Tuesday, November 4, 2014

Land Use in Canada - Where "Extensive and Restrictive Land Use Regulation is the Norm" by Deborah Curran

Greetings from Canada where most of the water flows north and there is no Canadian equivalent to the Fifth Amendment. Arguably the biggest difference in land use law between Canada and the U.S. is that we have no constitutionally protected property rights in Canada. Of suprise to many of you and, indeed, to many landowners in Canada, this approach to land use regulation allows provincial and local governments to restrict virtually all use of land without compensating the property rights holder for loss of land value as long as the regulation is in the public interest. As Justice Cromwell of the Supreme Court of Canada reasoned in Mariner Real Estate Ltd. v Nova Scotia (Attorney General), (1999) 177 D.L.R. (4th) 696, 178 N.S.R.(2d) 294 (NSCA) when he was a judge of the Nova Scotia Court of Appeal in a judgment that thoroughly canvassed this area of law (at paras. 41-42):

These U.S. and Australian constitutional cases concern constitutional limits on legislative power in relation to private property. As O'Connor, J. said in the Unites States Supreme Court case of Eastern Enterprises v Apfel 118 S. Ct. 2131 (U.S. Mass. 1998), the purpose of the U.S. constitutional provision (referred to as the "takings clause") is to prevent the government from "...forcing some people alone to bear public burdens which, in all fairness and justice, should be born by the public as a whole." Candian courts have no similar broad mandate to review and vary legislative judgments about the appropriate distribution of burdens and benefits flowing from environmental or other land use controls. In Canada, the courts' task is to determine whether the regulation in question entitles the respondents to compensation under the Expropriation Act, not to pass judgment on the way the Leiglature apportions the burdens flowing from land use regulation.

In this country, extensive and restrictive land use regulation is the norm. Such regulation has, almost without exception, been found not to consitute compensable expropriation.

However, the principle that a government or expropriating entity must pay compensation when expropriating an interest in property is alive and well in Canada. Its foundation rests in the royal perogative, powers bestowed on the Crown or government from the common law, and the common law principle that unless a statute explicitly provides, it is not to be construed as taking away property without just compensation (Attorney General v DeKeyser's Royal Hotel [1920] A.C. 508 H.L.). As a common law principle for which the courts have set a high bar when testing whether regulatory behaviour equals regulatory or de facto expropriation. The claimant must prove that:

1. The legislation or government action must so restrict a landowner's enjoyment of property as to constitute confiscation an interest in property; and

2. That interest in property must be acquired by the Crown (government).

It is the second part of the test that is the hardest to meet. Courts have found that simply benefitting Crown land such as a park is not sufficient to prove acquisition by the Crown.

In many provinces this common law rule is codified in a modified form in provincial land use law. For example, sections 914 of the Local Government Act in British Columbia and 621 of the Alberta Municipal Government Act state that no compensation will be paid for changes in the value of land caused by specified decisions made under a land use bylaw or permitting function. It is only when regulation takes away virtually all incidents of private ownership that the regulation will be found to be improper. The precise wording in British Columbia under s.914 is:

(1) Compensation is not payable to any person for any reduction in the value of that person's interest in land, or for any loss or damages that result from

(a) the adoption of an official community plan or a bylaw under this Division [zoning and other development regulation] or the issue of a permit under Division 9 [development permit] of this part,

***

(2) Subsection (1) does not apply where the bylaw under this Division rstricts the use of land to a public use.

These regulatory or de facto expropriations are few and far between in Canada. Although we hear about successfully argued "takings" cases in the U.S. courts, in Canada a court has never found land use regulation by a local government to result in a regulatory expropriation for which compensation is owed. See Mariner Real Estate Ltd. v Nova Scotia (Attorney General) 1999 CanLII 7241 (NSCA) for an excellent discussion of this area of law, and Canadian Pacific Railway Co. v Vancouver (City) [2006] 1 SCR 227, 2006 SCC 5 for the most recent Supreme Court of Canada discussion in the municipal land use context. Courts have ruled that significantly curtailing development on land that is environmentally sensitive, freezing development, development moratoria, and requirements to plant a vegetated buffer adjacent to a watercourse to protect a drinking water source do not require compensation.

The cases where courts have awarded compensation for loss of an interest in property centre around federal or provincial regulation that essentially prohibits an otherwise existing lawful activity or prevents access to a property right. Several cases in British Columbia award compensation for mineral rights that the provincial government rendered inaccessible upon creating a provincial park [R v Tener [1985 1 SCR 533; Casamiro Resource Corp. v British Columbia (Attorney General), 1991 CanLII 211 (BCCA)]. The classic case is Manitoba Fisheries v The Queen [1979] 1 SCR 101 where the court found a de facto expropriation by the federal government when it enacted legislation that created a monopoly in favour of a Crown corporation dealing with a freshwater fishery that removed all economic viability, including the goodwill, of one business.

