effect. Agenda items shuffled from tomorrow to today because the speaker is here, now. One speaker in the room, one speaker remote. Our audience is full of experts ... say, Billy can you pinch-hit on this panel? Sure. One speaker remoting in from his (unexpected) hotel room in Phoenix and presenting, before he went to the airport in the afternoon to continue on to Austin.

And so forth. Our long-time ALI-CLE Program Attorney, Amy Weinberg (who was delayed out of Philadelphia) was working furiously behind the scenes doing a lot of juggling, updating, texting and calling, and making alternative arrangements. And the tech team from ALI-CLE was preparing for overload if needed.

Plan A: continue to set the room up, assuming everyone is here or on the
way, and we'll have most or all of our people in the room.

Our Planning Chairs were ready, even if not
all of us were actually there (yet).

Plan B: the ALI-CLE technical crew was prepared to livestream
and record the Conference if the weather made travel
to Austin impossible or infeasible.

The tech command center.

Before we go on, a big thank you to our generous sponsors.
Without your support, this Conference would not be as
good as it is, year after year.

We're underway, with a pretty good crowd.

Thursday morning, 9:00 a.m., and we're looking not too bad. A fair number of folks have pressed forward despite the weather and travel disruptions and are in the room. More report they are not tapping out, and are pressing onwards.

We have more viewers remote than we originally anticipated, but the tech is holding up.

Over the next couple of days, our lawyers, judges, legal scholars, appraisers, law students, right-of-way agents, relocation experts, property owners, and other related professionals made their way to Austin.

The fact that folks who were experiencing some rather dramatic travel difficulties and delays (ask Jack about his late night Uber from Houston airport to Austin, or how our west coasters got re-routed all over creation), didn't quit but were determined to get to Austin told us something about why this Conference has been so successful over the decades.

It's more than great programming from the nation's experts. The Conference is also an essential venue to get acquainted with new colleagues and welcome them to the Dirt Law Bar, reconnect with long-time friends, and have a bit of fun together.

Most of the Conference attendees eventually made it, and very few (reasonably) threw in the towel and turned around for home. This was the 40th edition of the Conference, and we really know why it is one of the most-established and successful conferences in the ALI-CLE stable of programs. This year's experience really drove home why we come, and why our attendees and faculty are so dedicated and committed, despite the sacrifices we make to attend or to present. 

Hybrid: Pacific Legal Foundation's John Groen
remoting in while en-route via Phoenix, and
Baylor lawprof Jessica Asbridge on
"Everything Old is New Again: Why Today’s Practitioners
Need to Understand the Original Meaning of the
Takings and Just Compensation Clauses."


The "Condemnation 101" track was wildly popular
both with new members of the Eminent Domain Bar,
as well as old hands. Standing room only throughout the day.

We also had reports from the field that the remote viewing
was going well. Here's how we looked in the
mountains of North Carolina.

Let's not forget the substance of the Conference.
Lots of practical learning. Here's Hawaii's Mark Murakami
and Virginia's Steve Clarke on "Avoiding the Real Jeopardy:  
Structuring Eminent Domain Settlements."
And no, two-time Jeopardy! champion Steve did not
give answers in the form of a question.

Weather throughout Wednesday and Thursday was icy and nasty,
but towards the end of Thursday seemed to be clearing up.

Consequently, the view from the podium looked better and better
with more showing up and more reporting they were nearly there.

The programming at the Conference is traditionally
a mix of practical subjects and the more theoretical.
Here's one of the highlight latter programs,
Alan Ackerman (Michigan), Matthew Ackerman (also Michigan),
and Steve Davis (Missouri) on "What Does the Supreme Court
Mean When it Says Just Compensation is “Self-Executing?"

There's an ethics program, naturally, for those of us in jurisdictions
with mandatory CLE requirements. But we try and not do "typical"
(i.e., boring) ethics programs. Here's Sarah Kellner (Colorado) and
Shane Rayman (Ontario, CN) on "Ethics: Building Your Practice
by Mentoring the Next Generation of Eminent Domain Professionals."

An example of our practice-oriented programming: Tony DellaPelle
(New Jersey), Bernadette Duran-Brown (California), 
and Andrew Lines (Illinois) on "Preparing Your Expert
Witness to Shine in Virtual Proceedings:
Tools and Tips For Trial Lawyers." 

Andrew actually pretended he was far, far away for his "deposition"
when he was in fact one floor up from the Conference room.
Way to go all-in.

Thanks to our generous sponsors, we were able to avoid Austin's
icy roads and have our Mickelthwait barbecue
brought in for lunch. Was it well-received? See for yourself. Line
was through the lobby and nearly out the front door.

Thank you to Texas Supreme Court Justice Jimmy Blacklock
for speaking on "Developing Property Right Issues in Texas,
Questions and Answers with Justice Jimmy Blacklock"
(interviewed by Justin Hodge (Texas)

It was not an echo-chamber either. Here, in a hotly-debated
session, Jeff Redfern (Virginia), Steve Silva (Nevada), and
Lawprof Emilio Longoria (St Mary's Law, Texas)
debate "When the SWAT Team Comes (No) Knocking:
Police Power Takings."

Jeff, Steve, and Prof Longoria's session got everyone's blood pumping.

It wasn't all serious, and we had a bit of fun.
Like this after-hours live edition of the Eminent Domain & Right of Way
Clubhouse with Beth Smith (Wisconsin), Patrick McAllister (Indiana)
and some dude who was having a post-CLE session beer.

Some of our faculty are more formal and like to speak
standing at the lectern. Here, Pacific Legal Foundation's Jon Houghton
(New Jersey) and Ben Stormes (Montana) on
"Avoiding Pitfalls When Trying a Penn Central Case:
Lessons From the Takings Trenches."

Others are less formal, and speak while sitting
(and wildly gesticulating to make sure you are paying attention).
Kristen Renfro (California), and some guy on
"Your Regulatory Takings Case is in Federal Court – Now What?"

By Friday morning, the Austin weather was looking up. Really up.
And we nearly had everyone in the room.
By hook or by crook, most everyone was there.

By Friday were were pretty much back to normal.
Nearly all faculty and all attendees in the room.
And thus we turned it over to our Saturday morning stalwarts,
starting with Jim Burling, here speaking about "The Many Theories of
Property - Do They Matter in Court?" (and Pufendorf)

No one wanted to miss Michael Berger's "Regulatory Takings Update"
on Saturday morning either.

When you can fill this many seats at a CLE conference on a
Saturday morning after two full days of programming,
you know your speakers are the
right ones (thank you Jim and Michael).

After Jim and Michael did their thing, we held our "National Forum,"
a moderated "open-mic" session where Conference attendees
take to the podium and speak about their case or issue,
or crowdsource a question. Here, Pacific Legal
Foundation's Kady Valois, speaking about
our firm's latest takings cert grant.

We were happy to announce that the 41st ALI-CLE Eminent Domain &
Land Valuation Litigation Conference will be held February 1-3, 2024,
at the JW Marriott in New Orleans.
Save the date!

Ivy Cadle (Georgia - Go Dawgs!) is already planning his trip to
#EminentDomain 2024 in New Orleans.
See you there, Ivy.

With the programming wrapped up, it was time for farewells
and thank yous. Here, four of our law students from William and Mary Law,
who took the time out of their schedules to make their way to
Austin for some real-world learning and networking.
Well done, new colleagues!

Even after the proceedings closed, there was more work to be done.
Here, the ALI-CLE Tech Team breaks it down, after successfully
guiding us through the past four days. They are a large part of the
reason why this Conference works so well (plus, they make the
speakers look really good on camera).

To those who joined us - in-person or on-line, thank you. This conference reminded us of why this program is so successful, and why we all return year-after-year.

To those of you who didn't (or couldn't) join us, here's what you missed. You need to remedy that, and come join us next year in New Orleans...

We'll see you in New Orleans for
#EminentDomain2024!
(Want to keep the conversation going in the
interim? Join the ALI-CLE Eminent Domain Conference
page on LinkedIn.)

(Nearly) Last Call: There's Still Time To Join Us For The 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Feb 1-4, Austin

We really want you there...

One (nearly) last reminder that there's still time to register for your space at the 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, February 1-4, 2023, in Austin. In the past several years, we have sold out due to the conference room capacity and the conference hotel block. But there's still space, although we are nearly full. So register now - don't delay any further! 

Here's the brochure with the complete agenda, schedule, and faculty listing. But to tempt you, here are some of the highlights of the program:

• Everything Old is New Again: Why Today’s Practitioners Need to Understand the Original Meaning of the Takings and Just Compensation Clauses
  
• When the SWAT Team Comes (No) Knocking: Police Power Takings

• Private Utility Takeovers – Lessons From a 67 Day Trial

• "Contraband": How Property Rights Helped Pave the Way for Civil Rights

• Valuation Issues When Billboards and Signs are Condemned

• Setting Client Expectations and Identifying Red Flags

• Preparing Your Expert Witness to Shine in Virtual Proceedings: Tools and Tips for Trial Lawyers

• Developing Property Right Issues in Texas - Questions and Answers from the Bench (with Texas Supreme Court Justice Jimmy Blacklock)

• Eminent Domain and Regulatory Takings Updates: Important Decisions You Need to Know

• Ethics: Building Your Practice by Mentoring the Next Generation of Eminent Domain Lawyers

• the Condemnation 101 program (a one-day course for those new to the practice, or for experienced practitioners wanting a refresher)
• ...and much more!

To register, go here.

Looking forward to seeing everyone in Austin for the 40th edition of the Conference.

Program Brochure, 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Austin, Texas, Feb 1-...

Here's The Program For The 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Feb 1-4, 2023, Austin

Here it is, the official agenda and program for the 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, February 2-4, 2023 (with a special event the evening of Wednesday, February 1, 2023 to entice you to arrive early).

Here's the brochure with the complete agenda, schedule, and faculty listing. But to tempt you, here are some of the highlights of the program:

• Everything Old is New Again: Why Today’s Practitioners Need to Understand the Original Meaning of the Takings and Just Compensation Clauses

• Private Utility Takeovers – Lessons From a 67 Day Trial

• Valuation Issues When Billboards and Signs are Condemned

• Setting Client Expectations and Identifying Red Flags

• Developing Property Right Issues in Texas - Questions and Answers from the Bench: A View From the Bench (with Texas Supreme Court Justice Jimmy Blacklock)

• Eminent Domain and Regulatory Takings Updates: Important Decisions You Need to Know

• Ethics: Building Your Practice by Mentoring the Next Generation of Eminent Domain Lawyers

• ...and much more!

To register, go here.

Register now and hold your space. In the past several years, we have sold out due to the conference room capacity, and the conference hotel block. So don't delay. 

Looking forward to seeing everyone in Austin for the 40th edition of the Conference.

Program Brochure, 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Austin, Texas, Feb 1-...

CAFED Hears Arguments In Two Takings Cases

Ideker Farms, Inc. v. United States, No. 21-1849

As written up in the FedCircuitBlog (a must-follow for all you federal takings mavens):

It concerns the federal government’s liability for taking private property. Specifically, in this case, the Federal Circuit will review the conclusion of the Court of Federal Claims that the government’s action was the cause-in-fact of flooding damage and that, as a result, a taking-by-flooding occurred. The government appeals the CFC’s judgment, while Ideker Farms cross-appeals.

Behrens v. United States, No. 22-1277

Also from the FedCircuitBlog:

Behrens v. United States, which concerns a claim the federal government was liable for taking land for public use through the National Trails System Act. Specifically, in this case, the Federal Circuit will review the determination by the Court of Federal Claims that the plaintiffs were not entitled to compensation because the scope of the easement in question was broad enough to encompass railbanking and the construction of a hiking and biking trail.

New Cert Petition: Does Possibility Of Agency Regulation Restrict Property?

Here's the latest in a case we've been following from when the takings case was rejected by the Court of Federal Claims, and the dismissal affirmed by the Federal Circuit.

Yes, this is the "bump stock" takings case, and the Federal Circuit decision has now triggered a cert petition.

You remember that one. Petitioners owned "bump stocks" that apparently were legal at the time they acquired them. But later, the feds declared them illegal to own or possess, and the bump stock owners either turned theirs over to the government or destroyed them. Next up, a takings case: if getting bump stocks off the market is a good thing, the Armstrong principle compels compensation (the cost of public benefits should be distributed among the benefited public).

The CFC dismissed. We criticized the CFC's rationale that the reason the bump stock ban was not a taking was because it was a valid "police power" safety measure (putting aside for the moment that the feds don't have what you'd call a "police power" of course): the CFC "simply repeated the trope that the ban was a valid exercise of the government's regulatory power (which, we think was not really a question), and thus no taking." As we've noted before, this analysis is very unsatisfying. A takings claim like this doesn't challenge the validity of the ban, but instead says "if you are going to ban these things, the public needs to provide compensation."

The Federal Circuit took a different approach (and maybe went from bad to worse). It held that the bump stocks were not property because bump stocks were already regulated by the feds, who simply altered the ATF's interpretation of "machineguns" to include bump stocks when they were previously not covered (or at least it was not clear).

So even though the prior regs did not include bump stocks as "machineguns," bump stocks were subject to the regulations generally when the owners obtained them. Thus, the Federal Circuit concluded, the regulations limited the owner's rights.

Here's how the petition summarizes the issue:

This case raises fundamental questions about the interaction of the administrative state and the Fifth Amendment’s Takings Clause. Petitioners are owners and sellers of bump stocks. Petitioners acquired their bump stocks when their purchase, possession, and sale was unquestionably legal. After the Bureau of Alcohol, Tobacco and Firearms (ATF) promulgated a rule banning the possession of bump stocks—while affirming that prior to the effective date of the rule, the purchase, possession, and sale of them was legal—Petitioners complied with the rule and destroyed or surrendered their bump stocks. They then sought just compensation for the taking of their private property. The Federal Circuit rejected their Fifth Amendment claims, with a majority of the panel holding that there is an inherent restriction on title to any piece of personal property in America that is potentially subject to a federal agency’s general delegated legislative rulemaking authority.

The Federal Circuit’s holding raises fundamental questions about the nature of personal property in a nation in which nearly every object is subject to some general grant of legislative authority to an agency. By redefining the nature of title to personal property in a country dominated by grants of general regulatory authority to executive branch agencies, the Federal Circuit has removed a bedrock restraint on government power and eliminated a means of redress for citizens harmed by exercises of such power. If the Federal Circuit is right, then federal agencies can, with a stroke of a pen, outlaw not just the future sale but the mere private possession of cars that burn too much gas, or light bulbs deemed too inefficient, and so on—without paying a dime of compensation to their owners. The Federal Circuit’s holding thus presents questions of substantial importance that the courts below, as well as commentators in the property field, have recognized as doctrinally incoherent. And the decision conflicts with this court’s prior holdings applying the Takings Clause to personal property in Horne v. Department of Agriculture, 576 U.S. 350 (2015), and emphasizing the constitutional significance of bans on the mere possession of personal property in Andrus v. Allard, 444 U.S. 51 (1979).

Under the Federal Circuit’s decision, citizens and merchants alike are left with no recourse for the forced seizure and destruction of millions of dollars’ worth of lawfully-acquired property. This Court’s review is warranted.

Pet. 3-4.

Here's the Question Presented:

For purposes of the Fifth Amendment’s Taking Clause, does a delegation of general legislative rule-making authority to an agency constitute an inherent restraint on title to any personal property that could be subsequently subjected to a prospective legislative rule, rendering the physical taking of the property non-redressable?

Follow along on the Court's docket here.

Petition for a Writ of Certiorari, McCutchen v. United States, No. ____ (July 5, 2022)

Here's The Full Speaker And Topic List For The Brigham-Kanner Property Rights Conference (Sep 29-30, 2022)

By now, you know that the 19th Brigham-Kanner Property Rights Conference is set for September 29-30, 2022, at the William and Mary Law School in Williamsburg, Virginia (register here - space is limited - fee ranges from free to $195 - a bargain!). And you know that our colleague Jim Burling is this year's B-K Prize winner.

But now you know who is speaking at the Conference, and the topics: here's the full agenda. The list of speakers is too long to list here but check out these topics:

• Panel 1: The Importance of Property Rights: A Tribute to James S. Burling
• Panel 2: Reshaping the Framework Protecting Property Under the Roberts Court (that's the panel we're speaking on)
  
• Roundtable: Emerging Issues in Takings and Property Rights Litigation
• Panel 3: Choosing A Property Regime
• Panel 4: Property Rights in Times of Scarcity and Crisis

Who can resist these subjects? Plan on joining join us in September.

2022 Brigham-Kanner Property Rights Conference Speaker Panels

Fed Cir: Uniform Relocation Act Doesn't Authorize Fees For Pro Se Lawyering

In Haggart v. United States, No. 21-1660 (June 22, 2022), the U.S. Court of Appeals for the Federal Circuit held that the Uniform Relocation Act is like a lot of other fee-shifting statutes, and does not authorize attorneys fees for work performed by a lawyer if that lawyer is one of the litigants. Slip op. at 8 ("We see no sound reason to read the URA’s fee provision to authorize an attorney pro se litigant to receive attorney’s fees when 42 U.S.C. § 1988 and other fee-shifting statutes do not.").

We're posting this here because the underlying case involves a rails-to-trails takings claim, and because we know you are interested in any decisions interpreting and applying the URA.

