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Shades Of Eastern Enterprise: Applying "Meaningful" Rational Basis Review, NY Court Of Appeals Shields Retroactive Rent Control Law From Takings Analysis

We're certainly not going to delve in detail into the 109 single-spaced pages of the majority and dissenting opinions in the New York Court of Appeals' ruling in Regina Metro. Co., LLC v. N.Y. State Div. of Housing and Community Renewal, Nos. 1-4 (Apr. 3, 2020). New York's rent control law is infamously labyrinthine, and we're by no means learned in its nuances (and have no desire to become so). But there's a lot to digest in the opinion, and it might be worth your time to dig into certain parts. 

For our purposes, here is the short version. While an appeal was pending in these cases, the legislature amended the statute ("sweeping changes") and extended the statute of limitations and "the nature and scope of owner liability in rent overcharge cases." The question before the court was whether the new requirements govern the case. In other words, whether the recent amendments are to be applied retroactively, or whether the cases are governed by the law in effect at the time of the lawsuit (i.e., the old law).

The court concluded the legislature "evinced a sufficiently clear intent to apply [the new statute of limitations and changes in the law] to timely pending claims[.]" Slip op. at 38. Thus, the court had to grapple with the question of whether applying the law retroactively violated due process. 

As you know, due process means rational basis review (especially for so-called "economic" regulations), aka "aliens might have done it." But when the regulations are meant to apply retrospectively, judicial review is with a slightly more skeptical eye. Not that much, but a bit more: "there must be a 'persuasive reason' for the 'potentially harsh' impacts of retroactivity." Slip op. at 39-40 (citations omitted). 

We suggest you read the next few pages, because there, the court walks through all the reasons why applying the new rules retroactively to cases in the pipeline would be unfair and unconstitutional. The new provisions would "more severely impact substantive rights[,]" and the lookback period is "vast" and therefore "upends owners' expectations of repose relating to conduct that may have occurred many years prior to the recovery period." Slip op. at 45.   

Unlike cases where retroactive application rationally furthered a legislative goal, such as closing a state-administered fund benefitting insurers that imposed unsustainable costs on employers (see American Economy, 30 NY3d 136) or preventing legislation from being undermined by those seeking to escape its impact before enactment (see R.A. Gray & Co., 467 US 717) – there is no indication here that the Legislature considered the harsh and destabilizing effect on owners’ settled expectations, much less had a rational justification for that result. While prospective application of Part F to overcharges occurring after the effective date may serve legitimate and laudable policy goals, no explanation has been offered, much less a rational one, for retroactive application of the amendments to increase or create liability for rent overcharges that occurred years – even decades – in the past.

Slip op. at 50.

The court concluded, "[t]here can be no doubt here that ... the amendments represent a clear rejection of prior rent stabilization enforcement policy and effectuate a significant readjustment of substantive rights relating to overcharge recovery[.]" Slip op. at 46. The court applied what it called "meaningful" rational basis review (not quite the "aliens" theory), noting that a court isn't merely a rubber stamp, but is there to protect infringements on "fundamental principles as they have been understood by the traditions of our people and our law" (in other words, our old friend "the law of the land") - 

In this regard, the rational basis test – although extremely deferential – must be meaningfully applied to ensure basic principles of fairness and substantial justice, lest we abdicate our responsibility to the citizens of this State. As Justice Holmes wrote when dissenting in Lochner – espousing a view that later prevailed in the Supreme Court – “the word ‘liberty,’ in the 14th Amendment, is perverted when it is held to prevent the natural outcome of a dominant opinion, unless it can be said that a rational and fair [person] necessarily would admit that the statute proposed would infringe fundamental principles as they have been understood by the traditions of our people and our law” (Lochner, 198 US at 76 [Holmes, J., dissenting] [emphasis added]). The modern rejection of Lochner has never been understood to require courts to abandon “fundamental principles” of fairness – not even when reviewing economic legislation. There are few principles as fundamental or, in the words of the Supreme Court, as “elementary” or “deeply rooted” as the notion that government may not irrationally impose or expand liability for past conduct (Landgraf, 511 US at 265).

Slip op. at 55.

The dissent, as you might expect, raised the usual judicial kryptonite (Lochner), asserting that the majority overstepped its bounds, even though Lochner presented prospective, not retrospective, legislation restricting liberty of contract.

But by taking a slightly harder look at the backwards application of rent control and voiding the statute on due process grounds, however, the New York Court of Appeals avoided the takings question lurking the background. There's a pretty good case that if the majority had upheld the retroactive law, that it would be subject to a serious takings challenge as in Eastern Enterprises v Apfel, 524 U.S. 498 (1998). 

If New York seeks further review, might this case be the one in which the U.S. Supreme Court revisits that fractured decision? Stay tuned. 

Regina Metro. Co., LLC v. N.Y. State Div. of Hous. and Comm. Renewal, Nos. 1-4 (N.Y. Apr. 2, 2020)

Mi Casa Ain't Su Casa: Proof Of Lost Opportunity Is Evidence Of Penn Central's "Economic Impact" Factor

The work of the courts goes on, and as long as there's stuff to report, we'll keep reporting as usual.

Yesterday, the U.S. Court of Appeals for the Federal Circuit issued an important takings decision in a case and issue we've been following for what seems like forever. In Anaheim Gardens, L.P. v. United States, No. 19-1277 (Mar. 25, 2020), the court held that a property owner in a regulatory takings case asserting a Penn Central taking may prove the "economic impact" factor by introducing evidence "by demonstrating their lost opportunity to earn market-rate rental income after prepaying their mortgages." Slip op. at 17. The Court of Federal Claims had precluded such evidence, concluding instead that the before-the-regulation and after-the-regulation method was the only proper way. 

Here's the short story: the feds adopted programs providing incentives to developers to build low-income housing. The programs offered below-market 40-year mortgages guaranteed by HUD, for example. In return, the owner agreed to limit the rent increases for as long as the HUD guarantee remained in place. The programs also allowed an owner to get out early if after 20 years they prepaid the mortgage. If so, the agreed-upon rent restrictions would vanish. 

Perhaps not surprisingly, many owners took that option. Too many owners, in Congress' judgment. And thus (again, perhaps not surprisingly, also), the feds reacted by eliminating the prepayment option. No prepayment, no conversion of below-market units to market-rate. Takings lawsuits followed.

As noted above, the CFC rejected the expert economist testimony offered by the owners. William Wade, Ph.D., (disclosure: Dr. Wade is a colleague of ours, and has guest-blogged before, including posts on Penn Central), testified about the lost opportunity -- lost market-rate rental income -- that the owners suffered because Congress' elimination of the prepayment option forced the owners to keep renting at below-market rates. See slip op. at 11-12 for more details of Dr. Wade's testimony. See also the graphic above. 

Nope, held the CFC:

Despite Dr. Wade’s opinions, the Claims Court found that Dr. Wade’s analysis was nonprobative of economic im-pact under Penn Central. First, the court found that Dr. Wade’s lost income analysis was nonprobative because he was required to analyze and compare fair market values. Decision, 140 Fed. Cl. at 89 (“[FWPs] have not established the fair market value (FMV) of the FWPs’ properties at the time of the taking, for either the scenario where the mortgage prepayment right was unrestricted, or the scenario where the mortgage prepayment right was restricted by LIHPRHA.”). And second, the court found that “Dr. Wade’s methodology is unsound because it is inconsistent with binding precedent,” in particular relating to “the parcel as a whole concept” and “economic loss severity measures.” Id. at 89–91.

Slip op. at 13. 

"[G[uided by the Supreme Court's cautions against rigidity in this area of law," slip op. at 14, the Federal Circuit rejected the CFC's categorical rule, holding instead that "courts must have flexibility to determine in each individual case how to most accurately measure the economic value of what a takings claimant actually lost due to the governmental action." Slip op. at 15. Yes, "before and after" the regulation might serve the purpose of determining the economic impact of the regulation, but it isn't the sole way to approach it. Lost net income, discounted to present value, also could work. "Neither approach appears to be inherently better than the other." Id. 

The difference between temporary takings (as were at issue in prior Federal Circuit cases), and the permanent nature of the takings here did not matter. Yes, permanent vs temporary can affect the analysis. But it isn't determinative of the of the method used. Slip op. at 16 ("Regardless whether a taking is permanent or temporary in nature, there is no one-size-fits-all method for measuring the economic impact of a governmental action.").  

As for our post's title, one of the property owner/plaintiffs in the case was an outfit known as "620 Su Casa Por Cortez," which was in a slightly different position than the other plaintiffs. Su Casa didn't own its property prior to the time Congress changed the early-redemption rules, but bought subject to those rules. So yes, you guessed it, in Su Casa's case, the CFC held that purchasing the property already subject to the allegedly restrictive regulation means it failed the "investment-backed expectations" Penn Central prong also.   

Unlike the Federal Circuit's conclusion that the CFC got it wrong on the "economic impact" Penn Central prong, here the court agreed with the CFC. It rejected Su Casa's argument that Palazzolo rejected the "subsequent transfer" holding:

The governmental action in this case is the enactment of the Preservation Statutes. Su Casa purchased its property in an arms-length transaction after it already knew that the Preservation Statutes had eliminated the prepayment option that previously existed under the 1961 amendments to the National Housing Act. While the HUD regulations had not yet gone into effect at the time of the transaction, the Preservation Statutes themselves were sufficiently detailed to remove any reasonable expectation that Su Casa could have had that it would have the option to prepay its mortgage and convert its property from low-income housing to a market-rate rental property. 

Su Casa’s reliance on Palazzolo v. Rhode Island, 533 U.S. 606 (2001), is inapposite. . . .Here, unlike in Palazzolo, the Claims Court did have occasion to consider whether Su Casa could prove reasonable investment-backed expectations in view of the timing of its purchase and its knowledge about the Preservation Statutes. The Claims Court determined, not as a per se rule but rather as an evidentiary failure, that Su Casa lacked sufficient evidence to prevail at trial.

Slip op. at 8. Hmmm...ok. We'll have to see about that one. After all, the Supreme Court in Murr did say that purchase subject to restrictions is "a factor" in investment-backed expectations analysis. But that has always seemed more like a way to back into a per se rule, than an actual distinction to  us. Maybe this is the case to take back up on that issue? 

Please read the entire opinion. There's a lot there, obviously. And it is a good distraction from the swirl of the 25/7 news cycle that is making everyone just a bit crazy.  

Anaheim Gardens, L.P. v. United States, No. 19-1277 (Fed. Cir. Mar. 25, 2020) 

Unboxing The 2021 (Scottsdale) ALI-CLE Eminent Domain Conference Swag: Get Yours Today!

Missed out on the 2021 ALI-CLE Eminent Domain and Land Valuation Litigation Conference swag?

Well fear not: here's your chance to get your high-class reminder -- a kit of road warrior essentials -- to save the Conference date on your calendar. We're already underway with planning the agenda and faculty, so it's never too soon to block it off (January 28-30, 2021, at the 4-Diamond DoubleTree Resort, Scottsdale, Arizona). 

If you were not able to get your swag in Nashville, send us a note (rht@hawaiilawyer.com) and we shall gladly drop one or two in the mail to you.

While supplies last!  

Pennsylvania Coal Revisited: Outlawing Silica Mining Isn't A Taking, Even Though Mining Rights Are "Property" Under State Law

Here's the latest in a case we've been following that involves a local government prohibiting, via a zoning ordinance, the mining of silica (used as "frac sand"). Kind of like how Pennsylvania barred certain coal mining in our old friend, Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922). 

In Minnesota (where our story takes place) the right to subsurface minerals is separate from the rest of the land. Kind of like how Pennsylvania law recognized subsurface rights as a separate "stick" in Mahon. Here, the plaintiff owned several leases which allow it to mine silica. Sounds like a property interest, no? 

Well, no. At least not to a majority of the Minnesota Supreme Court, which held in Minnesota Sands, LLC v. County of Winona, No. A18-0090 (Mar. 11, 2020) (affirming the court of appeals) that the right to mine silica was a property right, but because it was "inchoate," it was not really a vested property right that covered by either the U.S. or Minnesota takings clause.

We won't go into great detail in this post (you can either read the opinion itself, or our earlier write up on the court of appeals' decision), but the overall vibe of the majority opinion is summarized in footnote 19 on page 34 of the slip opinion:

The dissent’s claim that our decision affords the government immunity to regulate the leases "out of existence" is incorrect. Our decision proceeds on the uncontroversial premise that the government cannot "take" property rights that a party never had. See Murr v. Wisconsin, __ U.S. __, __, 137 S. Ct. 1933, 1951 (2017) (Roberts, C.J., dissenting) (noting that the first question in a Takings Clause claim is “what ‘private property’ the government’s planned course of conduct will affect”). Likewise, the government does not regulate out of existence a leaseholder’s rights that terms of the lease never granted. It bears emphasizing that the rights granted under the terms of the lease agreements were determined by the parties. The decision to limit Minnesota Sands’ rights to a contingency interest that would not become definite unless the government granted a conditional-use permit was the company’s.

Slip op. at 34 n.19. In short, Minnesota Sands had not obtained a Conditional Use Permit.

We're not sure that the majority's reading of the lease terms to make the property rights granted by the lease "conditional" on the mining company obtaining a CUP, but this was the majority's way of trying to insulate the opinion from U.S. Supreme Court review. After all, what a lease means is a matter of state contract law, no? 

As we did with the court of appeals' opinion, we focused on the rationale set out by the two dissenting Justices. The dissenting opinion begins after page 39 of the slip opinion, and the "takings" analysis begins on page D-8. We urge you to read it in depth. The heart of the dissent's arguments is that the court should not have thrown the case out on the threshold property question, but should have reached the merits of whether the ban is a taking:

Because mineral leases, including the leases at issue here, have been “long recognized” as property, Phillips, 524 U.S. at 167, the protected property interest defined by those leases may not be regulated out of existence by the government, see Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922) (explaining that regulation will be recognized as a Fifth Amendment taking if it “goes too far”). Put another way, leasehold interests are protected by the Takings Clause of the United States Constitution. Because Minnesota Sands argues that its mineral leases were taken by the county ordinance, this case should, at a minimum, be remanded to the district court for an inquiry that considers factors “such as the economic impact of the regulation, its interference with reasonable investment-backed expectations, and the character of the government action.” Horne v. Dep’t of Agric., ___ U.S. ___, ___, 135 S. Ct. 2419, 2427 (2015) (discussing the takings factors to be considered under Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978)).

Dissent at D-10-D-11 (Anderson, J., dissenting) (footnote omitted).

We think Justice Anderson's dissent teed up a pretty good SCOTUS cert petition on either Penn Central or Palazzolo:

Legally, even if we could accept the court’s abridged take on the leases, I disagree with its abridged take on the Fifth Amendment. Under the court’s view of this constitutional protection, it does not matter how significant the interference of a regulation is with the “reasonable investment-backed expectations” of a property owner. Horne, ___ U.S. at ___, 135 S. Ct. at 2427 (discussing the Penn Central factors). Indeed, according to the court, it does not matter if the government subjected the owner’s private property to a total regulatory taking, see Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1016 (1992), if the owner’s property was not sufficiently “vested” before the regulation became effective. An owner’s regulatory takings claim, partial or total, may proceed only after the owner has a “vested interest to use” the property as expected. Here, according to the court, that means that Minnesota Sands has no constitutionally protected property interest until Winona County approves mining silica sand for hydraulic fracturing, which is the proposed use of Minnesota Sands’ leaseholds. Therefore, under the court’s logic, Minnesota Sands may not bring a Takings Clause challenge to Winona County’s frac sand mining ban until Winona County first permits frac sand mining.

Dissent at D-12-D-13 (Anderson, J., dissenting) (footnote omitted). As we wrote in our post about the court of appeals' decision, the majority's rationale is a classic bootstrap argument:

The majority's rationale was that there's no property interest because Minnesota Sands didn't get a CUP. Which overlooks the fact that under the ban, it cannot get a CUP. So the  very ban being challenged is what eliminated the plaintiffs' claim of owning property. Bootstrapping at its finest, and inconsistent, in our view, with the rule in Palazzolo v. Rhode Island, 533 U.S. 606 (2001), that the enactment of a regulation does not deprive a property owner of the right to challenge the regulation. 

Now, just wait til the cavalry arrives.

Postscript: for you Con Law types, much of the majority and dissenting opinions delve into the question of whether the "dormant" Commerce Clause was offended by the County's ban (was this a backhanded way of discriminating against non-County miners?), but we shall leave that issue to you, if interested.  

Minnesota Sands, LLC v. County of Winona, No. A18-0090 (Minn. Mar. 11, 2020) 

New Cert Petition: Are Patents "Property" Protected By The Takings Clause (Is Inter Partes Review A Taking)?

You recall that a short while ago, in Oil States Energy Servs., LLC v. Greene's Energy Group, LLC, 138 S. Ct. 1365 (2018), the Supreme Court held that patents are a form of "public property" (more like a government-created entitlement), and thus Congress can withhold the usual Article III tribunal and a jury when the validity of that property is challenged. The majority held that "inter partes review," under which the Patent and Trademark Office administratively reconsiders (and may cancel) previously-issued patents, does not run afoul of the Constitution because a patent is a "public right," and therefore more like a grant of a franchise than classic common law property.

Although the Court validated inter partes review, it left open the question of whether a patent owner who has her patent (in thousands of cases, these patents were issued before inter partes review was adopted) invalidated via administrative inter partes review would have a claim against the federal government for a taking, noting that patents may be "property for purposes of the Due Process Clause or the Takings Clause" (think rails-to-trails and Preseault). 

Well, here's that claim squarely presented in a case we've been following.

In Celgene Corp. v. Peter, 931 F.3d 1342 (Fed. Cir. 2019), the Federal Circuit concluded that the invalidation of an issued patent was not a taking. The (former) patent owner's cert petition asks this Question Presented:

When Congress passed the America Invents Act (AIA) in 2011, it created a new administrative proceeding called “inter partes review” for reviewing the validity of previously issued patents. See Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 6, 125 Stat. 284, 299-313 (2011). In the same Act, Congress created the Patent Trial and Appeal Board, a new administrative tribunal for conducting inter partes review. Id. § 7. That Board, now numbering 270-plus “administrative patent judges,” was given the retroactive power to cancel patent rights conferred prior to enactment of the AIA, “even though that procedure was not in place when [those patents] issued.” Oil States Energy Servs., LLC v. Greene’s Energy Group, LLC, 138 S. Ct. 1365, 1379 (2018). In just its first four years, the Board invalidated more than 16,600 patent claims, most of which were likely issued before inter partes review was enacted.

