THE FLOOD OF TAKINGS CASES AFTER HURRICANE HARVEY

 

On August 27, as Hurricane Harvey blew through the Houston area, the U.S. Army Corps of Engineers found itself between the proverbial rock and hard place. Since the 1940s, it had operated a flood control project to control the risk of flood damage to downtown Houston and the Houston Ship Channel. It had accomplished this by carefully controlling the release of flood waters from the project’s dams. Now, however, the Corps confronted Hurricane Harvey, a megastorm generating massive, unprecedented volumes of flood water.

The Corps faced the choice of either limiting water releases from the project to protect downstream properties at the cost of flooding upstream properties, or increasing project releases to protect upstream properties at the cost of flooding downstream properties. Not surprisingly, the Corps’ decision on August 27 and on the following days, to release up to 13,000 cubic feet per second from the project dams, which arguably contributed to the flooding of both downstream and upstream properties, left everyone unhappy.

What is surprising is that property owners upstream and downstream from the project have now filed as least 61 – yes, 61! – separate lawsuits in the U.S. Court of Federal Claims (CFC) asserting  a “taking” of their private property under the Takings Clause of the Fifth Amendment of the U.S. Constitution. All told, the complaints seek “just compensation” from the U.S. government to the tune of several billions of dollars.

Generally speaking, the plaintiffs assert that the flooding of their properties would not have occurred in the absence of the Corps’ decision, noting in many complaints that their flooded properties were outside the 100-year floodplain. Downstream plaintiffs focus on the fact that the project release gates were undergoing repair at the time Harvey struck, and the Corps realized the gates might give way completely if it attempted to hold back too much water. These plaintiffs claim that by reducing water releases to safeguard the project – as well as to protect certain other property owners from flooding – the Corps sacrificed their properties to serve its own goals and benefit the other property owners. On the other hand, upstream plaintiffs assert that, because the Corps’ limited the release of flood waters, they suffered flooding and consequent property damage.

A quick review of these complaints reveals a number of interesting issues. The first point to emphasize, however, is that all of these cases would have been laughed out of court prior to the Supreme Court’s 2012 decision in Arkansas Game & Fish Comm’n v. United States. Prior to that decision, the United States could and did successfully argue that it could not be held liable under the Takings Clause for temporary flood events. In Arkansas, the Court repudiated that bright line rule, determined that even temporary (possibly even one-time) flooding events could give rise to takings liability, and set forth a complex, multi-factor, fact-specific framework for analyzing such claims. Arkansas does not necessarily mean the Harvey plaintiffs will necessarily prevail, but it gives them a shot.

Justice Ruth Bader Ginsburg, writing for the Court in Arkansas, contended, somewhat defensively, that the Court’s new, more expansive takings standard “augurs no deluge of takings liability.” The flood of takings claims filed in the aftermath of Harvey obviously will put Justice Ginsburg’s reassuring words to the test.

One major issue in these cases will be causation. Most of the complaints, filed by both upstream and downstream plaintiffs, allege that the flooding was the direct, natural, and probable consequence of the Corps’ releases – that plaintiffs’ properties would not have flooded otherwise. But at least with respect to the downstream properties, if the Corps had held back more water, would the project release gates have collapsed, causing even more downstream flooding? If so, there arguably was nothing the Corps could have done to avoid the flooding. Or, at a minimum, the Corps may have made the best decision it could in an emergency to reduce property damage.

Apart from the issue of the structural integrity of the release gates, the record-setting rainfall during Harvey suggests that, at bottom, the Corps’ Houston-area flood control project was simply inadequate to deal with Harvey. Viewed this way, the Harvey flooding cases are like the 2007 case of Nicholson v. United States, in which the U.S. Court of Federal Claims rejected the argument that the overtopping of the Corps levee protecting New Orleans during Hurricane Katrina was a taking. It was the hurricane, not the Corps, that caused the flooding, said the court, because the flooding was so great that the levee made no difference. In the same vein, as far back as 1939, the Supreme Court held in United States v. Sponenbarger that a government flood control program does not effect a taking of lands the government chooses not to, or cannot, protect.