Haggart v. United States, No. 21-1660 (Fed. Cir. June 22, 2022)

CAFED: Flooded Property Owners Owned Property

We've covered some of the litigation against the federal government for its actions flooding property during Hurricane Harvey, including at least one from the "upstream" owners. Well here's one from the case involving the "downstream" owners.

In Milton v. United States, No. 21-1131 (June 2, 2022), the U.S. Court of Appeals for the Federal Circuit addressed the first question in every takings claim: does the plaintiff possess "private property?" The court held that the plaintiffs indeed have a property interest.

Now that may seem like an obvious conclusion. After all, it's right there in the first sentence of the opinion that the plaintiffs are owners of ... property: "[a]ppellants Virginia Milton and hundreds of other individuals and companies owned property downstream from the Addicks and Barker Dams in Houston, Texas." Slip op. at 1 (emphasis added). But as you takings mavens know, owning property doesn't mean you truly "own property" for purposes of the Fifth Amendment. You have to have a "cognizable property interest." Slip op. at 9.

The Federal Circuit reversed the Court of Federal Claims' conclusion that despite owning property that was flooded allegedly by or because of the U.S. Government, the "property" the owners owned was not their flooded land, but the right to not have the U.S. Government flood their land in these circumstances. In other words, what the CFC called "perfect flood control." Slip op. at 7. And besides, the CFC held, the owners bought their properties after construction of the dams, so they took their properties subject to the dams and the possibility of flooding. 

The CFC's method of determining the property interest is what we've called "bootstrap logic" where the reviewing court defines the property as the right to not have the very thing the plaintiffs are claiming happened, happen. This to us is a problem because it nearly always presages the outcome (no taking), by front-loading the merits question (does the government's action have similar effects on the owner as eminent domain?) into the pleading stage, which deprives the factfinder of the opportunity to, you know, find the relevant facts.

The Federal Circuit did not go all in on our analysis (fee ownership is enough to establish a property interest) but came close. It focused on the sticks, and concluded that the plaintiffs essentially alleged an interest in flowage easements on their land, and that qualified. Under Texas law, an owner of real property can peel off one of the sticks and grant a third party the right to flood their land. Aka, a flowage easement. That sounds a lot like "plaintiffs own the fee simple, so yeah they own 'property,'" but we are lawyers so we know we have to state the principle more complexly.

The Federal Circuit rejected each of the Government's contrary arguments: 

• There's no general "police power" exception to takings (a point we harp on a lot). Slip op. at 10-11.
• There's no general "Act of God" exception, either. That's a merits question. Slip op. at 12 ("Acts of God relate, if at all, to whether a taking has occurred, not whether a party has a cognizable property interest.").
• What about the fact that the owners bought their properties after the dams were built? "There is no blanket rule under Texas law that property rights are held subject to owners’ expectations on acquisition." Slip op. at 13.
• Finally, a claim of "necessity" isn't something that defines property, but "is a defense." Slip op. at 13.  

Having concluded that the plaintiffs own property, the Federal Circuit declined to determine whether the Government took that property (in the CFC, both sides sought summary judgment). The takings question is is a fact-intensive inquiry, and "summary judgment should not be granted precipitously." Slip op. at 13-14. Now remember that this is a physical takings claim and subject to the Supreme Court's categorical rule (which you might think makes summary judgment kind of appropriate). But the Federal Circuit was not comfortable deciding the issue "in the first instance," because the CFC had not developed the record even for a physical taking. Remanded:

Thus, it is appropriate to remand this case to the Court of Federal Claims to address the second prong of the takings analysis in the first instance. In other words, we leave it for the lower court to consider: (1) whether Appellants have shown that a temporary taking occurred under the test applicable to flooding cases, Ark. Game & Fish Comm’n v. United States, 568 U.S. 23, 39 (2012); (2) whether Appellants have established causation when considering “the impact of the entirety of government actions that address the relevant risk,” St. Bernard Par. Gov’t v. United States, 887 F.3d 1354, 1364 (Fed. Cir. 2018), cert. denied 139 S. Ct. 796 (2019); and (3) whether the Government can invoke the necessity doctrine as a defense.

Slip op. at 14.

Milton v. United States, No. 21-1131 (Fed. Cir. June 2, 2022)

2022 ALI-CLE Eminent Domain And Land Valuation Litigation Conference, Scottsdale: You Should Have Been There!

After a two-year absence in which we went remote, in the last week of last month (our usual spot on the calendar, between the playoffs and Super Bowl), we once again met in-person for the American Law Institute-CLE Eminent Domain and Land Valuation Litigation Conference.

Approximately 200 lawyers, judges, legal scholars, appraisers, law students, right-of-way agents, relocation experts, property owners, and other related professionals gathered in-person--yes, in-person--at the Scottsdale (Arizona) Resort at McCormick Ranch, to get reacquainted, learn stuff, and renew ties last made in-person in Nashville in 2020. In addition to the live attendance, we also welcomed about 50 remote colleagues, who joined the live webstream.

This was the 39th edition of the Conference, one of the most-established and successful conferences in the ALI-CLE stable of programs.

To those who joined us - thank you. This conference reminded us of why this program is so successful, and why we all return year-after-year.

To those of you who didn't (or couldn't) join us, here's what you missed. You need to remedy that, and come join us next year...

Our 2022 Proof of Life Photo.

Every year, as we open the program, I take to the lectern for what I call my "proof of life" photo. Our Conference ends up in some really fun, exciting places. Nashville. Palm Springs. San Diego. Austin. San Francisco. Charleston. And I want to prove to the folks back in the office that yes, we really are in the room, learning stuff. And not out enjoying all that our venues have to offer (we save that for after-hours).

In this photo, we're in the room, spread out (the Resort put us in its massive ballroom, so we had room to spare).

Thank you to our sponsors. Without your generosity, the Conference would not be as good as it is.

Lawprof Karen Bradshaw presented our keynote address on Friday, "Do Animals Have Property Rights?" with more from her recent book "Wildlife as Property Owners." Her talk was followed by a book signing, too. Interesting stuff for sure.

Our main room was nicely filled for every program. A real testament to the subjects discussed, and the quality of the faculty.

The program includes a mix of practice and substantive topics. Here, Virginia's Steve Clarke in one of the breakout rooms (also nicely filled), presenting on "Federal Court and the Daubert Challenge – How To Prepare."

But it wasn't all eminent domain, property, and CLE credits. Naturally, with the beautiful Arizona winter weather, we found time to get out-of-doors and do things. Like this intra-firm golf tournament.

Which firm prevailed? You'll have to ask them who has the bragging rights.

What was especially nice was that our sponsor tables and the ALI-CLE registration table could be outside of the presentation rooms. Love that AZ weather.

New Jersey's Tony Della Pelle and Connecticut's Dwight Merriam on "COVID-19 Takings."

Our faculty includes not only lawyers and law professors. We also have other industry professionals come and present. Here, Washington's Martyn Daniel, Texas' Kristen Bennett, and (lawyer) Alan Ackerman from Michigan speaking about "Maximizing Relocation Benefits: Understanding the Law and Regulations to Ensure Fairness."

Ah, ethics. A tough subject to cover. Especially at 8am. But Georgia's Ivy Cadle (with the obligatory "go dawgs!"), Michigan's Darius Dynkowski, and (off-screen) Virginia's Kelly Sheeran and Texas' Justin Hodge filled the room with "Ethics Jeopardy! Live."

Yeah, Justin really did go for the end zone for his role as Ethics Jeopardy! host.

We understood the situation. Our faculty, staff, and attendees came to Arizona from around the nation. Some places have opened up, others are still getting there. We minimized any risks. Spread out in a huge room, and everyone was pretty cool with the modest requirements from ALI-CLE. What was especially good was that nearly every event but the actual programming were outside. 

Another featured panel was on the Supreme Court's big decision in Cedar Point Nursery. We brought together three expert perspectives on the case and what it means for the future. "Did the Supreme Court Signal a New Direction for Property Rights in Cedar Point Nursery?" featured California's Joshua Thompson (prevailing counsel in the case), U. Virginia lawprof Julia Mahoney, and (off-camera, since he remoted in) Maryland's Matthew Littleton, who filed a government-side amicus brief in the case.

Also pictured: the moderator, some guy who writes a blog.

Colorado's Katie Gray and Nebraska's Bill Blake on "Project Abandonment: How to Position Your Client for the Fallout When Projects Don't Get Built." Really useful.

Tag swag (aka badge flair) courtesy of our Platinum sponsor.

Our two fave tags.

Outdoors at night - really nice under the lights by the fire, after a long day of CLE programming.

Hawaii's Mark Murakami teamed with Wisconsin's Smitha Chintamaneni for "Why Jurisdictional Offers Must Include an Assessment of Severance Damages."

Even our final programs each day attracted a substantial crowd, often tough to do after long days of sitting in class. A testament to the strength of the faculty and the topics. Here's the audience for "Defending the Appraisal in the Courtroom - The Insider's View."

We put speakers with competing views on these panels, to get the blood pumping and keep everyone's attention.

Saturday morning, after two full days of (great) programming, is still a tough spot for a speaker, because they have to keep us focused, and interested.

That's why we always reserve these spots for two old hands, who will keep us zeroed in. Above is California's Jim Burling, with a tour-de-force solo hour on "What Are the Top 20 Ways to Increase the Cost of Housing? The Answer May Surprise You!"

Below, Michael Berger (looking a bit like Big Brother, admittedly), who remoted in from California with his annual "Regulatory Takings Update."

Feral cats and property rights had us smiling (ask Michael about what this refers to).

Michael Berger is Watching You.

A group photo of the William and Mary Law School contingent at the Conference (minus two other WM Law colleagues who could not be there for the photo). Recent and long-time alumni, current law students, a law prof, and (fourth from left) Jim Burling who later this year will be awarded WM Law's Brigham-Kanner Property Rights Prize at the B-K Conference in September 2022.

A pretty good showing for the alma mater.

There was a whole lot of podcasting going on. Thanks, Infrastructure Junkies and Eminent Domain Podcast. Can't wait for the episodes you recorded.

Again, thank you sponsors!

What about next year? Usually, on the last day of a Conference, we announce the dates and the venue for the following year. This year, due to some slowdowns, ALI-CLE couldn't quite get all the requirements in place to make a formal, official announcement. As soon as we know the venue, we'll go loud here.

As for the date: same date as usual - last week of January or first week of February, depending on the football schedule (which we're trying to avoid).

Stay tuned.

 

CAFED: There's Right Way And A Wrong Way To Convey A Right Of Way (Under Texas Law)

A quick one from the Federal Circuit, in a rails-to-trails takings case.

The holding of the court in Anderson v. United States, No. 21-1445 (Jan. 20, 2022) (when a deed says it conveys "land," under [Texas law, that is a grant of fee simple), isn't all that groundbreaking. But the opinion contains a concise summary of rails-to-trails takings cases, and for that alone is worth a couple minutes of your time. See slip op. at 2-3.

The first step in a takings case, of course, is to identify the private property allegedly being taken. If the original right-of-way conveyance to the railroad by the plaintiffs' predecessor was limited (such as an easement), and the plaintiffs possess the "reversionary" right when the right-of-way ceases to be used for a railroad purpose, then pow!, the designation of the property as a recreational trail is a taking of that interest. If the original conveyance was of a fee simple interest, however, then no property to revert = no taking.

The court's conclusion on this question hinged on how Texas law treats deed language. Here, the 1902 deed conveying the right-of-way said, among other things, that the land was conveyed "for a right of way," and described the interest elsewhere as a "right of way." But the deed also started off with this language that described the grant as being "all that piece or parcel of land ..." See slip op. at 4-5.

So how does Texas law treat what looks like contradictory -- or at least ambiguous -- language in a deed? What interest was conveyed? The Federal Circuit noted that the Texas Supreme Court had already resolved that question back in 1952, where the Texas court concluded that similar language conveyed a fee simple interest. "The land" means a fee, while use of "right of way" is an easement - and you look to the granting clause for the controlling language. So when the deed here said "[t]hat we [the grantors] . . . do grant, bargain, sell and convey unto the said Texas Central Railroad Company all that piece or parcel of land, situate, lying and being in the County of McLennan, State of Texas ..." then it doesn't matter that later in the same deed, the property is described as a "right of way."

The Federal Circuit rejected the owners' argument that the 1952 Texas case relied upon by the Federal Circuit was out of date, and that in 2017 a Texas appellate court concluded otherwise. Slip op. at 9. In that case, the deed language was not the same as here, and the granting clause was even more ambiguous. Finally, the Federal Circuit also rejected the owners' arguments that the deed here expressly conveyed certain mineral interests, a recitation that would be unnecessary if the grant was intended to convey a fee simple absolute ownership in the railroad. The court noted that Texas cases have dealt with this same issue previously, and came down on the side of a fee simple conveyance. Slip op. at 10.

So summary judgment affirmed, plaintiffs lose. But they might take comfort that they couldn't have done much to change the outcome. Last we checked, it's impossible to go back in time and rewrite a deed to make it very clear that all that was granted was an easement.

What's the lesson for today, 120 years later? When drafting your deeds, choose your words carefully.

Anderson v. United States, No. 21-1445 (Fed. Cir. Jan. 20, 2022)

The Circle Is Now Complete: A Sampling Of Final Paper Topics From William and Mary Law's Eminent Domain & Property Rights, And Land Use Courses

If you ever get the opportunity to teach in a law school -- either as a full-time legal scholar, or part-time as an expert adjunct practitioner -- take it if you can. You might think you know a lot about a particular subject, but there's nothing like spending time at the lectern in a law classroom in front of sharp and eager lawyers-in-training to sharpen your thoughts, and get you to truly understand a subject.

And folks calling you "professor" can evoke a smile.

But if there's one downside to the law school experience from the teacher's side of the lectern, it's grading. Especially at a law school like William and Mary that has a pretty strict mandatory curve. In upper-division courses that we handle like Eminent Domain and Property Rights Law and Land Use -- where we're dealing with some very high-level stuff and the quality of the students is uniformly high -- that makes for some hard choices at this time of year. Despite these challenges, we've wrapped up grading for the Fall 2021 Semester, and have submitted the official scores.

Although I cannot share with you the students' final papers in these classes, I don't think they would mind if I give you a sampling of the topics and titles, just so you can see how the next generation of lawyers is thinking about property, property rights, takings, land use, and environmental law (inter alia). 

Check out these titles:

• The Many Saints of Land Use Law
• The Past, Present, and Future of Richmond Affordable Housing
• What's on the Menu? - The Future of Outdoor Dining and the Tension Between Land Use and Public Health
• Could Monetary Compensation Fully Indemnify Property Owners for Idiosyncratic Values in Takings Cases?
• The Lingering Effects of the Dawes Act on Tribal Land Use
• The Dawn of Debt and Everything Else: An Examination of the Works of Michael Graeber and the Role of Eminent Domain and Property Rights
• Inflation for Land Use Control
• Agritourism in Wine Country: Analysis of Accessory Uses in Napa Valley
• Judicial Exaction of Euclidean Deference Under Koontz
• A Review of Richard Rothstein’s The Color of Law: A Forgotten History of How Our Government Segregated America
• What’s on the Inside Counts: Why Historical Preservation Regulations Should be Allowed to Regulate Interior Landmarks and the Issue of Public Access
• Through the Buchanan Lens: Reframing Virginia Land Use Laws
• The Case for Equal Application of RLUIPA’s Equal Terms Provision
• The Government Giveth, and the Government Taketh Away: Retroactive Application of Inter Partes Review Under the Takings Clause
• The Right to Share: Is Virginia Beach’s Regulation of Short Term Rentals a Taking under the Takings Clause of the Fifth Amendment?
• The laws of nature do not recognize property rights, complicating the Commonwealth of Virginia’s adaptation to climate change
• Looking at Viniculture Through the Glass of Historic Preservation Law, or
  A Brief Wine Advocate
• Is the New York State Canal Corporation the Onceler of Upstate New York?: An Analysis of Town of Pittsford v. Power Authority of New York
• Law and Ownership as Evolving Stories: A Review of Mine!
• Incentive Zoning in New York
• The Tide is High but Norfolk's Holding on: An Analysis of Norfolk's Climate Change Adaptation Strategies and a Review of the Potential Claims in Response
• Flipping the Play: How Localities Can Use the Power of Eminent Domain to Seize Sports Franchises and Finally Stick it to Bob Irsay
• Land Use Control – Is it Important to the Average Joe?
• Re-Evaluating Bennis and Civil Forfeitures Under the Takings Clause
• The Guardian of Every Other Right - A Constitutional History of Property Rights and a Discussion on Tariffs, Redistributionism, and Capitalist Liberty
• Pipelines and Eminent Domain: A Constitutional and Environmental Analysis of Energy Takings
• Paradise Stolen: An Ethical Reexamination of Property Deprivation and the Plight of the Atakapa-Ishak Peoples of Louisiana’s Grand Bayou Indian Village
• A Flood of Pollutants: The Promises and Perils of a Regulatory-Takings Approach to the Right to a Clean Environment

And this is only a sampling.

I don't know about you, but I feel pretty good about this. I will be encouraging several of them to consider beefing up their papers and submitting them for publication.

Citing Locke's Labor Theory, CFC Finds "Property" In Oysters

We like oysters. When we think "oysters," that means going to a restaurant or oyster bar, sitting down, and ordering up a dozen or more. Easy stuff.