This case presents a question expressly left open in Oil States:

Whether retroactive application of inter partes review to patents issued before passage of the America Invents Act violates the Takings Clause of the Fifth Amendment.

Lots to absorb here: takings, "vested rights" and reliance, there's even a quasi-Contracts Clause vibe. So we shall be following along. 

Petition for a Writ of Certiorari, Celgene Corp. v. Peter, No. 19-1074 (Feb. 26, 2020) 

Idaho: Only The Owners At The Time Of The Taking Have Standing To Pursue Inverse Claim (Because It Is A "Personal Claim" & Doesn't Run With The Land)

It's Friday (and Valentine's Day), so we'll make this quick, even thought this is one of those cases with a fact pattern that you just can't digest quickly: In Day v. Idaho DOT, No. 45552 (Feb. 14, 2020), the Supreme Court of Idaho held that only the property owners at the time of the taking may assert an inverse condemnation claim. That, standing alone (pun intended), is not surprising.

But skip forward to page 7 of the slip opinion where the court determined when the taking occurred (at the time the government action alleged to be a taking -- here, an interchange -- was "substantially completed," not on the date the infrastructure project was actually completed):

This begs the following question: When did the taking in this case occur? The district court’s opinion states that “the parties stipulated that the taking occurred on December 5, 1997, when the Isaacs Canyon Interchange project was substantially completed.” In this appeal, the Day family vigorously disputes this statement, contending that they stipulated that valuation of any taking should be measured as of that date, but that accrual of their cause of action occurred subsequently. The Day family contends that their cause of action accrued when they were notified of ACHD’s refusal to permit a public street to be connected from their property to Eisenman Road and that until that time, the Isaac’s Canyon Interchange was merely a temporary interruption of their right of access to a public highway.

In support of this contention, the Day family relies on the Court of Appeals’ decision in Balivi Chemical Corporation v. Industrial Ventilation, Inc., 131 Idaho 449, 958 P.2d 606 (Ct. App. 1998). We are not persuaded by this argument. Without exploring the facts of the Balivi decision in length, we simply note that a case involving breach of a subsequent or substitute contract is inapposite to a claim of inverse condemnation.

We hold that the district court properly concluded that the date of the accrual of the cause of action was December 5, 1997, when the Isaacs Canyon Interchange was substantially completed.

Slip op. at 7.

Keep going to page 8 of the slip opinion, where the court concluded that the inverse condemnation claim in this case wasn't one that "runs with the land," but was a personal "chose in action" that belongs to the person who owned the property at the time of the taking. See slip op. at 8 (citing Palazzolo v. Rhode Island, 533 U.S. 606, 639 (2001) (Stevens, J., concurring in part and dissenting in part)). This bolstered the court's conclusion that future owners did not have standing (although it does avoid the question of whether the owners at the time of the taking could sell or transfer their personal rights to future owners). 

Applying these two rules, the court concluded that the owners of the property in 1997, when the DOT completed the interchange, were the only plaintiffs with standing to pursue an inverse claim. 

1997? What about the statute of limitations? In Idaho, inverse condemnation is subject to a four-year limitations period. Well, four years after 1997 was ... a long time ago. The court concluded, however, that the two plaintiffs with standing did not miss out because DOT's lawyer in 2000 sent the Day family a letter which stated, "I will also represent to you that the Department will not assert any type of statute of limitations defense if an agree on new access cannot be reached." Slip op. at 9. That was enough to induce reasonable reliance by the Day family, a question about which there remained a factual dispute. So no summary judgment on the SOL issue.

Check it out.  

Day v. Idaho Dep't of Transporatation, No. 45552 (Idaho Feb. 14, 2020)

Record Attendance (But There's Still Time For You Last-Minute Filers) At Nashville ALI-CLE Eminent Domain Conference

Picture 1: how normal people see pie.

Picture 2: how you see pie if you're coming to the
ALI-CLE Eminent Domain Conference. 

If you get the above, you probably are already set to join us next week for the 37th Annual ALI-CLE Eminent Domain and Land Valuation Litigation Conference in Nashville. (If not, shame on you!).

And having just reviewed the latest registration list, I can report that we have an all-time record attendance.  But there's still room for those of you still not committed. Register here. Don't miss out. There will be pie. 

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

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 an upper-division course like "Eminent Domain and Property Rights Law," where we're dealing with some very high-level stuff and the quality of the students is uniformly excellent, that makes for some hard choices at this time of year. But we've wrapped up grading, and have submitted the official scores.

Although I cannot share with you all the papers themselves, I don't think my students 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 this area of law: 

• One Man's Castle is Another Man's Parking Lot: A Homeowner's Theory of Eminent Domain
• Native Title: Concept and Compensation
• May the Forest Be With You: John Does in Trees Fight Pipelines Using the Right to Include
• Apportioning "A Chicken Which Is Really Not Big Enough to Go Around": Why Courts Should Abandon the Undivided Fee Rule for the Aggregate of Interests Approach
• Madisonian Musings on Judicial Takings
• Why Knick v. Township of Scott Returned Takings Jurisprudence to the Values Behind the Fourteenth Amendment
• In the Aftermath of Arkansas Game & Fish Commission and Livingston v. Virginia Department of Transportation: Virginia Localities Need to Plan for Great Liability Risks From Flooding
• The Veterans of Foreign Wars Case and the Undivided Fee Rule: Just Compensation for More Than One Owner
• Up-Zoning: A New American Dream and Shifting Property Paradigm
• I Believe I Can (Maybe) Fly: A Survey of Proper Law Interaction With Drones
• EPA's Takings Liability for Climate Change Inaction
• Are Pipelines Public Uses? 
• In States We Trust: The Limits, and Lack Thereof, on the States' Power to Modify the Public Trust Doctrine
• The Public Use Requirement: Changes Over Time

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 somewhere. 

Finally, I can't resist cutting and pasting from one of the paper's footnotes: "For more on 'exclusionary vibes' and the power of eminent domain, see The Castle (Debra Choate 1997)." 

Obi-Wan has taught you well. 

(Nearly) Last Chance To Join Us In Nashville For ALI-CLE's Eminent Domain Conference

You can also fly, drive, or bike to the upcoming 37th Annual ALI-CLE Eminent Domain & Land Valuation Litigation Conference. in Nashville. Limited space still available, so don't delay further and register now. We're on track to record attendance, so you don't want to miss the best nationally-focused three-day program on our area of law.

Takings, Knick, compensation, appraisals ... and a bit of fun thrown in. We have many new attendees, and many new speakers, too.  

Space Still Available For ALI-CLE Eminent Domain Conference, Nashville Jan 23-25, 2020

If you get this, you need to attend the 37th Annual ALI-CLE Eminent Domain & Land Valuation Litigation Conference, January 23-25, 2020, in Nashville.

And if you don't get this, you need to attend more. 

Register here. 

Tex App: City Ordinance Prohibiting Short-Term Rentals Unconstitutional

We've been meaning to post the Texas Court of Appeals' opinion in Zaatari v. City of  Austin, No. 03-17-00812 (Nov. 27, 2019) for some time.  

The City of Austin adopted an ordinance that, among other things, prohibited short term rental of a residence that is not also owner-occupied, barred certain activities (such as weddings) on other properties, and permitted City officials to enter such properties to ensure compliance with the regulations. Property owners challenged the ordinance, and the State of Texas intervened as a plaintiff. The trial court granted the City summary judgment.

The court of appeals reversed:

The ordinance provision banning non-homestead short-term rentals significantly affects property owners’ substantial interests in well-recognized property rights while, on the record before us, serving a minimal, if any, public interest. Therefore, the provision is unconstitutionally retroactive, and we will reverse the district court’s judgment on this issue and render judgment declaring the provision void. The ordinance provision restricting assembly infringes on Texans’ fundamental right to assemble because it limits peaceable assembly on private property. Therefore, because the City has not demonstrated that the provision is narrowly tailored to serve a compelling state interest, the provision violates the Texas Constitution’s guarantee to due course of law, and we will reverse the district court’s judgment on this issue and render judgment declaring the provision void.

Slip op. at 2. 

The good stuff starts on page 16 of the slip opinion, where the court concluded that the ordinance is unconstitutionally retroactive. The owners have a settled property right to rent their properties, and the ordinance "eliminate[d] well-established property rights that existed before the ordinance's adoption." Slip op. at 17. The City did not show a compelling interest in regulating these properties, but even if it had done so, on balance the settled expectations of property owners would have outweighed the government's interest. 

The right to use property includes the right to rent it, and although it may be regulated to some extent, the City even admitted that "Austinites have long exercised their right to lease their property by housing short-term tenants." Slip op. at 22. The ordinance resulted in a total elimination of that right. 

The owners and the State also raised a takings claim, but "having determined that [the ordinance] is unconstitutionally restrictive, we need not address the State and the Property Owners' remaining constitutional challenges to that same section." Slip op. at 23. 

Check it out. The entire opinion is worth reading.   

Zaatari v. City of Austin, No. 03-17-00812-CV (Tex. Ct. App. Nov. 27, 2019) 

Update On SCOTUS Property And Takings Cases

Now that the season is underway at 1 First Street NE, we thought we'd update you on some of the cases we've been following. 

Short story: no new grants in cases of interest.

• Stahl York Ave. Co., LLC v. City of New York, No. 18-1429 (cert. denied Oct. 7, 2019) - a good issue and one that is not going away: if an agency action is alleged to have take property, is the record limited to the record developed in the agency? 
• Guerin v. Fowler, No. 18-1545 (cert denied Oct 15, 2019) - a case we've been following closely, dealing with the nature of the takings remedy, and Eleventh Amendment immunity. You are not asking for money damages if all you want is an injunction ordering the State to stop keeping your money. 
• Katzin v. United States, No. 19-258 (cert. denied Oct. 21, 2019) - another case we've been following. The decision below, the 2-1 Federal Circuit (with Judge Newman filing a compelling dissent), held that it was not a taking by the USA when it claimed ownership of the plaintiff's property. 

But we're not all done yet with pending takings petitions. Smyth v. Conservation Comm'n of Falmouth, No. 19-223 (we filed an amicus brief in that one) is still there, with the government's BIO just filed. Penn Central is the issue in that one. 

And Cranston Police Retirees Action Committee v. City of Cranston, No. 19-286 is just getting underway. The Question Presented involves municipal pensions and whether there's a Contract Clause or Takings Clause violation when the city suspended the retirees' vested retirement benefits. 

Stay tuned, folks.

City Engineer's Email Was Not "Official Action" Triggering Vested Rights Even If You Responded With A Smiley Emoji

There's nothing terribly novel in the Texas Court of Appeals' opinion in City of Houston v. The Commons at Lake Houston, Ltd., No. 14-18-00664-CV (Oct. 15, 2019), but we highlight it here for a couple of reasons. 

First, the court's holding that a regulatory takings claim was not ripe because the property owner had not sought a permit -- and as a consequence, the city had not yet reached a "final decision" whether the regulations in question (which require that buildings in an area be built at least two feet above certain floodplains) -- reminds us that the first prong of Williamson County ripeness is alive and well (even though this was a case purely under Texas law, so Williamson County did not govern). The court noted that the owner "had not any permit of plat applications, or requests for variances, denied as a result of the amended ordinance. Indeed, the ordinance did not become effective until after the trial court denied the plea." Slip op. at 9.

Second, we were interested in this case because of the court's holding about what actions by a public employee can trigger vested rights. Or, more accurately, what actions can a property owner's rely on to move forward. Here, the plaintiff asserted that a city engineer's response to an email inquiry about the ordinance which asked general questions, was enough to for the city to have staked out an official position on whether the plaintiff's property was subject to the regulation, thus ripening a vested rights claim. The court disagreed, concluding the email was really general, and not some kind of official opinion about the applicability of the regulation to the property:

In the email, The Commons asked a general question about unspecified tracts of land without providing any details about the prior plan, plat, or permit applications that had been filed for The Crossing. The City’s employee clarified that she was “not an attorney” and gave a general answer. She offered to follow-up and get more information if the answer did not help. But The Commons did not respond with a request for more information or make any specific request to have Chapter 245 applied to The Crossing. We conclude that the email exchange is no evidence that the City has made a final decision to apply the new ordinance to The Commons’ property. See Tiki Island I, 464 S.W.3d at 442; Save Our Springs Alliance, 149 S.W.3d at 683–84. Under these circumstances, the Chapter 245 claim is not ripe.

Slip op. at 12 (footnote omitted). 

As for the title of this post (sorry, yes, it is clickbait), as if to emphasize the casual and general nature of the inquiry, the plaintiff responded to the engineer's email with the highlighted passage, below:

So here's your land use practice protip of the day: when you are trying to create a record of "official action" or "official assurances" for vested rights or zoning estoppel purposes (your term may be different, but the idea is the same), try to avoid emojis.  They don't really help in convincing a court that the conversation you are having with a government official is serious. 

City of Houston v. The Commons at Lake Houston, Ltd., No. 14-18-00664-CV (Tex. App. Oct. 15, 2019) 

ALI-CLE Eminent Domain & Land Valuation Litigation Conference - Jan 23-25, 2020, Nashville

2019 Brigham-Kanner Conference: The New New Property - Public Resources And Private Rights

Here is a transcript of the remarks I delivered today at the 2019 Brigham-Kanner Property Rights Conference. I was honored to join lawprof Henry Smith and Florida Supreme Court Justice (ret.) Ken Bell (who authored the Florida court's opinion in Stop the Beach Renourishment which was challenged in SCOTUS as a "judicial taking") to speak about "Public Resources and Private Rights" (moderated by Professor Katherine Mims Crocker). After paying our respects to 2019 B-K Prize winner Professor Steven Eagle, we each addressed some part of the question.

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The New New Property

As always, I bring to you tidings of "aloha" from the state where the legislature thought it was a going to reduce the price of residential housing by taking fee simple interests from "A" and giving them to "B," the leaseholders. 

Where now, the median price for a single-family, two bedroom, one bath, single wall house hovers just shy of $800 grand. 

And the state where the legislature thought that limiting the amount of rent gas companies could charge to their franchisees would somehow magically translate into lower gas prices at the pump for consumers. 

Where now, the price of gas is close to the highest in the nation -- although sorry, Californians, you may have us beat -- at or near $4 bucks a gallon. 

And in what may be a case of one-out-of-three-ain't-bad (so you don't write us off completely), our modest little jurisdiction is also responsible for at least one Supreme Court decision that we as property advocates really appreciate -- Kaiser Aetna v. United States, 444 U.S. 164 (1979) -- where the Court both affirmed that the right to exclude is one of those fundamental rights that is immune from interference by regulation unless first compensated, but also in one of the overlooked holdings of that case put in the context not of a fundamental right because it was recognized by state (Hawaii) law, but one sourced in the actions of Corps of Engineers personnel who had confirmed via a Section 10 Rivers and Harbors Act regulatory permit that Kaiser Aetna possessed the right to keep others out of the navigable marina it created:

While the consent of individual officials representing the United States cannot "estop" the United States, it can lead to the fruition of a number of expectancies embodied in the concept of "property" expectancies that, if sufficiently important, the Government must condemn and pay for before it takes over the management of the landowner's property.

I mention Kaiser Aetna because it is a good lead in to my portion of this panel, which is focusing on “Public Resources and Private Rights.” While we mostly speak of “property” as a private right, thanks in large part to our late colleague Charles Reich, whose place in the popular zeitgeist was secured by “The Greening of America,” but whom we lawyers will always remember as the author of the influential article “The New Property.” (And when I say "influential," I mean it is the most-cited article published by the Yale Law Journal. Ever.) 

That article got us to thinking about property in a different way: not exclusively as an instrument of private rights – most exemplified by the right to exclude – but as maybe something that looked a bit more like the commons. Things like government benefits, contracts, licenses, and in what may be the most famous instance, Board of Regents v. Roth, a government job. In that case a poor sap teaching at a state college who lacked tenure. (I feel your pain, brother.)

As we know the Court concluded that Professor Roth, who although he did not possess tenure, if he could show he possessed "new" property, could not be dismissed before the college conducted a hearing. In short, as what we might call Due Process Property. 

In the property rights context, we’ve seen similar rulings from the lower courts – most prominently the Second Circuit in Brody v. Port Chester (ask Dana Berliner about that one), the Tenth Circuit in M.A.K. Investment (before they declare your property blighted, they’ve got to tell you), and from my home court in Kellberg v. Yuen. 

How have government-granted or government-recognized “property” rights translated beyond the scope of individually-owned property? And can these Due Process property rights be translated to the language of takings-and-compensation property?

Two recent decisions highlight the differences. The first is from my home jurisdiction’s Supreme Court.

Now you might think that given the amount I give the business to my home court – Professor David Callies studied the opinions of our court over a 10 year time frame and revealed that it ruled in favor of environmental and similar plaintiffs nearly 90% of the time – that when our court issues a decision recognizing a new breed of “property” that I might rejoice. And it is a right that, as far as we can tell, no other court, state or federal, has ever recognized. 

The court concluded the Sierra Club possesses a constitutional property right in a "clean and healthful environment" entitling the organization to certain procedural protections under the state constitution’s due process of law clause. The ruling allowed the Club to intervene in a Public Utilities Commission petition regarding a power purchase agreement for a now-defunct electric plant on Maui. 

Here’s that again in case it didn't quite sink in: the court recognized a property right in a clean and healthful environment. 

Maui Electric filed an application with the State PUC, seeking the Commission's approval of an agreement between the utility and Hawaiian Commercial and Sugar Company which, if approved, would allow a rate increase to account for the additional production charges associated with the Puunene Plant, a coal-powered facility on former sugar lands in central Maui which transformed bagasse, the byproduct of sugar production, into electric power. We use the past tense because by the time the Supreme Court decided the case, the plant had closed, following the recent closure of the sugar plantation. No sugar plantation, no sugar, no bagasse. 