Before I seal your view of Canada as the quiet socialist neighbour to the north ("What? No constitutionally protected property rights?") I must add that in practice land use regulation by local governments works much the same in Canada as in most parts of the U.S. Zoning typically awards development potential or development rights, and once an application is submitted to a local government that zoning and other regulations vest. Few local governments attempt to curb growth in any comprehensive way. There is little coordination at a regional scale about where new development will occur, and most cities are challenged with revitalization of a formerly industrialized water front or downtown core that has to compete with the big box periphery. Proposals for a slight increase in residential density in existing neighbourhoods result in an eight hour public hearing, and there is, of course, no accounting for municipal bad taste in what was kind of development council believes is in the public interest. Although we have somehow resisted building freeways through most of our urban centres and do have a few somewhat successful provincial growth management or agricultural land protection law in place (more on that this month), the local politics of land use law often favours individual property rights.

If we conducted a poll I would be willing to wager that most Canadians and, in particular, municipal elected officials believe that compensation is owed if development "rights" are taken away by regulation. Most intersting is the fact that the Canadian law of regulatory expropriation has remained unchanged since land use regulation came into vogue yet it is popularly trumped by the law of eminent domain from the U.S. Perhaps telecommunications law has more impact on land use than land use regulation itself.

November 4, 2014 in Comparative Land Use, Constitutional Law, Development, Eminent Domain, Local Government, Planning, Property, Property Rights, Takings, Zoning | Permalink | Comments (0)

Monday, April 21, 2014

Dyal-Chand on Sharing the Cathedral

Rashmi Dyal-Chand (Northeastern) has posted Sharing the Cathedral, 46 Conn. L. Rev. 647 (2013).  Here's the abstract:

Sharing is an indispensable part of American property law, often mediating the harsh implications of ownership rights. Yet sharing is also a hidden component of this legal structure. In both theory and doctrinal manifestations, sharing is overshadowed by the iconic property right of exclusion. This Article argues that property law suffers a critical loss from its under-recognition of sharing because it fails to use sharing to correct distributional failures in a world of increasingly scarce resources. Sharing could be the basis for developing a rich range of outcomes in common property disputes. Instead, as described by Calabresi and Melamed in their famed article on remedies, outcomes are tagged to exclusion in the form of blanket property rules and “keep out” signs. As a result, sharing currently functions merely to create very narrow exceptions to broad rights of ownership. To correct this failure, this Article presents a model for sharing as a preferred outcome in property disputes. Sharing as an outcome is a powerful means of addressing property inequalities, limiting harmful externalities, preserving efficiency, and harnessing the extraordinary potential of outcomes in property law.

Jim K.

 

April 21, 2014 in Property, Property Rights, Property Theory, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Friday, April 18, 2014

Alexander on Property's Ends

Greg Alexander (Cornell) has posted Property's Ends: The Publicness of Private Law Values, 99 Iowa L. Rev. 1257 (2014).  Here's the abstract:

Property theorists commonly suppose that property has as its ends certain private values, such as individual autonomy and personal security. This Article contends that property’s real end is human flourishing, that is, living a life that is as fulfilling as possible. Human flourishing, although property’s ultimate end, is neither monistic or simple. Rather, it is inclusive and comprises multiple values. Those values, the content of human flourishing, derives, at least in part, from an understanding of the sorts of beings we are ― social and political.  A consequence of this conception of the human condition is that the values of which human flourishing is constitutive ― property’s ends― are public as well as private. Further, the public and private values that serve as property’s ends are mutually dependent for their realization. Hence, any account of property that assigns it solely to the private sphere, categorically removed from public values, is incoherent.

Jim K.

April 18, 2014 in Constitutional Law, Property, Property Rights, Property Theory, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Monday, March 24, 2014

Festa on Property and Republicanism in the Northwest Ordinance

Our own Matt Festa (South Texas) has posted his new article, Property and Republicanism in the Northwest Ordinance, 45 Ariz. St. L. J. 409 (2014).  Here's the abstract:

Property rights were central to the political ideology of the founding era. The Northwest Ordinance of 1787 shows how the concept of property was part of both the liberal and the republican narratives of the revolutionary and constitutional eras. Conventional wisdom holds that property rights were key to the liberal argument, but that they must yield to the common good in the civic republican view. This Article shows that property was a key concept to both the liberal and republican ideologies at the founding by analyzing a critically important, but relatively neglected, founding document: the Northwest Ordinance.

The Northwest Ordinance -- one of the four most important American founding documents -- established governance in the unorganized territories of the new nation, and provided the blueprint for admitting new states to the union. A close reading of the Ordinance shows that it is fundamentally concerned with property rights, but is also thoroughly republican in character. It provides numerous rules about property ownership, in terms of inheritance, transactions, and political participation. It contains individual-rights precursors to the Constitution’s property clauses, including direct historical links to the Contracts Clause and the Takings Clause. It also envisions the role of property in an expanding republic. The property rights provisions in the Northwest Ordinance reflect a concern for not only individual liberty, but also for the promotion of the common good, through a virtuous society of individual property owners. The Northwest Ordinance shows that both the liberal and the republican narrative of the founding era rely on a fundamental consideration for individual property rights.

Jim K.