But the real work of oyster farming is "arduous, backbreaking work requiring a special dedication." Avenal v. State, 886 So. 2d 1085, 1110 (La. 2004). It "takes a lot of labor effort," is "pretty difficult work," and oyster farmers "have to put in blood, sweat and toil to sometimes turn muddy water bottoms into an area that could be used for oyster cultivation." Planting and harvesting the oysters means even more work. Knowing the effort that goes into delivering up oysters to consumers just makes us appreciate them all the more.

But the last time we reported on a takings case involving oysters, we had to conclude that the court did not like oysters that much. As property, that is. Yes, the Virginia Supreme Court held, oysters are property; but they are not, you know, property (as in "compensable property" - the kind that is protected against takings).

But check out Campo v. United States, No. 20-44 (Dec. 23, 2021), in which the Court of Federal Claims concluded that the plaintiffs' oysters are property of the compensable sort. In the order denying the government's "no property" motion to dismiss for failure to state a claim, the CFC noted the issue:

In his 1690 Second Treatise of Government, John Locke famously noted “the labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property.” Over 300 years later, this case raises the unique legal issue of whether Louisiana oyster growers may claim property rights in the fruits of their labor—oysters.

Slip op. at 1.

The plaintiffs lease submerged lands from the State of Louisiana which they use as oyster beds. In 2019, the Corps of Engineers opened the Bonnet Carré Spillway releasing thousands of cubic feet of fresh water. This fresh water diluted the salinity of the water on the oyster beds. Oysters, you see, "prefer moderate salinities" (brackish water, in other words). See slip op. at 4. In the plaintiffs' oyster beds, oyster mortality rates were up to 100% in some areas. The Louisiana Department of Health ordered several of the oyster areas closed due to low salinity levels.

The oyster farmers brought a claim for a permanent taking against the United States in the CFC. The property claimed to be taken was the oysters and the oyster reefs. The government sought dismissal for failure to state a claim, arguing that the plaintiffs oysters are not "property" protected by the Fifth Amendment. The State of Louisiana owns the waters, the government argued, and the Louisiana Supreme Court (in Avenal v. State, 886 So. 2d 1085 (La. 2004) held that there's no private property in these situations.

The CFC's analysis begins in earnest on page 14. The court acknowledged that in Avenal, the Louisiana Supreme Court held that the oyster farmers could not claim a (Louisiana constitution) taking against the State of Louisiana. But that doesn't mean that oyster farmers have no claim against the federal government for a Fifth Amendment taking. Slip op. at 16 ("In other words, plaintiffs versus the United States is different than plaintiffs versus Louisiana—the Louisiana Supreme Court may hold differently if the United States were defendant instead of the State of Louisiana."). 

The court next dove into the good stuff: a discussion of Louisiana property law and whether the plaintiffs possessed compensable property. The court rejected the government's argument that Louisiana owns the oysters under the State leases. The lease may say so - and that may limit the plaintiffs' property rights - but it doesn't mean they don't have "some property rights in oysters." Slip op. at 22. "It could be that the State of Louisiana has superior property rights but property rights are diverse and lesser rights are still property rights." Id. And like above, the CFC held that property limitations in the lease in favor of the State of Louisiana don't mean that third parties such as the United States are subject to those same property limitations. 
See slip op. at 23-27. The CFC also concluded that under a "traditional" analysis under Louisiana property law, the plaintiffs' rights here look a lot like property:

The government admits plaintiffs have several rights including rights to exclude, destroy, use, possess, sue third parties for damages, recover under larceny, alienate, and enjoy the fruits of selling the oysters. The Court therefore finds plaintiffs have all three essential features of the “bundle of rights” commonly characterized as “property” under Louisiana law. Melancon, 703 F.3d at 269. Accordingly, a traditional property rights analysis confirms plaintiffs have compensable property rights in oysters as against third parties such as the United States under certain circumstances.

Slip op. at 32 (citations and footnote omitted).

Next, the opinion gets to the Locke stuff that you came here for. They key was the government admission that planting the oysters on the state-owned submerged land "takes a lot of labor effort," and "is pretty difficult work" as we noted at the start of htis post. Slip op. at 32. To the court, that signaled that the oysters are just fleshy briny tasty blobs, but represent something more, the fruits (de mer) of the plaintiffs' efforts:

In his Second Treatise of Government, John Locke explains every individual has a property right “in his own person” and in anything he “remove[s] from the common state [of] Nature” and “mixe[s] his labour with.” See Carpenter v. United States, 138 S. Ct. 2206, 2239 (2018) (Thomas, J., dissenting) (citing Second Treatise of Government § 27 (1690)); see also Nollan v. California Coastal Comm’n, 483 U.S. 825, 860 n.10 (1987) (Brennan, J., dissenting) (“By any traditional labor theory of value justification for property rights, for instance, see, e.g., J. Locke, The Second Treatise of Civil Government 15–26 (E. Gough, ed. 1947), Monsanto [in Ruckelshaus v. Monsanto] would have a superior claim, for the chemical formulae which constitute its property only came into being by virtue of Monsanto’s efforts.”). In Carpenter, Justice Thomas discusses “Lockean labor theory,” which is “[t]he philosopher John Locke’s justification of private property, based on the natural right of one’s ownership of one’s own labor, and the right to nature’s common property to the extent that one’s labor can make use of it.” Lockean Labor Theory, Black’s Law Dictionary (11th ed. 2019). Locke states 1 percent of the value of “every thing” “is purely owing to nature” whereas 99 percent of the value is “wholly to be put on the account of labour.” Second Treatise of Government § 40.

Slip op. at 33.

The Fifth Amendment is Lockean, the CFC concluded, and Madison, the drafter, "expressed views consistent with Locke's[.]" Slip op. at 33, 34 ("In his 1792 essay on property, James Madison suggests a broad reading of the Takings Clause stating, just as property cannot be “directly” taken without compensation, neither can the government take property “indirectly” by diminishing the value of property without payment of just compensation. See James Madison, Property (1792)."). 

The government’s suggestion plaintiffs are compensated for “the fruits of [their oyster-growing] effort[s]” in the marketplace, yet plaintiffs lack property rights in the oysters, runs counter to the Lockean foundation of the Fifth Amendment Takings Clause. Plaintiffs fix the water bottoms with cultch, acquire seed oysters, place these seed oysters within their leases, cultivate the oysters, and then harvest the oysters. In the government’s own words, plaintiffs’ “blood, sweat and toil” are mixed with the oysters and this mixture is why plaintiffs are paid when they sell oysters. See Tr. at 132:17–24. These “backbreaking” efforts when “mixed” with the water bottoms, cultch, and seed oysters confirms plaintiffs have quintessential Lockean property rights in the oysters—this mixture is what the Fifth Amendment assumed to be compensable property if taken for public purpose.

Slip op. at 34.

There you have it. Plaintiffs possess a private property interest as that term is set out in the Fifth Amendment, and the government's motion to dismiss failed. This doesn't mean that the plaintiffs have proven that this property was taken by the desalinization of the water, but it does mean that they live to fight another day. And that, as we've noted recently, is a victory in itself.

This is a month ending in "R," so we're going to celebrate by ordering up a dozen.

Opinion and Order, Campo v. United States, No. 20-44 (Fed. Cl. Dec. 23, 2021)

New(ish) Article: "The Realities of Takings Litigation" (Dave Owen)

Another law review article worth reading. This one from lawprof Dave Owen, is about "The Realities of Takings Litigation" (forthcoming BYU Law Review). That title certainly got our attention - any time a law journal article is about 'reality' and takings, and includes empirical research, we're going to read it.

Here's the abstract:

This Article presents an empirical study of takings litigation against the United States. It reviews the cohort of takings cases filed against the federal government between 2000 and 2014, tracing each case from filing through final disposition. The result is a picture of takings litigation that is at odds with much of the conventional wisdom of the field.

That conventional wisdom suggests that most takings cases will involve alleged regulatory takings; that the most intellectually challenging issues will arise within the field of regulatory takings; and, more broadly, that takings litigation will play an important role in the United States’ efforts to balance government regulation against individual liberty. This article instead reveals that most takings litigation against the federal government involves alleged physical takings; that key recurring questions involve the selection of a method of takings analysis and the nature of property rights rather than the nuances of regulatory takings standards; and that takings litigation is only peripherally relevant to relationships between federal regulators and most regulated entities. These findings apply only to takings litigation against the federal government, however; takings litigation against state and local governments was not part of this study.

Even with that significant caveat, these findings demonstrate the need to recalibrate the focus of takings theory and doctrine. At a general level, they call for heightened attention to alleged physical takings. More specifically, they call for more careful policing of the boundaries between methods of takings analysis, for more focus on the types of property rights that should receive takings protection, and for reexamination of the premise that almost all physical takings claims should be subject to categorical analyses.

More here, from SSRN.

Fed Cir Tries To Avoid "Police Power" Takings Exception In Bump Stock Case By (Unsuccessfully) Finessing The Property Interest

As we've said before, you don't need to know much about takings doctrine to understand that a challenge wherein the property alleged to have been taken are "bump stocks" -- devices that allow rapid activation of a semi-automatic rifle such that it roughly imitates a fully-automatic weapon -- to understand that courts may be inherently reluctant to limit the government's authority to regulate their use and ownership even to the point of outlawing it. There's a long judicial history of courts not getting in the way when it comes to the other branches' response to the problem du jour. The judicial reluctance many not be rational, it may not be doctrinally consistent. But, in our view, it just is, and that's something that owners of such property and those of us who seek doctrinal clarity have to take into account.  

Here's the latest in a case we've been following, that in our opinion could be Exhibit "A" proving the notion that courts are unwilling to limit the power of government in these type of situations (where something has become toxic) -- either directly, by curbing its regulatory power or indirectly through the just compensation requirement -- that they put themselves through a lot of analytic twists and turns to avoid doing so. 

In McCutchen v United States, No. 20-1188 (Oct. 1, 2021), the Federal Circuit did what you might expect: it affirmed the Court of Federal Claims' dismissal of the plaintiffs' complaint which seeks just compensation for the taking of their (now-outlawed) bump stocks. We criticized the CFC's rationale that the reason the bump stock ban was not a taking was because it was a valid "police power" safety measure (putting aside for the moment that the feds don't have what you'd call a "police power" of course): the CFC "simply repeated the trope that the ban was a valid exercise of the government's regulatory power (which, we think was not really a question), and thus no taking." As we've noted before, this analysis is very unsatisfying. A takings claim like this doesn't challenge the validity of the ban (Lingle, anyone?), but instead says "if you are going to ban these things, the pubic needs to provide compensation."

The Federal Circuit avoided the CFC's erroneous analysis, claiming to go a different way: "[w]e affirm, but we do so on a threshold ground different from, though related to, the Claims Court’s grounds." Slip op. at 4. That's a good thing, because unlike many courts, some are beginning to get the idea that just because a regulation is imposed for an arguably valid police power reason (or other proper regulatory justification in the case of federal restrictions), does not insulate it from takings review. Indeed it is the first step in the takings analysis not the last. See this Fourth Circuit decision, for example, where the court concluded "[t]hat Government actions taken pursuant to the police power are not per se exempt from the Takings Clause is axiomatic in the Supreme Court’s jurisprudence." Good for the Federal and Fourth Circuits.

So how did the Federal Circuit get to the no-takings result, without going down the same (wrong) path the CFC traveled? It looked at the property interest alleged, and concluded that the owners of bump stocks were already subject to existing federal regulations that prohibit machineguns, and that the new prohibition on bump stocks is simply a new agency interpretation of the long-standing rule.

Congress has banned "machineguns" since 1934, in a statute that also defined what a machinegun is. That definition remained the same until 1986, when Congress amended it to include "any part ... for use in converting a weapon" into a device that shoots more than a single round with a single pull of the trigger. The AG has the authority to promulgate rules and regulations enforcing this provision. And that's what happened here, the Federal Circuit concluded.

The regulations being challenged define a bump stocks as a device or part that allows someone to shoot multiple rounds with a single trigger pull. The court also noted that the AG's interpretation changed over time, and in the past -- between 2008 and 2017 -- had excluded bump stocks from the machinegun definition. See slip op. at 9. But after the Las Vegas massacre in which the shooter used a bump stock, the AG "clarified" that bump stocks are, in the government's view, machineguns. The Federal Circuit focused on this as the key. Thus, this wasn't some new rule outlawing bump stocks, but a "pre-existing law circumstance" (slip op. at 15) -- merely an enforcement of the longstanding prohibition of machineguns.

The court first pointed out it was avoiding the hard question:

We do not reach the grounds on which the Claims Court relied. In particular, we do not decide under what circumstances a measure that newly bars possession of personal property (as opposed to restricting a use of property) and that serves a “police power” purpose (and is constitutionally authorized for the federal government) is not a “taking,” and thus requires no compensation. Nor do we decide whether mandating permanent dispossession by ordering destruction of personal property cannot be a “physical taking,” even if the government-specified alternative to destruction is surrender to the government and the mandate is backed by government remedies of seizure and forfeiture for a willful violation as well as criminal remedies for a knowing violation.

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

To do so, the court engaged in what we see as a clever sleight-of-hand, something that occurs frequently in takings cases by determining the property interest involved never included the right to make the now-barred use: courts frequently avoid addressing the Armstrong principle by narrowing the scope of the property interest claimed to be taken. Here, the Federal Circuit concluded that although the bump stock owners unquestionably possessed property as defined by state law, the longstanding federal regulation of that property was a background principle that inhered in the title to these things. See slip op. at 17 ("And valid preexisting federal-law limitations on what otherwise would be state-law property rights are among the limitations that may inhere in title so as to limit compensable property rights.").

In short, the owners of the bump stocks never had the right to keep and transfer them:

In this case, the federal-law prohibition on possession and transfer, together with a congressional grant of implementation authority, predated the existence, let alone plaintiffs’ possession, of the bump-stock-type devices that plaintiffs were compelled to destroy or surrender. That prohibition is a very specific one, defined in terms of the physical operation of particular devices, not in terms simply of a broadly stated goal. The latter situation raises issues not presented here.

Slip op. at 18 (footnote omitted).

But wait...weren't these things ok before the AG reimagined the regulations to include them in the definition of machinegun? That's where the court got creative. The sleight-of-hand we referred to above starts on pages 18 and 19, where the court rejected what at first glance might have been the property owners' most compelling argument -- that the AG's latest interpretation was a "new" prohibition because in the past it had a differing view of whether bump stocks qualifed as machineguns.

The Federal Circuit was able to avoid that argument by concluding the owners conceded the point when they acknowledged the AG's new interpretation is a "legally valid interpretation of the statutory prohibition[.]" Slip op. at 18. But we're guessing that isn't quite what the owners conceded, as it seems more likely that they merely acknowledged that they were not challenging the validity of the current prohibition, something that Federal Circuit doctrine requires them do in order to bring a takings claim in the CFC. A challenge to the validity of the prohibition is either an APA or a due process challenge, and those belong in a district court not the CFC (where jurisdiction is limited by the Tucker Act to money claims). In short, because of the split jurisdiction between the CFC and the district courts, you cannot raise both a challenge to the validity of the action and a takings claim.

But the court took that concession as also acknowledging the limitation of the challenged regulation on the owner's property rights, which to us seems like bootstrap logic. If the Federal Circuit's approach to the owner's "concession" is universally applied, it would result in a property owner acknowledging the validity of the regulation challenged as a taking as a ticket to the takings claim, but at the same time conceding that the challenged regulation is a background principle, wiping out the claimed property right.

We think the heart of the Federal Circuit's rationale that starts of page 20 of the slip opinion for why the AG was not truly switching gears and implementing a "new" prohibition, but rather was merely returning interpretation of the machinegun prohibition to where it had always been is a real exercise in the metaphysics of Chevron deference. The AG's most recent take on the definition of machinegun might or might not be the "best interpretation" of the statute's meaning, but the statute itself has always been clear, according to the court. See slip op. at 20 ("In either event, the preexisting statute itself, properly understood, barred the possession or transfer at issue. In these circumstances, the bar always limited plaintiffs’ title, and plaintiffs never had a property right against government assertion of the duty to destroy the devices at issue or surrender them.").

Or, the court alternatively concluded, even if the statute was not clear, the owners' property rights were always subject to the government changing its mind on including bump stocks in the definition of machinegun:

For plaintiffs here, the preexisting limitation on their title included subjection to future valid agency interpretations of the possession-and-transfer prohibition (as assumed here) adopted in the exercise of that authority. In these circumstances, plaintiffs had no property interest protected by the compensation requirement of the Takings Clause against such a valid interpretation when adopted.

Slip op. at 21. In short, where a statutory term might be ambiguous (and what statute isn't, we ask?), the owner's property rights must account for the ambiguity by applying Chevron deference. Slip op. at 21 ("By 1986, the Supreme Court’s 1984 decision in Chevron already made clear that the law, for a statute like 18 U.S.C. § 922(o), included the possibility of reasonable resolutions of ambiguities").

Property rights are shaped by Chevron? Holy cow, that's a new one; or perhaps just way of backing into the old claim that property rights are limited by "highly regulated" markets.

Having concluded that the bump stock owners' property interests did not include the right to be free of regulation that might outlaw the property, the court easily concluded that there was no taking. No "property," no need to even evaluate the physical deprivation or even a Penn Central claim.