Sierra Club asked the PUC to intervene in the administrative process under the PUC's rules, asserting its own rights as well as several of its Maui members. The power plant, the petition asserted, would "impact Sierra Club's members' health, aesthetic, and recreational interests. Sierra Club also asserted its organizational interest in reducing Hawaii's dependence on imported fossil fuels and advancing a clean energy grid." 

Pretty vague stuff, and to me, more like policy questions than something best resolved by an adjudicative proceeding, but under existing judicial standing rules in similar cases in original jurisdiction actions brought in Hawaii courts, nothing too far from the norm. We’re not subject to Article III standing requirements, and the Hawaii Supreme Court’s state standing doctrine can best be summarized as “come on in the water’s fine.”  There's little doubt that if this were a case brought in a Hawaii trial court, that Sierra Club adequately alleged judicial standing. Anyone questioning that conclusion need only recall the Superferry case in which the Hawaii Supreme Court held that Sierra Club had standing to raise an environmental challenge to the now-defunct inter-island ferry because the ferry threatened the organization with four types of injury: (1) endangered species could be adversely impacted by a high-speed ferry; (2) the Superferry could increase the introduction of alien species; (3) surfers, divers, and canoe paddlers who used a state operated harbor could conceivably suffer adverse impacts; and (4) the threat of increased traffic on the road next to the harbor entrance. Again, that's a pretty vague butterfly-effect logic to gain standing. But for better or worse, that's the current state of Hawaii's standing law. 

However, the Maui Electric case was not an original jurisdiction action, it was an administrative proceeding in the Commission under the PUC's admin rules, governed by a different standard, one based in the Hawaii Administrative Procedures Act. Under the APA, an outsider may intervene in a "contested case" (an quasi-judicial adjudicative administrative process) when an agency rule or a statute gives the party a seat at the table, or when intervention is required by law because the agency is adjudicating that party's rights (in this case, the law was the Hawaii Constitution's due process clause).

And here, the Sierra Club alleged both that PUC statutes and the Hawaii Constitution's procedural due process of law protections gave it the right to intervene in the agency proceedings: 

Sierra Club argued that its members were concerned that the Puunene Plant relied too heavily on coal in order to meet its power obligations under the existing agreement and also that its members were concerned "about the public health and visibility impacts of burning coal."

Neither the PUC nor the court of appeals bought the Sierra Club's theory. The Commission denied intervention and decided Maui Electric's application without the Club's presence. The Club appealed to the Intermediate Court of Appeals which agreed with Maui Electric and dismissed the appeal for lack of jurisdiction. It concluded that because Sierra Club was not "aggrieved" by the decision by the PUC (because it correctly excluded the Club from the admin case), the appellate court did not have jurisdiction.

So up to the Hawaii Supreme Court they went, on the same two theories: the Club should have been allowed to intervene, either because the PUC's governing statutes gave it the right to do so, or because due process required it because the Club's property was at stake in the PUC proceeding. After rejecting a claim of mootness, three of our five justices got to the constitutional question: does the Hawaii Constitution recognize Sierra Club's environmental concerns as a property interest entitling it to procedural due process?

The majority based its conclusion on Article XI, section 9 of the Hawaii Constitution (a provision added by the 1978 constitutional convention):

Each person has the right to a clean and healthful environment, as defined by laws relating to environmental quality, including control of pollution and conservation, protection and enhancement of natural resources. Any person may enforce this right against any party, public or private, through appropriate legal proceedings, subject to reasonable limitations and regulation as provided by law.

That, the majority held, created a legitimate claim of entitlement to a clean and healthful environment, and thus it is a property right. It "is a substantive right guaranteed to each person." The majority noted that the court had earlier held that Native Hawaiian rights -- a right also found in the Hawaii Constitution -- are "property" rights, and that environmental concerns are no different. As a self-executing right, it is a legitimate entitlement --

We therefore conclude that HRS Chapter 269 is a law relating to environmental quality that defines the right to a clean and healthful environment under article XI, section 9 by providing that express consideration be given to reduction of greenhouse gas emissions in the decision-making of the Commission. Accordingly, we hold that Sierra Club has established a legitimate claim of entitlement to a clean and healthful environment under article XI, section 9 and HRS Chapter 269.

After reaching the conclusion that Sierra Club owns property in a clean and healthful environment, it was all over but the shouting and the majority held by applying the Professor Roth test, that the PUC had a duty to provide a hearing before it deprived the Club of its property:

The risks of an erroneous deprivation are high in this case absent the protections provided by a contested case hearing, particularly in light of the potential long-term impact on the air quality in the area, the denial of Sierra Club’s motion for intervention or participation in the proceeding, and the absence of other proceedings in which Sierra Club could have a meaningful opportunity to be heard concerning HC&S’s performance of the Agreement.

Finally, in a footnote, the majority made it clear that the result is immune from future legislative tinkering. This is a ruling based on the Hawaii Constitution, and thus no mere legislature can mess with it too much. 

Two justices disagreed, arguing this was a stretch, and one of those Pandora’s Box situations:

Respectfully, the Majority’s expansive interpretation of what constitutes a protected property interest in these circumstances may have unintended consequences in other contexts, such as statutes where the legislature has mandated consideration of specific factors by executive agencies when implementing a statute.

The dissent concluded the majority's result was unnecessary, because it was more of a policy choice than a judicial decision, and ultimately, if denied administrative intervention in the PUC, Sierra Club could deploy the loose standing rules which we mentioned earlier in this post, and institute an original jurisdiction action.

So is this property, New Property, or what we might call New New Property? 

The biggest question I have about the majority's conclusion is this: if the most fundamental aspect of owning "property" is the right to exclude others from the res, how in the world do members of the public have the right to exclude other members of the public from a clean and healthful environment? 

As the U.S. Supreme Court held in the aforementioned Kaiser Aetna, and Nollan "[w]e have repeatedly held that, as to property reserved by its owner for private use, 'the right to exclude [others is] 'one of the most essential sticks in the bundle of rights that are commonly characterized as property.'' (Or maybe Stevie Wonder said it better when he sang "this is mine, you can't take it.") 

Either way, the ability to keep others off of what you own -- and have the law back you up -- is one of the defining sticks in the bundle of rights which we call property.

Thus, I don’t think the court adequately grappled with the real foundational question built into the arguments -- should these types of environmental concerns even be shoehorned into the concept of "property" as that term has been used for thousands of years? Doesn't "property" as used in the Hawaii Constitution's due process clause mean private property? After all, as far as we can tell, every other time this court has dealt with property in Hawaii's due process clause, it has either expressly defined, or implicitly assumed, that the property interest at stake was private property, and not a right that looks more like something "owned" collectively by everyone. Essentially what the majority accomplished was a subtle redefinition of property from a private right to a public resource. 

So what’s on the horizon? I’m thinking the second shoe to drop is going to be "public trust" rights. As Professor Callies has written on the Hawaii form of the public trust which goes well beyond the Roman and English concepts, if the notion of public property is extended to the public trust, there’s a danger that this background principle could well eclipse – or indeed swallow up completely – the notion of private property. 

And our court is just one vote shy of concluding that Native Hawaiian rights – a form of cultural property – qualify as constitutional property.  Australia’s High Court has recently concluded that the property rights first recognized in the Mabo v. Queensland decision lead to a requirement for compensation when those rights were expropriated. Real money, even if it is Australian dollars. And since we’re here in the south what does the recognition of cultural property mean for things like those troublesome Confederate monuments that sit there on courthouse lawns (and across the street from certain law schools)? Is there a cultural property right for them to remain, or to be paid compensation to leave? 

As if responding to the Hawaii Supreme Court, the following year, the DC Circuit – applying Pennsylvania’s similar constitutional provision – came to the opposite conclusion. 

The court held that the Pennsylvania Constitution's Environmental Rights Amendment's guarantee of "clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic [sic] values of the environment" was not a liberty or property interest triggering the Fourteenth Amendment's due process protections. 

The case was a challenge by Riverkeeper to the Federal Energy Regulatory Commission's enabling statute, which requires FERC to recover its costs from the industries it regulates. Riverkeeper asserted this makes it more likely that FERC will approve pipelines. 

The court first concluded that Riverkeeper had standing. And it quickly dismissed its claim to possess a liberty interest because the ERA's rights are not "essential to the orderly pursuit of happiness by free men," and "the right to a healthy environment can[not] itself fairly be described as a 'liberty' interest." 

The court subjected Riverkeeper's "property" claim to a bit more analysis. State law defines property, and Pennsylvania's ERA "guarantees" certain things, and even calls them "rights." The court concluded, however, that the ERA's rights are "vague and indeterminate." Slip op. at 8. And the rights it recognizes do not have "some acertainable monetary value."  Most importantly, the question is whether the rights look like "any traditional conception of property."

The court held that because the ERA recognizes the rights as belonging to "the people," it failed this latter test:

Most importantly, the Environmental Rights Amendment creates no right to exclude—or anything like it. To the contrary, its first sentence vests the single “right” at issue collectively in “[t]he people,” its second sentence confirms that “Pennsylvania’s public natural resources are the common property of all the people,” and its third sentence requires the Commonwealth to conserve and maintain environmental resources “for the benefit of all the people.” Moreover, although the Supreme Court of Pennsylvania has held that the Amendment is judicially enforceable by private individuals, it has also confirmed that the right the Amendment creates is shared equally by all Pennsylvanians.

In other words, no Pennsylvanian may exclude any other from the right to clean air, pure water, and a preserved environment. So, the Amendment protects not private property rights, but public goods. In that respect, it is like “the right that we all possess to use the public lands”—which for due-process purposes “is not the ‘property’ right of anyone.”

The court concluded that "[t]he amendment is unlike traditional or even new property in yet other respects. For one thing, the right to a preserved environment cannot be bought or sold—and thus has no 'ascertainable monetary value,' as the Supreme Court’s 'property-as-entitlement cases have implicitly required.'"

So which is it, and maybe more critically what defines “property?” State law, notions of natural law or fundamental rights?

On that, I’d like to touch on one more recent decision, which will naturally lead us into a discussion of one of my favorite metaphysical law cases, Stop the Beach Renourishment (yes, we’re going to dive into judicial takings in a moment).

This is a case from the Ninth Circuit. The plaintiffs filed a class action alleging that state officials failed "to return interest that was allegedly skimmed from their state-managed retirement accounts." The District Court denied class action status and granted the State summary judgment, concluding the case was "potentially unripe" because the State had not finished the process of administrative rulemaking, which might, in the court's view, address the plaintiffs' claims for interest.

The Ninth Circuit – somewhat surprisingly, given its reputation --  reversed. The State argued that because the Washington Court of Appeals held that the statute at issue didn't require the payment of interest, there was no "property" that was taken when the state officials kept the interest. If it ain't property under state law, the state argued, it ain't "property." 

Not quite, held the Ninth Circuit. Interest on principal is one of those "core" and "traditional" property rights that a state simply cannot disavow:  

There we observed that “constitutionally protected property rights can—and often do—exist despite statutes . . . that appear to deny their existence.” Citing the Supreme Court’s opinion in Phillips, we noted that “a State may not sidestep the Takings Clause by disavowing traditional property interests long recognized under state law.” We then held that there is “a ‘core’ notion of constitutionally protected property into which state regulation simply may not intrude without prompting Takings Clause scrutiny.” This “core” is “defined by reference to traditional ‘background principles’ of property law.” In that case, we concluded that interest income earned on an interest-bearing account falls within this class of fundamental property rights. 

In short, while state law usually defines property, there are certain sticks that transcend a state's ability to redefine them out of existence. 

Before we move to Justice Bell and Stop the Beach Renourishment, let me say this. First, thank you to Lynda Butler for again asking me to be here. I’ve said before that being in this room is like being at the Super Bowl for property law. This is Yankee Stadium in October, the Champs Elysees or Wimbledon in July (although with the stellar talent in the room, I kind of feel like the poor sap up matched up with Venus Williams). Second, hearty congratulations to Professor Eagle. His regulatory takings treatise is one of those rare ones that is on what I call my “back” bookshelf. The books within reach when you turn around at your desk. A well-deserved recognition for your wonderful work and scholarship. 

**** 

Latest Ep, Eminent Domain Podcast: Short-Term Rentals, Tiki Island, The Castle, Penn Central

Last week, along with Bob Grace, I (Robert (don't-call-me-Bob) Thomas), was a guest on Clint Schumacher's Eminent Domain Podcast. Stream it above, or download it here.

Clint and I had a wide-ranging discussion that centered on the recent trend of limiting short-term rentals, the legal pushback, and (of course) takings. We discussed the memorably-captioned Tiki Island case from Clint's home state of Texas. Penn Central, naturally. Vested rights. Mrs. Murphy exceptions (although those deal with discrimination in rental housing). First Amendment stuff. The upcoming ALI-CLE Eminent Domain and Land Valuation Litigation Conference in Nashville (Jan 23-25, 2020), at which both Clint and Bob are speaking. And The Castle (which might not only be our favorite eminent domain movie, but our favorite movie period). 

Check it out.

Not only is Clint presenting at our Ethics program in Nashville in January, he will -- as he did in Palm Springs -- be bringing the Eminent Domain Podcast mobile unit, and will be doing the podcast from the Conference. Drop by and say hello and be a guest! 

About the only thing that's not perfect about the Eminent Domain Podcast is that it isn't more frequent. But we understand, Clint. As they say, good lawyers are always busy. Just keep 'em coming. 

Here's The Agenda And Faculty For The 2020 ALI-CLE Eminent Domain And Land Valuation Litigation Conference, Nashville, Jan 23-25, 2020

You overwhelmingly asked for Nashville, and we're bringing it to you!

Get ready, and hold your place now: here's the list of programs and speakers for the 36th Annual ALI-CLE Eminent Domain and Land Valuation Litigation Conference, to be held at the Downtown Nashville Hilton, January 23,- 25, 2020. Two-and-a-half days with top-notch national faculty (lawyers from both sides, judges, legal scholars, appraisers, relocation experts, and others).  

Early registration and group rates are available now. 

Here are just some of the programs:

• Featured Presentation: Property Rights as Civil Rights: Seeking Justice Though the Fourth and Fifth Amendments. Hon. Jonathan Apgar, Jamila Johnson, Alan Ackerman. Moderator: Leslie Fields.
• Making Sense of the New Rules After Knick v. Township of Scott: Where Do I Go, What Do I Do? David Breemer, Smitha Chintamaneni, Professor Bethany Berger. Moderator: Professor Steven Eagle.
• When A River Runs Thought It: Water Rights and Takings. Nancie Marzulla, Hertha Lund, and Charles McFarland. 
• Passive Takings by Government Inaction. Professor Christopher Serkin.
• Show, Don't Tell: The Dos and Don'ts of Demonstrative Evidence. John Murphy, Jeffrey Hamill.
• Is Close Enough Good Enough? Establishing the Date of Valuation in Direct and Inverse Cases. Neil Olson, Bill Ryan.
• Creative Approaches to Solving Difficult Appraisal Problems, Edward Burg, Bob Grace, MAI, Michael Rikon. Moderator: Joseph Waldo. 
• All You Need is Love: New Frontiers in Alternative Dispute Resolution in Eminent Domain. Cortney Young, Dwight Merriam.
• Road Warriors: Building and Trying an Eminent Domain Case From Your Laptop. Paul Henry, Jody McSpadden.
• Special Benefits: The Givings Clause? Heather Cunningham, Randy Smith.
• How To Try and Settle Pipeline Cases. Thomas Peebles, Melissa Glassman.
• Going Where No Court Has Gone Before: The Tension Between the Courts and Appraisal Methodology. Kevin Walsh, Kannon Conway. 
• Responding to Project Changes: Valuing a Taking When Government Action Changes or is Ongoing. Meghan Largent, W. Andrew Gowder. 
• Responding to the Abuse of Motions in Limine. Anthony Della Pelle, Williams James (invited)

There's also an Ethics program. For that, we are doing something a little different this year, with a special don't-miss presentation, "Surviving the Daily Fistfight: Finding Your Resilience When Every Day is a Battle" with Clint Schumacher, Christian Torgrimson, and Michael Ryan. 

And for those new to the field, or old hands who would like a refresher course, there's the "101" track on Thursday, going through an eminent domain case from A to Z. 

And this isn't the complete list, and there's more on relocation, regulatory takings from both sides of the case, effective strategies to determine unity of lands, fixtures, national updates for eminent domain and regulatory takings, and the "open mike" National Forum (where practitioners from around the nation share their issues and cases).

Look for the complete brochure shortly on the Conference web page on the ALI-CLE site.

And of course, there's Nashville. We're right around the corner from all that the town has to offer. Music City, USA. Hot chicken. The Grand Ole Opry. Country Music Hall of Fame. The Hermitage. 

So make your flight and hotel reservations now. Don't miss out. The attendance at the last several conferences has been record-setting, and the conference block at the hotel has sold out.

Join us - old friends and new colleagues! 

Virginia SCT: Reasonable Probability Of Rezoning Is Something The Jury Should Consider

We sometimes assume that everyone gets that the point of an eminent domain valuation trial is to try to establish the price the real-world market of buyers and sellers would have arrived on for the property being taken had the transaction been voluntary. We know it is all hypothetical because this market didn't actually exist, and the taking itself isn't a market transaction. In fact, a taking is pretty much the opposite of a market transaction. In other words, you're trying to recreate a market that did not in fact exist. 

To do so, you try to step into the shoes of a potential buyer of the property. What would they look at when trying to come up with a price? Would they limit themselves to the property's present use? Maybe. But depending on the circumstances, they also might think its worth paying more than the present use for the property because it is being underused, and there's a good chance that the buyer would buy it to make a more intense use. Why we look at the highest and best use of the property, and not just its current use. That vacant piece of industrially-zoned land would look awfully good with a 40-story building on it, and there's a good chance I could get the zoning changed to apartment. You old hands get what we're saying. 