March 24, 2014 in Constitutional Law, Property Rights, Property Theory, Takings | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 28, 2014

Takings and Conservation Easements

Like many nerds tech-savvy people, I have an alert set up with WestLaw to send me any new law review article or case that even mentions the phrase "conservation easement." It sends me a lot of fluff, but every now and then I find a gem that seems to have eluded the 5,000 SSRN lists I get. When I saw an article entitled "Environmental Preservation and the Fifth Amendment: The Use and Limits of Conservation Easements by Regulatory Takings and Eminent Domain," I just couldn't resist dropping everything and reading it immediately.

I was surprised that I didn't know the author (Beckett Cantley of Atlanta's John Marshall Law School) because well the conservation easement crew is a small one. Turns out that Cantley is an interesting combination of a tax law prof who also teaches property. As the title suggests, the article focus on standard 5th Amendment  takings analysis. Unsurprisingly, this involves a large focus on exacted conservation easements. As I am sure all none of you know, my 2005 dissertation was entitled Exacted Conservation Easements, and I have a small obsession with the phenomenon.

Cantley has an interesting take on the issue.

First, he asks whether there is a market for conservation easements. He contends that a landowner's ability to voluntarily sell a conservation easement constitutes an "economic use for regulated land that could help avoid a regulatory taking by lessening the economic impact of environmental and land use regulations." I assume the argument goes this way: The government entity enacts a land-use law that restricts development. The landowner argues that this violates the 5th amendment under a Lucas-style total deprivation of value argument. The government entity says no we haven't totally deprived you of value because you could still donate or sell a conservation easement on your land. Of course, it would be pretty tricky to find a willing buyer for such a conservation easement but probably not impossible to find someone willing to accept the donation (depending on the features of that parcel). But what would be the value of the donation? Would it be zero? Well the current regulations do not allow development, but conservation easements can extend regulations (making them more stringent, giving them certainty, extending the restriction in perpetuity). So the value of the conservation easement while low, is probably  not zero. Cantley suggests that such a conservation easement market would be so speculative that it would not be enough to defeat a Lucas-style takings claim.

Second, Cantley analyzes the ability of a government agency to create a conservation easement with eminent domain. This is a tricky issue. As a threshold, it would only work where the government entity had eminent domain power. Some states prohibit creation of CEs via eminent domain explicitly. In other places, it is just politically sensitive (not to mention potentially hard to calculate). The best example of this phenomenon was when the Highway Commission in Wisconsin exercised eminent domain over holdouts for scenic easements along the Great River Road. One of the confusing points for me here has to do with the fact that when a parcel encumbered by CE is condemned, most jurisdictions acknowledge the CE is compensable and they pay the CE holder for their lost property interest when they pay the underlying landowner just compensation for her property interest. Do such payment policies mean that the jurisdictions recognize CEs as something one could take via eminent domain without taking the fee title? Just an interesting way to do parcel by parcel regulation? Spot zoning with compensation? Something several folks have speculated about but few governments seem interested in pursuing just to amuse us academics.

Now, on the exacted CE front, Cantley notes that generally Nollan and Dolan analysis apply but in some places there is a bit of trickiness with what constitutes an "exaction" meriting Nollan/Dolan analysis (i.e., nexus + rough proportionality) versus just a regulatory act with the less demanding Penn Central balancing test. I have written about this weirdness before in New York where the case of Smith v. Town of Mendon held that conservation easements are not actually "exactions" even where they are er... exacted. As I speculated in a recent piece for the Environmental Section of the New York Bar Association, I think the broad definition of exaction in Koontz overrules Smith v. Town of Mendon and makes it pretty hard to argue that you can't exact conservation easements. One bone I have to pick with Cantley is his description of exacted conservation easements as being required donations. I think we really need to remove the donation language from our talk about such CEs. Landowners are sometime surprised that they can't (or well at least they shouldn't) get tax benefits from these exactions because they associate all CEs with tax breaks. It also looks to me like Cantley must have written his article pre-Koontz (unsurprising considering the pace of law review publication). I think that case may change his assessment that failed exactions are not cognizable takings... or maybe it depends on how/when we assess failure.

Interesting stuff! The artcle doesn't appear to be available for free on SSRN or elsewhere, but those of you with access to various legal databases can find it at

Beckett G. Cantley, Environmental Preservation and the Fifth Amendment: The Use and Limits of Conservation Easmeents by Regulatory Taking and Eminent Domain, 20 Hastings W.-N.W. J. Envtl. L. & Pol'y 215 (2014).

 

January 28, 2014 in Caselaw, Conservation Easements, Eminent Domain, New York, Scholarship, Servitudes, Supreme Court, Takings | Permalink | Comments (1) | TrackBack (0)

Thursday, January 23, 2014

Is a Right-of-Way an Easement?

Turning old railroad lines into parks and bike paths seems like a great idea. When it results in things like NYC's Highline Park who can complain, but not everyone is happy about these rail to trail projects. In fact, it is the subject of a case currently pending before the Supreme Court. (This is not a case under the Rails-to-Trails Act but implicated perhaps thousands of miles of trails that came from rails).