To us, despite the court's claim to have avoided the CFC's rationale that a valid-police-power-regulation-is-not-a-taking, it pretty much undertakes the same analytical approach. But the Federal Circuit dresses it up better. After all, if the prohibition being challenged is part of the property's "background principles," what is left of the property itself other than the very Hobbesian notion that the state defines an owner's expectations at will? Here, the Federal Circuit endorses that idea when it concluded that despite the AG expressly excluding bump stocks from the definition of machinegun between 2008 and 2017, the AG had also put the owners on notice in the ATF Handbook where it reserved the right to change its mind. See slip op. at 23 ("Nevertheless, classifications are subject to change if later determined to be erroneous or impacted by subsequent changes in the law or regulations"). Here, the law or regulations didn't change, but the circumstances did.

In short, the official word of the the government is good...until it isn't. Proceed at your own risk.

Are we surprised by the result in the Federal Circuit? No. Are we just a little bit disappointed that the court went about it this way? Yeah, just a little.

McCutchen v. United States, No. 20-1188 (Fed. Cir. Oct. 1, 2021)

Cert Petition: Please Stop The Federal Circuit's "determined dismantling of the guarantees of the Takings Clause"

There's a lot going on in this cert petition, recently filed. More fallout from the big auto bailouts. Regulatory vs physical takings. And more.

But what really grabs our attention starts on page 35. There, the petition asserts the property owner's loss in this case is just part of a bigger picture in which the Federal Circuit employs "result-oriented reasoning" in takings cases. Ouch.

The panel's use of result-oriented reasoning, clearly "a Machiavellian, ends-justifies-the-means process[,]" is unconstitutional because it is beyond debate that "the Constitution ... is concerned with means as well as ends.

The exercise of this Court's Rule 10(a) supervisory power is the only obstacle to the Federal Circuit's determined dismantling of the guarantees of the Takings Clause.

The most interesting Question Presented asks the Court to review the Federal Circuit's "but for" requirement -- which imposes a causation test that asks whether the damage to the owner's property would have occurred anyway. In other words, the property owner must show that but for the government's action, the claimed loss of use or value would not have occurred.

If you want to follow along, stay tuned here or track the Court's e-docket.

Petition for a Writ of Certiorari, Mike Finnin Motors, Inc. v. United States, No. 21-233 (Aug. 11, 2021)

Registration Open Now: ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Jan 26-29, 2022, Scottsdale

All the topics you want to know about, presented by top-notch faculty from across the nation. Sessions include:

• Keynote: Do Animals Have Property Rights?
• Did the Supreme Court Signal a New Direction in Property Rights in Cedar Point Nursery?
• Maximizing Relocation Benefits: Understanding the Law and Regulations to Ensure Fairness
• Challenging Public Use: Lessons From a 67-Day Trial
• COVID Takings
• Property Rights as Civil Rights
• Eminent Domain National Update
• Federal Court and the Daubert Challenge: How to Prepare
• How to Position Your Client for the Fallout When Projects Don't Get Built
• Rural Broadband and the Emerging Constitutional Challenges
• Are Precondemnation Entry Statutes Still Valid After Cedar Point Nursery?
• How Condemnor and Property Owners' Counsel Prepare the Battlefield
• How Will the Trillion Dollar Infrastructure Bill Impact Your Practice?
• Ethics
• ...and more, including a full slate of networking and social events!

We've sold out the last few years, so don't miss out. Room block now taking reservations. Registration and agenda information here.

Join us in Scottsdale in January!

Takings Maven Dream Job® (x2): Property Rights Constitutional Litigator at Pacific Legal Foundation

You've got big dreams, you want fame...

If so, here's your chance: two (2!) Takings Maven Dream Jobs® are now available.

Pacific Legal Foundation requesting applications for positions as a Property Rights Constitutional Litigator. Job description includes "You will find and win the next important Supreme Court property rights case."

Oh, have we got your attention now?

You: An entrepreneurial freedom fighter with a passion for, and significant experience in, property rights litigation. You find and win cutting-edge property rights cases across the country. You are a national spokesperson for property rights—you speak at conferences, engage the media, and publish scholarship on property rights. You are a leader who will elevate PLF’s junior attorneys to be the best property rights litigators in the nation. You have demonstrated a dedication to public interest law and property rights throughout your career.

...

You will be a leader in PLF’s Property Rights Practice Group. From Nollan to Koontz to Knick to Cedar Point Nursery, PLF’s property rights litigation is unparalleled. (If you can’t describe these four cases without checking your notes, do not apply!) You will find and win the next important Supreme Court property rights case. Your ideas will help shape PLF strategy by identifying and litigating emerging property rights theories. And you will be recognized as a nationwide leader on property rights: giving speeches, attending conferences, appearing on radio and television, and publishing op-eds and scholarly articles on property rights.

You will also be a key contributor to PLF’s property rights practice group. You will work on teams with junior and senior attorneys, providing your expertise and knowledge and elevating the talent and skill of our attorneys. You will have the latitude to think big and the resources to execute. You will be at the forefront of shaping property rights for all Americans.

In a nutshell, we’re seeking someone who’s passionate about liberty and property rights, someone who is confident and magnanimous, and someone who is a bold and relentless freedom fighter.

Sound good? We made the jump earlier this year, now you can join in the fun.

You love coffee, and as we know, coffee is for closers!

More here, including application information and deadline.

New Takings Complaint: $26 Billion For CDC's Eviction Moratorium

Programming note: as we noted here, we've recently moved our email subscribers to a new service. If you are already subscribed to our email updates you should not need to do anything, except look for the emails coming from Feedblitz, not Feedburner. If you want to sign up for email updates anew, go here. If you experience technical issues, or receive duplicate email notifications, please let me know.

Now back to your regularly scheduled programming...

Check out this Complaint, filed last week which asks the U.S. Court of Federal Claims to award property owners an unspecified amount (noted as $26 billion in the cover sheet) in just compensation for the taking of the plaintiffs' property by the Center for Disease Control's order temporarily halting residential evictions.

The Complaint alleges a physical invasion taking because it precludes "property owners from excluding [tenants] and leasing the rental homes to rent-paying persons, even as the property owners must continue paying taxes, utility payments, employee salaries, maintenance costs, the cost of capital, and other expenses." Complaint at 10. Alternatively, the property owners allege that the CDC order is an "illegal exaction because the CDC exceeded and contravened its statutory and regulatory authority and as a direct result exacted Plaintiffs' private property and property interests[.]" Id. at 2.

The just compensation sought "includes the amount of rental income Plaintiffs would have received in the absence of the physical occupation and taking or exaction of their property ..." Id.

Stay tuned, we'll follow along as this one progresses.

Complaint, Nat'l Apt. Ass'n v. United States, No. 21-1621 (Fed. Cl. July 27, 2021)

Join Us For The 39th Annual ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Jan 26-29, 2022 (Scottsdale, AZ)

All the topics you want to know about, presented by top-notch faculty from across the nation. Sessions include:

• Property Rights as Civil Rights
• Eminent Domain National Update
• Just Relocation: Understanding the Law and Regulations to Ensure Fairness
• Challenging Public Use: Lessons From a 67-Day Trial
• COVID Takings
• Federal Court and the Daubert Challenge: How to Prepare
• Did the Supreme Court Signal a New Direction in Property Rights in Cedar Point Nursery?
• How to Position Your Client for the Fallout When Projects Don't Get Built
• Rural Broadband and the Emerging Constitutional Challenges
• Are Precondemnation Entry Statutes Still Valid After Cedar Point Nursery?
• How Condemnor and Property Owners' Counsel Prepare the Battlefield
• How Will the Trillion Dollar Infrastructure Bill Impact Your Practice?
• Ethics
• ...and more, including a full slate of networking and social events!

We've sold out the last few years, so don't miss out. Room block now taking reservations. Registration and agenda information here.

Join us in Scottsdale in January!

Cedar Point Part V: Help Us Help You

In this post -- the fifth and penultimate post in a series of deeper dives that we're posting about June's U.S. Supreme Court opinion in Cedar Point Nursery v. Hassid, No. 20-107 (June 23, 2021) -- we'll be trying to take some educated guesses about what the decision means for the future.

Here are all of the posts in our Cedar Point series:

• Part I: SCOTUS's Strawberry Letter 23 To Property Rights
• Part II: Common Sense (Keep Out) And Common Law (The Right To Exclude)
• Part III: No, Chicken Little, The Sky Isn't Falling
• Part IV: The Other Opinions
  
• Part V: Help Us Help You
• Part VI: What Others Are Saying

And in case you missed the live webcast on Friday, July 16, 2021 that featured expert analysis of the case, please don't miss listening to the recording of ALI-CLE's "Takings and Eminent Domain After Cedar Point: What Practitioners Need to Know."

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So what to make of Cedar Point beyond its narrowest holding that absent a few exceptional circumstances, any regulation that gives a right of access to someone's land is a "categorical" taking regardless of the duration of the access granted, and that the only issue in these cases is the amount of compensation owed?

One one hand, you might see this case simply and only as clarifying (or sub silentio overruling, take your pick) the physical takings rule of Loretto, which if you were to read that case narrowly limited categorical treatment to "permanent" occupations, and subject less-than-permanent physical access regulations to non-categorical (Penn Central) treatment. Or you might see this as the Court doubling down on the distinction between physical invasions and plain-old regulatory takings. Or maybe an invitation to strike while the property rights iron is hot. 

Our point in this post is to look at these other possible hands. Or at least try and read any tea leaves the majority laid down.

So here are some of the points that get us thinking.

The Property Guy

The biggest point we read between the lines of Chief Justice Roberts' opinion was this: the Chief is solidly the "property guy" on the Court. In addition to Cedar Point, how many of the Court's property or property-related opinions has he authored? Knick. Penn East. Horne II. Murr dissent. Winter. This recent per curiam sure reads a lot like he wrote it, too. Those opinions he didn't author he played a big part in: the fifth vote in Koontz; presumably employing his role as Chief to organize unanimous or nearly unanimous decisions in Arkansas Game, Horne I, Brandt, Hawkes, and Sackett; and joining in very pro-property rights pluralities when there wasn't a majority. (Did we miss any?)

Yes, he was counsel for the government in Tahoe-Sierra (which held that a long-term moratorium on development is not a categorical taking), but that was in his role as advocate. And as we know, a lawyer's position when serving as counsel may not necessarily be the lawyer's own views. We read the Cedar Point majority opinion's nine positive Tahoe-Sierra citations not as a sign that CJ Roberts doesn't understand his his own earlier handiwork, but more as a signal that we shouldn't hold out his role as the advocate in that case as a sign he's a police power hawk or a takings dove. Indeed, if you were to not already know that Tahoe-Sierra was decided against the property owner, the Cedar Point majority opinion would not clue you in to that fact because it cites the case very positively -- you'd think the owner won that one.

We think a more likely signal comes from his time as a clerk for then-Associate Justice Rehnquist, author of the Kaiser Aetna opinion that plays such a large role in the Cedar Point rationale. Rehnquist was also on the unanimous Pruneyard Court -- and if we're reading the timeline correctly, young Mr. Roberts was one of his clerks during consideration of that case. [Barista's edit: lawprof Josh Blackman sent us a note with the correct timeline: "Roberts clerked for Rehnquist starting in OT 1980--a few months after Pruneyard was decided."] We're guessing that he is in sync with Justice Rehnquist's property sensibilities more than his own Tahoe-Sierra advocacy.

As an exercise, you might compare the style of the Kaiser Aetna opinion (Rehnquist) with Cedar Point (Roberts). We get a lot of the same vibe. To us, the opinions are similar enough that they could have been written by the same author if you didn't know better: the centrality of the right to exclude with a nod to local property law, but not a sole reliance on it; owners' reliance interests in property as a set of shared cultural understandings; and the eschewing of an overly technical labeling of these rights. Read them side-by-side and see if you don't agree.

In sum, despite a lot of criticism of the Chief in conservative circles because he goes wobbly on a lot of those issues, there's little question in our mind that he's the solid center of gravity on the Court for property rights. Convince him, and you will very likely carry the day. (Remember that as you frame the issues in your case, brothers and sisters.)

Help Us Help You

That takes us to our second point, which is related.

After a string of love-fest decisions in which the Court issued unanimous or near-unanimous opinions (many think in a reaction to the calls for expansion of the Court), what was the first case in which we might say that the Court broke the string and split along the "usual" conservative/liberal lines and the headlines could tell us about a "sharply divided" Court? That's right, Cedar Point. Do we think it was merely coincidence that a takings case was the one in which the Court's solid public front got put aside (albeit gently - see, e.g., the majority's and dissent's "you the man" nods to each other's analytical chops). No we don't.

Now maybe we're reading too much into the fact that a property rights case was selected as the one where everyone went back to their own hill, but hear us out: we think Cedar Point sends up a clear flag that the majority might not be overly excited about considering many of the headline-grabbing hot-button political and social issues, but may be receptive to more on the property front.

What drives our conclusion?

First, Cedar Point starts off with a strong reaffirmation of the essential nature of property rights. See slip op. at 5 (which cites "the Founders" including John Adams). The Justices might not feel institutionally equipped to resolve politically-charged social issues, but property rights may be a whole different story because property questions are firmly rooted in common law lawyering, a topic that the Justices seem very comfortable speaking with expertise about. Next, the majority continued by with pooh-poohing the core argument against a broader scope of regulatory takings (that any restrictions on property rights that are a result of regulations must be analyzed under Penn Central), and concluded that the result is more important than the method. See slip op. at 7. Finally, the majority shifted the focus when a regulation regulates property's use to the point that it "appropriates" the right to exclude (or other fundamental property right), from whether there's been a taking to the amount of compensation owed, a point the property rights bar has been emphasizing for a long time. See slip op. at 11 ("The duration of an appropriation—just like the size of an appropriation ... bears only on the amount of compensation.").

We're also taking as a good sign that six Justices signed on to the Cedar Point opinion although a couple of them have been property rights ciphers so far. There's no question in our view that Cedar Point takes a bold, confident stance on property rights at a time that the Court and its members are under extreme scrutiny and could just have easily adopted a Tahoe-Sierra-ish analysis of less-than-permanent invasions. But they didn't and instead went big. So even though Cedar Point may be a good example of Chief Justice Roberts' usual incremental approach, we're taking it as a big hint that the Court wouldn't mind the opportunity to look at a lot of takings stuff with fresh eyes. Bring us cases. "Show us the pure joy of the game" (to paraphrase Jerry Maguire). Go big or go home. Help us help you. 

And if we're completely off base about this, we think that if nothing else the solid majority in Cedar Point does offer a lot of intriguing possibilities about takings and property due process cases in the next few years, whichever way they cut.

More than the "Just Compensation" Clause

Next, Cedar Point confirmed for us something we've contended for a long time: that the Fifth Amendment is not just the "Just Compensation" clause, and that declaratory and injunctive relief are available remedies for "takings" issues. In Cedar Point, the property owner did not ask for just compensation, but only "declaratory and injunctive relief prohibiting the Board from enforcing the regulation against them." Slip op. at 3. Just comp may be the usual remedy in these cases, but it isn't the only remedy.

In our thinking, this should spur us all to go back and look at a few issues. First, the jurisdiction of the federal courts to hear takings claims against the federal government, and whether they belong exclusively in the Court of Federal Claims. Second, the same issue with respect to takings claims against state governments in federal court. The real party in interest in Cedar Point, after all, was the State of California, notwithstanding the Eleventh Amendment. And finally, whether more regulation may be subject to takings challenges because the relief sought isn't limited to a massive just compensation judgment (thus taking out of contention many cases that may not present be ones the owner can convince a lawyer to undertake), but includes a remedy that puts the onus where it should be: on the government asking itself not simply whether a regulation is a good thing, but thinking about whether it wants to pay for it. 

State law isn't the be-all-end-all of "property"

In light of Cedar Point's "common sense" and "intuitive" approach to defining private property in the Fifth and Fourteenth Amendments and its re-emphasis of background principles of nuisance law, we think that there's going to be a renewed focus on what it means to own property, and more fundamentally, where that debate takes place (in state courts, state legislatures, or elsewhere). Cedar Point rejected the argument that state law alone defines "property," and can with the stroke of a pen "manipulate" certain concepts inherent in the notion of the Court’s conception of what it means to own private property.

And don't get too hung up on labels the Court cautioned, and we think this governs not only "regulatory takings," but the definition of property itself. See slip op. at 6 ("But that label can mislead."). Formalities may count for a lot in the law (and in property law specifically), but just as we don't require livery of seisin in order to convey real property any longer, the Court isn't going to be hidebound to how a state defines or redefines property if doing so undermines traditional "sticks" the majority see as fundamental.

Next up, Part VI (the final post in this series), in which we'll check out what others are saying about the case, and post up some of the many commentaries that have been written about Cedar Point.

Cedar Point Nursery v. Hassid, No. 20-107 (U.S. June 23, 2021)

Fed Cir: No Judicial Taking When CA11 Dismissed Tort Claims

Today's case: a short per curiam opinion from the Federal Circuit, Straw v. United States, No. 21-1596 (July 14, 2021).

The court affirmed the Court of Federal Claims' dismissal of a takings claim that alleged that the plaintiff's property was taken when the Eleventh Circuit affirmed a district court's dismissal of the plaintiff's Federal Tort Claims Act claim for missing the statute of limitations deadline. 

You know it wasn't going to go well for the plaintiff when the court's analysis (slip op. at 3) begins with this: "This appeal is frivolous." The CFC takings claim was merely a "collateral attack" on the district court's judgment, the court concluded. "Because Mr. Straw’s takings claim depends on him challenging the Georgia district court’s decision—which is final and preclusive—the Claims Court correctly held that it cannot grant the relief he seeks." Slip op. at 4.