Another issue is how the plaintiffs’ claims might fare under the Arkansas decisionThe Supreme Court explained in Arkansas that relevant factors will include the severity of the intrusion on private property caused by this single, unprecedented event, the character of the properties at issue and the owners’ “reasonable investment-backed expectations” relating to their lands, and the extent to which the flooding was the intended or the foreseeable result of authorized government action. Suffice it to say that it is difficult to predict how these factors will apply to different plaintiffs’ undoubtedly widely varying factual circumstances. The fact that Houston was already one of the most flood-prone cities in the country will certainly not cut in plaintiffs’ favor.

Third, the Corps’ choice of the rate at which to release water from the Houston project during Hurricane Harvey raises the issue of how the Takings Clause should apply when the government has nothing but bad options. In the famous 1928 case of Miller v. Schoene, the Supreme Court held that the government could not be held liable under the Takings Clause for ordering the destruction of ornamental cedar trees, which served as host to a fungus that threatened nearby apple orchards. If the government had not ordered the destruction of the cedars, the apple trees would have been destroyed by the fungus instead, the Court reasoned, and in this circumstance, the government could pick what it perceives to be the least harmful option without incurring takings liability. Does this venerable precedent control the Harvey flooding cases?

Looking to the future, and anticipating more frequent and larger precipitation events due to climate change, the Harvey takings cases might be the prelude to a veritable torrent of future takings litigation, especially if some or even a few of the Harvey claimants succeed. Takings doctrine might become a kind of social insurance program for risk associated with climate change, at least for those climate change victims fortunate enough to be able to point to a deep-pocketed defendant like the United States.  At the same time, successful takings litigation may actually impede initiative to take steps to avoid the worst effects of climate change, undermining our collective ability to build more resilient communities.

John Echeverria, Center for Progressive Reform, Member Scholar; Professor, Vermont Law School

Robert Meltz, Special Counsel, Defenders of Wildlife


Big Victory for State and Local Governments in Murr

On June 23, 2017, the U.S. Supreme Court issued its decision in Murr v. State of Wisconsin, affirming the judgment of the Wisconsin Court of Appeals that enforcement of a “lot merger” provision in a county zoning ordinance did not result in a compensable taking under the Fifth Amendment. While seemingly narrow and technical, Murr represents the most significant takings decision from the Supreme Court in at least a decade.  The Court’s opinion has particularly important implications for future takings litigation involving land use and environmental regulations.  Here are the basic takeaways from Murr.  (Full disclosure:  I filed an amicus brief in Murr on behalf of a group of land economists urging the Court to embrace a more rigorous analysis of how land values are affected by regulation.)

The Background.

The facts of the case are straightforward. Four adult siblings in the Murr family jointly owned two adjacent building lots on the Lower St. Croix River, one with a house on it (Lot F), and one vacant (Lot E), both of which the Murrs had acquired from their parents in a series of transactions in the 1990’s.  Under the county zoning regulations, both of the lots were substandard in size.  Furthermore, because the Murrs held both lots in common ownership, they were “merged” – effectively treated as one lot – under the zoning’s merger provision.   When the Murrs approached county officials about developing Lot E, they were told the lots had merged and they were barred from building a house on Lot E (or selling Lot E to someone else). Disappointed by this regulatory obstacle, they brought suit under the Takings Clause.

The issue before the Supreme Court was whether the “relevant parcel” for the purpose of assessing the economic impact of the restriction was Lot E or Lots E and F combined. The Murrs, represented by the Pacific Legal Foundation, argued for Lot E alone while the government argued for combining the lots. Defining the relevant parcel as Lot E made the potential adverse economic impact of the restriction appear relatively severe, increasing plaintiffs’ chances of establishing a taking.  Defining the relevant parcel as both lots combined reduced the apparent economic impact (because the plaintiffs already had one house on the combined lots), virtually precluding a finding of a taking.