So it makes us scratch our head when a party tries to exclude evidence about the property's potential for rezoning, on the basis that opinion testimony is "hypothetical," and as a consequence is not admissible. Yeah, man, it's all hypothetical. It bothers us even more when courts go along with that rationale.

Thankfully, in Helmick Family Farm, LLC v. Comm'r of Highways, No. 1180691 (Aug. 29, 2019), the Virginia Supreme Court avoided that. All seven justices agreed that, generally speaking, evidence of a reasonable probability of rezoning may be admissible. Where the court split 4-3 was on whether the situation on the ground (so to speak) merited the jury hearing about it. The majority concluded that the owner of a vacant plot of agriculturally-zoned land was wrongfully denied the ability to present to the jury evidence that there was a reasonable probability the property could be rezoned to a more intense use. 

Quick facts: Helmick Family Farm is 168 acres. The highway department needed about 2 acres for an interchange plus associated easements. Offered $20k. The farm thought that was too little, and declined. Condemnation followed. 

The farm wanted to have a local planner testify. His report opined that the parcels were planned for commercial or industrial development, even though the existing zoning was agricultural. He also was prepared to testify that an application for a zonig change to Light Industry would likely be approved. Indeed, the Board of Supervisors "had approved nearly every application for such rezonings between 2006 and 2015." Slip op. at 2. An appraiser was also prepared to testify that the highest and best use of the land would be to rezone it for commercial or light industrial, as the county's comprehensive plan envisioned.

The trial court, however, agreed with the condemnor, which argued in a motion in limine that evidence about "a hypothetical rezoning of the subject property from Agricultural (A-1) to Light Industrial or Commercial before the take on August 20, 2014" was inadmissible. Slip op. at 3. "The court agreed, reasoning that such evidence is too speculative and remote. The court ruled that 'all testimony and evidence regarding hypothetical rezoning of the subject property is excluded from trial.'" Id. 

We mostly assumed that that the general rule about the admissibility of this type of evidence was a settled matter in Virginia. Apparently not. Maybe that is a good thing, because now it is. The majority held (slip op. at 7) and the dissenters agreed (slip op. at 20) that, as the dissent put it, "the reasonable probability of rezoning of property taken through condemnation may be relevant to the property's fair market value and that nothing in our prior cases forecloses the admissiblity of such evidence." Slip op. at 20. The court held that under Virginia law, "fair market value" is the measure of compensation, that the hypothetical market price is the key element, that "everything which affects the market value is to be taken into consideration" is potentially admissible. "[C]onsideration is given to the property's adaptability and suitability for any legitimate purpose in light of conditions and circumstances that exist at the time of the take or that reasonably may be expected in the near future." Slip op. at 7.

The court noted USPAP, The Appraisal of Real Estate manual and an "avalanche of authority from other jurisdictions" that "make clear that such evidence is widely permitted." Slip op. at 8 (footnote omitted)..

The reason for allowing the factfinder to hear such evidence is obvious: a willing buyer will pay more for property that presents a fair prospect for more favorable zoning than a property that offers no such prospect. In an arms-length transaction, “the parties can be expected to bargain toward a price that can be viewed as the value of the property with the more valuable zoning classification, discounted by some amount.”

Slip op. at 8 (quoting William B. Knipe, Valuing the Probability of Rezoning, 56 Appraisal J. 217, 220 (1988)). "In short," the majority concluded, "the reasonable prospect of a favorable rezoning has an effect on the market value of the property and is, therefore, relevant." Slip op. at 9.

And yes, this is all hypothetical. Id. ("The entire enterprise of assessing the market value of land hinges of proof concerning acts of a hypothetical third party, namely, a person who would purchase the land."). 

The majority then walked through the property owner's evidence, and concluded that it was sufficiently concrete to warrant submission to the jury. The trial court still has a relatively minor gatekeeping role, to ensure that there is "sufficient evidence" of a reasonable probability of rezoning. To do so, the court looks at a bunch of factors (see slip op. at 14 for the list), all of which make sense when you think about it. Things like nearby properties being rezoned, the local plan, use patterns in the area, the physical characteristics of the property. And so on. In other words, things that a potential buyer would look at. 

As noted above the three dissenters agreed with both the general rule (such evidence is not automatically excluded simply because it is, by its nature, hypothetical, and highest and best use is the measure of compensation), and with the factors which the trial court looks at to determine "sufficient evidence." Where the dissenters disagreed was whether the farm's witnesses met that standard. 

See pages 21 and 22 for the dissenters' reasons why they concluded the evidence just wasn't sufficient. In sum, they thought the county's comprehensive plan was "not binding" (oh really? tell that to the County Board of Supervisors next time you try and do a development that isn't in conformity with the plan), the property owner had not actually submitted an amendments to the plan or the zoning (again, why is that dispositive? It's the reasonable probability of rezoning that matters, not whether the owners actually tried it; of course, if the owners had actually done so, maybe the discount would be less, and the property even more). The dissenters also believed that the fact the owners had not vested into a plan or zone change was fatal. Slip op. at 22-23. To us, that is simply another way of saying what they said earlier. Of course, if the owner had vested, it might have received an even higher price in the hypothetical market (because a vested right is a separate property right). But just because it has not actually vested doesn't mean that a hypothetical buyer might not still reasonably believe that an upzone is likely in the near future, and be willing to pay more. To us, that goes to the amount of the discount, if any, to be applied, not to admissibility.

To us, this type of analysis should turn on the old 401/403 rules of relevance vs. undue prejudice. Trial judges shouldn't be in the business of weighing evidence, only determining whether it is relevant under 401, and if so whether it is unduly prejudicial under 403. If not, the jury should consider it, and make the call whether it adds up to a reasonable probability given the circumstances: how the hypothetical buyer would measure the probability of a more intense use, and the risk that it would not come to fruition. That's what juries do. 

Helmick Family Farm, LLC v. Comm'r of Highways, No. 1180691 (Va. Aug. 29, 2019)

Get Ready: The 2020 ALI-CLE Eminent Domain And Land Valuation Litigation Conference Agenda Coming Soon

The final agenda and faculty list will soon be officially published, but we wanted to give you a preview of what is in store at the ALI-CLE Eminent Domain and Land Valuation Litigation Conference, January 23-25, 2020, at the Nashville Hilton (downtown, just a few steps away from everything that Nashville has to offer). 

Don't miss out: in recent years, we've been at-or-near capacity, and the conference hotel has even sold out a couple of times. Visit the ALI-CLE website to register and hold your space. 

Here are some of the things we'll be discussing: 

• Making Sense of the New Rules After Knick v. Township of Scott: Where Do I Go, What Do I Do?
• The Missing Link in Valuing Fixtures
• When a River Runs Through it: Water Rights and Takings
• Responding to Project Changes: Valuation When Government Action is Ongoing
• Property Rights as Civil Rights: Seeking Justice Through The Fifth Amendment
• Special Benefits: The Givings Clause?
• How To Try and Settle Pipeline Cases
• And, of course Ethics. 

Many of our expert faculty are returning, but we're also featuring many new presenters who have never been on our dais before. And a mix of perspectives and backgrounds: property owners' counsel, condemning agency lawyers, public interest, judges, and legal scholars. Plus a chance to meet your colleagues from across the country. Make connections, and see old friends. 

Early bird registration underway here. See you there. 

NY Court of Appeals Considering Whether A Pipeline Can Take Property For A Project That Can't Legally Be Built

Here's a case that's pending in the New York Court of Appeals that has been briefed and is awaiting argument. 

In Natural Fuel Gas Supply Corp. v. Schueckler, No. 17-02021 (Nov. 9, 2018), the Appellate Division answered this question:

This appeal therefore presents a novel question of condemnation law: can a corporation involuntarily expropriate privately-owned land when the underlying public project cannot be lawfully constructed?

Slip op. at 1. 

The court stated it clearly: "We answer that question firmly in the negative."

Like many projects, in order to be built this natural gas pipeline had a long and complex checklist. It needed approvals of FERC -- a certificate of public convenience -- under the Natural Gas Act. And certain approvals under the federal Clean Water Act. Which in turn meant it needed state enviro checkoffs, here a water quality certificate from a New York agency. It also needed to acquire the needed property, either by negotiation or by eminent domain (in this case, condemnation under state law). Under New York's eminent domain law, if a condemnor obtains a certificate of public convenience, it is exempt from the usual process of proving public use and purpose. 

FERC ok'd the pipeline and granted the certificate of public convenience. But it wasn't an unconditional certificate. It was, by law, subject to all those other things we mentioned above. It was the water quality certificate from the State of New York that proved to be the hangup. After it applied for -- but before it actually obtained -- that certificate, the pipeline began condemnation proceedings in a New York court to take the property.

But "[s]hortly after petitioner commenced the vesting proceeding, however, the New York State Department of  Environmental Conservation (DEC) denied petitioner's application for a WQC. Slip op. at 5. Oops. "The WQC application, held the DEC, 'fails to demonstrate compliance with New York State water quality standards.'" Id. The pipeline objected, naturally. It sought judicial review of the denial. That challenge remains pending. But if the denial of the enviro certificate is "ultimately upheld, the pipeline cannot be built." Id. 

Back in the eminent domain case, the property owners objected to the taking. The pipeline doesn't have a valid certificate of public convenience, they asserted. The New York Supreme Court (the trial division - yeah, we watch Law and Order (dun-dun) so we know that the "supreme" court is that state's general jurisdiction trial court) disagreed, and "authorized the acquisition of the easements necessary for the construction and operation of the pipeline." Slip op. at 7. As we wrote about a separate pipeline case, many courts view eminent domain as inevitable, and are not bothered terribly by the details.

The Appellate Division (4-2) reversed ("firmly" as the majority noted above). As long as FERC's certificate of public convenience was subject to conditions, and those conditions are not met, the attempted taking lacks proof of a public use or purpose because the pipeline is not exempt from the usual requirement to establish a public use. 

Although it is true that a federal commission issued a certificate of public necessity approving petitioner’s pipeline project, the certificate nevertheless authorized construction of the pipeline “subject to” various conditions, including, as discussed above, the State’s issuance of a WQC. “ ‘[S]ubject to’ . . . language means what is says: no vested rights are created . . . prior to” the occurrence of the condition to which the instrument is subject (Moran v Erk, 11 NY3d 452, 456 [2008]). Thus, when the State denied the very permit upon which petitioner’s authority to construct the pipeline was conditioned, petitioner – by definition – lost its contingent right to construct the public project[.]

Slip op. at 8.  

Conditions unsatisfied means no valid FERC certificate. No FERC certificate means no exemption from the usual showing of public use or purpose. The majority rejected the pipeline's argument that a valid and fully realized FERC certificate was not a condition precedent to taking property, and was only needed to start actual construction. That "entire line of argument is a non sequitur." Slip op. at 8. Nor did the court accept the pipeline's argument that a fully vested FERC certificate wasn't needed to start taking the property:

Rather, the lodestar of petitioner’s eminent domain power is the public project authorized by the certificate (see Transportation Corporations Law § 83). The certificate, in other words, simply authorizes the public project, and the power of eminent domain stands or falls with that project as a necessary ancillary to its implementation (see generally NY Const, art 1, § 7 [a]). Thus, when the public project cannot be legally completed, any eminent domain power in connection with that project is necessarily extinguished.3 To say otherwise would effectively give a condemnor the power to condemn land in the absence of a public project, and that would violate the plain text of the State Constitution.

Slip op. at 9. 

The court also rejected the old "well, they're going to be compensated for it so what's the problem" argument as "entirely besides the point." Id. "in a constitutional order such as ours, jealous as it is of the right to own property and do with it as one pleases, only a viable public project can force respondents to surrender their rights in their land." Id. If only the federal courts of appeals understood that!

The dissenters pointed out that a later-filed order seemed to moot the objections (appellate procedure mavens, take note and compare page 10 of the dissent with the second paragraph of footnote 2 of the majority opinion on page 6): "in an order issued August 6, 2018 ... the DEC waived its WQC certification authority under section 401 of the Clean Water Act. Thus, as things now stand, the DEC's denial of the WQC is no longer an impediment to construction of the pipeline." Dissent at 10. Amazing things happen when you have the agency in your hand, no? The court should take judicial notice of that bit of administrative sleight of hand because it makes the you-don't-have-a-valid-FERC-certificate argument irrelevant, according to the dissent.   

After all that, the New York Court of Appeals agreed to review the issue. The briefs have been filed, and we're awaiting oral argument.

• Pipeline's opening brief
• Schueckler's answering brief
• Pipeline's reply
• the Record on Appeal, if you want to take a deep dive

So stay tuned, everyone. We'll keep following along (even if the pipeline asks to dismiss for appellate mootness, a motion we would not be surprised to see). 

National Fuel Gas Supply Corp. v. Schueckler, No. 17-02021 (N.Y.A.D. Nov. 9, 2018)

RI: Ten-Year Suspension Of Pension's COLA Adjustment Not A Penn Central Taking

In Cranston Police Retirees Action Committee v. City of Cranston, No. 2017-36 (June 3, 2019), the Rhode Island Supreme Court concluded that a municipal ordinance "the promulgated a ten-year suspension of the cost-of-living-adjustment (COLA) benefit for retirees of the Cranston Police Department and Cranston Fire Department who were enrolled in the City of Cranston's pension plan" was not a taking of the pension plans' members property.

Takings mavens should skip to page 27 of the opinion for the good stuff. First, the court assumed that the plan members possessed "property." A COLA benefit, once vested, is property, and the parties did not challenge the trial court's conclusion on that issue. Second, the court rejected the contention that the suspension of COLA benefits was a physical invasion or a Lucas economic wipeout. Slip op. at 30-31. This was a regulatory taking, analyzed under Penn Central's three-part ad hoc test. Slip op. at 31.

• Economic impact: "the cumulative impact of the COLA suspension on CPRAC's members was significant." Slip op. at 32. But (and there's always a "but") the impact was temporary. (Ten years is "temporary?" Many retirees we know would disagree.) And it's not like the suspension included the base payment, just the COLA adjustment.
• Character of the government action: "The City did not 'physically invade or permanently appropriate any of the [retirees'] assets for its own use." Slip op. at 32. And its motivation was to "improve the health of the City's pension system." Id.
• Interference with investment-backed expectations: The opinion doesn't expressly deal with this factor, and assumes that the retirees had valid expectations, which they backed by investing their time and careers. 

In short, the court viewed the ordinances as one of those "adjustments of rights for the public good," which the city didn't have to pay for.

Cranston Police Retirees Action Committee v. City of Cranston, No. 2017-36 (R.I. June 3, 2019)

Links And Materials From Today's Transportation Research Board Session

Here are the cases and other items I either spoke about or mentioned at today's Transportation Research Board's 57th Annual Workshop on Transportation Law in Cambridge, Massachusetts:

• The Colorado public use cases: public use vs. public purpose: Lafayette and Carousel Farms
• On the Supreme Court docket: Violet Dock Port (SCOTUS, Louisiana)
• The Louisiana Supreme Court's ruling on valuation of a unique property (replacement cost vs fair market value)
• "New" property vs. "old" property - environmental rights as "property" (CADC, Hawaii)
• Tribal immunity from eminent domain (CA10, cert denied)
• Public can use the electricity produced, not the land taken (but that's good       enough) (SD)
• Utility takings: Claremont (Cal), Missoula (Montana)
• Post-Kelo statutes: how effective? (Georgia)
• The relationship between condemnation and inverse: Stimson (NC)
• Inverse vs. tort, part II: MR/GO and Katrina flooding (CAFED)
• Maryland: government inaction could result in inverse liability (Maryland)
• Objecting to eminent domain is a political opinion (CA9)
• Highest and Best Use could include "conceptual plans" (Florida)
• Causing a nonprofit to lose even more money is considered compensable "goodwill" under California law (California)
• Billboard valuation - loss of income isn't compensable, but there is more that one way to still get it (NC)
• Larger parcel, quick take deposit (Hawaii)
• Here's the amicus brief we filed in the above case, which cites Baetjer v. United States, 143 F.2d 391, 395 (1st Cir.) (condemnation on island of Vieques caused severance damages to parcels on Puerto Rico), cert. denied, 323 U.S. 772 (1944).
• Federal Relocation Act, inverse condemnation, and attorney fees  (West Virginia)
• The larger parcel in inverse cases (aka the "denominator" issue) (SCOTUS)
• Bye bye, Williamson County? (SCOTUS)
• Palazzolo applied (NY)
• Judicial Takings Redux - Martin's Beach (SCOTUS)

Thanks to my fellow speakers -- Bernadette Duran-Brown and Laura Curry -- and to the organizers of the Conference for asking me to be here. 

New York City Allowing Ridesharing Isn't A Taking Of Taxi Medallions

Surge pricing applies!

You really have to feel for taxi operators who invested what could be huge amounts of money to obtain a taxi medallion getting whacked by the competition from ridesharing outfits like Lyft and Uber. These services look and feel an awful lot like taxis, don't they? As we wrote in a recent article:

These services—at least from the consumer’s standpoint—operate a heck of a lot like taxis do. You hail a ride (not with your arm and a sharp whistle, but with your fingers and your smartphone), you get in, you go, you get where you are going, you pay the driver (again, with the app, not by handing the driver cash or your credit card). Is that enough of a difference to say that ridesharing isn’t taxicabbing? On that, I am mostly with the taxicab operators. Having used Uber and Lyft more than a few times, they sure do seem like taxis with some very inconsequential differences.

But they, unlike yellow cabs, don't need a city-issued medallion.

But like other courts before it, in Glyka Trans, LLC v. City of New York, No. D55245 (May 2, 2018), the Second Department of New York's Appellate Division concluded the differences between ridesharing and taxicabbing were enough that a city would not be held liable for a taking of taxi medallions after it adopted rules regulating ridesharing services, not subjecting them to the same rules which apply to New York's existing three types of vehicles for hire (yellow medallion cabs, street hail liveries, and for-hire vehicles):

The fourth and fifth causes of action sought a judgment declaring that “the City’s decision to allow black cars to pick up e-hails constitutes an unconstitutional taking of the Petitioners’ property without just compensation” under the Takings Clause of the Fifth Amendment of the United States Constitution and article I, § 7 of the New York Constitution. 