Besides, this isn't really a takings claim, but a tort claim outside the jurisdiction of the CFC:

Mr. Straw contends that a claim of a taking of property without just compensation is cognizable even if the alleged taking is effected by judicial branch officers. The extent to which the Takings Clause of the Fifth Amendment applies to the actions of courts has been the subject of debate. Compare Stop the Beach Renourishment, Inc. v. Fla. Dep’t of Env’t Prot., 560 U.S. 702, 713–15 (opinion of Scalia, J.), with id. at 733–42 (opinion of Kennedy, J.). But even accepting that the prohibition against taking property without just compensation applies to courts in the same manner that it does to other governmental entities, there is no force to Mr. Straw’s argument that a party can characterize an adverse judicial decision in a tort case as a taking of a “chose in action” and seek “compensation” for that taking through an action in the Court of Federal Claims.

At bottom, Mr. Straw’s takings theory is based on the assertion that when a court errs in denying a plaintiff relief in a tort case, it effectively “takes” his cause of action and his entitlement to relief. Under that logic, all cases sounding in tort in which a plaintiff is denied relief could be re-cast as Takings Clause claims and re-presented to the Claims Court, notwithstanding the prohibition in the Tucker Act against the Claims Court exercising jurisdiction over tort claims. Not surprisingly, Mr. Straw cites no authority in support of that theory of recovery.

Slip op. at 5-6.

Which just reinforces our thinking that situations in which a judicial takings claim is viable are both rare and limited.  

Straw v. United States, No. 21-1596 (Fed. Cir. July 14, 2021) (per curiam)

New(ish) Cert Petition: Kish, Scrap, And Slag Takings From Environmental Remediation

Here's the latest in a case we've been following. It's not exactly a "new" cert petition, but one which we missed when it was filed back in February.

This one comes up via the Court of Federal Claims and the Federal Circuit, with the latter vacating the CFC's award of partial compensation, concluding that the petitioner did not have a compensable property interest in the entire property it alleged was taken.

The petitioner bought some of a steel mill's assets in bankruptcy. Those assets included piles of some of what is known as slag, scrap, and kish. EPA later determined that the piles were leaching contaminants. And you know what that means: remediation. EPA reduced the size of some of the piles and left others in place. The owner sued for a taking of the kish, slag, and scrap the EPA recovered from the site. 

After trial, the Court of Federal Claims concluded that EPA's remediation resulted in a taking, but only of the slag, and not the kish or scrap. The owner appealed the failure to award comp for the kish and scrap, and the US appealed the takings judgment.

The Federal Circuit concluded that the owner should have received nothing for the slag taking, and vacated the award of compensation. The owner did not have a compensable property interest in the entire pile of slag. In its contract to buy the steel mill's assets, the owner purchased 420,000 cubic yards of slag. And even after the EPA took some of it, it left more than 420k cubic yards in the pile. And there was no impediment to the owner using whatever slag remains. In short, the owner bargained for 420k cy of slag, and it still has 420k cy of slag. The Federal Circuit also rejected the owner's argument that after having determined the EPA took the kish and scrap, the CFC "was duty-bound to fashion an appropriate damage award." No, the court concluded, a trial court "is not obligated to fashion its own award when a plaintiff has not provided evidence sufficient to determine just compensation with reasonable certainty."

Here are the Questions Presented:

I.  Whether this Court should fill a statutory and jurisprudential void in Tucker Act inverse condemnation "takings" law to resolve the obvious constitutional dilemma that confronted the Court of Federal Claims below, where the court found that the Environmental Protection Agency took Petitioner's property and sold some of it for $13.5 million, made no offer of compensation whatsoever, forced Petitioner to incur a decade of expense litigating against the government's ferocious effort to avoid payment, and at trial the court found a compensable per se taking, but the court simply set aside the constitutional requirement of just compensation under the Fifth Amendment's Takings Clause and awarded nothing, on the basis that Petitioner's evidence failed to prove a precise value of the property with "reasonable certainty".

II.  Whether the Federal Circuit committed clear constitutional error where it ignored the conduct constituting the taking of Petitioner's slag, impermissibly set aside the trial court's fact findings underlying its conclusion that a taking of slag had occurred, and improperly substituted its own de novo findings of fact that themselves were contrary to the record, all in order to disturb the Court of Federal Claims' determination that the government did commit a compensable taking of Petitioner's slag and violated the Takings Clause by failing to pay for it?

Here are the briefs:

• Cert petition
• USA's BIO
• Property owner's Reply

Conference is set for June 17, 2021, so stay tuned.

Fed Cir (unpub.): Feds Not Liable For Taking When Wyld Stallyns Drink Your Milkshake

OK, we get that law is a serious business and that one should never make light of others' situations. Each person's claim is important to them, at the very least.

But after reading today's Federal Circuit opinion (unpublished, nonprecedential) in Bench Creek Ranch, LLC v. United States, No. 20-2151 (May 7, 2021), we couldn't help but make a couple of lighthearted movie references.

First, the above clip from one of the "Bill and Ted" movies is there because the Bench Creek case alleged that the feds are liable for a taking due to its failure to prevent wild horses from invading their land where they drank Bench Creek's water.

Bench Creek alleged in its complaint that, after a wildfire in July 2017, hundreds of wild horses on federal lands—owned by the United States and managed by the Bureau of Land Management—drank water that belonged to Bench Creek under a permit the Bureau issued to Bench Creek for grazing livestock on the lands at issue. Bench Creek alleged that the Bureau’s failure to manage the wild horses resulted in a taking of its property without just compensation, in violation of the Takings Clause of the Fifth Amendment to the United States Constitution.

Slip op. at 1. In case you aren't a fan of the Bill and Ted trilogy, their band is "Wyld Stallyns." That's it.

Second, the horses were drinking plaintiff's water, which triggered in us the other reference in this post's title, Daniel Day-Lewis's over the top "I drink your milkshake" scene in "Let There Be Blood." We've always viewed that scene through the lens of eminent domain (naturally).

Back to the opinion. It actually addresses an issue that is worthy of attention. Might the government be liable for a taking if instead of affirmative action it has failed to do something? Some courts say yes (sometimes), other courts, like the Federal Circuit, say categorically no.

Here, the answer is no (same as it ever was), the feds are not liable for wild horses drinking plaintiff's milkshake water. Just like feral cats, we suppose.

On that note, enjoy the weekend and be excellent to each other!

Bench Creek Ranch, LLC v. United States, No. 20-2151 (Fed. Cir. May 7, 2021) (unpub.)

Fed Cir: FCC Giving Isn't A Taking - Don't Disguise Your Challenge To Reduction In Subsidies As A Takings Case

Go read the Federal Circuit's opinion in Sandwich Isles Communications, Inc. v. United States, No. 20-1446 (Apr. 1, 2021), especially the very-dense fact section. There's a lot there: acronyms, bureaucracy-speak, family-insider politician dealings, tax fraud convictions, and the like. So what's a case like this doing in the Court of Federal Claims and the Federal Circuit, which (for our purposes) deals with takings claims against the United States?

Skip forward to page 7, where we get to the heart of the plaintiff's complaint:

In January 2019, SIC filed this suit in the Claims Court, alleging that the cumulative effect of the FCC’s reductions in SIC’s federal subsidies resulted in a taking of property without just compensation.

Slip op. at 7 (footnote omitted).

Yes, you read that right: this was a violation of the Givings Clause.

Consequently, the CFC dismissed the complaint for lack of subject matter jurisdiction. First, because this really sought review of the FCC's actions (and you know you don't go to the CFC for that kind of review, you go to the court of appeals. Second, because there's no property interest "in receiving support payments from FCC-administered funds." Slip op. at 8.

The Federal Circuit affirmed. You can't bring a Tucker Act claim (a "gap filler" as the court noted) when Congress has otherwise provided a comprehensive, detailed statute that provides its own remedies. The Federal Communications Act is one of those latter types. Comprehensive. Detailed. With a specific judicial review provision. The question the Federal Circuit resolved was whether in the Communications Act, Congress intended to withdraw Tucker Act jurisdiction. Yes, the court concluded (and it wasn't a new issue). In a recent 2018 decision, the Federal Circuit held that the Communications Act did just that. Examining the "true nature" of the plaintiff's claim, the court concluded that it really just seeks review of the FCC's order:

In analyzing whether subsection 402(a) applies, we “must look to the true nature of [the plaintiff’s] claim, not how plaintiff characterize[s] it.” Folden, 379 F.3d at 1359 n.13. Here, SIC’s takings claim is based on its disagreement with FCC decisions regarding the amount of subsidies SIC could receive from the USF and NECA pools. SIC also takes issue with the FCC’s 2013 order, which denied SIC’s petition for waiver of the $250 per-line, per-month cap on high-cost universal service support. These allegations take aim at FCC orders and seek to “enjoin, set aside, annul, or suspend” them. See 47 U.S.C. § 402(a). Because SIC’s takings claim challenges FCC actions and orders governed by 47 U.S.C. § 402(a), the statutory scheme set forth in the Communications Act displaces the Claims Court’s Tucker Act jurisdiction.

Slip op. at 14-15. No we didn't, the plaintiff asserted, "this is a takings case, not a challenge to the order."

Sorry, no deal held the court. The claim "is premised on [the plaintiff's] disagreement with the amount of subsidy funding it has received from the FCC-administered funds[.]" Slip op. at 15. Go take it up -- including your takings claim -- with the FCC as the statute requires.

SIC also maintains that it could not have raised its takings claim as a challenge to any FCC order because “a takings claim asserted in an appeal from the FCC’s order would be unripe.” Appellant’s Br. 12–13. At the same time, however, SIC alleges that “a confiscatory rate takings claim is ripe when its impacts are known” and the “impacts of the FCC’s 2011 rates have been fully manifested.” Id. ready ripe when SIC filed its 2015 petition.” Id. SIC’s ripeness allegations, which seem to be a moving target, miss the mark. The fact remains that SIC has not raised its takings claim before the FCC, which it was required to do be-fore seeking judicial review. See Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 194–95 (1985) (“[A] claim that the application of government regulations effects a taking of a property interest is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue.”), overruled on other grounds by Knick v. Twp. of Scott, 139 S. Ct. 2162, 2179 (2019).

Slip op. at 15-16.

What about the CFC's alternative basis for dismissal, the conclusion that the plaintiff does not possess a property interest in a government subsidy? No analysis from the Federal Circuit, other than "[w]e have considered SIC's remaining arguments and find them unpersuasive." Slip op. at 17.

There's a lesson this case teaches: takings claims are takings claims, and not a desperate last-line-of-defense solution to every legal problem.

Sandwich Isles Communications, Inc. v. United States, No. 20-1446 (Fed. Cir. Apr. 1, 2021)

Fed Cir: No Taking Because Plaintiff Can't Prove Ownership Of Afghanistan Property Army Used For Combat Base

A landowner in Afghanistan sued the United States for taking land he allegedly owned for use as a combat base.

Prove you own this land, the Government responded. The first step to doing that is to attach to the complaint documents that make out a prima facie case of ownership. Otherwise, dismissal for failure to state a takings claim (no plausible allegation that the plaintiff owned "property"). 

The plaintiff complied with the Court of Federal Claims' order for more definite statement and attached to his complaint documents he said showed he owned the property which the U.S. Army used to build Combat Outpost Millett. The CFC concluded these were not good enough under Afghanistan law (specifically, something called the "Law of Land Management Affairs," which the court noted was "revised by the Taliban in 2000 and by the Afghan government in 2008[.]" This law looks for formal registration, which none of the three documents provided by the plaintiff were (they were more about informal customary ownership). 

In Sharifi v. United States, No. 19-2382 (Feb. 10, 2021), the Federal Circuit affirmed the dismissal. The court noted that the applicable "independent source" of law recognizing the alleged property right here is the law of Afghanistan. Slip op. at 10. Under Afghan law, "seven types of documents may serve as proof of land ownership[.]" Id. And because none of the three documents the plaintiff attached to the complaint were of these types, "[w]e therefore find Sharifi’s factual allegations about these records insufficient to show he or his grandfather had a cognizable property interest under Afghan law in the allegedly taken land." Slip op. at 10-11.

In short, the court rejected the plaintiff's claim that Afghan law recognizes customary or equitable title in the land. No property alleged, no taking possible.

Sharifi v. United States, No. 19-2382 (Fed. Cir. Feb. 10, 2021)

Still Time To Join Us: ALI-CLE Eminent Domain & Land Valuation Litigation Conference (Online!) This Thursday & Friday. Tuition Deals! #EminentDomain2021

Yes, it starts tomorrow, Thursday, January 28, 2021, but we're "remote" this year, so it is not too late to register to join us for the 38th Annual ALI-CLE Eminent Domain & Land Valuation Litigation Conference. This is the "big one" where the nation's best practitioners, scholars, jurists, and other industry professionals gather to talk shop about the subjects we know and love.

Details here (ALI-CLE's page with faculty, agenda, and times), or here (a recent episode of Clint Schumacher's Eminent Domain Podcast, where we preview the Conference). Here's your chance to be a part of what is the best conference on these topics.

We have set it up to take advantage of the remote format, and tuition has been reduced (thank you to ALI-CLE for recognizing this, and for our sponsors for being so generous). We're seeing a lot of first-time registrations, and this is a great opportunity to give us a test drive if you've always thought about attending, but never wanted to spend 4 days away from the office to do so.

A long-timer coming back? Look for the special deal which includes a discount on the 2022 conference.

We're having programs with intriguing subjects such as "Planning to Win: Practical Strategies for a Successful Inverse Condemnation Case," "How Do I Keep My Firm’s Doors Open When the Courthouse Doors Are Closed? Making Your Practice More Efficient When You Can’t Try Cases," "Where Is the Supreme Court Headed on Takings Cases? Regulatory Takings Update and Cedar Point Preview," "No Show and All Tell: Breaking News in Property Rights and Takings," "More Than the Fifth Amendment: Other Tools for Upholding Property Rights," and "Evaluating Lockdown, Moratorium, and Emergency Claims."

Your 2021 ALI-CLE Eminent Domain & Land Valuation Litigation Conference (Jan 28-29, Remote) BINGO Card

If you "get" this, you should be registered for the 38th Annual Eminent Domain & Land Valuation Litigation Conference, to be held remotely on Thursday and Friday, January 28-29, 2021.

The list is growing rapidly, and you need to join us!

This is the "big one" where the nation's best practitioners, scholars, jurists, and other industry professionals gather to talk shop about the subjects we know and love. We're having programs with intriguing subjects such as "Planning to Win: Practical Strategies for a Successful Inverse Condemnation Case," "How Do I Keep My Firm’s Doors Open When the Courthouse Doors Are Closed? Making Your Practice More Efficient When You Can’t Try Cases," "Where Is the Supreme Court Headed on Takings Cases? Regulatory Takings Update and Cedar Point Preview," "No Show and All Tell: Breaking News in Property Rights and Takings," "More Than the Fifth Amendment: Other Tools for Upholding Property Rights," and "Evaluating Lockdown, Moratorium, and Emergency Claims."

Details here (ALI-CLE's page with faculty, agenda, and times), or here (the latest episode of Clint Schumacher's Eminent Domain Podcast, where we preview the Conference). Here's your chance to be a part of what is the best conference on these topics.

Always wanted to join in, but didn't like the travel? Here's your chance to try us out with reduced tuition. A long-timer coming back? Look for the special deal which includes a discount on the 2022 conference.

Eminent Domain Podcast's Preview Of The Upcoming ALI-CLE Eminent Domain & Land Valuation Litigation Conference

Our thanks to Clint Schumacher for having us on his program to talk about the upcoming Conference. We're "remote" this year, but that means a different approach to our presentations (and a very modest tuition!).

We're having programs with intriguing subjects such as "Planning to Win: Practical Strategies for a Successful Inverse Condemnation Case," "How Do I Keep My Firm’s Doors Open When the Courthouse Doors Are Closed? Making Your Practice More Efficient When You Can’t Try Cases," "Where Is the Supreme Court Headed on Takings Cases? Regulatory Takings Update and Cedar Point Preview," "No Show and All Tell: Breaking News in Property Rights and Takings," "More Than the Fifth Amendment: Other Tools for Upholding Property Rights," "Evaluating Lockdown, Moratorium, and Emergency Claims," and more (including Ethics for those of you in MCLE jurisdictions). We'll have a post with more details. 

Register now!

Fed Cir: No Taking, Because Oregon Property Law Is Clear (But Is It?)

A short (unpublished) one from the Federal Circuit, Albright v. United States, No. 19-2078 (Dec. 1, 2020).

This rails-to-trails takings case turned on the predicate question: do the plaintiffs own private property? That question turned on the lex loci, and whether, under Oregon law, the original right-of-way conveyance meant to grant to the railroad an easement or a fee simple interest. 

Thus, the opinion naturally relies solely on Oregon's property law: if the grant was for a limited purpose ("right of way" or "railroad"), then it was an easement; if the grant did not specify the use or was otherwise unlimited, it was a conveyance of fee simple. That was enough for the federal court:

In addition, none of the deeds provide for a reverter or otherwise contain language limiting the use that the grantee could make of the land. To the contrary, each of the deeds purport to convey land to the grantee and “to its successors and assigns forever.”

. . . .