The Murrs argued that Lot E was the appropriate parcel because Lot E had been lawfully created under Wisconsin subdivision rules and state property rules should govern definition of the relevant parcel. The Court rejected this theory and instead ruled that the relevant parcel for takings purposes turns on “whether reasonable expectations about property ownership would lead a landowner to anticipate that his holdings would be treated as one parcel.”  More specifically, the Court said this inquiry should be guided by, among other things, how land is bounded and divided under state and local law, the physical characteristics of the property in question, and the potentially positive impact of a restriction on one of a claimant’s holdings on the value of an adjacent holding.   Applying this multi-factor analysis, the Court ruled that combined Lots E and F represented the relevant parcel, taking into account that the lots had merged under the county’s lot merger provision, the Murrs were aware that their lots bordered a national wild and scenic river and might be subject to stringent regulation, and the fact that the restrictions on Lot E contributed to the value of the development rights on Lot F.

Justice Kennedy wrote the opinion for the Court for himself and four other justices. Chief Justice Roberts wrote a dissenting opinion, joined by Justices Alito and Thomas.  He contended that lot lines established under local law “should in all but the most exceptional circumstances determine the parcel at issue,” meaning that in his view Lot E alone should have been regarded as the relevant parcel.  Justice Thomas wrote a separate dissent arguing, in typically iconoclastic fashion, that the Court has “never purported to ground” its takings precedents “in the Constitution as it was originally understood,” and suggesting that the Court should take a “fresh look” at takings doctrine.  Justice Gorsuch did not participate in the case.  Bottom line, the Court split 5 to 3 on the important “parcel issue” presented by the case.

The Major Takeaways.

The Parcel Status Quo Maintained. Murr basically reaffirms the traditional “parcel as a whole rule” in takings litigation. Murr breaks new ground by firmly grounding the parcel as a whole concept in a claimant’s “reasonable expectations about property ownership” and by enumerating three apparently nonexclusive factors for gauging a claimant’s expectations relevant to the parcel issue: the treatment of the land under state and local law, the physical characteristics of the land, and the effect of restricting use of one land holding on the value of an adjacent land holding.  In practice, however, these guidelines should generally lead courts to adopt parcel definitions in line with the traditional approach to the parcel issue prior to the Murr decision.  State and local law can support either a narrow or, as in the Murr case, a broader definition of the relevant parcel.  Consideration of the physical characteristics of the land and the economic interactions between adjacent land holdings will often support unified treatment of adjacent holdings.  Ultimately, it appears likely that the courts, under the Murr “reasonable expectations” approach, will typically treat a contiguous or otherwise connected set of land holdings as a single parcel for takings purposes so long as they are part of a single development project or investment venture.  Thus, it appears that the Court effectively endorsed the parcel approach it previously applied in Palazzolo, where the Court treated a property that had been subdivided into dozens of separate building lots as a single parcel for the purpose of takings analysis.  This approach also is consistent with how the overwhelming majority of lower federal and state courts have resolved the parcel issue in takings challenges to land use and environmental regulations.  In short, the Court in Murr offered a mainstream answer to the parcel question that is consistent with longstanding practice.

By contrast, if the Court had adopted the Pacific Legal Foundation’s position, and defined each lawfully subdivided lot as the relevant parcel (or at least as the presumptively relevant parcel), it would have produced a substantial increase in takings liability for government at all levels. Happily, the Court declined to make a radical change in this feature of takings law.

Economic Pros and Cons of Regulation Recognized. The Murr decision breaks new ground by recognizing more explicitly than the Court ever has before that land use regulations produce a complex mix of positive as well as negative effects on private property values.  A land use regulation may depress property values by limiting what an owner can do with her land. But it also can increase property values by protecting the amenities that make a community an attractive place to live and work and by restricting available development opportunities and making them scarcer and hence more valuable.

As just discussed, the Court recognized that the mix of negative and positive economic impacts of regulation will support a broad definition of the relevant parcel in many cases.   The Court explained:  “[C]ourts should assess the value of the property under the challenged regulation, with special attention to the effect of burdened land on the value of other holdings.  Though a use restriction may decrease the market value of the property, the effect may be tempered if the regulated land adds value to the remaining property, such as by increasing privacy, expanding recreational space, or preserving surrounding natural beauty . . . . [I]f the landowner’s other property is adjacent to the [owner’s] lot, the market value of the properties may well increase if their combination enables the expansion of a structure, or if development restraints for one part of the parcel protect the unobstructed skyline views of another part. That, in turn, may counsel in favor of treatment as a single parcel and may reveal the weakness of a regulatory takings challenge to the law.”