The petitioners alleged in the amended petition/complaint that medallion yellow taxicabs have the exclusive right to pick up passengers via “hail,” which includes both a “request, either through a verbal (audio) action ... and/or a visible physical action” and “an electronic method such as an E-Hail App” (35 RCNY 51-03). The petitioners alleged that “[t]he TLC’s decision to allow companies like Uber to pick up e-hails—even though Uber is not required to shoulder the enormous financial burden of purchasing medallions and is not bound by the fare limitations and other significant restrictions that apply to yellow taxis in consideration for their hail exclusivity—enables Uber to compete unfairly with yellow taxis.”

Slip op. at 2-3.

The trial court agreed with the city, and the Appellate Division affirmed. The court first concluded that the city was not acting unreasonably when it determined that using an app to call a rideshare was not the same as a street hail: "We also agree with the Supreme Court’s determination that the TLC did not act arbitrarily or capriciously in deciding that the use of a smartphone application to request a ride from an FHV was a form of prearrangement and not synonymous with a street hail." Slip op. at 5.

On the takings issue, the court held that a taxi medallion isn't a property right to be free from competition:

The crux of the petitioners’ claim is that the TLC’s decision to “allow black cars to pick up e-hails” has diminished the value of their medallions, decreased the number of taxicab trips per day, and reduced their medallion income. However, “‘[p]roperty’ does not include a right to be free from competition” (Illinois Transp. Trade Assn. v City of Chicago, 839 F3d at 596). Accordingly, the TLC’s decision to allow companies such as Uber to pick up passengers via a smartphone application does not interfere with a taxicab’s use of its medallion or exclusive right to pick up passengers via street hail.

Slip op. at 5.

This is consistent with every other court which has addressed the issue, so this result should not come as much of a surprise. But medallions are often very expensive, and many of the owners have invested their lives' work into acquiring one and have built up expectations that it gave them certain rights. So to have the courts simply conclude that these expectations are not reasonable doesn't feel quite "right." We're not sure there's much that takings doctrine can do, but there it is.

Glyka Trans, LLC v. City of New York, No. D55245 (N.Y.A.D. May 2, 2018)

Property Lawyers, Read The Supreme Court's Latest Patent Case

Here's one we've been waiting to drop, but when it did, we were tied up so couldn't get to it quickly. 

Yes, it's a patent case. But as we explained here, a case that property mavens should be following because it deals with what is "property," and where an owner goes to resolve disputes about that property. 

In Oil States Energy Services, LLC v. Greene's Energy Group, LLC, No. 16-713 (Apr. 24, 2018), the Court's majority held that patents are a form of "public property" (more like a government-created entitlement), and thus Congress can withhold the usual Article III tribunal and a jury when the validity of that property is challenged. In an opinion by Justice Thomas (joined by everyone but the Chief Justice and Justice Gorsuch), the Court held that "inter partes review," under which the Patent and Trademark Office administratively reconsiders (and may cancel) previously-issued patents, does not run afoul of the Constitution because a patent is a "public right," and therefore more like a grant of a franchise than classic common law property:

Inter partes review falls squarely within the public-rights doctrine. This Court has recognized, and the parties do not dispute, that the decision to grant a patent is a matter involving public rights—specifically, the grant of a public franchise. Inter partes review is simply a reconsideration of that grant, and Congress has permissibly re-served the PTO’s authority to conduct that reconsideration. Thus, the PTO can do so without violating Article III.

Slip op. at 6-7. Thus, inter partes review isn't really like a challenge to the patent, but more like a "second look at an earlier administrative grant of a patent." Slip op. at 8. This is like the situation in which Congress grants a franchise for a private operator to collect a toll on a bridge and reserves the right to revoke or amend that franchise. When it does so, according to the majority, Congress need not use an Article III court. A patent holder's rights are derived from statute, and thus can be limited. 

What the King gives, the King can take away on the King's terms. 

Yes, patents are "private property," but that property is "only a specific form of property right -- a public franchise." Slip op. at 10. These are a different kind of property right than takings mavens are used to dealing with (property rights expressly recognized in the Fifth and Fourteenth Amendments), a distinction which the majority recognized:

Finally, our decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause. See, e.g., Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank, 527 U. S. 627, 642 (1999); James v. Campbell, 104 U. S. 356, 358 (1882).

Slip op. at 17.

This means that the question presented in a parallel case in which the Court recently denied cert, is still open. In Brott v. United States, No. 17-712, the property owner challenged the constitutionality of requiring property owners with big takings claims against the federal government to pursue compensation in the non-Article III, non-jury Court of Federal Claims. The court denied review in Brott and a companion case raising the same issue, but as we know, a denial of cert isn't conclusive of the issue presented. 

Three Justices (Breyer, Ginsburg, and Sotomayor) filed a short concurring opinion to note that "the Court’s opinion should not be read to say that matters involving private rights may never be adjudicated other than by Article III courts, say, sometimes by agencies." Concurring op. at 1. In short, "we three think that even takings claims involving private rights can be relegated by Congress to non-Article III tribunals."

Justice Gorsuch, joined by Chief Justice Roberts dissented in a very readable opinion arguing that under English common law, patents were dealt with by the courts, not the Privy Council, and that the Founders understood this. Judges, not the executive's own officers, should resolve these type of claims:

No doubt this efficient scheme is well intended. But can there be any doubt that it also represents a retreat from the promise of judicial independence? Or that when an independent Judiciary gives ground to bureaucrats in the adjudication of cases, the losers will often prove the unpopular and vulnerable? Powerful interests are capable of amassing armies of lobbyists and lawyers to influence (and even capture) politically accountable bureaucracies. But what about everyone else?

Of course, all this invites the question: how do we know which cases independent judges must hear? The Constitution’s original public meaning supplies the key, for the Constitution cannot secure the people’s liberty any less today than it did the day it was ratified.

Dissent at 3. 

Thus, Oil States tells us that there are at least six Justices who might be open to a Brott claim down the road, because public rights like patents and franchises are different in history and in kind from private rights (classic property like land and stuff). 

Our final thought: the petitioners must have understood -- as did the Brott petitioners -- that this was a very uphill fight. Asking the courts to overturn an elaborate (and in the case of the Tucker Act, an entrenched and well-oiled) scheme by tribunals that look a lot like "courts," is going to be daunting. Knowing nothing else, it cannot be much of a surprise when the courts uphold the status quo. 

But that doesn't mean the status quo is right, or conforms to the Constitution. Thus, we think that the issue in Brott -- whether takings claims against the federal government can be assigned to the Article I CFC, without a jury -- is still up for grabs. So, as always, stay tuned. The next few years are going to be interesting.  

Oil States Energy Services, LLC v. Greene's Energy Group, LLC, No. 16-712 (Apr. 24, 2018) 

Cases And Materials From The Takings And Eminent Domain Session At The Land Use Institute

Some of the Land Use Institute faculty, including (front row left), Planning Chair Frank Schnidman and Planning Co-Chair Patty Salkin

Last Friday at the 32nd Annual Land Use Institute in Detroit, I was honored to moderate a freewheeling discussion by a panel of takings experts, Professor Steven Eagle, Minnesota lawyer Howard Roston, and Michigan's own Alan Ackerman on "Takings, Eminent Domain, and Vested Rights."

Here are the cases and other materials we discussed, as well as a few others which we did not have time to cover (but wish we could have):

• Murr v. Wisconsin (SCOTUS): should unified use be the most critical determining factor?
• The first post-Murr case? Here's the cert petition in that case.
• Knick v. Township of Scott (SCOTUS): Williamson County ripeness on the chopping block?
• Colony Cove: rent control takings claim back in the Ninth Circuit. Any guesses on the outcome?
• Martin's Beach v. Surfrider Foundation: judicial takings cert petition.
• Leone v. County of Maui - loss of all "use" or of all "value" as the measure of a Lucas taking?
• Song v. Sessions: eminent domain protests as the basis for political asylum.
• Gunderson v. Indiana: public trust and the equal footing doctrine.
• MR-GO: Katrina flooding as a taking.
• North Carolina's Map Act cases: project announcement and condemnation blight.
• St Bernard Port Authority v. Violet Dock Port - taking for private benefit, replacement cost as measure of just compensation.
• City of Marietta v. Summerour - pre-taking requirements in Georgia’s property owners bill of rights.

To those who attended: thank you for joining us for a lively and informative session on our favorite topics.

Land Use Institute - Detroit

We're in Detroit the rest of the week at the Mercy Law School for the venerable Land Use Institute, now in its 32nd iteration.

Planning Chair Frank Schnidman has assembled a great faculty including out Detroit colleague Alan Ackerman (above, talking about takings liability for flooding), and we'll be spending the time talking inverse condemnation, public trust, planning law, homelessness, autonomous vehicles, affordable housing, RULIPA, and similar topics. We'll be presenting on "Eminent Domain, Vested Rights, and Regulatory Takings," "Client Representation: Developer, Government, and Citizens Groups," and "Federal Laws Affecting Local Land Use Decision Making." 

If you are here with us in Detroit, stop by and say hello. If you aren't here, shame on you! This is one of the best and most affordable tuition deals in CLE.

But all kidding aside, if you are not in Detroit now, be sure to calendar these two dates:

• 2018 Land Use Institute: April 11-12, 2019, Baltimore, MD (Royal Sonesta Harbor Court Hotel)
• 2020 Land Use Institute: April 23-24, 2020, Tampa, FL (Le Meridien Tampa)

Reserve the dates!

There's Still Time To Join Us In Detroit: 32d Annual Land Use Institute

Space is filling up, but there's still time to join us later this month in Detroit for the 32nd Annual Land Use Institute (April-19-20). 

We'll let program Planning Chair Frank Schnidman explain all the reasons why, and we'll add only these points: (1) it's a very good program that won't take much of your time (fly in for the Thursday afternoon program, stay a night, fly home on Friday evening); (2) Detroit is the place to be these days; and (3) it's one of the best deals in CLE credits, with tuition as low as $400.

2018 Land Use Institute Brochure Detroit 5 2018

New Article: Murr And Other "Blurred Lines"

Here's an article ("Murr v. Wisconsin: The Supreme Court Rewrites Property Rules in Multiple-Parcel Regulatory Takings Cases"), which we authored along with a colleague, published in February 2018's Zoning and Planning Law Report, about the U.S. Supreme Court's decision in Murr v. Wisconsin, the case about the "larger parcel" in regulatory takings.

As you might predict, we concluded that the Murr majority's analysis was vague, unsatisfying, and generally not helpful. Strong letter to follow!

Here's a passage from the Introduction:

The U.S. Supreme Court’s 5-3 long-anticipated ruling in Murr v. Wisconsin, expected to resolve the “larger parcel” or “denominator” issue in regulatory takings cases, has instead created a test that neither property owners, lawyers, nor government officials can understand or rely on.

The majority opinion, authored by Justice Anthony Kennedy, addressed a long-standing question in regulatory takings law: when a claimant who owns more than a single parcel alleges a regulation works a taking of one of them, how much of the claimant’s total holdings will the economic impact of the regulation measured against? The question in Murr arose as a choice between which regulatory takings rule would apply in the case, the categorical “deprivation of economically beneficial use” rule from Lucas, or the ad hoc Penn Central balancing test. This threshold question governed the outcome because the narrower the Murrs’ property interest was defined by the courts, the more likely it would be they would be able to prove the regulation was a taking. In other words, how would the “property” which was claimed to have been taken defined?

Thanks to ZPLR Editor Patricia Salkin and the editorial team at West Thompson Retuters, and to our coauthor Erica Levine Powers.

32nd Annual Land Use Institute: Detroit, April 19-20, 2018

Mark your calendars, plan to come: Detroit, April 19-20, 2018. For what is perhaps the best deal in CLE (tuition as low as $400), the 32d Annual Land Use Institute, sponsored by our section of the ABA, the Section of State and Local Government Law.

The venue is the Detroit Mercy School of Law, and the conference hotel is the historic Westin Book Cadillac in downtown Detroit. The Land Use Institute is being held in conjunction with the Section's Spring State and Local Law Conference. Register for one conference, and you are free to move between sessions (no additional registration fees).

Planning Chairs Frank Schnidman and Dean Patrica Salkin have assembled an excellent faculty and program for the two days. Topics include: "Nuts and Bolts of Land Use Practice: Vested Rights and Regulatory Takings," "Public-Private Partnerships," "Climate Change and Resilient Development," "Client Representation: Developer, Government and Citizen Groups," "Housing Supply and Affordability: Planning Alternatives and Legal Consequences," and "Community Benefits Agreements, Environmental Justice and Access to Housing." The Annual Richard Babcock Keynote Address will be by Wendie Kellington, "The Role of Planning and Law in Solving Homelessness." Complete agenda is posted here.

Other featured speakers: Dennis Archer, former Detroit Mayor (and Past President of the American Bar Association); Neisen Kasdin, former Mayor of the City of Miami Beach; Jared Fleischer, Quicken Loans; and Maurice D. Cox, Director, Planning & Development, City of Detroit. And, as always, a renown national faculty of land use law practitioners, scholars, jurists, and public officials. 

Come and join us in the reborn City of Detroit, where there's a lot to do and see.

Indiana: Equal Footing Doctrine Means Public Owns Up To The Ordinary High Water Mark

Update: thanks to Daniel Lehmann for keying us in to this case, now being reviewed by the Supreme Court, involving the foundational question of whether title to Equal Footing Doctrine submerged lands is a question of state or federal law. Scheduled for the Court's 2/16/2018 conference.

* * * *

In our experience, rationality often takes a second chair when delving into the question of who may own various parts of beaches. It's certainly true in our home jurisdiction, where any claims to private rights anywhere near a beach can be met with howls of protest, regardless of what the law might actually provide in any given circumstance. Trying to unwrap these cases can be an exercise in frustration, and if you don't understand the background and politics -- the "real story" -- you can't really say you understand a decision.

That is what we're wondering about the Indiana Supreme Court's long-awaited opinion in Gunderson v. Indiana, No. 46S03-17060PL-423 (Feb. 14, 2018), in which the court concluded that the public, and not the Gundersons, owned the area below Lake Michigan's ordinary mean high water mark. We have read the opinion, and the court frames the issue the same we see it: "What is the precise boundary at which the State’s ownership interest ends and private property interests begin?" Slip op. at 1. But what, if anything, in the real story here and what other forces are at play other than those we read in the opinion and briefs? We wish we knew.

The case is a property lawyer's delight, full of things like the Equal Footing Doctrine, the Northwest Ordinance, public trust, Shively v. Bowlby, 152 U.S. 1 (1894), and Martin v. Waddell’s Lessee, 41 U.S. (16 Pet.) 367 (1842). (If you don't need to look up any of these terms, congratulations - you are officially a property law geek.) We recommend you read the opinion yourself; it isn't that long (29 pages) you will be entertained for sure. 

Here's the short version: everyone actually agreed that the ordinary mean high water mark -- or, as the case cryptically shortens it "OHWM" -- is the boundary between public land and the Gunderson's private property. The big question was where was that line? The plat map of the owners' lots, which they can trace back to an 1837 federal land patent, say they own up to the "Lake Edge." In 2010, however, the Town of Long Beach adopted what the court refers to as an "administrative boundary" which set the public-private boundary landward of where the the Gundersons thought it was. The court framed the issue this way:  

The basic controversy here is whether the State holds exclusive title to the exposed shore of Lake Michigan up to the OHWM, or whether the Gundersons, as riparian property owners, hold title to the water’s edge, thus excluding public use of the beach. All parties agree that land below Lake Michigan’s OHWM is held in trust for public use. The legal dispute relates to the precise location of that OHWM: whereas the Gundersons argue that it lies wherever the water meets the land at any given moment, the State and Intervenors locate the boundary further landward to include the exposed shore.

Resolution of this case entails a two-part analysis: First, we must determine the boundary of the bed of Lake Michigan that originally passed to Indiana at statehood in 1816. Second, we must decide whether the State has since relinquished title to land within that boundary. The former question is a matter of federal law; the latter inquiry, a matter of state law. Oregon ex rel. State Land Bd. v. Corvallis Sand & Gravel Co., 429 U.S. 363, 376-77 (1977) (“[D]etermination of the initial boundary between [the beds of navigable waters] acquired under the equal-footing doctrine, and riparian fast lands [is] a matter of federal law . . . [whereas] subsequent changes in the contour of the land, as well as subsequent transfers of the land, are governed by the state law.”).

Slip op. at 6-7 (footnote omitted). 

The court concluded that at statehood, the Equal Footing Doctrine gave the State title to submerged lands. The Gundersons argued this means just what their documents say: right up to the lake edge, where ever that is at the moment. The State, by contrast, argued this means the OHWM. The court held that the Northwest Ordinance did not shift the line or alter the State's title, and that the Gundersons' deed and other documents did not either, because although the federal government had the power in 1827 to convey Equal Footing submerged lands to private interests, such a conveyance must have been explicit, which it was not here. 

The heart of the opinion starts on page 13 of the slip opinion, where the court concludes that the public-private boundary is the OHWM, and not the water's edge. The court acknowledged that the U.S. Supreme Court cases on this issue are not 100% clear or consistent (some, for example, merely mention "submerged" land, or those "bounded by navigable waters"), but concluded that those terms really mean OHWM. The court relied on the Corvallis Sand & Gavel case, which noted that the states own riparian land "between the high and low water mark, as well as the bed of the river[.]" Slip op. at 14. 