In sum, like the granting clause at issue in Bouche, the granting clauses in all the deeds at issue here plainly purport to convey real property. And the deeds state that the property is conveyed to the grantee and its successors and assigns “forever.” The granting clauses do not purport to convey an easement, a right of way, or something else that would indicate an intent to convey an easement, such as property for specific purposes like the deed at issue in Bernards. Nor do the deeds provide for reverter or otherwise limit the uses the grantee can make of the land. These observations strongly support the conclusion that the deeds transferred fee simple absolute title to the land. See Bouche, 293 P.2d at 209–10; Bernards, 248 P.2d at 342–44.

Slip op. at 13-14 (footnotes omitted).

The only question we really have is would an Oregon court have a different view? We're guessing that Oregon property law isn't as cut-and-dried as four federal judges (none of whom were lawyers in Oregon) believe it to be.

Albright v. United States, No. 19-2078 (Fed. Cir. Dec. 1, 2020) (unpub.)

Your 2020 Brigham-Kanner Property Rights Conference Bingo Card

There's Still Room: Join Us For The 17th Annual Brigham-Kanner Property Rights Conference (Online, Free!)

Although it is set to launch this Friday, October 2, 2020, there's still more than enough time to register (and room at the inn) for you to join us for the 17th Annual Brigham-Kanner Property Rights Conference at the William and Mary Law School.

Like everything else this season, the Conference is online (register here), and although we would have preferred to gather in-person of course, the online format has some advantages: the number of attendees isn't limited by the classroom size (this year's registrations are at record levels), you don't need to travel to Williamsburg, and the Conference is free if you don't want Virginia CLE credit for attending. What a deal.

In our opinion, this is the best legal academy/practicing bar conference on property law. This year, the Conference honors the Brigham-Kanner Prizewinner, Harvard Law School Professor Henry Smith.

Here are the panel topics (complete program agenda here):

• Where Theory Meets Practice: A Tribute to Professor Henry E. Smith Recipient, 2020 Brigham-Kanner Property Rights Prize
• The Housing Crisis
• Roundtable: Emerging Issues in Takings and Eminent Domain Law
• The Reach of Government’s Confiscatory Powers Over Exigencies and Emergencies
• The Risk of Unjust Compensation

Speakers include Professor Smith and past Prize winners, prominent members of the practicing property bar, and property scholars. The complete list is posted here.

Come, join us without even leaving home (or the office)! Register here. Did we mention the tuition is FREE?

Considered In Today's SCOTUS Conference: What Triggers The Takings Statute Of Limitations?

Today, the U.S. Supreme Court is considering our cert petition during the Court's "long conference."

This is the case focusing on the interplay between Williamson County's "final decision" ripeness rule and the "case and controversy" injury-in-fact standing requirement, and asks: if the government makes its final decision, but the plaintiff isn't injured until later, has there been an actionable taking? 

Often, the date on which the government ripens a takings claim by making the final decision to apply the regulation to the plaintiff's property, and the date on which the plaintiff's property rights are actually affected are the same. But here, the two key events happened on different dates. The feds allege they made their final decision to jettison in the GM bankruptcy the plaintiffs' tort and related claims on July 1, 2009. The Federal Circuit accepted the government's assertion that final decision occurred when it uploaded its proposed order to the bankruptcy court.  The Federal Circuit held that this was the date that plaintiffs' property was taken,and thus the date that the statute of limitations clock started ticking.

The Federal Circuit, however, rejected the plaintiffs' assertion that their property rights were not actually injured in a concrete way until July 10, 2010, and even though a taking may be prudentially ripe under Williamson County, federal courts also require a plaintiff with standing. That is, a party who has suffered a concrete injury-in-fact. 

Here is the Question Presented:

The Federal Circuit concluded that “[i]n the case of a regulatory taking, ... the taking may occur before the effect of the regulatory action is felt.” It held that the  Government’s “final decision”—its submission of a proposed order to the bankruptcy court for approval—was an actionable taking. Consequently, the statute of limitations clock started ticking even “before ... the actual damage to the property interest [was] entirely determinable.” The question presented is:

Does the Tucker Act’s statute of limitations for a regulatory takings claim accrue when the Government makes a final decision, or when the plaintiff’s property rights are actually injured-in-fact as a result of that decision?

Here are all of the set of cert-stage briefs.

• Cert petition
• USA's BIO
• Petitioners' Reply
• Center for Auto Safety's Amicus

Stay tuned here, or follow along on the Court's docket. We'll let you know if we strike lightning.

Reply to Brief in Opposition, Campbell v. United States, No. 19-1252 (Aug. 25, 2020)

Motion to File as Amicus Curiae and Brief of Amicus Curiae Center for Auto Safety, Campbell v. United State...

Complaint (N.D. Ga.): CDC Eviction Moratorium Is Unconstitutional (No Takings Claim, However)

Well, that didn't take long: as we surmised back when the CDC first issued its order halting residential evictions until the end of the year due to COVID (see "How Can? U.S. DHS: National Eviction Moratorium (Roscoe Filburn Could Not Be Reached For Comment)," the order has resulted in a complaint in the U.S. District Court for the Northern District of Georgia that alleges the order is unconstitutional.

No takings claim (not the right court to raise a just comp claim), but there's a lot "there," so to speak: admin law (CDC exceeded its authority), violation of the right of court access, Supremacy Clause, Tenth Amendment, anti-commandeering, this is an invalid exercise of legislative power under Article I.

No takings claim, but read the complaint anyway.  

Complaint, Brown v. Azar, No. 1:20-cv-03702 (N.D. Ga. Sep. 8, 2020)

How Can? U.S. DHS: National Eviction Moratorium (Roscoe Filburn Could Not Be Reached For Comment)

In Hawaii we employ a phrase, "how can?" as a shorthand response when you're wondering how something can be. It's easy, short, and more efficient than saying "I'm sorry, I don't understand how you think you can accomplish this."

Thus, "how can?" was our first response when the U.S. Department of Health and Human Services' recently-released agency order establishing a covid response nationwide residential eviction moratorium crossed our desk yesterday. By what authority does the federal government purport to dictate (yes, we're going to use that word) whether state and local governments (and state courts) allow evictions for not paying rent? We thought that property law was one of those local things?

Just as we were about to dive in, our friend and colleague Tony Della Pelle produced an analysis more cogent than "how can?" In "COVID Eviction Freezes - Who Is Supposed To Pay?," Tony asks, "Did the CDC have the authority to issue a sweeping order that affects all Americans in private contractual relationships concerning their rental of housing?" Good question (and again, more eloquent than our "how can?").

We don't have much to add, and we suggest you read Tony's post. Or this from the New York Times with the details of how this national eviction moratorium is supposed to work ("U.S. Orders Eviction Moratorium for Most Through Year's End"). But we will try to add one thing. The order responds to our "how can?" question with this:

The authority for this Order is Section 361 of the Public Health Service Act (42 U.S.C. 264) and 42 CFR 70.2.

Order at 37. So what is this Section 361 authority? Here's what section (a) says:

(a) Promulgation and enforcement by Surgeon General

The Surgeon General, with the approval of the Secretary, is authorized to make and enforce such regulations as in his judgment are necessary to prevent the introduction, transmission, or spread of communicable diseases from foreign countries into the States or possessions, or from one State or possession into any other State or possession. For purposes of carrying out and enforcing such regulations, the Surgeon General may provide for such inspection, fumigation, disinfection, sanitation, pest extermination, destruction of animals or articles found to be so infected or contaminated as to be sources of dangerous infection to human beings, and other measures, as in his judgment may be necessary.

Hmm. There's no federal "police power" to regulate in the interest of health, safety, welfare, or morals, but as we know, federal power, although supposedly limited, is pretty wide-ranging. Just ask Farmer Filburn about his locally-grown wheat. Is this an exercise of commerce power, tax, defense, or something that is "necessary and proper" in the furtherance of some enumerated federal power, or something else? We guess if the national government can order you to buy insurance, it can prevent owners from seeking to evict tenants for nonpayment in rent? 

And what might this mean? To us, this raises a few points:

• Even if the feds have the authority to do this, state and local governments may be breathing a sigh of relief: thanks to this order, the feds have just stepped up to be the defendant in takings lawsuits and to be on the financial hook for any judgments for eviction moratoria (at least in those jurisdictions that have not adopted more protective restrictions).
• State and local judges, as well as U.S. District Court and regional Courts of Appeals judges might also be silently thanking the DHS. The big money takings lawsuits may no longer be filed in those courts, but in the Court of Federal Claims (with appeals to the Federal Circuit). Bone up on your federal takings law, folks.
• Tahoe-Sierra's rationale really needs a revisit. Can we really say that these restrictions are "temporary," or that the right to collect rent from the defaulting tenants after the motatoria are lifted isn't more illusory than real?

More to come, for sure. Stay tuned.

Dep't of Health and Human Services, Temporary Halt in Residential Evictions to Prevent the Further Spread o...

Breaking: News About The 2021 ALI-CLE Eminent Domain & Land Valuation Litigation Conference (Jan. 28-29, 2021)

News just in: we've just received confirmation that the Conference will not be in-person in Scottsdale in January 2021, and we're going online.

Not a big surprise, but still a bit disappointing, and it's a shame that the circumstances won’t allow us to meet in-person to talk shop and to renew our friendships like we do every year. 

But rest assured we're making lemonade out of these lemons, and we'd appreciate everyone holding the dates on your calendars to join your colleagues from across the nation for the online Conference. And no, we're not going to do two-and-a-half-days remotely, we're paring down the agenda and will be focusing on hot topics, and great presenters. The remote format has some advantages, and we’re taking advantage of the circumstances to plan a conference more interactive and a bit different than usual.

This will also be a great program for first-time Conference participants. If you haven't taken the dive and joined us in the past because you could not spend the time away or the costs of attending in-person kept you away, this will be your chance to see what we're all about and get a taste of what you've been missing, so you can join us when we reconvene in-person in 2022. 

Stay tuned for more details, to be released shortly! 

Fed Cir: No Taking For Invalidating Patent By Inter Partes Review (But You Knew That Already)

Reading through the Federal Circuit's opinion in Christy, Inc. v. United States, No. 19-1738 (Aug. 24, 2020) (a case we've been following since its inception; see here for the complaint), doesn't hold out a lot of hope for something new, because the Federal Circuit already ruled in Golden v. United States, 955 F.3d 981 (Fed. Cir. 2020), that cancellation of a patent via inter partes review is not a taking. That precedent took care of the Christy plaintiffs' main beef.

But they also alleged that the fees they paid to the PTO for issuance and maintenance of the patent were exactions. They wanted the fees they had paid refunded. Why should we have to pay for what the government eventually held was an invalid patent? No dice, held the court. An "exaction" is for money paid "in contravention of the Constitution, a statute, or a regulation." Slip op. at 6 (quoting Norman v. United States, 429 F.3d 1081 (Fed. Cir. 2005)). The issuance and maintenance fees are none of these. First, they don't violate the Constitution because there's no Fifth Amendment claim (see above and Golden). And the statute requires payment of the fees "without regard to any later result of post-issuance proceedings." Slip op. at 7.

So yeah, even if it does seem unfair to have to pay to issue and maintain what turn out to be invalid patents, your remedy isn't to get a court to order those fees returned, but to go lobby Congress to change the statute.

Christy’s payment of standard issuance and maintenance fees—and the PTO’s refusal to refund the fees after 18 of Christy’s 20 claims in the ’640 patent were canceled—did not stem from any mistake or impropriety by the PTO, but followed the requirements of the law. The PTO did not collect fees in excess of its statutory authority, and therefore did not illegally exact those fees. We affirm the Court of Federal Claims’s dismissal of Christy’s illegal exaction claim.

Slip op. at 8.

Christy, Inc. v. United States, No. 19-1738 (Fed. Cir. Aug. 24, 2020)

New Cert Petition: Does A Physical Invasion Taking Require 24/7 Occupation?

Here's the cert petition that we've been waiting to drop in a case we've been following. Last we checked in, the Ninth Circuit (with concurral) had denied en banc review, over a dissental.

In Cedar Point Nursery v. Shiroma, 923 F.3d 524 (May 8, 2019), a 2-1 panel of the Ninth Circuit affirmed the dismissal of a complaint for failure to plausibly state a takings claim under Twombly/Iqbal.  At issue was a regulation adopted by California's Agricultural Labor Relations Board which requires agricultural employees to open their land to labor union organizers. The regulation is framed as protecting the rights of ag employees to "access by union organizers to the premises of an agricultural employer for the purpose of meeting and talking with employees and soliciting their support."

The panel majority viewed the complaint as alleging a Loretto physical invasion taking, and held the plaintiffs did not plausibly state a claim because they could not allege the invasion was permanent. The majority instead relied on PruneYard Shopping Center v. Robins, 447 U.S. 74 (1980), in which the Supreme Court concluded that the California Supreme Court had not effected a taking when it held that the California Constitution required shopping centers to be forums for public speech.

The property owners sought en banc review, asking all of the active judges on the Ninth Circuit to take a look. No deal, review denied. But not without comments. Two judges concurred in the denial: the panel got it right. A whole lot more judges (eight, including some -- but not all -- recent appointees) dissented from the denial en banc, and pointed out "[t]his decision not only contradicts Supreme Court precedent but also causes a circuit split." Dissental at 10. (That split is with the Federal Circuit, by the way, perhaps the most important federal circuit when it comes to takings cases.)

The issue? How "permanent" does a physical invasion have to be to qualify as a Loretto taking (or, more accurately here, how well does a complaint need to plead facts to show that the invasion qualified as a Loretto taking)? The panel majority and the concurral pointed out that union organizers aren't allowed on the property all the time. The panel dissent and the dissental pointed out that it shouldn't matter that the occupation by union organizers was not literally 24/7, merely that the property right allegedly taken was, you know, taken (government takes easements all the time and pays for that privilege).

To us, this fetish of the amount of time that an occupation is permitted or anticipated should not be the controlling question. After all, nothing is truly "permanent" is it? The cables and box on Ms. Loretto's building could be removed, and the Arkansas flood waters receded. What the courts should be focusing on is whether the owner lost the right to exclude, no matter how long or short the resulting invasion lasted. Indeed, even if not a single union organizer ever enters the nursery property, it has the right to do so, and the owner doesn't have the right to keep them out.

Here's the Question Presented:

California law forces agricultural businesses to allow labor organizers onto their property three times a day for 120 days each year. The regulation provides no mechanism for compensation. A divided panel below held that, although the regulation takes an uncompensated easement, it does not effect a per se physical taking of private property because it does not allow “24 hours a day, 365 days a year” occupation. As an eight-judge dissent from denial of rehearing en banc noted, the panel “decision not only contradicts Supreme Court precedent but also causes a conflict split.”

The question presented is whether the uncompensated appropriation of an easement that is limited in time effects a per se physical taking under the Fifth Amendment.

Will we follow along? For sure, so stay tuned.

Petition for a Writ of Certiorari, Cedar Point Nursery v. Hassid, No. ___ (July 29, 2020)

A Not Too "Takey" Takings Opinion From The Federal Circuit

It was mostly a win for the property owners in today's Federal Circuit opinion in Hardy v. United States, No. 19-1793 (July 15, 2020).

The opinion isn't heavy on the takings doctrine. It spent most of the time affirming the Court of Federal Claims' conclusion that the plaintiff-owners owned property under Georgia law (their predecessors had conveyed easements, not fee simple interests, and thus maybe had their reversionary interests taken when, after the rails were abandoned, they were converted to trails use).

Check it out for the nuances of Georgia property law. Is this an easement, a fee, a right-of-way, or something else? Whatever the feds wanted them to be, the court agreed with the owners that Georgia said they were easements. And we know who defines property, mostly, for purposes of the takings clause in this case: Georgia.

The balance of the opinion was more of a draw, with the court vacating the CFC's judgment and remanding the case. Not because there was something wrong with the CFC's conclusion, but because the feds raised an issue on appeal that apparently had not been covered below, and the CFC's judgment was rendered before the recent Federal Circuit opinion in Caquelin v. United States, 959 F.3d 1360 (Fed. Cir. May 29, 2020). That case reaffirmed the long-standing Federal Circuit rule that the issuance of a Notice of Interim Trail Use is the "taking" in a rails-to-trails case, and also set out in more detail how that test should be applied.

In Hardy, the federal government asserted that the railroad never intended to abandon certain portions of the rail lines. Thus, no taking for those parts. The plaintiffs, naturally, disputed that. But you know what appellate courts do when confronted with new authority (Caquelin), and an undeveloped factual record: remand for more factfinding:

Because the briefing and argument before this court did not sufficiently focus on whether or when the Railroad would have abandoned its easements for land east of mile-post E-65.80 absent the NITU, we decline to address this issue on the merits in the first instance. Accordingly, we vacate the Court of Federal Claims’ decision that issuance of the NITU effected a physical taking of land east of mile-post E-65.80 and remand for further proceedings on the questions of whether and when the Railroad would have abandoned the portion of its rail line east of milepost E-65.80 absent the August 2013 NITU.

Slip op. at 18.

Not a complete win for the property owners. But often in our world, you can count as living to fight another day as a win. We think this counts as a win. 

Hardy v. United States, No. 19-1793 (Fed. Cir. July 15, 2020)

Federal Circuit: Be Grateful Your Property Was Flooded (It Could Have Been Worse)

It's been a long week, and it's Friday with a filing coming up. So we're not going to spend a lot of time digesting the Federal Circuit's opinion in Alford v. United States, No 19-1678 (June 19, 2020). Plus, it is a short one (11 pages) that makes one major point.