In addition, once the relevant parcel has been determined, the Court’s economic insights in Murr also should improve the fairness and accuracy of the courts’ analysis of whether a “taking” has occurred, in particular the assessment of the economic impact of a regulatory restriction.  A regulatory restriction typically applies not only to part of a claimant’s land, but also to many other property owners in the community.  For the reasons the Court has explained in Murr, enforcement of the regulation against others in the community will benefit the claimant.   Murr strongly suggests that these benefits received by takings claimants should be factored into the analysis of whether the application of the regulation to the claimant results in a “taking” of his property.

Parcel Rule is a Federal Law Rule. Murr makes clear that federal law, not state or local law, ultimately determines the proper definition of the relevant parcel for the purpose of takings analysis. The Court rejected both the Murrs’ and the State of Wisconsin’s efforts to tie the parcel definition to state and local property rules. The Court said that allowing state law rules to define the relevant parcel would give states or their localities too much authority to define the relevant parcel either too narrowly or too broadly, undermining the Supreme Court’s authority to define the scope of what is, after all, a federal constitutional protection. Instead, the Court articulated a multifactor test which evidently derives from the Takings Clause itself. Under this test, state and local property rules are relevant, but they are not determinative of the parcel question.  It is not entirely clear from Murr whether the parcel issue is part of the analysis of whether a government action amounts to a “taking,” or whether instead it is part of the threshold question of how to define the “property” the claimant possesses. In any event, regardless of how the result is rationalized in doctrinal terms, Murr makes clear that the parcel issue is ultimately governed by federal law.  Chief Justice Roberts, in dissent, took a different position, arguing that the definition of the relevant parcel should be governed by state law.

Lot Merger Provisions Upheld.   The Murr case offers a ringing endorsement of the constitutionality of lot merger provisions.  It is especially noteworthy that, even as the Court split on the proper approach to the parcel issue, the justices agreed unanimously that there was no taking in this case.  That common sense conclusion is hardly surprising.  Prior to Murr, no lower federal or state court had ever ruled that a lot merger provision results in a compensable taking, and it would have been surprising indeed if the Supreme Court had been the first court to do so.   As explained in the effective amicus brief filed by the State and Local Legal Center, lot merger provisions in local zoning ordinances are very widespread and have been around almost since the advent of zoning. And, setting doctrinal complexities to one side, lot merger provisions are eminently fair and just, which is the Supreme Court’s ultimate test under the Takings Clause.  When a community adopts zoning (and the Supreme Court has left no doubt that zoning itself is constitutional), there almost always will be some pre-existing lots that are too small to comply with new minimum lot-size requirements.  Regulators could simply bar use of these lots, imposing heavy economic losses on the owners, or allow the owners to develop the lots even though they are not consistent with the zoning plan.   Faced with this choice, local governments commonly permit the development of so-called “non-conforming” lots.  This decision is arguably fair, although it allows the owners of these lots to ignore the zoning rules being followed be everyone else while simultaneously reaping the benefit of their neighbors’ compliance with the rules.  The calculus is different, however, if citizens acquire adjacent substandard lots that together constitute conforming lots.  In that situation, it is fairer to treat owners of adjacent substandard lots as owners of conforming lots and subject them to the same rules that apply to everyone else, rather than allow them to reap double the special benefits conferred on owners of single substandard lots.  Small wonder that no Justice in Murr was inclined to assert that sensible, time-tested lot merger provisions result in a taking.