After siding with the State that the public cannot give up its public trust ownership except in unusual circumstances, the court agreed with the property owners that the state agency's attempt to alter the public-private line established by the Equal Footing and related doctrines by defining where the OHWM is located was ineffective. These regulations defined OHWM is a more clear fashion, which the government asserted was better because they provided more certainty than the common law doctrines. Perhaps so, but the court concluded that a state agency cannot amend the law, only the legislature can. Besides, there's a natural symmetry to a legally-defined (but moving) boundary:

The common-law OHWM is a moveable boundary subject to the natural variability of the shoreline. Bureau of Land Mgmt., Manual of Surveying Instructions at 81 (“When by action of water the bed of the body of water changes, the OHWM changes, and the ownership of adjoining land progresses with it.”). Riparian boundary law relies on the adaptive doctrines of accretion and erosion to account for these shoreline dynamics. Under the accretion doctrine, the riparian landowner gains property as the OHWM shifts lakeward due to the gradual deposit of sand or other material. Bath v. Courts, 459 N.E.2d 72, 74 (Ind. Ct. App. 1984). The doctrine of erosion, by contrast, has the opposite effect: the riparian landowner loses property as the boundary shifts landward due to the gradual loss of shoreline. 93 C.J.S. Waters § 187 (2017). These doctrines operate to maintain the status quo of relative rights to the shores of navigable waters. While the physical boundary shifts (e.g., shelving or terrestrial vegetation) the legal relationships—private riparian ownership and public trust title—remain the same. In other words, while accretion or erosion may change the actual location of the OHWM, the legal boundary remains the OHWM.

Slip op. at 25 (footnotes omitted). What we refer to as the "bitter and sweet" approach to accretion and erosion. Thus, the court concluded the natural OHWM is the public-private boundary, not the the line in the rules promulgated by the agency.

Finally, the court rejected the argument that any public trust uses other than those previously recognized by common-law tradition would be a taking: fishing, commerce, and navigation. The court held that it would not be a taking for either the legislature or the courts to expand the scope of the public's use of public trust property, and since the legislature hasn't acted, the court would. Slip op. at 23 ("Absent a statutory framework of public trust rights in the shores of Lake Michigan, this Court retains its common law powers to articulate—and even expand—the scope of protected uses."). Thus, the public may "at minimum" walk on land below the OHWM without infringing on the littoral owner's property rights.  

But the court declined to expand it further, deferring to the Indiana Legislature on that one. 

The local paper covered the story: "Indiana Supreme Court rules Lake Michigan shoreline belongs to all Hoosiers." 

Will this be the last stop for this case, or will there be a cert petition? Stay tuned, as always. 

Gunderson v. Indiana, No. 46S03-17060PL-423 (Ind. Feb. 14, 2018) 

New York City Uncompensated Takings Pilgrimage, High Line Edition

At first, you might not pay much attention to it. After all, it doesn't really stick out -- elevated rail lines aren't that unusual in a big city. Street-level trains and pedestrians don't mix well, and in the early 20th Century, New York State adopted a law which moved some of the lines above the street. Indeed, some portions of New York's subway are still above grade, especially once you are out in the boroughs.

These elevated routes, like many rail lines, were not constructed on land the railroad owned in fee. Instead, the owners of the land granted an easement to the rail lines to use the land "for railroad purposes." Which meant that the grant of easement remained only as long as the easement holder used the land for a railroad or related purposes. Again, nothing out of the ordinary there.

But then you remember that Manhattan's last el ran decades ago. The elevated trains eventually were discontinued because they were "loud, dirty, messy, and slow." But even after the railroads ceased operating, some of the structures were not dismantled and removed. The High Line, on Manhattan's west side, is one of those. It was not an elevated passenger line, but carried freight, and opened for service in the 1930's with the last train running some time in the 1980's. Upon discontinuation of the railroad use, the easement should have been extinguished and the land revert to the fee owner.

But this is a rails-to-trails story, so you know what happened next. Eventually, the city converted the former rail line into a unique public park, full of green spaces, Manhattan views, performance venues, and a pedestrian walkway. All right there, in the middle of the big city.

But despite the abandonment of railroad uses and the public taking over the property, the family which owned the reversionary interest was not offered compensation for their property. So they brought suit in the Court of Federal Claims for a taking.

Those of you who follow the blog should be familiar with this tale, because it resulted in a Federal Circuit decision as well as a cert petition to the U.S. Supreme Court. We filed amicus briefs in both venues. 

Unfortunately, unsuccessfully, we might add. The Federal Circuit concluded that the Romanoffs' predecessor-in-interest had granted a "general" easement to the railroad, which permitted it to use the land for virtually any purpose it desired, not just a railroad purpose. Thus, the Romanoffs could not complain when the High Line freight line ceased operations and the railroad abandoned the track, and the Romanoffs did not own property that had been taken. The court rejected the argument that New York law had never recognized such an animal as a "general" easement, and indeed, if an easement was interpreted to have granted unlimited use, it really wasn't an "easement" at all, but was a transfer of fee simple title, something which plainly was not intended here.

But that's the story.

So last time we were in New York City, we planned on paying a visit to the High Line to see for ourselves.

We did, and so should you. It's a pleasant place, for sure. Gardens, flowers, nice places to sit and contemplate, just above the busy street.

But we ask this: are the below scenes really a "railway purpose," Federal Circuit?

There's a rail line under there, somewhere.

Only thing missing from this sanitized story is the fact that the Romanoffs were forced to donate their property to the enterprise. Hey, free money!

Green spaces, and a garden-in-the-sky.

 

The performance stage. Sure looks like a "railroad purpose" to us. As we wrote in our amicus brief, the High Line is used more for "tai chi, 'gender bending performances from the club and theater stage,' and 'stargazing,'" than anything that could conceivably be considered a railroad purpose. 

The train schedule. By that we mean the performance calendar.

You know you are in New York by the views.

No mistaking that building. 

Watch out for the trains!

Even local businesses play up the rail angle. This seems more of a railroad purpose than the use being made of the former rail line.

 

Supremes Consider Unconstitutional Conditions, Vested Rights, And Property ... In A Patent Case

If case you were thinking you might have missed a big property case that made its way to the Supreme Court, fear not. All of the above issues were raised in the course of yesterday's arguments in a patent case.

As the transcript in Oil States Energy Services, LLC v. Greene's Energy Group, LLC, reveals, the issue in that case is whether the Patent and Trademark Office's Patent Trial and Appeal Board is unconstitutional because it can deprive a patent holder of its rights without the benefit of adjudication in an Article III court. A patent is property (yes, it is a creature of statute, and not a common law right, but it is property), and the owners of patents can't be deprived of their property except in an Article III court. Or so the Petitioner's argument goes.

If that issue sounds familiar, it is. In Brott v. United States, No. 17-712 (cert petition filed Nov. 6, 2017), the Court is being asked to consider whether inverse condemnation cases against the federal government must be considered by an Article III court, and a jury. Brott is a rails-to-trails case, and as followers of this blog know, these claims, when they exceed $10,000, must be raised in the Article I Court of Federal Claims, where you get the case tried by a judge, and not a jury. The jurisdiction of the CFC was conferred by Congress in the Tucker Act. Brott challenged that setup (complaint here), arguing that the self-executing nature of the Fifth Amendment's Just Compensation Clause requires both an Article III court, and a jury.

Both the District Court and the Sixth Circuit disagreed. (We filed an amicus brief in the Sixth Circuit supporting the property owner.) The Supreme Court now has the case, where it is being asked to resolve this Question Presented:

Can the federal government take private property and deny the owner the ability to vindicate his constitutional right to be justly compensated in an Article III Court with trial by jury?

Sounds a lot like the issue in Oil States, no?

Indeed, Brott's counsel (our colleague Thor Hearne and his team), along with Pacific Legal Foundation, filed an amicus brief in Oil States, arguing that Congress cannot confer judicial power on non-Article III tribunals (like the PTAB), especially when someone's property is at stake. And while patents are a form of property, surely real property interests are even better property, and neither can be taken away without the benefit of a jury. 

Yesterday's Oil States arguments hit on some of these issues, if only tangentially. For example Chief Justice Roberts posed this question to Petitioner's counsel:

CHIEF JUSTICE ROBERTS: What is - what is the relationship between your position and the takings clause? The government can certainly diminish the value of your property rights quite extensively when it comes up with new -- new regulation.

You have a lot that you think you could have built a mansion on, and then the government passes a law and you can only build a shed on it and -- and yet we often say -- or give the government a lot of leeway in saying that -- that they don't have to pay compensation.

So, if the government can restrict your property right in real property to that extent, why can't it do so with respect to patent rights?

Transcript at 12.

Justice Breyer also saw hints of the takings issue:

JUSTICE BREYER: So -- so is that -look, the answer -- what I'm thinking, quite seriously, is saying should we leave open, assuming I basically agree with you, but leave open the question of what happens if there has been huge investment?

That, I think, is what was dividing -what was worrying Brandeis in Crowell. I -- I think that -- that we don't face it here in this case, and it seems to me it would be properly raised more likely under either a takings clause or the due process clause probably.

Transcript at 55.

Justice Gorsuch saw the issue much more starkly, suggesting that private rights (like patents and property) can only be taken in Article III forum:

JUSTICE GORSUCH: Why not -- why not, though, Ms. Ho, just simply say the question is whether there's a private right involved? In answering Justice Kagan's questions and Justice Breyer's questions, you struggled with how much of an adjudication does an inquisitorial process have to have before it becomes an adjudication. Why does that matter at all?

If -- if you really want to stake your ground and think McCormick's right, why not just say anytime a private right is taken by anyone, it has to be through an Article III forum?

Transcript at 23.

We don't think Oil States will necessarily take care of the Brott issue, although depending on the outcome in Oil States, the Court could, conceivably, GVR Brott in light of that case. But we'll see. In the meantime, we'll be preparing an amicus brief in Brott in support of the property owners.

More about Oil States in this report: "Supreme Court deeply divided on patent review process."

Transcript, Oil States Energy Services, LLC v. Greene's Energy Group, LLC, No. 16-712 (Nov. 27, 2017)

5th Annual Hawaii Land Use Litigation Update - Hawaii State Bar Association

For those of you who want to listen only,
stream the audio below, or download the mp3 here.  

Every year, our partners (and land use and property law mavens) Greg Kugle and Mark M. Murakami present a one-hour tour-de-force update on litigation essentials in their field of practice to the Hawaii State Bar Association's Real Property and Financial Services Section. 

Links to the cases they discussed today (and more) are in the handout and below. 

Watch, listen, and learn.  

2017 Litigation Update - Hawaii State Bar Association Real Property & Financial Services Section 11-17-2017... 

2018 ALI-CLE Eminent Domain Conference - Agenda And Faculty Now Posted

The complete agenda and faculty list has now been posted on the ALI-CLE website, and early registration is open! Go now and reserve your spot. 

We paid a visit to Charleston recently, the venue for our January 2018 conference, to scout it out. We can report that we're going to have a great time, for sure. When we polled you last year, you selected Charleston as your first choice (a new city for the Conference), and it is shaping up to be a very good selection. In addition to the usual lineup of CLE programming, there are a ton of things to see and do in the area. We recorded a short video down at the "four corners of law" (the intersection of Meeting Street and Broad Street), to give you a preview (the weather was much better than in our 2016 preview video, too).

As an added exclusive bonus, there will also be a special sneak preview of the movie about Kelo v. City of New London, Little Pink House. If you joined us in Austin in 2016, you’ll remember that we spoke with Ted Balaker, the film's producer about the movie, which was then being shot. It is now complete, and we're privileged to be getting a before-the-public screening of the film on Friday evening of the Conference.  

So plan on joining us in Charleston, January 25-27, 2018. See you there. 

2018 ALI-CLE Eminent Domain and Land Valuation Litigation and Condemnation 101, Charleston, SC, January 25-... 

ABA CLE, NYC: "Murr and Beyond: Implications for Regulatory Takings" - Aug 11, 2017

If you are scheduled to be in or near New York City on Friday, August 11, 2017, please consider attending one or both of the following events:

• 10-11:30am, Midtown Hilton, Concourse E, Concourse level: "Murr and Beyond: Implications for Regulatory Takings." Yes, Murr is the case that keeps on giving, and has already given CLE providers numerous opportunities to add to their coffers. The ABA is sponsoring this program, which includes the lawyers for the two main parties, and two (me included) lawyers who do this kind of thing. Come,  join your colleagues for a roundtable discussion of the case, and more importantly, what comes next. With John M. Groen, Principal Attorney, Pacific Legal Foundation, Sacramento,CA; Robert Thomas, Damon Key Leong Kupchak Hastert, Honolulu, HI; Hon. Misha Tseytlin, Solictor General , WI Dept. of Justice, Madison,WI; and Nancy Stroud, Land Use Attorney, Lewis Stroud & Deutsch, Boca Raton, FL. Our moderator will be the Hon. Peter Buchsbaum.
• 6-7:30pm: Incoming Chair's Reception, The Three Monkeys, 236 West 54th Street: Come join us up on the rooftop deck as we celebrate becoming the Chair of the ABA Section of State and Local Government Law.  

Hope to see you at these events. Make a day of it. 

Condemnor Didn't Have To Pay For Escaped Gas

Escaping gas isn't enough, it has to be captured.

Yes, a clickbaity title, but this one is about just compensation, so please. You can create your own puns for this case, Northern Natural Gas Co. v. L.D. Drilling Defendants, No. 15-3272 (July 11, 2017), in which the U.S. Court of Appeals for the Tenth Circuit considered things like natural gas injections and escapes, companies that can't control their gas, and the difference between "migrating," "injected," and "native" gas. Yeah, baby.  

Northern owned a mostly-depleted underground natural gas field, and when the gas in place ran out, it used the area as a gas storage area. Over time, it noticed that it was pulling out less gas than it was putting in, leading to the conclusion that some of its stored gas was leaking out into nearby fields, owned by others. So it exercised its delegated power of eminent domain to condemn these nearby fields, some of which had active wells to extract the underground gas. After the commissioners determined compensation, affirmed by the District Judge, both sides appealed.

The most interesting argument was Northern Gas's claim that the just compensation award should not have included payment for the gas which it claimed it already owned (the gas which it stored in its underground facility, but which escaped into the condemnees' property). The court concluded that under a Kansas statute, gas injected into an underground storage facility remains the property of the injector, subject to certain conditions. Otherwise, it is the property of whomever "captures" it. Here, however, 

while the Landowners and Producers may have held certain property rights over the natural gas in and under their land at some point in time before Northern obtained the authority (via private lease agreements and proper regulatory certification) to include the property within the Cunningham Field’s legal boundaries, these rights had been eliminated by the date of taking. On the date of taking, the gas “in place” in and under the Extension Area land was within the Cunningham Field’s certified boundaries as required by Kansas law and, accordingly, was wholly Northern’s property. Because of Northern’s ownership, the gas was not subject to the rule of capture. Thus, the commission erred by including the value of that gas in the condemnation award when the Landowners and Producers had no vested property rights or ownership interests in the gas on the date of taking.

Slip op. at 19. 

The court rejected the condemnees' takings argument, because they couldn't exercise the right of capture, which "confers only a right to produce the migrated gas. It confers no right to the gas itself." Because the migrated gas was still in the ground, it had not been "produced." 

To capitalize on their opportunity to “capture” the gas, the Landowners and Producers would have had to actually produce the gas and would then own the produced gas. But here, the Landowners and Producers seek compensation for gas they did not produce but which remained in the ground on the date of taking. Rather than yielding an unconstitutional taking, Kansas law merely prohibits the Landowners and Producers from recovering the value of storage gas that Northern both (1) originally owned and injected, and (2) acquired certificate authority over.

Slip op. at 20. 

So here's your rule of law: you don't need to pay compensation for escaped gas which you already own. A good one to keep in mind for future reference.  

Northern Natural Gas Co. v. L.D. Drilling Defendants, No. 15-3272 (10th Cir. July 11, 2017) 

Cases And Links From Today's American Planning Association's 2017 Planning Law Review

Here are links to the cases and materials we spoke about today during our portions of the APA's 2017 Planning Law Review webinar:

• Justice Kennedy's Social Justice Warrior Test For Takings Clause "Property" In Murr v. Wisconsin
• The Federal Circuit's Lost Tree decision (cert denied just after Murr, so this should be seen as a bookend to that case).
• Town of Ponce Inlet v. Pacetta, LLC, No. 5D14-4520 (Fla. Dist. Ct. App. June 16, 2017).
• Case to watch: 616 Croft Avenue, LLC v. City of West Hollywood, No. 16-1137 (cert. petition filed Mar. 17, 2017) (legislative vs. administrative exactions). 
• Case to Watch II: Highland-in-the-Woods, LLC v. Polk County, No. 2D15-2801 (Fla. Dist. Ct. App. Apr. 28, 2017) (quasi-legislative exactions and Nollan/Dolan).
• Case to Watch III: Scher v. Burke, No. S230104 (Cal. June 15, 2017) (public recreational dedications along the coast, and vested rights).
• Case to Watch IV: State of New Jersey v. North Beach 1003, LLC, No. A-3393-15T4 (N.J. App. Div. June 22, 2017) (coastal dunes and takings). 
• Case to Watch V: "Voters May Not Usurp City’s Administrative Land Use Authority Through Initiative Process" (from Miller, Starr, Regalia's land use blog). 

Thanks to all those who were on the call. They tell us there was record attendance. 

Friday, Aug 11, 2017, New York City: Chair-Elect Reception, Unpacking Murr - ABA State & Local Govt Law Section

If my colleagues don't wise up and change their minds before August, I am slated to become Chair of the ABA's Section of State and Local Government Law (which, by the way, includes an Eminent Domain Committee, Chaired by Howard Roston, and co-Chaired by Kelly Walsh and John Peloso). On Friday, August 11, at the ABA Annual Meeting in New York City, we'll be having a party to celebrate, and you are invited. 

Earlier that day, our Section is producing a CLE session about the US Supreme Court's recent decision in Murr v. Wisconsin, "Murr and Beyond: Implications for Regulatory Takings," featuring two of the arguing counsel in the case (John Groen (PLF), and Misha Tseytlin (Wisconsin SG), and commentary from me and Nancy Stroud (FL). Judge (ret.) Peter Buschbaum (NJ) is moderating. We'll not only try and figure out what the majority did in Murr, but what we do from here, and what this might mean for regulatory takings and eminent domain down the road. Make it a "two fer" and come for the CLE, and then stay for the reception. 