Short story: after an unusual amount of rain, to save a levee from a predicted 95% chance of breach, the Corps of Engineers decided to raise the normal levels of Eagle Lake, causing damage to the plaintiffs' lakefront properties. Their land was flooded for three months. The CFC agreed this was a taking, and awarded $168,000 in just compensation.

The Federal Circuit reversed (opinion by Judge Dyk, are you that surprised?). The court held that on the whole, the property owners should be grateful that the Corps flooded their lands, because the "relative benefits" doctrine. If the government flooding isn't greater than that which would have occurred if the government had not acted, no taking. See United States v. Sponenbarger, 308 U.S. 256 (1939).

The Federal Circuit concluded that if the Corps hadn't flooded the plaintiffs' properties to save the levee, a levee breach would have resulted in even worse flooding:

Even assuming that this narrow focus was correct, the plaintiffs make no claim that they would have been better off if the government had allowed the levee to breach. The government’s uncontested evidence showed that, in the event of a breach of the levee, the water level of Eagle Lake would have far exceeded that caused by the Corps’ intentional flooding. Each of the plaintiffs suffered considerably less damage due to the government’s planned flooding of Eagle Lake than if the levee had breached. The Claims Court expressly found that the plaintiffs had directly benefitted from the government’s action. The Claims Court found that it was “certainly true” that the flood protection offered by the levee and Control Structure “benefitted the plaintiffs.” J.A. 3. Absent government intervention, “the likelihood of [a] breach [of the levee] was over 95%.” J.A. 2. “If the levee had broken,” the “[p]laintiffs’ propert[ies] would have been totally inundated” and would have “suffered more serious damage than they actually did.” J.A. 3. “[T]he plaintiffs would have been far worse off . . . .” Id. Under the Claims Court’s findings, the benefit of the government action, with respect to preventing a breach of the levee, outweighed the damage caused by the government’s flooding of Eagle Lake.

Slip oop. at 8-9 (footnote omitted).

The court rejected the CFC's analysis, which looked a lot like a "special benefits" approach: if the benefits to the general public were substantial, it didn't matter whether the plaintiffs also benefitted. Slip op. at 10-11 ("The relative benefits doctrine considers only government actions directed to the particular property at issue and considers only government activities directed to mitigating the type of problem that caused the damage.").

The plaintiffs would have been "far worse off" if the Corps had not acted. Be thankful you ingrates!

Alford v. United States, No. 19-1678 (Fed. Cir. June 19, 2020)

Federal Circuit: Arkansas Game Did Not Overrule Ladd (NITUs Are Categorical Takings)

Congratulations - if you understood this post's headline, you are officially a rails-to-trails nerd. A super-nerd.

But even if not, you shouldn't need a rails-to-trails nerd's level of knowledge to understand and appreciate the Federal Circuit's ruling in Caquelin v. United States, No. 19-1385 (May 29, 2020). It's a case worth reading for all of us -- nonnerds included -- because it nicely gets into the weeds of takings doctrine. 

One observation before we begin. There are takings of a fee simple interest. Takings of less-than-a-fee interest, such as the taking of an easement. Partial takings where less than all of the owner's property is taken, and there's a remainder property. Temporal takings where the seizure is not forever (temporary takings vs permanent takings). Regulatory takings, inverse condemnations, per se (categorical) takings, physical takings and ad hoc (Penn Central) takings. And myriad combinations fo the above. Takings theory comes in a lot of flavors. We note this only because in reading the court's opinion, those distinctions need to be kept in mind, or else you may find yourself losing the script.

Caquelin started off as your somewhat typical rails-to-trails case. Unused railroad on an easement through Caquelin's land. Railroad asked the Surface Transportation Board for its OK to abandon the line, subject to the fictional assertion that the abandonment isn't forever, just until such time as the need for rail service kicks back in. In the interim, we're OK with using the easement for non-railroady things like a recreational trail. If a trail sponsor steps forward, the STB issues a Notice of Interim Trail Use, which gives the parties 6 months to figure out if they can make it work. If the parties agree, then the former railbed becomes a recreational trail, with the STB retaining jurisdiction. Critically, reversion of the rail's right of way under state law is thwarted. Normally, when an easement owner stops the use, the easement reverts to the owner of the servient estate. Federal law preventing that from happening is a permanent taking of the reversionary interest.

So far so good. In these cases, the taking occurs (and the statute of limitations begins running) when the STB issues the NITU, which is the operative act interfering with the owner's reversion under state property law. But what if the rail and the trail sponsor never reach an agreement to operate a trail? In that case, the taking is merely temporary, not "permanent." That's what happened in Caquelin. The CFC, consistent with existing Federal Circuit precedent (Ladd v. United States, 630 F.3d 1015 (Fed. Cir. 2010)), held that this was a temporary categorical taking. In other words, a total wipeout of the entire reversionary interest for a limited period of time. The CFC entered summary judgment on liability for the landowner. Compensation? Everyone agreed: $900.

In response -- and backed up against its own goal line -- the federal government went for the end zone. It argued that Ladd and two other long-standing takings precedents -- Caldwell v. United States, 391 F.3d 1226 (Fed. Cir. 2004), and Barclay v. United States, 443 F.3d 1368 (Fed. Cir. 2006) -- should be overruled. All over $900. These kind of temporary suspension of the reversionary interest should not be treated as a total wipout for a limited time, but rather as an ad hoc loss-of-use-and-other-factors Penn Central taking, or maybe under the Arkansas Game temporary takings multifactor analysis. On remand after an appeal to the Federal Circuit, the CFC applied the Arkansas Game factors, but still concluded it was a total, but temporary, wipeout of the reversionary interest.

The federal government presented two main arguments on appeal:

The government accepts that the trial court’s judgment is supported by Ladd I, but it renews its two arguments that this court should no longer adhere to Ladd I. First, it contends, the Supreme Court’s decision in Tahoe-Sierra requires that the general regulatory-takings analysis of Penn Central be applied to assess whether a NITU is a taking when no trail-use agreement has been reached before it expires, and that such a NITU should not be treated as a categorical taking. Second, it contends, at a minimum we should replace the categorical approach with the multi-factor approach of Arkansas Game—which shares certain features of the Penn Central analysis.

Slip op. at 10. The Federal Circuit rejected both contentions.

First, it held that Ladd was not inconsistent with Arkansas Game. A NITU allows a physical invasion of the property. Slip op. at 11 ("The government seems to accept, and in any event has not meaningfully contradicted, the foregoing characterization of the NITU as allowing occupation by someone other than the landowner.") (footnote omitted). That's an "easement," after all. Wiping out -- even temporarily -- my right occupy my land is a taking of my right to exclude. All of it. And that is Ladd and Caldwell and Barclay. This isn't some case where a regulation temporarily restricts the use of property as in Tahoe-Sierra, but a physical (categorical) taking where the "character of the government action" (to use Penn Central's terminology) is categorically a taking. Slip op. at 14 ("Neither in Tahoe-Sierra nor any other case cited by the government did the Court treat as a “regulation” subject to the Penn Central standard a government action aimed only at securing a coerced easement for others to use the landowner’s land.").

Second, Arkansas Game, the Federal Circuit concluded, rejected "categorical exemptions from Takings Clause liability[.]" Slip op. at 15 (emphasis original). This case involves " mandated continuation of an easement," and not merely regulating the owner's use of land. In other words, the Federal Circuit viewed the NITU as allowing a physical occupation, and under the same analysis where a physical invasion is of such an invasive character under Penn Central that it is a taking without examination of the economic harm or the owner's expectations, here too. Slip op. at 15-16. Besides, the CFC here did walk through the Arkansas Game factors, which the Federal Circuit held, are pretty much baked into the Ladd analysis.

All right. Lots of jargon there, but you get the drift: Ladd is still good, a NITU is a categorical taking of either a temporary or permanent duration.

Finally, the court warmed to the government's argument that there's no taking if the railroad would not have abandoned the rail line:

It suggests that a taking should not be found to have occurred during the period a NITU is in effect if, even in the absence of the NITU, the railroad would not have abandoned its rail line during that period.

Slip op. at 17. In other words, the owner would have lost the property anyway, even in the absence of government action. You know, "causation."  The court concluded that neither Ladd, Caldwell, nor Barclay addressed that question directly, but that the usual rules of causation in takings still applies. Slip op. at 21 ("We conclude, therefore, that there is no taking until the time as of which, had there been no NITU, the railroad would have abandoned the rail line, causing termination of the easement that the NITU continued by law."). Applying that principle, the court held that to government had not shown that the railroad would on its own delayed abandonment.

Check the opinion out. It is worth reading, even if you are not a super-takings-rails-to-trails nerd.

Caquelin v. United States, No. 19-1385 (Fed. Cir. May 29, 2020)

Memorial Day 2020: Arlington National Cemetery And Takings

Programming note: On the weekend we've set aside to remember our nation's war dead, we thought we'd repost this one, about how Arlington National Cemetery came to be, and how yes, there's a takings story there.

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You know how we're always saying that the provisions in the Takings Clause are "self-executing," that even in the absence of a waiver of sovereign immunity, the Tucker Act, and section 1983, property owners would still be able to maintain a claim for compensation? Well here's an article that explains that how that rule was first articulated, and not in a dry academic way, but with a fascinating historical story.

It's the tale of United States v. Lee, 106 U.S. 196 (1882). We knew the land that is now Arlington National Cemetery was once owned by Robert E. Lee, but we can't say that we gave much thought to how it became public property. We always assumed that it had simply been seized as war booty from Lee during the Civil War, and that was that.

In The Arlington Cemetery Case: A Court and a Nation Divided, 37 The Journal of Supreme Court History 1 (March 2012), lawprof and historian Anthony Gaughan gives us a concise history of the legal battle that followed the Union's seizure of Arlington:

In May 1861, the United States Army seized the Virginia home of Confederate General Robert E. Lee and his wife, Mary Lee. During the Civil War, the Lincoln Administration converted the estate into a refugee camp for runaway slaves and a military cemetery, a burial ground that is known today as Arlington National Cemetery. In December 1882, seventeen years after Lee surrendered at Appomattox, the United States Supreme Court ruled that the federal government had unlawfully seized the Arlington estate without paying just compensation to the Lee family. It further held that the doctrine of sovereign immunity did not bar the Lees from bringing suit to vindicate their legal title to the property. In the aftermath of the Supreme Court’s ruling, Congress reached a settlement agreement with the Lee family. Arlington National Cemetery has remained the lawful property of the United States ever since. The Supreme Court’s ruling in United States v. Lee made clear that the Constitution is not suspended in wartime. At all times, legal and constitutional limits govern the exercise of official power. This article tells the story of United States v. Lee and places the case in historical context.

This article is an excerpt from the book The Last Battle of the Civil War: United States Versus Lee, 1861-1883 (2011), available here, and here (e-book). Highly recommended.

One final note. Arlington is the most well-known of our national cemeteries. But there are hundreds more, both domestically and overseas. So when we are in the neighborhood of one, we try and pay a visit even if only briefly to leave a silent word of thanks to these gentle heroes.

 

Programming note: On the weekend we've set aside to remember our nation's war dead, we thought we'd repost this one, about how Arlington National Cemetery came to be, and how yes, there's a takings story there.

---------------------------------------------------------

You know how we're always saying that the provisions in the Takings Clause are "self-executing," that even in the absence of a waiver of sovereign immunity, the Tucker Act, and section 1983, property owners would still be able to maintain a claim for compensation? Well here's an article that explains that how that rule was first articulated, and not in a dry academic way, but with a fascinating historical story.

It's the tale of United States v. Lee, 106 U.S. 196 (1882). We knew the land that is now Arlington National Cemetery was once owned by Robert E. Lee, but we can't say that we gave much thought to how it became public property. We always assumed that it had simply been seized as war booty from Lee during the Civil War, and that was that.

In The Arlington Cemetery Case: A Court and a Nation Divided, 37 The Journal of Supreme Court History 1 (March 2012), lawprof and historian Anthony Gaughan gives us a concise history of the legal battle that followed the Union's seizure of Arlington:

In May 1861, the United States Army seized the Virginia home of Confederate General Robert E. Lee and his wife, Mary Lee. During the Civil War, the Lincoln Administration converted the estate into a refugee camp for runaway slaves and a military cemetery, a burial ground that is known today as Arlington National Cemetery. In December 1882, seventeen years after Lee surrendered at Appomattox, the United States Supreme Court ruled that the federal government had unlawfully seized the Arlington estate without paying just compensation to the Lee family. It further held that the doctrine of sovereign immunity did not bar the Lees from bringing suit to vindicate their legal title to the property. In the aftermath of the Supreme Court’s ruling, Congress reached a settlement agreement with the Lee family. Arlington National Cemetery has remained the lawful property of the United States ever since. The Supreme Court’s ruling in United States v. Lee made clear that the Constitution is not suspended in wartime. At all times, legal and constitutional limits govern the exercise of official power. This article tells the story of United States v. Lee and places the case in historical context.

This article is an excerpt from the book The Last Battle of the Civil War: United States Versus Lee, 1861-1883 (2011), available here, and here (e-book). Highly recommended.

One final note. Arlington is the most well-known of our national cemeteries. But there are hundreds more, both domestically and overseas. So when we are in the neighborhood of one, we try and pay a visit even if only briefly to leave a silent word of thanks to these gentle heroes.

 

Three New Property And Takings Articles From William & Mary Law Review

Looking for some property and takings scholarly reading while you cool your heels at home? Well, the William and Mary Law Review has recently published no less than three worthy pieces, all available for download.

• Charles D. Wallace, When (and Why) the Levee Breaks: A Suggested Causation Framework for Takings Claims That Arise From Government-Induced Flooding, 61 Wm. & Mary L. Rev. 603 (2019). An article authored by a (recently) former student of ours about takings liability for flooding, focusing on the "MR/GO" case and related issues. (The author is so modest, he didn't tell me his note was published!)
• Timothy M. Mulvaney, The State of Exactions, 61 Wm. & Mary L. Rev. 169 (2019). The latest on exactions, focusing on whether the third part of the trilogy -- Koontz v. St. Johns River Water Management District -- has provided "momentum for a more significant expansion of [heightened judicial] scrutiny in takings cases[.]" The article contends "that Koontz's footprint thus far is rather light."
• Lee Anne Fennell, Property Beyond Exclusion, 61 Wm. & Mary L. Rev. 521 (2019). We all talk about the right to exclude being among the most fundamental sticks in the property rights bundle. Has that right to exclude become a "less useful, less necessary, and more expensive way of regulating access to resources[?]" Read the article and find out how Professor Fennell thinks about this intriguing question. 

Check them all out.

Taking A New Look At Takings Remedies: What If Just Compensation Really Isn't The Remedy For An Inverse Condemnation?

Professor Josh Blackman's posts over at the Volokh Conspiracy on the bump-stock takings case (and follow ups taking a deeper dive into the takings question, see this post, this post, and this post), got us to thinking. So we wrote up our thoughts, in which we noted that we thought the "self-executing" nature of the Just Compensation Clause means that even in the absence of a Tucker Act waiver of sovereign immunity, the federal government could be sued in an Article III court for compensation ("Lawprof Josh Blackman Asks: "Is there an express cause of action under the Takings Clause?"). This is the position we took in the Brott litigation, where we thought that the Tucker Act is unconstitutional to the extent that it denies a jury trial for compensation claims. But as you know, Brott ended up with "cert denied."

But that also got us to thinking: what if we're wrong, and in order to get an award of compensation or damages from the United States, it first has to agree that it can be sued, and thus any waiver of sovereign immunity such as the Tucker Act can be conditioned any way the sovereign pleases (its good to be king). Then what, are property owners outta luck in getting an Article III judge to consider the case?

But what if the remedy sought is not monetary (not "just compensation," or at least not directly)?  We're going to do a bit of thinking out loud here, just to see where it leads us. 

First, we've seen cases in which the Supreme Court has recognized that an award of just compensation is not the sole way to raise a takings claim. You can raise it as a defense to some government action ("you can't do X, government, because to do X without compensation would be an unconstitutional taking" - this is more like a rule that government cannot act except in conformity with the constitution than an actual "takings" claim for compensation). The raisin case (Horne v. USDA) is a good example. Another is Kaiser Aetna v. United States, 444 U.S. 164 (1970), where the property owner raised a similar argument in response to the Corps of Engineers' district court lawsuit under the Rivers and Harbors Act. Or, you might raise a takings argument affirmatively by declaratory judgment:

MR. JUSTICE REHNQUIST suggests that appellees' "taking" claim will not support jurisdiction under § 1331(a), but instead that such a claim can be adjudicated only in the Court of Claims under the Tucker Act, 28 U.S.C. § 1491 (1976 ed.). We disagree. Appellees are not seeking compensation for a taking, a claim properly brought in the Court of Claims, but are now requesting a declaratory judgment that, since the Price-Anderson Act does not provide advance assurance of adequate compensation in the event of a taking, it is unconstitutional. As such, appellees' claim tracks quite closely that of the petitioners in the Regional Rail Reorganization Act Cases, 419 U. S. 102 (1974), which were brought under § 1331 as well as the Declaratory Judgment Act. See App. in Regional Rail Reorganization Act Cases, O.T. 1974, Nos. 74-165, 74-166, 74-167, 74-168, p. 161. While the Declaratory Judgment Act does not expand our jurisdiction, it expands the scope of available remedies. Here, it allows individuals threatened with a taking to seek a declaration of the constitutionality of the disputed governmental action before potentially uncompensable damages are sustained.