RIBE’s Defense Strengthened. The Murr decision expands the significance of the claimant’s reasonable investment-backed expectations (“RIBE’s”) in takings analysis, enhancing the ability of government defendants to point to the regulations in place when the claimant purchased the property as a basis for rejecting a takings claim.  In Palazzolo, the Court (in an opinion by Justice Kennedy) famously rejected the-so-called “notice rule,” the idea that a landowner is barred from suing for a taking based on a regulation already in place when she purchased the property.   The opinion for the Court left uncertain whether, even if a pre-existing regulation is not a complete bar to a takings claim, it should be a factor potentially weighing against a takings claim.   Justice Scalia wrote a concurring opinion insisting that the fact that a rule was already in place at the time of purchase should be irrelevant in a regulatory takings case.  Justice O’Conner filed a separate concurrence taking the opposite tack, asserting that notice of pre-existing regulations should be a relevant consideration.  Because four dissenters in Palazzolo embraced Justice O’Connor’s viewpoint, most lower courts accepted Justice O’Connor’s position as probably representative of a majority of the Court.   But, until now, the Court had never squarely addressed the issue in a majority opinion.  In Murr, Justice Kennedy, speaking for the Court, stated that “[a] reasonable restriction that predates a landowner’s acquisition . . . can be one of the objective factors that most landowners would reasonably consider in forming fair expectations about their property.”   Furthermore, the Court specifically relied on this consideration in resolving the Murr case, pointing out that plaintiffs’ “land was subject to this regulatory burden . . . only because of voluntary conduct in bringing the lots under common ownership after the regulations were enacted.”   So, following Murr, there is no question that an owner’s knowledge of regulatory restrictions in place when she purchased the property will weigh against the owner’s subsequent takings claim based on that restriction.

Importance of Environment Recognized. The Murr decision recognizes the significance of the government’s goal of protecting ecologically fragile parts of the landscape, both for the purpose of defining the relevant parcel and in deciding whether a taking has occurred.  As discussed, the Court said one relevant factor in defining the relevant parcel is “the physical characteristics of the landowner’s property.”   The Court continued:  “These include the physical relationship of any distinguishable tracts, the parcel’s topography, and the surrounding human and ecological environment.  In particular, it may be relevant that the property is located in an area that is subject to, or is likely to become subject to, environmental or other regulations.”  Under this standard, the likelihood that a portion of a claimant’s land holdings might be strictly regulated due to environmental constraints supports treating an owner’s adjacent holdings as a unified parcel.  Thus, in Murr the Court said that the “rough terrain” encompassed by the Murr lots, and their location on a designated wild and scenic river, both supported defining the relevant parcel as Lots E and F.

The Court also said that the government’s environmental protection objectives are relevant as part of the takings analysis, observing that, in assessing the “character” of the county zoning under the Penn Central analysis, it was noteworthy that “the governmental action was a reasonable land-use regulation, enacted as part of a coordinated federal, state, and local effort to preserve the river and surrounding land.”

Time to Revisit Lucas? Murr raises a serious question about whether the Court may be prepared to revisit the apparently strict doctrine laid down twenty-five years ago in Lucas v. South Carolina Coastal Council.   In that case, in an opinion by Justice Scalia, the Court said that a regulation that denies an owner “all economically viable use” of his property should be regarded as a “categorical” taking, unless the government is responding to an emergency or the restriction parallels “background  principles” of nuisance or property law.   Based on this test, the U.S. Supreme Court overturned a ruling by the South Carolina Supreme Court that a state setback line barring developing along the ocean shore did not result in a taking.  Justice Kennedy concurred in the judgment in Lucas but expressed various reservations about the narrowness of Justice Scalia’s per se rule.  In his opinion for the Court in Murr Kennedy quoted twice from his concurring opinion in Lucas. First, in explaining that a claimant’s reasonable expectations about property ownership should be the guide in defining the relevant parcel, he quoted his statement in Lucas that “[t]he expectations protected by the Constitution are based on objective rules and customs that can be understood as reasonable by all parties involved.” Second, in explaining why the physical characteristics, including the environmental sensitivities, of land should be relevant in defining the relevant parcel, he quoted the following: “Coastal property may present such unique concerns for a fragile land system that the State can go further in regulating its development and use than the common law of nuisance might otherwise permit.”   Of course these are only brief snippets in a lengthy opinion. But they do appear in an opinion for the Court. And they reflect the current thinking of the Justice, as illustrated by the vote in Murr, most likely to decide the outcome of hotly debated takings cases before the Court.   At a minimum, Murr appears to open the door to reconsideration of the Lucas precedent and raise the question whether the Court, if presented with the Lucas case today, would be more likely to issue a decision tracking the thinking of Justice Kennedy or the views of the late Justice Scalia.