Also, if you are looking for a place to do Bar Association things, let me, Howard, Kelly, or John know.  We have a very active Section, and there are opportunities for publishing, CLE’s, and other such things. Our section is a mix of private practitioners like us, government lawyers and outside counsel, legal scholars, and jurists. The Section also now produces the annual Land Use Institute, a two-day conference on Planning, Regulation, Litigation, Eminent Domain, and Compensation (Detroit, April 19-20, 2018), 

Invitation to the Chair-Elect Reception (State & Local Govt Law Section), Friday, Aug. 11, 2017, New York C... 

New Article: "Property" And Investment-Backed Expectations In Ridesharing Regulatory Takings Claims

Earlier this year, I had the honor of moderating a panel speaking about transportation sharing legal issues at the University of Hawaii Law Review's sharing economy symposium. The editors have been hard at work since, and the symposium issue is being printed as we speak.

They also permitted me to pen this little missive, a short essay in which I discuss several recent cases about transportation sharing to illustrate what I see as one of the problems with how regulatory takings claims are framed. 

This essay will review several cases which the sharing economy has thus far produced, cases where taxicab companies have sued municipalities for allowing ridesharing services to operate without medallions, most often employing a regulatory takings theory. I argue that the approach employed by these courts wrongly focus on the property interests involved, rather than where the real analytical question resides: what are the investment-backed expectations of those already providing vehicle-for-hire services in the marketplace. Shifting the analysis from artificial distinctions between property for purposes of the Takings Clause and other forms of property, would, I conclude, put the focus where it should be—an owner’s expectations when she obtains a taxicab medallion. Doing so would place these questions in the proper takings context, to be measured along with the other factors which courts consider in most regulatory takings cases.

Check it out: "Property" and Investment-Backed Expectations in Ridesharing Regulatory Takings Cases, 39 U. Haw. L. Rev. 301 (2017). Given the Supreme Court's recent foray into the definition of Takings Clause "property," and Justice Thomas' call to revisit regulatory takings doctrine, I'm hoping this essay will add to the creative flow for our next steps. 

My thanks to the editors for accommodating my practitioner's schedule, and for allowing the essay to serve as the foreword to the scholarly articles on the sharing economy in the rest of the symposium volume. We'll post up notice when the other articles in the symposium are available -- I've read them, and they are well worth it for those of you interested in this developing area of law.   

"Property" and Investment-Backed Expectations in Ridesharing Regulatory Takings Claims, 39 U. Haw. L. Rev.... 

Justice Kennedy's Social Justice Warrior Test For Takings Clause "Property" In Murr v. Wisconsin

What to make the Justice Kennedy-authored 5 justice majority opinion in Murr v. Wisconsin, No. 15-214 (June 23, 2017)? 

There, the majority adopted -- maybe "created from whole cloth" would be a more accurate description -- a multifactor test for determining the "larger parcel' or "denominator" in regulatory takings cases where the owner possesses more than a single parcel of land.  We quoted the opinion's list in this post, and won't repeat it entirely here, but below is a short list of things that now must be considered by lower court judges (not juries) when they are deciding how much of the property the plaintiff owns can be used to measure the impact of the regulation on the parcel which she claims was taken:

• The "treatment of land." Yes, the actual metes-and-bounds of the legal parcel, but also, get this, the "expectations ... an acquirer of land must acknowledge legitimate restrictions affecting his or her subsequent use and dispensation of the property." So in other words, not just the regs in existence at the time, but break out your crystal balls, property owners, you've got to maybe figure out future regulations. 
• The "physical characteristics" of the property. "These include the physical relationship of any distinguishable tracts, the parcel’s topography, and the surrounding human and ecological environment." Topography ... seriously? And the human and ecological environment. What in the world could that touchy-feely factor actually mean in practice? This isn't a the Lockean view of property (the one that was, we thought, baked into the Fifth Amendment), this is a Leviathan-esque view of property as the mere product of positive law. You only own property as defined by "the human and ecological environment," according to five justices of the Supreme Court. 
• Also, judges will need to look at the "value of the property under the challenged regulation," which is about as recursive a test as we could imagine, since it bootstraps the entire takings question into the bootstrapped property question. So in order to determine whether there's been a taking of property, the owner will need to show not only that the regulation has the same effect as eminent domain on the merits, but will also have to show that the regulation has the same effect as eminent domain to even get past the summary judgment threshold of whether the owner owns "property."

But the regulation must be "reasonable" according to Justice Kennedy, as if rational basis review were some kind of safety net for property owners. Besides, we thought after Lingle rejected Agins' "substantially advance" test that the reasonableness, vel non, of the regulation wasn't supposed to be part of the takings calculus. But after Murr, apparently it is back. See also Kennedy's Kelo and Lingle concurring opinions for more of his substantive due process view of the world. 

From our point of view, the majority went completely off the rails here, and the opinion represents the four-plus-Kennedy simply throwing up their hands and tossing intellectual honesty out the window in favor of a test that federalizes common law (i.e., state law) property concepts which had survived mostly unchanged for a millennium. 

Why would they do such a thing? All we can figure is that the majority may have predicted that Murr would be one of their last chances to influence the development of regulatory takings doctrine for a long time. COVFEFE! I only hope I am around when the true story of this case comes out.

The Court granted the cert petition when Justice Scalia was still alive, and it appeared that Hillary Clinton was the odds-on favorite to appoint a new, left-leaning Court majority during her predicted tenure with a lock on making a generation of liberal decisions. Perhaps the four solid conservatives (CJ Roberts, Scalia, Alito, and Thomas) believed that Murr would be one of their last chances to influence takings law before it inevitably swung leftward after the election, hence the grant of certiorari.

But those assumptions radically changed after Justice Scalia passed, and especially in November 2016, of course, and fortunes were radically reversed: The all-but-certain future liberal majority now could see that their presumed dominance had evaporated overnight. We speculated that the conservatives might -- during the months the Court delayed scheduling oral arguments -- try to muster support for dismissing the petition as improvidently granted.

We wondered whether there was any maneuvering on that, given the ultimate weakness in the facts which Chief Justice Roberts recognized in his dissent (he noted that even under the proper test, the Murrs might lose), and we predicted after oral arguments that he could be the sixth vote to affirm. So maybe better to dump the case than to risk a chance of it serving as a vehicle for the four liberal justices to convince Justice Kennedy this was one of the final cases in which he could cement his already spotty conservative property law legacy by moving regulatory takings doctrine two steps back, something he seemed to be hankering to do since Lucas by making it all due-processey and, like seemingly everything in his view, a mishmash test of “reasonableness.”

But that never happened. 

So maybe the liberal majority, viewing Murr as the last charge of Wyatt Earp and his Immortals, threw principle to the wind, created a metaphysical, social justice warrior test for property that undercuts a thousand years of common law principles, deprives juries of the opportunity to decide what is and what isn’t reasonable reliance on metes-and-bounds, and takes the power to define property away from both property owners and state and local legislators, and hands it to mostly unelected philosopher-kings in black robes. 

The Murr majority gives lower court judges a chance to play Justice Kennedy for a day and decide what counts as property (for today, but may not be tomorrow, who knows?), all based on what Your Honor believes is fair, or isn't, or is or isn’t worthy of being compensated, or whether the government can really afford to pay. There will no doubt be a plethora of law review articles which will try and justify these vague SJW factors as based somewhere in our common law property traditions. The authors would have a mighty hard time convincing us, because under Justice Kennedy's ad hoc-ism, you really don't know whether you own property until you make a takings claim and some judge decides you deserve to not be compensated when it is impressed into public service. 

That’s not law, that’s judicial mob rule.

Strong letter to follow!

* * * *

Programming note: we'll be sponsoring a program at the ABA Annual Meeting in New York City on August 11, 2017 at the Hilton Midtown, Concourse E, entitled "Murr and Beyond: Implications for Regulatory Takings," featuring the arguing counsel for the parties (and us!). Ping me to sign up to attend. 

SCOTUS Argument Preview: Does Fee Simple Absolute Mean Anything? The "Larger Parcel" Issue In Regulatory Takings

As takings mavens are no doubt already aware, next Monday, the 8-Justice Supreme Court will hear arguments in Murr v. Wisconsin, the regulatory takings case which asks whether the county can avoid application of the Lucas wipeout standard on one parcel by taking advantage of the fact that the plaintiffs also own the adjacent parcel. Thus, the county argues, both parcels should be combined to determine how the regulation has impacted the property. 

Others have done a better job at previewing the issues than we could hope to (see SCOTUSblog, the National Constitution Center, and the Federalist Society), so we won't do a big summary here, but will limit ourselves to pointing out what we think will be the key areas of contention. Go read the voluminous briefing as well. And with the Court one-Justice-down for this case, we're certainly not going to even venture into guessing about the outcome. 

Watering Down the Lucas Test

Under Lingle, the core question which a regulatory takings claim is trying to solve is whether a regulation is so restrictive that it deprives the owner of the economically beneficial use of her property and has an impact similar to the government's exercise of eminent domain. At heart, the question the Court is being asked in Murr is how much of an owner's entire property holdings can be used to measure the impact.

There's little question that the parcel the Murrs claim was regulated to near worthlessness, standing alone, has little value to them in its regulated state. They can't build on it except in combination with their other parcel, they can't sell it. Only when combined with the neighboring parcel which the Murrs also own can the county argue that its regulations merely are a reduction in value for the Murrs, and not a total loss. If the Murrs only owned the one parcel, they wouldn't be in this fight. In short, the issue to be resolved is whether on the merits, the court will apply the Lucas per se test -- a claim the Murrs are very likely to win -- or the Penn Central ad hoc takings test which is heavily slanted in favor of the county. 

A Millennium of Fee Simple vs a Century of Combination

The Murrs argue that their separate fee simple parcels should treated as separate, at least as the starting point. And before they can be combined to measure a taking, the county needs to show more than the same owners own two adjoining substandard parcels. As Professor Lee Fennell recently wrote, title to fee simple parcels in the foundation on which our concept of private property is built:

Nearly all privately owned real estate in the United States is held in fee simple absolute, or fee simple for short. Every law student learns that the fee simple is the most extensive of all the estates in land—endless in duration, unencumbered by future interests, alienable, bequeathable, and inheritable. Behind these descriptive elements lies the implicit normative message that the fee simple represents the endpoint of real property’s evolution, a more or less final answer to the question of how a modern society should structure access to land.

Fennell, Fee Simple Obsolete, 91 N.Y.U. L. Rev. 1456, 1456-57 (2016) (footnotes omitted). 

The county, state, and their amici take a much different approach, arguing that fee simple metes-and-bounds are just lines on a map, and that Wisconsin property law -- on which the Murrs rely to define their fee simple property rights -- also includes the regulations which require combining substandard, adjacently-owned parcels. People don't own property parcel-by-parcel, they claim, but more like a Monopoly game in which an owner collects up different deeds, and what really matters is all of your stuff considered together. 

In our view, the owners' discrete parcel approach is the better one, since fee simple absolute title of identified parcels of land is the building block on which property law has been built for a thousand years. Ask a real person (not a lawyer or planner) about ownership of land, and chances are they will talk about a parcel, defined by its metes-and-bounds. Robert Frost wouldn't just combine adjacent properties (good fences make good neighbors, right?), and we think the Court will be hard-pressed to say the starting point for the Murrs isn't their recognized fee simple parcel, and is a vaguely-defined combination of two legally distinct pieces. Title matters to most people, and it should here. It isn't like the Murrs segmented their property "bundle" into its various "sticks," then argued the regulations worked a wipeout of one stick. And the net result which an eventual win by them will presumably be that they will sign over the deed to their entire second parcel to the government, once they are paid compensation.

Locke and Load

Another problem for the county, state, and their amici is more conceptual than physical. Their arguments are built on a very Hobbesian foundation -- the Murrs rely on Wisconsin property law for their fee simple title to the parcel they claim has been taken, so the limiting regulations are also part of that body of law, and the Murrs have to take the bitter with the sweet. Savvy property owners have to know about these and similar ordinances nationwide.

That argument, as the headline reveals, is very Levianthan-esque in our view. Too Levianthan-esque for the Court to want to visit, since it has always suggested that property ownership isn't one of those things that is totally subject to state definition or redefinition. See, for example, the Stop the Beach case (for judicial redefinition), or our recently-filed cert petition (for legislative redefinition of property). The Founders certainly had a Lockian outlook on property (see John Adams’ proclamation that "property must be secured or liberty cannot exist," and John Locke's Second Treatise on Civil Government. Part XI, section 138, if you want to get really specific). We don't think a majority of today's Court would be willing to jettison those principles just yet.

And state law has never been the be-all, end-all of the question of what constitutes "property" as the county and state and their amici argue, at least as far as what is a compensable property interest. There are some principles which transcend a state's ability to define it (the right to physically exclude, the right to transfer, the right to make economically beneficial use), regardless of state definitions. See Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980).

The Just Compensation Clause is self-executing, which means that once "property" is taken, the state cannot avoid paying for it. As much as Wisconsin is free to tailor its property law to its own needs, it cannot avoid the Fifth Amendment's requirements when it does so. And the ordinance's prohibition on sale to a third party owner who might be able to make use of it is the part which we think will bring the most grief from the Justices. Not only can the Murrs not use their second parcel unless combined with their first, they can't even sell so someone who can. 

For Richer For Poorer?

If the Murrs didn't happen to own adjoining parcels, they'd be in Lucasland for sure. Thus, what the county is essentially arguing is that the more affluent the plaintiff, the less the complete loss of a single separate parcel will have on her overall wallet. The more you own, the less a taking of a discrete parcel hurts. There's some inherent appeal with the argument because as we all know, eminent domain is focused on the "loss to the owner" (and not the "gain to the taker"), and we expect some questions on this for the owners' counsel from the left side of the Court's bench on Monday. 

But there doesn't seem to be a limiting principle to that argument, unless the Court is ready to say that a more wealthy plaintiff is entitled to less constitutional protection. We'd be surprised if there were five votes for that. Truth be told, we'd be surprised if there were more than one vote for that (scroll down the linked post to "Lone Wolf"). We think even if the Court were inclined to go there, the practicalities would take over - the more wealthy a property owner, the more sophisticated she is likely to be; the more sophisticated, the more likely she would be able to structure ownership of multiple parcels in such a way to avoid formal common ownership, so any such rule could fairly easily be avoided or overcome. 

What About Straight Takings Doctrine?

The federal government's amicus brief -- ostensibly in favor of the county and state, but in reality much more a "neither party" type of argument -- argues that the Court's doesn't like bright lines in takings cases, and it shouldn't draw them here. There's a lot of appeal to that argument because, yes, the Court has reminded us a number of times that clear rules are a "temptation" that must be "resisted." See, e.g., Palazzolo v. Rhode Island, 533 U.S. 606, 636 (2001) ("The temptation to adopt what amount to per se rules in either direction must be resisted.”). Instead, the feds suggest a rule that looks an awful lot like the three-factor test for "larger parcel" in eminent domain. 

You eminent domain lawyers know what we're talking about, the "three unities." In cases where a condemnor is taking Parcel A, the owner may claim severance damages to Parcel B if all or some combination of three elements are met. The more an owner can show that she formally owns both, that they are nearby, and that they are used together, the more likely it will be that the finder of fact will award severance damages for the parcel not formally taken. In that analysis, the most important is whether the condemnee uses the two parcels together such that they can be treated by the court as one. Thus, when a parking lot is condemned, the condemnor may have to pay severance damages to the business across the street that uses the parking lot, if the parking lot owner also owns the business. Separate parcels, but they can be treated as one for purposes of eminent domain law if they are used together. 

We think the Justices may consider importing this approach into regulatory takings law, since it could be applied in a wide variety of reg takings situations, and has the additional intellectual value of bringing some symmetry to regulatory takings and eminent domain doctrine. Our own view is that there is nothing incompatible with the Murrs' argument that fee simple absolute metes-and-bounds title is the presumptive starting point for analysis of the larger parcel in regulatory takings.

The Murrs are not asserting that settling on their proposed rule (fee simple title is the denominator is reg takings unless the government can prove that there's some other reason otherwise) will dispose of their case. They still have to show denial of all economically beneficial use of their primary parcel. Title is the starting point in eminent domain cases, and the Court may like that it is the starting point in regulatory takings as well.

Predictions?

As we noted above, we aren't going to hazard a guess on how this one will come out. With only eight Justices hearing the arguments, even if we see a Justice Gorsuch soon, it's very likely that he will not play a part in deciding this case. We could even see a four-four split, which means affirmed by an equally-divided Court. Or a dismissal of the writ for being improvidently granted. Wait for the next case (and there are other cases in the pipeline which present this issue). Or we could see a wholesale revisit to Penn Central's ad hoc three-part test.

We won't be able to be there in person on Monday, but we'll bring you our thoughts on the arguments as soon as we can read the transcript. Stay tuned. 

Monday Links: Murr SCOTUS Preview, Mass. Reg Takings Verdict, Great Wall Of America, Train Takings

Here's what we're reading this Monday:

• Preview of SCOTUS oral arguments in Murr v. Wisconsin. This is the "larger parcel" case which will be heard next Monday, March 20. The Cato Institute is having a session on it at its DC facility, "Rethinking Regulatory Takings." If you can't be there in-person, it will be live streamed. More here. We'll have our own preview later this week. 
• Our colleagues at the Massachusetts Land Use Monitor comes this report ("Regulatory Taking, Anyone?") about a recent jury verdict which concluded that denial of a variance resulted in a loss of all beneficial use of property. And you know what that means, don't you? 
• Professor Ilya Somin writes about the "Potential pitfalls of building Trump's Great Wall of eminent domain" in the Washington Post. 
• Professor Gerald S. Dickinson adds his thoughts on the Wall: "The biggest problem for Trump's border wall isn't money. It's getting the land." 
• Professor Gideon Kanner has also weighed in on the wall: "That Big Fence on the Mexican Border Means Lots of Eminent Domain Cases."
• And one more on the wall: an immigration lawyer adds his two cents on eminent domain law: "Eminent Domain Litigation Will Halt Border Wall Construction." 
• "'Come and take it': Eminent domain dispute and heart of bullet train battles." The Dallas-to-Houston "bullet train" and the power to take.

U. Hawaii Law Review Sharing Economy Symposium (Feb. 17, 2017)

This year, the University of Hawaii Law Review is devoting one of its issues to a symposium on issues related to the sharing economy. 