Marvin Brandt is upset about the bike trail built by the Forest Service on an abandoned railway through his land. Brandt argues that the when the railroad abandoned the government-issued right-of-way, the feds did not have the right to create a new right-of-way in the form of the trail.

The tricky issue here is determining what exactly a railroad right-of-way is. When I hear the term ROW, I envision an easement. But as we all know there are some things out there that sound like easements but aren’t actually easements. The government argues here that these railroad ROWs were not easements in the traditional sense. However, nor were they fee simple strips of land given to the railroad. Instead they are some third category of property law that no one can quite figure out how to define. A surface defeasible fee subject to a reverter perhaps? Let’s break it down.

If it’s an easement: The federal government gives the railroad an easement through public land. The common law rules of easements apply. This means that when the railroad abandons the track in the 1980s (or whenever it was), the easement is extinguished and full unencumbered fee simple title goes back to the underlying landowner. This particular parcel is no longer federal land because the Forest Service swapped it with the Brandt family. Traditional run of the mill easement law tells us that the Brandt family (owner of the servient estate) should have this land with no dominant easement holder left around to bug them (or ride bikes through their property). This is what Brandt’s attorney argues. Not argued, but hinted at by Justice Sotomayor is that the easement holder was really the US and it temporarily transferred its easement rights to the railroad. Now that the railroad is done, it can keep using the easement for similar (transportation) uses through the Forest Service bike trail.

If it was a patent (i.e., fee simple absolute): The federal government gave the railroad a strip of land and the railroad owned that strip (or spaghetti noodle as the court seemed to like envisioning it). This would mean that the railroad owns the land for any purpose and once it stops using the railroad tracks for trains, it could use them for something else or it could sell them to the underlying landowner (or lose ownership via adverse possession if it stands by and does nothing while the forest service or underlying landowner makes use of the land). No one actually argues that the railroad had an unrestricted fee simple though. Instead, it might be that they had a type of defeasible fee (starting to give you flashbacks of your 1L property class yet?). That’s right, the railroad had a fee interest subject to the possibility of reverter. That is, the federal government had a reversionary interest and would get the land back if the railroad stopped using it for railroad purposes.

Now of course, it is not as simple as just reading over the grant to the railroad and figuring out what it said. Instead, we have several wrinkles. For example, there is an 1922 Act (postdating the grant to the railroad) explaining that when the railroad stops using the land for railroad purposes and it reverts to the feds, the feds should first use the land for roads and streets, then consider giving to municipalities, and if that doesn’t pan out give the land to neighboring landowners. There is a more recent statute adjusting that order of priority, but these statutes sure make it sound like the US had a reversionary interest. Of course, Justice Scalia pointed out that he doesn’t care very much about how a subsequent Congress interpreted the railroad’s property right. He is only interest in looking at the 1875 Act enabling grants of ROWs the railroad to try and figure out the property right.

There are some cases muddying the water including a 1942 case interpreting the 1875 Act, concluding that the railroad in question there had not gotten subsurface rights and instead had gotten something akin to an easement.  

There is also the tricky part of the land conveyance to the Brandts. The Forest Service swapped some land with Brandt’s father back in 1976. While the land conveyance noted the railroad’s ROW, it did not mention any reversionary interest. Leading the Brandts (quite reasonably) to believe that the ROW was just a standard run of the mill easement. Can an underlying federal law be in trouble where the forest service neglected to mention it in a land conveyance? Perhaps Brandt’s property lawyer should have researched more and tried to determine what was really going on…

The oral argument in this case is fun for land geeks, especially those of us who teach or study property and/or federal lands. The Court seemed particularly interested in figuring out how much lands the feds own and how much has been converted to other uses -- and what the implications of allowing such reversions would be. Several justices pushed the parties to try and explain how many acres or how many landowners were at stake. No one dared to put forth an estimate. I actually laughed out loud when the justices were shocked that the federal government didn’t keep good track of its land holdings and dispersals. They are so cute sometimes.

 

January 23, 2014 in Caselaw, Constitutional Law, Federal Government, Property, Servitudes, Supreme Court, Takings | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 13, 2013

Dagan on Justifications for Undercompensation in Eminent Domain

Hanoch Dagan (Tel Aviv) has posted his anthology entry entitled Expropriatory Compensation, Distributive Justice and the Rule of Law in Rethinking Public Interest in Expropriation Law (Mostert & Verstaapen eds., forthcoming 2014).  Here's the abstract:

This Essay examines the possible justification for providing less than full (fair market value) compensation for expropriation. One obvious justification applies in cases of public measures, where the burden is deliberately distributed progressively, namely, where redistribution is the desired goal of the public action or, at least, one of its primary objectives. Beside this relatively uncontroversial category, two other explanations are often raised: that partial compensation is justified by reference to the significance of the public interest, even if it is not redistributive, and that it can serve as a means for adjusting the amount of the compensation to the specific circumstances of the case. This Essay criticizes both justifications, arguing that the former is normatively impoverished while the latter affronts the rule of law. The notion of partial and differential compensation, however, can serve as a powerful tool for developing a nuanced expropriation doctrine that serves important property values, and also targets the potentially regressive effects of a uniform rule of full market value. The proposed doctrine draws careful, rule-based distinctions between types of injured property (fungible vs. constitutive) and types of benefited groups (local communities vs. the broader society).