Texas, Flooding, and Public Use

On June 17, 2016, the Texas Supreme Court issued a decision in Harris County Flood Control District v. Kerr, available here, http://www.txcourts.gov/supreme/orders-opinions/2016/june/june-17,-2016.aspx, which should be of great interest to all those who follow major developments in takings doctrine.

The Texas Supreme Court, by a vote of 5-4, rejected a takings claim based on the theory that Harris County should be held liable for property damage allegedly caused by the county’s prior approval of upstream development without adequate flood mitigation. The headline is that the Court’s recent decision supersedes the Court’s prior decision in this case, issued on June 12, 2015, http://www.txcourts.gov/media/996484/130303.pdf, supporting, again by a 5 to 4 vote, the plaintiffs’ takings theory.  The change in outcome was explained by Justice Eva Guzman’s decision, in response to an application for rehearing, to switch her vote.

The plaintiffs in the case were more than 400 residents and homeowners in the Upper White Oak watershed in Harris County, Texas, which surrounds the City of Houston. They brought suit under the Texas Takings Clause, Article 1, Section 17 of the Texas Constitution.  The plaintiffs’ case was based on the theory that the county should be held liable for just compensation under the Takings Clause because (1) the county was substantially certain at the time it approved the development that it would cause downstream flooding and (2) the upstream development in fact caused increased flooding downstream resulting in property damage.   The trial court and the intermediate court of appeals ruled that the county was not entitled to dismissal of the case on summary judgment, saying that plaintiffs had created a factual dispute about whether they could prevail on their takings claim.  In its latest decision, the Texas Supreme Court ruled that plaintiffs’ claims were insufficient as a matter of law, principally because they had offered no evidence that the county was “consciously aware” that approval of any particular development  upstream was substantially likely to lead to flooding of plaintiffs’ specific downstream properties.

The Court made clear that it was influenced by a concern that a contrary ruling would open a Pandora’s box of takings liability, stating, “[t]he homeowners’ theory of takings liability would vastly and unwisely expand the liability of governmental entities.” The court also observed that plaintiffs’ theory “lacks any discernible limiting principle and would appear to cover many scenarios where the government has no designs on a particular plaintiffs’ property, but only knows that somewhere, someday, its routine governmental operations will likely cause damage to some as yet unidentified property.”   In its parade of horribles that it thought might follow from awarding plaintiffs a victory in this case, the Court cited a potential climate takings lawsuit by victims of sea level rise against the government for issuing permits to oil and gas drillers or power plant operators.

The Court also expressed concern that a ruling in favor of plaintiffs could undermine the doctrine of sovereign immunity, observing that if the plaintiffs were allowed to proceed under takings doctrine, as opposed to, say, tort doctrine, sovereign immunity would not defeat the plaintiffs’ claim. The Court stressed, quoting one of its venerable precedents, that “the doctrine of the non-suability of the state is grounded upon sound public policy,” for “[i]f the state were suable and liable for every tortious act of its agents, servants, and employees committed in the performance of their official duties, there would result a serious impairment of the public service and the necessary administrative function of government would be hampered.”  In a striking final flourish, the Court justified its ruling by citing Justice Robert Jackson’s famous caution that the Bill of Rights should not be converted “into a suicide pact.”

This case is full of ironies. The most striking feature of the case is that the county was charged with a taking for failing to take regulatory decisions which themselves might have generated takings lawsuits.   Plaintiffs alleged that the county failed to control downstream flooding by failing to impose adequate mitigation conditions on upstream development approvals.  But imposing those kinds of conditions will inevitably draw takings fire under Nollan, Dolan, and Koontz, which impose a heavy burden on government to justify development “exactions.”  In other words, under the plaintiffs’ theory, the county should have been liable under the Takings Clause for failing to impose regulatory restrictions which themselves might well have resulted in takings liability.  Talk about being caught between the devil and the deep blue sea!  Or as the, Court aptly put it, entry into a suicide pact!