On Friday, February 17, 2017, the law review is sponsoring a series of presentations from 9:00 am - 4:30 pm at the law school (lunch included if you RSVP ahead of time), followed by a reception in downtown Honolulu.

Presenters include national experts such as Professor Stephen Miller (who is also the founding Chair of the ABA State and Local Government Law Section's Sharing Economy Committee), Christina Sandefur of the Goldwater Institute, local players such as Michael Formby, the Director of Transportation Services for the City and County of Honolulu and Greg Kugle of my law firm, and industry insiders such as Timothy Burr Jr., Senior Public Policy Manager for Lyft. 

The day will see presentations on Housing, Transportation, and Discrimination, as well as a keynote address by Professor Erez Aloni, "Access and Excess in the P2P Economy: A Comparative Approach." 

I'll be moderating the panel on Transportation issues, so come on up to campus and get educated on these cutting-edge issues.

If you can't make it there, you should join us downtown after the day's presentations for a reception at 1003 Bishop Street in the main second floor lobby. Free parking! 

More on the symposium and a complete agenda (including speakers and topics) is posted here. 

UH Law Review Sharing Economy Symposium 

2017 ALI-CLE Eminent Domain Conference Wrap, 2018 Venue Announcement

When we previewed the 2017 ALI-CLE Eminent Domain & Land Valuation Litigation Conference while we were getting buried in the snow a couple of weeks ago, we promised there would be better weather in San Diego than much of the country was then experiencing. As you can see, we delivered.

We -- and by "we" I mean the faculty, the ALI-CLE staff, and the record number of attendees who came to San Diego -- also delivered on a really great conference. See our posts on several of the presentations here, here, here, and here for a flavor.

We also announced that the date and location for the 2018 Conference has been set, and the hotel and site have been booked:

2018 ALI-CLE
Eminent Domain & Land Valuation Litigation Conference
Francis Marion Hotel
Charleston, South Carolina
January 25-27, 2018

Stay tuned for details. Send your ideas for what you'd like to see at the 2018 Conference. Tell your colleagues to come if they missed out this year. The more who attend, the better this gets.

We'll post more once the agenda, faculty, and registration process are ready. See y'all in Charleston. 

Day 1, 2017 ALI-CLE Eminent Domain And Land Valuation Litigation Conference, San Diego

Here are the links and references to the cases we spoke about today at our opening session on the national trends in eminent domain law at the 2017 ALI-CLE Eminent Domain and Land Valuation Litigation Conference in San Diego. 

We again have a record attendance, and a good number of new attendees. If you aren't here now, we're sorry you didn't make it. But fear not: ALI-CLE has already set the date and location for the 2018 Conference: save the date on your calendars now -- January 25-27, 2018, Charleston, South Carolina, at the Francis Marion Hotel. 

• North Carolina's Map Act case (Kirby). Land banking to keep the eventual acquisition price low, is a taking.
• Nevada: No Regulatory Taking When DOT Announced Future Plans To Condemn.
• California's City of Indio case: temporary "no build" area while city gets around to taking the property is a taking.
• Municipal takings of public utilities: Montana Supreme Court writes "more" out of the "more necessary" clause.
• Pennsylvania Supreme Court: Delegation Of Eminent Domain Power To Pipeline Companies Violates Fifth Amendment's Public Use Clause.
• Through, Not To: A Pipeline With No Kentucky Offramps Isn't For Public Use (for Kentucky).
• Pipeline takings: Pennsylvania appellate court agrees that the polar vortex made them do it.
• Creative Thinking Prize: Texas Supreme Court sides with property owner who formed conservation district to beat back a taking. Don't tell me no, tell me how.
• Georgia appellate court: appraisal "before" negotiations means just that.
• Colorado Supreme Court reads its eminent domain statute narrowly: when it says Commission must approve taking, DOT can't do it.
• Virginia: an unacceptably low appraisal = "bona fide" offer.
• Entry statutes: the California Supreme Court decision in Property Reserve: the court rewrites the statute in order to save it.
• Virginia federal court rejects facial challenge to Virginia's entry statute.
• North Dakota Supreme Court finds that small entries are "examinations" and not takings.
• Who decides, Part II: West Virginia Supreme Court concludes that condemnor (not the courts) is sole determiner of sufficiency of quick take deposit.
• Tex App: Rail Construction Cutting Off Access Can Be Inverse Condemnation - Even When There's Been No Taking.
• Kauai condemnation: Hawaii Supreme Court arguments in "larger parcel" case. 
• SCOTUS and larger parcel in regulatory takings: Murr v. Wisconsin - the "larger parcel' in regulatory takings.
• Who decides? California Supreme Court in City of Perris -- judge decides Nollan/Dolan issues (but they may be project influences, so property owners do the happy dance).

Related articles

Amici Brief: Precondemnation Entry That Goes Beyond "Innocuous" And "Superficial" Is A Taking

NJ Court: There's No Substitute For The Eminent Domain Process, Even On The Shore, Even In An "Emergency"

inversecondemnation.com: Hawaii Supreme Court Oral Argument In Lucas "Economically Beneficial Use" Taking Case

Ode To A Road

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Notes And Links From Today's Hawaii Land Use Conference Session On Reg Takings

To supplement your written materials for the 2017 Hawaii Land Use Conference, here are the decisions and other materials which we spoke about this morning at the 2017 Hawaii Land Use Conference:  

• Leone: Hawaii Supreme Court oral arguments in "economically beneficial use" case. 
• CNMI: Compensation Delayed, Is Justice Denied
• Our colleagues' recent Hawaii State Bar Association talk about developments in Hawaii land use law.
• Kauai condemnation: Hawaii Supreme Court arguments in "larger parcel" case. 
• Guam: Eminent Domain Interest Statute Cannot Limit Constitutional Right to Just Compensation
• Entry statutes: the California Supreme Court decision in Property Reserve: the court rewrites the statute in order to save it.
• Virginia federal court rejects facial challenge to Virginia's entry statute.
• North Dakota Supreme Court finds that small entries are "examinations" and not takings.
• Pipeline takings: Pennsylvania appellate court agrees that the polar vortex made them do it.
• North Carolina's Map Act case (Kirby). Land banking to keep the eventual acquisition price low, is a taking.
• California's City of Indio case: temporary "no build" area while city gets around to taking the property is a taking.
• Virginia: an unacceptably low appraisal = "bona fide" offer.
• Colorado Supreme Court reads its eminent domain statute narrowly: when it says Commission must approve taking, DOT can't do it.
• Georgia appellate court: appraisal "before" negotiations means just that.
• Who decides, Part I: California Supreme Court in City of Perris -- judge decides Nollan/Dolan issues (but they may be project influences, so property owners do the happy dance).
• Who decides, Part II: West Virginia Supreme Court concludes that condemnor (not the courts) is sole determiner of sufficiency of quick take deposit.
• Municipal takings of public utilities: Montana Supreme Court writes "more" out of the "more necessary" clause.
• Creative Thinking Prize: Texas Supreme Court sides with property owner who formed conservation district to beat back a taking. Don't tell me no, tell me how.
• Pending issues at SCOTUS: (1) attorneys' fees under the URA; (2) Murr v. Wisconsin - the "larger parcel' in regulatory takings.
• Speaking of attorneys' fees: property owner's claim that trial date (and not date of complaint) was date of valuation was not reasonable.
• Law review articles of note:
• Bill Wade's article on damages and just comp when you are dealing in income-producing properties
• Virginia Law Review article on state constitutional property.
• Mike Berger's lookback on "Property, Democracy & The Constitution."
• Arizona Law Review: do animals have property rights?

Related articles

Kelo At 10: Still Stinks, And A Decade Has Not Lessened The Odor

Ode To A Road

inversecondemnation.com: Hawaii Supreme Court Oral Argument In Lucas "Economically Beneficial Use" Taking Case

Amici Brief: Precondemnation Entry That Goes Beyond "Innocuous" And "Superficial" Is A Taking

Annual Hawaii Bar Association Land Use Update Video

Every year, our partners Greg Kugle and Mark M. Murakami update the Hawaii State Bar Associations Real Property Section on the latest decisions and issues in Hawaii and national land use law. The week before last, they did their thing, and the HSBA kindly recorded it for those of you who couldn't be there. 

Well worth watching or listening. 

Mark Your Calendars: The Land Use Institute Is Returning - February 1-2, 2017, Miami

 

After a short absence and a change of lead sponsor (from ALI-CLE, to the American Bar Association's Section of State and Local Government Law), the Land Use Institute is back on.

Download the print brochure here, or visit the LUI web site for more. It will be held February 1-2, 2017, in Miami, Florida, at the Brickell City Centre's Akerman Conference Center, in conjunction with the ABA's Midyear Meeting. One of the best aspects of this program is the registration fee, a mere $300, $250 if you are a judge, an academic, young lawyer, or government attorney (perhaps the best deal in CLE). Register on line here. For those who cannot attend in-person, the LUI will be live-streamed. Register here. 

Planning Chairs Frank Schnidman and Dean Patrica Salkin have assembled a very good faculty and program. Topics include: "Nuts and Bolts of Land Use Practice: Vested Rights and Regulatory Takings: Where Are We Now?," "Public-Private Partnerships," "Climate Change and Resilient Development," "Client Representation: Developer, Government and Citizen Groups," "Regulating Navigable Airspace: The Drones Are Here," "Housing Supply and Affordability: Planning Alternatives and Legal Consequences," and "Community Benefits Agreements, Environmental Justice and Access to Housing." The Annual Richard Babcock Keynote Address will be by Deborah Rosenthal, "From the Ground Up: Unshared Assumptions in Law and Planning." Complete agenda here. 

We'll be speaking on the Vested Rights panel, along with Professor Steven Eagle, Amy Boulris, and Howard Roston.

The faculty list is impressive; all national experts in land use law: Lisa M. Agrimonti, Fredrikson & Byron, P.A., Minneapolis, MN; Cecily T. Barclay, Perkins Coie, LLP, San Francisco, CA; Amy Boulris, Gunster, Miami, FL; Frederick K. Brewington, Hempstead, NY; Mary T. Cagel, Inspector General, Miami-Dade County, Miami, FL; David Callies, Benjamin A. Kudo Professor of Law, University of Hawaii at Manoa, William S. Richardson School of Law, Honolulu, HI; Nadia L. Costa, Miller Starr Regalia, Walnut Creek, CA; Steven J. Eagle, Professor, George Mason University School of Law, Arlington, VA; W. Andrew Gowder, Jr. Austen & Gowder, Charleston, SC; The Honorable Keon Hardemon, Commissioner, District 5, Miami, FL; Neisen Kasdin, Akerman, LLP, Miami, FL; Wendie L. Kellington, Lake Oswego, OR; Victor Marquez, The Marquez Law Group, San Francisco, CA; Dwight Merriam, Robinson + Cole, Hartford, CT; James F. Murley, Chief Resilience Officer, Miami-Dade County, Miami, FL; Ellen F. Rosenblum, Oregon Attorney General, Salem, OR; Deborah Rosenthal, FitzGerald Yap Kreditor, LLP, Irvine, CA; Howard Roston, Fredrikson & Byron, P.A., Minneapolis, MN; Katherine Fernandez Rundle, State Attorney, Miami-Dade County, Miami, FL; Julie A. Tappendorf, Ancel Glink, P.C., Chicago, IL; Benjamin F. Wilson, Beveridge & Diamond, Washington, D.C.; and Steven W. Zelkowitz, Gray/Robinson, Miami, FL. More on the faculty here. 

Miami is pretty nice in February, we hear. Come join us.

2017 Land Use Institute brochure - ABA State & Local Govt Law Section, Miami, Feb 1-2 

Details: ALI-CLE Eminent Domain And Land Valuation Conference - San Diego, January 26-28, 2017

We've teased some of the details on the 2017 ALI-CLE Eminent Domain and Land Valuation Litigation and Condemnation 101 Conference, to be held at the Westin San Diego, January 26-28, 2017, but here are the details you've been waiting for.

This is the "big one," our annual 3-day festival of all things eminent domain, property, takings, inverse condemnation, and just compensation. Truly national in scope, this is the 34th annual edition, and the one conference you must attend. Our 2016 conference in Austin was one of the best in years, and we're on the way to replicating it in 2017, with a great venue in an exciting city. 

Look for the web and printed brochures to show up in your mailboxes, but in the meantime, here are some of the highlights (we'll post more in the next few days):

• Relocation, relocation, relocation: we are featuring two sessions on this important and growing area of law. Our first panel will address the tension between condemnors, property owners, and tenants in securing relocation benefits, and our second will be a case study of an appeal under the Uniform Relocation Act, complete with lessons learned and traps for the unwary. Featuring a slate of experts: David Arnold (Virginia), Janet Handy Bush (Maryland), Kenneth Gindy (Texas), Brian Kunze (Virginia), Jill Gelineau (Oregon), Kelly Walsh (Washington), and Martyn Daniel (Washington). 
• Present and Future Highway Projects: we have several panels on issues related to present and planned highways and other transportation projects. We'll focus on the issues that arise when a highway authority plans to take property but doesn't do so immediately -- where are the lines between planning and taking in those cases? Strategies for property owners in obtaining information from the highway department under public records laws, and the role of federal funding in these and similar cases. Featuring Linde Hurst Webb (Ohio), Matthew Bryant (North Carolina), W. Andrew Gowder (South Carolina), Minming Wu (from the Federal Transit Administration (invited)), and Mark Murakami (Hawaii). 
• Trial and practice insights: we have several panels devoted to the latest strategies from condemnation jury trial experts: how to use experts (appraisers and others) to make your case; how to employ a jury consultant to maximize your results; winning valuation evidentiary issues before and during trial; admitting or excluding the "lowball" offer; and maximizing the property owner's testimony in the just comp phase. With Jeremy Hopkins (Virginia), Mary Nell Bennett (Louisiana), Christian Torgrimson (Georgia), Darius Dynkowski (Michigan and Ohio), Andrew Brigham (Florida), Scott Jenny (California), Justin Hodge (Texas), and Susan MacPherson (Minnesota)
• Inverse and regulatory takings: It's been 25 years since the Supreme Court blockbuster Lucas -- has the sky fallen? With Dwight Merriam (Connecticut), and Luke Wake (California and DC). Where the line is between an exercise of the police power to protect the public, and a taking is something we've been trying to figure out for nearly a century since Pennsylvania Coal. David Breemer (California) and I (Hawaii) will bring you the latest. 

There's a lot more, of course, Reserve your space by registering for the conference here. 

Related articles

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West Virginia: DOT Should Not Have Mined Privately Owned Limestone Without Owner's Permission

2015 ALI-CLE Eminent Domain Conference: Third Day Update And Lessons Learned

inversecondemnation.com: Land Use: License Plate Edition

HAWICA Rejects Planning Department's Formalistic Definition Of "Applicant" In Vacation Rental Case

One for you land users. We're not going to analyze the Hawaii Intermediate Court of Appeals' published opinion in Robert D. Ferris Trust v. Planning Comm'n of the County of Kauai, No. CAAP-15-0000581 (Aug. 9, 2016) in too much detail, because our Damon Key colleagues Greg Kugle and Chris Leong represent the prevailing appellant. But here's a short summary, after which you can read the opinion itself.

The narrow issue in the case involves the definition of the term "applicant" in two different sections in the County's zoning ordinance. The underlying issue is one that's hot right now across Hawaii and elsewhere: short-term or transient vacation rentals, defined in the Kauai zoning ordinance as rental for less than 6 months.  

Here, the homeowner had a parcel in an agricultural district, with a single-family residence on the lot. It began renting the home to vacationers in 2003, prior to the County's adoption of an ordinance prohibiting new TVRs outside of certain specially-designated districts. The ordinance also required existing lawful TVRs to register, after which the owner or operator was required to obtain a nonconforming use certificate within a certain time. The County followed up with another ordinance "targeting the grandfathering provision established by" the earlier ordinance. Slip op. at 2.

The owner registered and filed a nonconforming use application. But the Planning Department repeatedly informed it that the application was not complete, and ultimately focused on the fact that the property was condominiumized and the owner thus needed the consent of at least 75% of the owners of the lot in order to apply. A separate ordinance defined "applicant" as someone who possesses a "controlling interest" in the subject property, and according to the Department, it was not sufficient that the applicant was the "owner, operator, or proprietor" of the TVR as set forth in the registration ordinance.  

Time marched on while this was being sorted out, and eventually "the Planning Department informed the Ferris Trust that the time period for applying for a nonconforming use certificate ended on August 8, 2011, and asked the Ferris Trust's counsel to advise their client to cease and desist from further use of land designated as agricultural from further use as TVRs." Slip op. at 3. The Trust appealed up the administrative chain to the Planning Commission and after a contested case before a hearings officer, the Commission denied the appeal. On to circuit court under the Administrative Procedures Act. That court affirmed the Commission.

The ICA saw it differently. The issue was whether the Trust could apply for a nonconforming use certificate despite it not having a controlling interest in the property, even though as "owner, operator, or proprietor" of the TVR, it was required by the TVR ordinance to apply for the certificate. The ICA began by noting that lawfully existing uses ("grandfathering") are grounded in constitutional and vested rights principles, and subsequently-adopted restrictions cannot limit a property owner's ability to continue with a preexisting use. The court concluded:

[p]ersons with less than a a seventy-five percent ownership interest may be able to establish vested right to prior lawful conforming uses. Therefore, precluding such persons from even applying for a nonconforming use certificate would be inconsistent with the purpose of the ordinance to identify those engaged in the prior lawful use of their property as a transient vacation rental and allow them to apply to continue that use.

Slip op. at 10-11. Limiting the ability of the Trust to apply as the County argued would raise "serious constitutional questions." Slip op. at 11.

The court applied the avoidance principle to read the ordinances to allow the Trust to seek the required permit, because that would allow the court to avoid those tough questions. Thus, because it was an "operator," the Trust qualified as an applicant, notwithstanding that it did not have a "controlling interest" in the property.   

Robert D. Ferris Trust v. Planning Comm'n of the County of Kauai, No. CAAP-15-0000581 (Haw. App. Aug....

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