One of the wonderful benefits of participating in the annual gatherings of the Association of Law, Property and Society is the opportunity to emgage with scholars from other countries.  A 2011 panel focusing on his book Property: Values and Institutions (Oxford Univ. Press, 2011), which Dean Dagan participated in personally, was one of the best discussions of property theory that I've ever had the chance to hear. 

Jim K.

November 13, 2013 in Comparative Land Use, Constitutional Law, Property, Property Rights, Property Theory, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Monday, November 11, 2013

Fennell and Peñalver on Exactions Creep

Lee Fennell (Chicago)  and Eduardo Peñalver (Chicago) have posted Exactions Creep, 2013 Sup. Ct. Rev. ___ (forthcoming).  Here's the abstract:

How can the Constitution protect landowners from government exploitation without disabling the machinery that protects landowners from each other? The Supreme Court left this central question unanswered — and indeed unasked — in Koontz v St. Johns River Water Management District. The Court’s exactions jurisprudence, set forth in Nollan v. California Coastal Commission, Dolan v. City of Tigard, and now Koontz, requires the government to satisfy demanding criteria for certain bargains — or proposed bargains — implicating the use of land. Yet because virtually every restriction, fee, or tax associated with the ownership or use of land can be cast as a bargain, the Court must find some way to hive off the domain of exactions from garden variety land use regulations. This it refused to do in Koontz, opting instead to reject boundary principles that it found normatively unstable. By beating back one form of exactions creep — the possibility that local governments will circumvent a too-narrowly drawn circle of heightened scrutiny — the Court left land use regulation vulnerable to the creeping expansion of heightened scrutiny under the auspices of its exactions jurisprudence. In this paper, we lay out this dilemma and suggest that it should lead the Court to rethink its exactions jurisprudence, and especially its grounding in the Takings Clause, rather than the Due Process Clause. The sort of skepticism about bargaining reflected in the Court’s exactions cases, we suggest, finds its most plausible roots in rule-of-law concerns implicated by land use dealmaking. With those concerns in mind, we consider alternatives that would attempt to reconcile the Court’s twin interests in reining in governmental power over property owners and in keeping the gears of ordinary land use regulation running in ways that protect the property interests of those owners.

 

Jim K.

November 11, 2013 in Impact Fees, Judicial Review, Local Government, Property, Property Rights, Property Theory, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Sunday, September 8, 2013

Fennell on Lee's Eminent Domain as Just Undercompensation

Lee Fennell (Chicago) critiques and enhances Brian Lee's Columbia Law review article entitled Just Undercompensation: The Idiosyncratic Premium in Eminent Domain, blogged about here earlier this summer.  In her concise on-line response, Just Enough, 133 Colum. L. Rev. Sidebar 109 (2013) (pdf here), Fennell moves through the positive and normative aspects of the tripartite analysis of how Fair Market Value (FMV) purportedly fails to fully compensate property owners whose interests are liquidated through eminent domain proceedings.  As she lays it out in her intro:

Like other scholars, I have previously observed that the FMV measure of compensation leaves an increment of value uncompensated:

The uncompensated increment is made up of three distinct components: (1) the increment by which the property owner’s subjective value exceeds fair market value; (2) the chance of reaping a surplus from trade (that is, of obtaining an amount larger than one’s own true subjective valuation); and (3) the autonomy of choosing for oneself when to sell.

Lee argues that appropriate amounts of both subjective value and the chance of gains from trade are included in FMV, leaving only interference with autonomy categorically uncompensated in a manner that would implicate fairness concerns. This Part focuses only on the positive question of what does and does not get included in FMV, leaving the normative questions to the next Part. Part I.A considers subjective value and Part I.B turns to the last two components of the “uncompensated increment.”

Even after demonstrating, contra Lee, that existing owners' subjective attachments are not necessarily baked in to market valuations, she helps out by showing that a prevalence of rooted homeowners together with zoning-induced supply contraints might support the kind of extended sellers' market that diminishes the difference between market prices and the reservation prices of most homeowners. 

Jim  K.

 

September 8, 2013 in Constitutional Law, Eminent Domain, Judicial Review, Property, Property Rights, Property Theory, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Saturday, August 31, 2013

Echeverria's Take on Koontz

John Echeverria (Vermont) has just this week posted Koontz:  The Very Worst Takings Decision Ever?.  In it, he takes on both of the U.S. Supreme Court's holdings in its most recent land use decision and spells out how they will inhibit development planning discussions at the local level.  Here's the abstract:

This article argues that Koontz v. St. Johns River Water Management District, the most widely discussed of the Supreme Court’s takings trilogy in the 2012-13 term, represents a major, unprincipled break from prior law and casts an unfortunate pall of confusion and uncertainty over takings doctrine, partly reversing the Court’s recent, successful effort to make takings doctrine more coherent and predictable. The Court ruled that the relatively heightened standard of judicial review established by the Supreme Court for so-called “development exactions” in Nollan v. California Coastal Commission and Dolan v. City of Tigard applies both (1) when the government denies a development permit after the developer rejects a government demand for an exaction as a condition of project approval, and (2) when a permit condition requires a developer to pay or expend money to mitigate project impacts. In so ruling, the Court rejected the position that claims challenging such government orders should be evaluated under either the Court’s relatively forgiving regulatory takings analysis or deferential due process analysis.  Justice Elena Kagan wrote a dissent for herself and three other justices, arguing that the case did not involve an actual demand triggering Nollan and Dolan and that the standards established by those cases do not apply to permit conditions requiring the expenditure of money. This article contends that the Koontz decision is one of the worst decisions, if the not the worst decision, in the pantheon of Supreme Court takings cases. In doctrinal terms, the majority opinion flagrantly contradicts or ignores established precedent, fails to acknowledge its departure from prior law, and does not attempt to offer any new, coherent justifications for its novel holdings. As a practical matter, the decision creates a perverse, wasteful incentive for local officials to decline to work cooperatively with developers in designing projects that make business sense and protect the interests of the community.  Finally, the decision injects new uncertainty into takings law, setting the stage for future debates over the legitimacy and appropriate scope of intrusive judicial review of local land use decision-making, including whether local governments retain the authority to reject development proposals based on unacceptable project impacts without triggering stringent judicial review. 

Jim K.

August 31, 2013 in Community Economic Development, Constitutional Law, Environmental Law, Impact Fees, Planning, Property, Property Rights, Property Theory, Scholarship, Takings, Zoning | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 9, 2013

Professor's Corner on Koontz

This month's ABA Real Property "Professors' Corner" teleconference will focus on Koontz, the end-of-Term exactions that is one of the most significant Supreme Court property-rights cases in recent years.  (Jessie Owley has discussed it here, and Tim Mulvaney and others have weighed in around the net).  This Professor's Corner session should be a good one with several leading scholars participating.  Here's the announcement:

Professors’ Corner:  Wednesday, July 10, 2013:  Koontz v. St. John’s River Water Management District:  A Significant Victory for Property Rights?

Professors’ Corner is a monthly free teleconference sponsored by the ABA Real Property, Trust and Estate Law Section's Legal Education and Uniform Laws Group. Each month’s call features a panel of law professors who discuss recent cases or issues of interest to real estate practitioners and scholars.   Members of the AALS Property Section are invited to participate in the call (as well as to join and become involved in the ABA Real Property, Trust and Estate Law Section).

Wednesday, July 10, 2013

12:30 p.m. Eastern time (11:30 a.m. Central, 9:30 a.m. Pacific). Call is ONE HOUR in length.

Call-in number: 866-646-6488

Passcode: 5577419753

This program will feature a roundtable discussion breaking down the Supreme Court’s important June 25 decision in Koontz v. St. John’s River Water Management District. If “monetary exactions” have always seemed a little untamed to you, you’re not alone. The 5-4 decision in Koontz leaves a lot of room for analysis, and this month’s panel is prepared to guide you through it by parsing the decision and the dissent.  Our distinguished panel will include Professor Jonathan H. Adler, who is the Johan Verheij Memorial Professor of Law and Director of the Center for Business Law and Regulation at Case Western Reserve University School of Law; John D. Echeverria, Professor of Law at Vermont Law School; and David L. Callies, who is the Benjamin A. Kudo Professor of Law at the University of Hawai’i. 

For those that haven’t already seen it, here’s a link to the opinion:

http://www.supremecourt.gov/opinions/12pdf/11-1447_4e46.pdf

Please join us Wednesday for this great program!

Matt Festa

July 9, 2013 in Caselaw, Conferences, Conservation Easements, Constitutional Law, Environmental Law, Federal Government, Property Rights, Scholarship, Supreme Court, Sustainability, Takings, Wetlands | Permalink | Comments (0) | TrackBack (0)

Monday, July 1, 2013

Late to the Game: Koontz and whether you can have a takings claim without an actual takings

The past few weeks have been exciting ones for Supreme Court opinions. Busily finishing a book chapter, I did not have time to read Koontz carefully until Friday and of course by that time, I also had a stack of blog postings and news articles to peruse as well by then (Note to self: Post earlier next time so I don't have to read everyone else's posts first and try to avoid repeating them). As so much has already been said (and said better than I could), I am going to highlight the way the case could affect New York law (particularly conservation easements in NY). I get giddy anytime we here the Supreme Court mention conservation easements even when well they aren't really talking about conservation easements.

As we all know by now, there are two intriguing topics in Koontz.