A second striking feature of this case is the Court’s convoluted discussion of the issue of “public use.” The county contended that one of the reasons it could not be held liable for a taking was that issuing approvals for private development could not properly be regarded as a “public use” supporting takings liability.  In its latest decision, the Texas Supreme Court appeared to embrace this argument (although an ambiguous footnote considerably muddies the waters).  But Justice Lehrmann, who provided a crucial fifth vote to make the new majority, filed a concurring opinion emphasizing her position that a takings claim that fails the public use requirement can still support an award of compensation in an inverse condemnation case.  Property rights advocates have frequently adopted a similar line:  the public use requirement should be strictly enforced if the question is whether the government can exercise the power of eminent domain (see Kelo), but the lack of a public use should not be a barrier to recovery in an inverse condemnation case.

At least as a matter of federal takings doctrine, this argument is plainly errant nonsense. In its unanimous 2005 decision in Lingle v. Chevron USA, Inc. the Court made crystal clear that the public use requirement is fully applicable in inverse condemnation cases, stating:

“The [Takings] Clause expressly requires compensation where government takes    private property for public use. It does not bar government from interfering with property rights,    but rather requires compensation in the event of otherwise proper interference amounting to a taking. First English Evangelical Lutheran Church, 482 U. S., at 315 (emphasis added).  Conversely, if a government action is found to be impermissible, for      instance because it fails to meet the public use requirement or is so arbitrary as to violate due process, that is the end of the inquiry. No amount of compensation can authorize such action.”

Now, of course, the Texas Supreme Court is free to adopt its own special reading of the Texas Takings Clause. But as a matter of textual analysis and plain common sense, it would be illogical to read the phrase “public use” in the Texas Takings Clause to mean once thing in the eminent domain context and another thing in the inverse condemnation context.   And the fact that reading the phrase “public use” in a disjunctive fashion would be most beneficial to developers (an apparently favored class in Texas), and least protective of government (not so much), is not an argument in favor of this reading, at least not one rooted in law.

A final, sadly telling point:   The Texas Supreme Court has stepped back from the precipice of an expansive takings ruling, and has found a new respect for the constitutional principle of sovereign immunity, in a case in which hundreds of ordinary homeowners were seeking recovery for property damages they claimed to have suffered at the hands of their government (acting for the benefit of developers by issuing them lax permits)  Without disputing the merits of the Texas Supreme Court’s ruling in this case, one has to wonder about the Texas courts’ apparent lack of concern about  a “vast and unwise” expansion of takings doctrine, or about undermining the principle of sovereign immunity, when they issued rulings expanding the scope of takings doctrine for the benefit of developers and agricultural interests.  (See, e.g., Town of Flower Mound v. Stafford Estates Ltd. Partnership, 135 S.W.3d 620 (Tex. 2004) (ruling that an exaction imposed on a developer resulted in taking), or Edwards Aquifer Authority v. Bragg, 421 S.W.3d 118 (Tex. App. 20130, review denied (May 1, 2015) (ruling that implementation of the Edwards Aquifer Act resulted in taking of a farmer’s property),  In Texas, one has to wonder if there are property owners and then there are property owners.


Tobacco, Takings and the TPP

As furious negotiations continue to try to complete a Trans-Pacific Partnership (TPP) trade agreement, for which Congress granted the Obama administration fast track authority a few months  ago, a dispute has arisen over whether tobacco companies should be allowed to invoke the takings and other “investor protections” in the TPP to beat back efforts by developing countries to adopt regulations to protect their populations from the ravages of tobacco.  The Coalition for Tobacco Free Kids has a done a nice job of documenting how tobacco companies have used international investor-state claims under international trade agreements to attack tobacco regulation.  The Obama administration, under pressure from numerous public health groups, has proposed  a provision in the TPP to protect member countries from “abusive” tobacco company investor-state claims

A major argument against this approach by the tobacco companies and their allies in Congress has been: “First they come for the tobacco companies . . . “   In other words, maybe tobacco will be denied the opportunity to exploit the investor-state process today, but who knows what other kinds of “abusive’ takings claims will be targeted next?   Which is not a bad point.   If tobacco companies should be denied the opportunity to exploit trade agreements to challenge tobacco regulations, why shouldn’t this good thinking be applied to  protect all manner of lawful domestic environmental and social welfare legislation from abusive investor-state litigation?