Duke Power Co v. Carolina Env. Study Group, Inc., 438 U.S. 60, 71 n.15 (1979)

So that takes care of the remedy, and the notion that just compensation is the sole avenue of relief under the Takings Clause (yes, it's the "Takings" clause as well as the "Just Compensation" clause). Let's call it an equitable remedy for a shorthand. 

That gets us to our second point. How do you get beyond the sovereign immunity barrier if the federal government itself hasn't agree to be sued for even that remedy? How about a "takings" lawsuit in an Article III court against the federal official or agency whom the owner says has taken their property, but not affirmatively provided the required just compensation? A mandamus-like remedy directing the official to comply with her ministerial duty to provide compensation in accord with the Fifth Amendment? 

We've seen hints of this approach in two Supreme Court cases. The first is the Arlington Cemetery case, United States v. Lee, 106 U.S. 196 (1882). We focused on that case in our Brott amici brief (and in this post). In that case, Custis Lee (Robert E. Lee's son, who would have inherited title to Arlington had General and Mrs. Lee not lost it by tax foreclosure) sued federal officials in Virginia state courts, alleging that they failed to compensate Mrs. Lee after seizing the property during the war. The federal officials removed the case to federal court.

The Supreme Court rejected the officials' sovereign immunity claim, concluding that federal officials could be sued in federal courts because "there is no such thing as a kingly head to the nation, nor to any of the states which compose it." Id. at 205. The Court likened Lee's claim to a petition for a writ of habeas corpus:

Undoubtedly those provisions of the constitution are of that character which it is  intended the courts shall enforce, when cases involving their operation and effect are brought before them.The instances in which the life and liberty of the citizen have been protected by the judicial writ of habeas corpus are too familiar to need citation, and many of these cases, indeed almost all of them, are those in which life or liberty was invaded by persons assuming to act under the authority of the government. Ex parte Milligan, 4 Wall. 2. If this constitutional provision is a sufficient authority for the court to interfere to rescue a prisoner from the hands of those holding him under the asserted authority of the government, what reason is there that the same courts shall not give remedy to the citizen whose property has been seized without due process of law and devoted to public use without just compensation?

Id. at 218-19.

Later, in Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682 (1949), the Court picked up on this thread. In a case in which the plaintiff read Lee as allowing federal suits against federal officials if the relief equitable. In that case, the plaintiff sought a declaration that its contract with the feds was valid, and an injunction preventing the government from selling the coal that the plaintiff said it was entitled to buy under the contract to another buyer. The plaintiff asserted that sovereign immunity was no bar. Nice try, held the Court, this is just a routine breach of contract dispute with the government itself, not the officials charged with implementing the contract.

But what about Lee, the plaintiff argued? Sorry, the relief you are seeking is not so much against the defendant officers, but against the federal government itself, the Court concluded. The Court looked at the duty of the officials to act the plaintiff alleged. The source of the duty was the contract between the plaintiff and the government. Thus, the officials were only acting as agents of the government itself. The Court in Larson concluded that Larson was out of luck because he fell within the general rule that you can't sue officials when the relief sought is really against the government itself. 

But (and there's always a "but," as Justice Gorsuch pointed out today when during telephone oral arguments today he noted, "there is no rule without an exception"), the Larson opinion pointed out an exception to that general rule based on the source of the official's duty to act:

A second type of case is that in which the statute or order conferring power upon the officer to take action in the sovereign's name is claimed to be unconstitutional. Actions for habeas corpus against a warden and injunctions against the threatened enforcement of unconstitutional statutes are familiar examples of this type. Here, too, the conduct against which specific relief is sought is beyond the officer's powers, and is therefore not the conduct of the sovereign. The only difference is that, in this case, the power has been conferred in form, but the grant is lacking in substance because of its constitutional invalidity.

Id. at 690. If the duty to act is sourced in the Constitution, different case. 

The Court in Larson referred to Lee as a case like habeas corpus, a "constitutional exception to the doctrine of sovereign immunity." Id. at 696. 

United States v. Lee, 106 U. S. 196 (1882), is said to have established the rule for which the respondent contends. It did not. It represents, rather, a specific application of the constitutional exception to the doctrine of sovereign immunity. The suit there was against federal officers to recover land held by them, within the scope of their authority, as a United States military station and cemetery. The question at issue was the validity of a tax sale under which the United States, at least in the view of the officers, had obtained title to the property. The plaintiff alleged that the sale was invalid, and that title to the land was in him. The Court held that if he was right, the defendants' possession of the land was illegal, and a suit against them was not a suit against the sovereign. Prima facie, this holding would appear to support the contention of the plaintiff. Examination of the Lee case, however, indicates that the basis of the decision was the assumed lack of the defendants' constitutional authority to hold the land against the plaintiff.

Id. 

In Lee, the taking lacked authority because it was accomplished without a payment of compensation. The Takings Clause prohibits taking property without compensation. Id. at 696-97. The officials who seized Arlington and later who held it did so without authority because compensation had not been provided (ultra vires for you old-timers). Thus, the "possession of the property was an unconstitutional use of [the officials'] power, and was therefore not validly authorized by the sovereign. For that reason, a suit for specific relief, to obtain the property, was not a suit against the sovereign, and could be maintained against the defendants as individuals." Id. at 697.

Got it. Now we have both a equitable-type remedy for takings, and a legal theory to back that up in situations where it is alleged that government officials have taken property, and are wrongly withholding compensation.  

And that takes us to our third and final point. How do you get from equitable relief to compensation? What about the way that some states handle inverse condemnation claims. Well, technically they do not recognize inverse condemnation claims. Correct us if we're wrong, but these states (mostly in the midwest, to our knowledge) don't really recognize "inverse condemnation" claims, at least as we in other jurisdictions use that term. Instead of recognizing a direct cause of action for compensation and damages when government has taken property physically or by regulation, these jurisdictions separate the one-step inverse condemnation claim into two different stages. First, the property owner sues for a writ of mandamus, to compel the government to recognize it has taken property and to order it to formally condemn the property by the usual eminent domain process. If the owner is successful, the court orders the government to institute a plain-old eminent domain action to calculate compensation. See, e.g., Moore v. City of Middletown, 975 N.E.2d 977 (Ohio 2012).

There is a lot of appeal in this approach. It is both respectful of theory, but also avoids much of the procedural confusion in inverse cases (for example, what procedures from eminent domain law are applicable to inverse cases?). Would that same approach work under Lee and Larson in an article III federal court?

At least one court has approved of a version of that theory, least against state officials and state governments. In Guerin v. Fowler, 899 F.3d 1112 (9th Cir. 2018), the court held that if proven, state officials’ failure to pay daily interest allegedly skimmed from state-managed retirement accounts was a taking. The plaintiffs did not seek an award of damages, only equitable relief: an injunction ordering the officials to return the wrongly withheld money.

The plaintiffs sued the officials in federal court, but the officials claimed this was really a suit against the State of Washington itself, and not just an equitable suit against the officials, because the ultimate remedy would affect the state treasury. Thus, they argued, the 11th Amendment was a bar to the lawsuit. The court rejected the state’s contention that the plaintiffs “seek monetary damages,” concluding “the [plaintiffs] actually seek an injunction ordering the [state] to return savings taken from them.” Id. at 1120 (“Prospective injunctive relief of this sort is readily distinguishable from a compensatory damages award.”). 

Applied in a case where a federal official is claimed to be violating the Fifth Amendment, how about a Lee/Larson claim wrapped up in a Duke Power format brought in a federal district court, for an order to compel a federal official or agency to stop violating the Fifth Amendment and institute an eminent domain lawsuit under Rule 71.1? You might not get a jury to determine the taking, but you would get a jury to consider compensation. After all, if the a right the Court has repeatedly told us is "self-executing," and the government is obligated to provide compensation when the it takes property, pronouncements that the requirement is self-executing seem pretty toothless if the federal government can simply withdraw the Tucker Act at will and say "sorry, no takings claims." Are owners whose property is taken by the feds simply out of luck? 

We wrap up with this question. This theory would seem to work in a case where there's been a physical occupation, like Lee. It would also seem worthy of consideration in situations like Guerin, where the officials were accused of wrongfully withholding property (the daily interest on state-managed retirement accounts). But what about in non-possessory regulatory takings cases? There, the officials haven't seized anything concrete (well, except maybe the property owner's right to use property). But the official could be withholding the constitutionally-required compensation if there's been a taking (the very issue the court would be asked to resolve, just like in Lee).   

What do you think? 

Lawprof Josh Blackman Asks: "Is there an express cause of action under the Takings Clause?"

(Spoiler alert: we think the answer is "yes" -- see below)

Delving into the latest Supreme Court opinion related to the Affordable Care Act, lawprof Josh Blackman (who recently wrote about bump stock takings), now asks a broader question: Is there an express cause of action under the Takings Clause? More pointedly he writes about a question that takings mavens often think about (but on which there are few guideposts):

[I]s it possible to sue the federal government for an unconstitutional taking, without relying on the Tucker Act? That is, does the Takings Clause itself create an express cause of action.

...

What would have happened if the Congress never enacted the Tucker Act in 1887? Could the federal government take property without paying "just compensation"?

He points out that the majority opinion in the recent ACA case said no (see here, note 12 on page 25), or here:

Justice Alito's dissent (see top of post) also touches on the takings question.

It's a good one. Best we can say is that the question has not been directly addressed by the Supreme Court. Closest it got was a case brought (Brott v. United States, yes, pun intended) by our Federal Takings colleagues in the Sixth Circuit seeking compensation for a federal taking, and demanding a jury trial. District Court said no, as did the Sixth Circuit. So the property owners drummed up a cert petition. Well, as you know, the Supreme Court didn't take the case up (even though we filed an amicus brief). In that brief, we offered our thoughts on the subject.

If you want to skip the below, here's the short story: Congress has provided a remedy for property owner who claim that the federal government has taken their property and want compensation, the Tucker Act. The Supreme Court has held that when Congress makes a remedy available, you can't sue directly under a constitutional provision. But the Tucker Act does not allow for a jury trial, and property owners have a right to a jury trial. In short, the Tucker Act is unconstitutional, and property owners may sue directly in an Article III court:

The government does not enjoy its usual sovereign immunity when it takes property, either affirmatively or inversely, and this Court has repeatedly confirmed that the Just Compensation Clause is “self-executing.” First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 315 (1987) (“We have recognized that a landowner is entitled to bring an action in inverse condemnation as a result of ‘the self-executing character of the constitutional provision with respect to compensation.”).

But what does this mean, exactly? Even as the Sixth Circuit recognized that property owners have a right to compensation that springs from the Constitution itself and the right to sue does not depend upon a waiver of sovereign immunity, it held that Congress is not compelled to provide an Article III forum to vindicate that right. Or indeed, any forum at all. Thus, even if the forum Congress created―the Article I non-jury Court of Federal Claims (CFC)―is not constitutionally adequate, well, that’s good enough. In the words of the Sixth Circuit, “[t]he Fifth Amendment details a broad right to compensation, but does not provide a means to enforce that right. Courts must look to other sources (such as the Tucker Act and the Little Tucker Act) to determine how the right to compensation is to be enforced.” Brott v. United States, 858 F.3d 425, 432-33 (6th Cir. 2017). That is sovereign immunity by another name.

Professor Blackman promises to offer his take on the issue in an upcoming post. We'll provide notice here when he does. We look forward to his analysis. 

Still Time To Join Us (Tomorrow): ALI-CLE Webinar - Strategies for Litigating Regulatory Taking Cases

There's still time to join us tomorrow, Friday, April 24, 2020 at 2-3pm Eastern Time, they will be presenting "Strategies for Litigating Regulatory Taking Cases" in a webinar produced by ALI-CLE. Register here (multiple attendee discounts available). 

At the recent ALI-CLE Eminent Domain and Land Valuation Litigation Conference in Nashville, our colleagues, New York's Jon Houghton and Hawaii's Dave Day presented a very informative program on litigating regulatory takings cases. Jon is a property owner-side lawyer, while Dave is a Deputy Attorney General who represents the State of Hawaii in such cases. So it was a practical and balanced presentation. Jon and Dave are taking it to the next level. This isn't simply a repeat of their Nashville program, but they will be exploring in more detail the practicalities of building and defending these difficult cases. 

Here's the description of the program:

The U.S. Constitution provides that private property may not be taken for public use without just compensation. When a government regulation substantially reduces or eliminates the value of property, a regulatory taking claim may be present. To successfully litigate one of these cases, it is essential to have a firm understanding of the different tests courts may apply to determine if a taking has occurred, how to compute fair compensation, and what evidence must be presented to support or defend both. If you are or may be involved in a regulatory taking case, set aside one hour to learn strategies from government and landowner attorneys, and benefit from the differing perspectives on litigating these types of claims from both sides of the aisle.

This webcast will present a unique look behind the curtain at how the two opposing sides approach prosecuting and defending a regulatory taking claim. Discussions will address building a case, using experts, potential motions practice, and trial strategy. Specific topics include: 

• Litigating a Lucas claim
• Loss of economically beneficial uses
• Complete elimination of value
• Litigating a Penn Central claim
• Distinct investment-backed expectations and the economic impact of the regulation
• Character of the government action
• Background principles
• Establishing the Murr factors
• Just compensation and appraisals

More details on the program, including registration information here. 

See you online tomorrow. 

Fed Cir Bummer: Govt Bogarted None Of Your Kish, Slag, Or Scrap

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

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

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

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

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

After trial, the Court of Federal Claims concluded: 

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

Slip op. at 8. 

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

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

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

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

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

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

Slip op. at 14. 

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

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

New Cert Petition (Ours) Offers A Moment Of Zen: If The Government Makes The Final Decision But The Property Isn't Yet Actually Injured, Must The Owner Sue For A Taking Now?

Here's the cert petition that along with our colleague Steve Jakubowski we're filing today in Campbell v. United States, No. 19-___, in which we ask the Court to review the Federal Circuit's ruling that the plaintiffs in a Court of Federal Claims takings case missed the Tucker Act's statute of limitations (28 U.S.C. § 2501).

This one focuses on the interplay between Williamson County's "final decision" ripeness rule and the "case and controversy" injury-in-fact standing requirement, and asks: if the government makes its final decision, but the plaintiff isn't injured until later, has there been an actionable taking?  

Often, the date on which the government ripens a takings claim by making the final decision to apply the regulation to the plaintiff's property, and the date on which the plaintiff's property rights are actually affected are the same. But here, the two key events happened on different dates. The feds allege they made their final decision to jettison in the GM bankruptcy the plaintiffs' tort and related claims on July 1, 2009. The Federal Circuit accepted the government's assertion that final decision occurred when it uploaded its proposed order to the bankruptcy court.  The Federal Circuit held that this was the date that plaintiffs' property was taken,and thus the date that the statute of limitations clock started ticking.

The Federal Circuit, however, rejected the plaintiffs' assertion that their property rights were not actually injured in a concrete way until July 10, 2010, and even though a taking may be prudentially ripe under Williamson County, federal courts also require a plaintiff with standing. That is, a party who has suffered a concrete injury-in-fact. 

This is all somewhat detailed (and a bit metaphysical, so rather than try to retell the story, we're just going to cut-and-paste the key parts of the petition. 

From the Introduction:

Petitioners’ claims for just compensation arose out of the Government’s acquisition of General Motors’ assets in bankruptcy, “free and clear” of Petitioners’ tort and related successor liability claims. Jettisoning Petitioners—while saving other, more preferred creditors—was a lynchpin of the largest governmental takeover of a private company in American history. The Federal Circuit determined that the submission of a proposed order to the bankruptcy court for consideration—which, when subsequently made effective by the bankruptcy court, would wipe out Petitioners’ claims—was a “final decision” that started the statute of limitations clock ticking on Petitioners’ takings claims, even though Petitioners’ property rights were not actually injured until later.

Contrary to this Court’s established “case and controversy” standing requirement that plaintiffs in every case must allege an injury-in-fact, the Federal Circuit adopted a rule unique to takings claims: “[i]n the case of a regulatory taking, . . . the taking may occur before the effect of the regulatory action is felt . . . .” App. 14 (emphasis added). The Federal Circuit concluded that injury-in-fact is not part of the accrual calculus. This stunning rule—that the statute of limitations starts to run even “before the effect of the regulatory action is felt”—starkly contrasts with the customary accrual rule that a plaintiff may bring suit only after she is actually injured.

A regulatory takings claim cannot accrue before an owner’s property rights are actually injured by the Government’s final action. The Federal Circuit’s conclusion that the clock began ticking even before Petitioners were injured-in-fact brings to mind a variation of a classic Zen parable: if the Government makes a decision but the property owner isn’t actually injured, can the owner sue for a taking?

Here's the Question Presented:

The Federal Circuit concluded that “[i]n the case of a regulatory taking, ... the taking may occur before the effect of the regulatory action is felt.” It held that the Government’s “final decision”—its submission of a proposed order to the bankruptcy court for approval—was an actionable taking. Consequently, the statute of limitations clock started ticking even “before ... the actual damage to the property interest [was] entirely determinable.” The question presented is:

Does the Tucker Act’s statute of limitations for a regulatory takings claim accrue when the Government makes a final decision, or when the plaintiff’s property rights are actually injured-in-fact as a result of that decision?

Stay tuned.

Petition for a Writ of Certiorari, Campbell v. United States, No. 19-___ (Apr. 20, 2020)