Coastal Retreat and the Takings ClausePosted: September 14, 2014
The recent decision by the federal District Court for the Eastern District of North Carolina in the case of Town of Nags Head v. Toloczko, provides some insight into the potential obstacles presented by the Takings Clause to the use of nuisance-abatement ordinances to effect orderly retreat from eroding shores in the era of climate change.
In November 2009, a powerful storm hit Nags Head, North Carolina, including the Toloczkos’ beachfront cottage. The storm caused considerable damage to the property, including leaving the septic system exposed. In addition, while erosion had been a chronic problem for the Toloczkos, the 2009 storm substantially eroded the remaining beach in front of their property, leaving the cottage on the dry sand portion of the beach.
The Town declared the cottage a “nuisance” under a local ordinance which defined a storm- or erosion-damaged coastal structure a “public nuisance” when (1) the structure is “in danger of collapsing,” (2) the damaged structure or debris creates a “likelihood of personal or property damage,” or (3) the structure or debris “is located in whole or in part in a public trust area or public land.” In response to the Town’s request, the Toloczkos declined to remove the damaged cottage. Citing the second and third provisions of the ordinance, the Town filed suit seeking to abate the nuisance and penalties for failure to comply with the removal order. (Subsequently, following completion of a beach renourishment project, the Town concluded that the cottage could safely remain in place but continued to pursue recovery of civil penalties.) The Toloczkos filed counterclaims alleging, among other things, a taking of their property.
The District Court rejected the Town’s request for civil penalties on the ground that the cited provisions of the local ordinance were invalid. First, the Court observed that an intervening decision by the North Carolina Court of Appeals (Town of Nags Head v. Cherry, Inc., 723 S.E.2d 156 (N.C.Ct.App.), disc. rev. denied,366 N.C. 386, 733 S.E.2d 85 (2012)), established that only the State, acting through the Attorney General, has the authority to enforce the North Carolina public trust doctrine, meaning the Town’s effort to do so in this instance was ultra vires. Second, the Court ruled that “the Town’s police powers . . . do not include the power to order the destruction of a structure without first giving the owner a reasonable opportunity to repair it, unless the structure poses ‘an imminent threat to the public.’” (The Court’s statement seems an overstatement; what the Court apparently means is that state statutory law places this limitation on the municipal nuisance-abatement power, not that the North Carolina police power itself contains this limitation).
At the same time, the Court suggested, without definitively resolving the question, that the Toloczkos might well be permitted to recover for a temporary taking of their property, due to the Town’s prohibition on repairs while the nuisance order was pending. The Court recognized that no one can claim an entitlement to engage in a nuisance, but indicated that this background principle could not help the Town in this instance given its lack of authority to enforce the public trust doctrine and the right of an owner under state law to seek to repair a damaged property rather than demolish it. Turning to the takings issue, the Court rejected the Toloczkos’ effort to fit their claim into the per se rule for physical takings, but strongly suggested that they could prevail under a Penn Central analysis, ultimately concluding that disputed facts precluded a definitive resolution of the question on summary judgment.
Significantly, the Court observed in a footnote that “[t[he Town did not raise, and therefore the court does not address, whether the Toloczkos’ takings claim could be defeated on the theory that the public trust doctrine is a background principle of North Carolina property law, and independently limited how the Toloczkos could use the Cottage even though the Town lacked authority under North Carolina law to enforce public trust rights,” citing some of the leading cases on the public trust doctrine as a background principle, including , Esplanade Props., LLC v. City of Seattle, 307 F.3d 978, 985–87 (9th Cir.2002); Nat’l Ass’n of Home Builders v. N.J. Dep’t of Envtl. Prot., 64 F.Supp.2d 354, 358 (D.N.J.1999); McQueen v. S.C. Coastal Council, 354 S.C. 142, 146–51, 580 S.E.2d 116, 118–20 (2003). The Court continued “[l]ikewise, the Town did not raise the doctrine of custom as a background principle of North Carolina property law,” alluding to Oregon’s familiar reliance on the doctrine of custom to defeat takings claims arising from beach protection measures.
One of the lessons of this case appears to be that local governments need to deploy background principles with care in order to promote coastal retreat without incurring takings liability, preferably with the support of strong State enabling legislation, something that was obviously lacking in this instance.