Meanwhile, the Bloomberg and Bill and Melinda Gates foundations have set up a mufti-million dollar fund to provide advice to countries targeted by tobacco companies with investor-state litigation.    Which is all well and good, but one would hope the foundations would also pay some attention to the root causes of this international litigation explosion in the out-of-control  property rights ideology currently being promoted not only on the international scene but in our own domestic court system, including the U.S. Supreme Court.


Floodplain Regulation Not a Taking in South Carolina

Yesterday the South Carolina Supreme Court produced an important ruling in a regulatory takings case involving floodplain management.  In Columbia Venture, LLC v. Richland County, the Court issued a unanimous decision affirming a ruling by a Special Referee that county restrictions on development in a federally-designated floodway did not result in a taking.   This ruling is consistent with an apparently unbroken string of precedent from around the country holding that floodplain development restrictions do not represent takings. Read the rest of this entry »


Looking for “property” in 9th circuit workers comp “lien activation” case

In another demonstration of the challenges sometimes presented by the need to identify the relevant property interest in a takings case, the U.S. Court of Appeals for the Ninth Circuit recently ruled in Angelotti Chiropractic, Inc. v. Baker that a takings claim failed for lack of a predicate property interest. The case involved an alleged taking based on a California law requiring medical providers to pay an “activation fee” in order to enforce a “lien” covering payment for medical services. Read the rest of this entry »


Kelo Before the House Judiciary Committee (Again)

Kelo continues to provide fodder for political debate ten years after the decision, and the latest installment of this debate was a hearing last week before the U.S. House of Representatives Judiciary Commitee, Subcommittee on the Constitution and Civil Justice, entitled “The State of Property Rights in America Ten Years After Kelo v. City of New London.”   My testimony is available here and other testimony is available on the subcommittee website. Read the rest of this entry »


Horne: Supreme Court Says Seizures of Personal Property Are Subject to a Per Se Rule

The U.S. Supreme Court issued its decision today in Horne v. Department of Agriculture, reversing the Ninth Circuit and ruling that the Hornes are not subject to monetary fines for violating the Department’s raisin marketing order.  The fines were invalid, the Court ruled, because compliance with the marketing order would have resulted in a taking of private property without compensation under the Takings Clause. The Court split along depressingly predictable partisan lines, with four justices (you know who they are) joining an opinion for the Court written by Chief Justice John Roberts, and four other justices (you know who they are) dissenting in whole or in part.  Many people will have interesting things to say about this case, which will deserve continued study, but here is a brief recap and a few initial observations.  Read the rest of this entry »


California Supreme Court Upholds Inclusionary Housing

Earlier this week the California Supreme Court issued a major takings decision rejecting a suit by the California Building Industry Association (“CBIA”) seeking invalidation of the City of San Jose’s inclusionary housing ordinance. The unanimous decision In CBIA v. City of San Jose is not only a ringing affirmation of the constitutionality of inclusionary housing policies but also an important explication of the line between “exactions” (subject to unusually strict judicial review) and land use regulation (subject to more traditional, deferential review). The case was brought under both the California and the Federal takings clauses, but the California Court assumed the two clauses should be interpreted congruently in this context. Read the rest of this entry »


Zero for Starr International in Bailout Lawsuit

The U.S. Court of Federal Claims today handed Maurice (“Hank”) Greenberg and his attorney David Boies a stinging defeat by declining to award a penny in monetary compensation in their lawsuit seeking in excess of $40 billion in connection with AIG bailout. (The NY Times headline for today’s story about the case starts off by asserting, “Victory for Ex-A.I.G. Chief in Bailout Suit . . .;” we have to wonder what part of goose egg they don’t understand over at the gray lady.) Read the rest of this entry »