(1) Timing. I like to think of this as when does a takings become a takings even if that is a bit inartfully said. On this point, I think both the majority and the dissent get it right. In thinking about the life of a permit and associated takings case, we generally see a landowner trying to get a permit to build on her property. In exchange for the permit, the permit-issuing agency requires something of the applicant. For example, let's say you want to build on your 10-acre property that is mostly wetlands. The local governement may allow you to build on 2 acres as long as you restrict building on the rest of the property with a conservation easement. Nollan tells us that the government's demand must have a significant nexus with the harm. For example, where the landowner converts wetlands, the exaction should be aboout protecting wetlands or the ecosystem services provided by wetlands. Dolan tells is that the government demand must be roughly proportional to the harm caused. If the property owner is converting 2-acres of wetland to dry land, you need to make sure the exaction compensates for those 2-acres -- requiring creation of a 100-acre wetland park would likely be considered disporportionate (unless you could show that those were some amazing super wetlands that were being destroyed). Okay, so far so good. This has been the established analysis for takings in the exaction context for some years now. This case now says, what if the governement tells the landowner that in return for developing 2-acres, she needs to protect 8 acres and the landowner thinks that is not proportional (i.e., violative of Dolan's rough proportionality rule).

Could our hypothetical landowner challenge this as a takings? Note, nothing has actually been taken at this point. She had not actually given over the 8 acres.

I actually  think that Justice Alito gets it right (not sure I have ever written that phrase before) here when he says, yes. It simply doesn't make sense to go forward with the project and then seek compensation for the 8 acres. This is especially true in the context of exacted conservation easements because they are perpetual. What would we do afterward if a court held that the exaction was too much? It would be pretty hard to change the perpetual conservation easement at that point and compensation can be challenging to calculate. Although I agree with Alito on this principle though, I think Justice Kagan has a better read on the facts in Koontz. Here, it looked like the Water District (the permit agency) and the landowner were in negotiations over what type of exaction might be appropriate. Koontz made an offer. The Water District made a counteroffer, but said it was interested in further negotiations. Instead of more back and forth though, Koontz jumped straight to the lawsuit. I am not sure how to figure out at what point we would say that we have the final word from the agancy and its decision is ripe for review, but it doesn't seem like this should be it. The agency was still in discussions.

It also seems that Alito and Kagan both agree that Koontz doesn't get compensation here, as again nothing was actually taken. Does he get his permit issued though? That doesn't seem quite right to me either. It seems like we should go back to the agency to get another round of negotiations and a chance to impose a proper exaction.

(2) Definitional. Now, this is a question that has been intriguing me particularly since I moved to New York. What constistutes an exaction and therefore requires Nollan/Dolan analysis versus just run-o-the mill Penn Central style inquiry. I have had severeal conversations during my brief academic career on what constitutes an exaction (with Tim Mulvaney almost convincing me that requirements to paint your house a certain color should qualify). Logically, it makes sense that anything we are demanding of the landowner in exchange for a permit is an exaction. Thus, anything that is not the permit application fee or something already required by another law should qualify. Some courts and commentaters assert however that exactions are only interests in land. This has been an interesting issue in New York because of a case called Smith v. Town of Mendon from New York's highest court. In that case, the court confusingly held that a conservation restriction was not an exaction because it there was no public access but because it was bound by precedent the court acknowledged that you could have monetary exactions. In a short piece written between oral argument and the issuance of the opinion in Koontz (for the Environmental Law Section of the NY Bar Association), I discuss the meaning of exactions in New York and ponder the potential implications of Koontz on New York's rules. It seems hard to swallow New York's definition excluding conservation easements in light of this opinion, which seems to read exactions so broadly.

Overall, it is hard not to agree with commenters who believe this decision just makes things messier for courts and complicates land use planning. Tim Mulvaney has a great summary of course, with links to others chiming in.

Jessie Owley

 

July 1, 2013 in Caselaw, Conservation Easements, New York, Supreme Court, Takings, Wetlands | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 11, 2013

Zeiner on a Theraputic Jurisprudence Analysis of the Use of Eminent Domain to Create a Leasehold

Carol Zeiner (St. Thomas) has posted A Therapeutic Jurisprudence Analysis of the Use of Eminent Domain to Create a Leasehold, forthcoming in the Utah Law Review (2013).  The abstract:

Therapeutic jurisprudence provides an excellent tool to analyze and guide the development of the law on the use of eminent domain to create leaseholds. The objective of these takings is for the condemnor to become a tenant under a “lease,” rather than the fee simple owner.

I am perhaps the only scholar who has written extensively on the topic of takings to create a leasehold. In a previous work, I provided an exhaustive analysis of the conclusion that government can use eminent domain to create a leasehold. That work went on to conclude that there are circumstances in which government should use eminent domain to create a leasehold, but that difficult problems can arise in such takings. They necessitate refinements in arriving at just compensation.

That work also concluded that there is at least one situation in which government should not be allowed to use eminent domain to create a leasehold. I labeled such takings Kelo-type takings, wherein the government uses its power of eminent domain with the objective of creating a leasehold that it will then transfer to a private party for private use. My argument that the use of such Kelo-type takings to create leaseholds should not be allowed was based primarily on public policy considerations. I concluded that the problems arising from takings that create private leaseholds are much worse than those encountered in situations such as Kelo, in which government acquires a fee simple from the condemnee and then makes a transfer to a private party, because the form disrupts the social contract between government and the people.

Any such conclusion demands reexamination on theoretical grounds, which is done in this Article. In order to re-examine the question, it formally extends the jurisprudential philosophy of therapeutic justice to eminent domain in general and specifically to takings to create leaseholds. The principles underlying therapeutic jurisprudence, as well as the illuminating insights derived from its application, confirm the prior conclusion.

Matt Festa

June 11, 2013 in Eminent Domain, Landlord-Tenant, Property Rights, Property Theory, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Saturday, May 18, 2013

Stern on State Legislative Checks and Judicial Takings

Here's another recently-posted paper from Stephanie Stern (Chicago-Kent): Protecting Property Through Politics: State Legislative Checks and Judicial Takings, forthcoming in the Minnesota Law Review.  The abstract:

In the 2010 Supreme Court case Stop the Beach Renourishment v. Florida Department of Environmental Protection, a plurality of the Court launched judicial takings in political and scholarly debate and laid the groundwork for expanding the Fifth Amendment to encompass court decisions. This Article explores a neglected institution in the debate over judicial takings — state legislatures. In the comparatively rare instances when state courts overreach, state legislatures can revise state court decisions and restore private property rights. Through case studies of state legislative checks of judicial activism, I examine the comparative institutional advantages, and the potential gaps, of situating primary responsibility for state court revision in state legislatures. In view of takings federalism and the costs of judicial takings, I contend that the existing balance of state legislative checks and state court restraint works well enough to police against state court property activism.

Matt Festa

May 18, 2013 in Caselaw, Constitutional Law, Eminent Domain, Judicial Review, Politics, Property Rights, Property Theory, Scholarship, State Government, Supreme Court, Takings | Permalink | Comments (0) | TrackBack (0)

Thursday, March 7, 2013

Owen on Taking Groundwater

Dave Owen (Maine) has posted Taking Groundwater.  The abstract:

In February, 2012, in a case called Edwards Aquifer Authority v. Day, the Texas Supreme Court held that landowners hold property rights to the groundwater beneath their land, and that a regulatory restriction on groundwater use could constitute a taking of private property. The decision provoked strong reactions, both positive and negative, throughout the world of water law, for it signaled the possibility of severe restrictions on governmental ability to regulate groundwater use.

This Article considers the deeper issue that confronted the Texas Supreme Court, and that has confronted other courts across the country: how should the Takings Clause of the Fifth Amendment, and parallel clauses of state constitutions, apply to groundwater use regulation? Initially, this Article explains why this issue is exceedingly and increasingly important. It then reviews all of the groundwater/takings decisions from federal and state courts in the United States. Finally, the Article considers the implications of foundational property theories for the application of takings doctrine to groundwater use.

The analysis supports two key conclusions. First, it undermines arguments against treating water rights as “constitutional property” — that is, property protected by federal and state takings clauses. Proponents of those arguments generally assert that treating water rights as property has uneven support from prior caselaw and that such treatment will be prevent sensible governance. A review of groundwater caselaw demonstrates that the former assertion runs counter to the weight of authority, and that the fears underlying the latter argument are overstated. Second, and more importantly, the analysis undermines arguments for granting groundwater use rights heightened protection against regulatory takings. Recently, litigants and commentators skeptical of government regulatory authority have widely advanced those arguments. But they find no support in past groundwater/takings caselaw, and no property theory justifies adopting such an approach.

An important issue, and a reminder that state supreme courts continue to play a crucial role in shaping modern property law.

Matt Festa

March 7, 2013 in Caselaw, Constitutional Law, Environmental Law, Property, Property Rights, Scholarship, State Government, Sustainability, Takings, Texas, Water | Permalink | Comments (0) | TrackBack (0)

Friday, February 22, 2013

Eagle on Economic Impact in Regulatory Takings Law

Steven J. Eagle (George Mason) has posted "Economic Impact" in Regualtory Takings Law, forthcoming in the West-Northwest Journal of Environmental Law & Policy.  The abstract:

In Penn Central Transportation Co. v. City of New York the Supreme Court stated that the existence of a regulatory taking would be determined through “essentially ad hoc, factual inquiries,” and that one of three factors of “particular significance” was the economic impact of the regulation on the claimant. This article examines the conceptual problem whereby the Fifth Amendment requires compensation for the taking of property and not a fraction of its owner’s worth. The fact that economic impact of stringent regulations is greater when parcels are smaller has led to a complex “parcel as a whole” test that conflates impact with another Penn Central test, owner’s expectations. Furthermore, application of the impact test to parcels held as investment property might vitiate the temporary taking. The Federal Circuit’s recent abandonment of its prior “return on equity” approach is emblematic of this problem. 

Measuring the economic impact upon owners also is complex where government condemns part of an owner’s parcel, leading to difficulties in computing severance damages. Broad assertions that “offsetting benefits” conferred upon property owners by government actions reduce the impact of regulations also requires clarification. 

The article concludes that unresolved issues and complexities in adjudicating the “economic impact of the regulation on the claimant” test provide an additional reason why the conceptually incoherent Penn Central doctrine must be replaced.

Matt Festa

February 22, 2013 in Caselaw, Constitutional Law, Eminent Domain, Property Rights, Scholarship, Supreme Court, Takings | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 9, 2012

ABA Professor's Corner on Eminent Domain for Mortgage Modifications

This month's installment of the ABA Section on Real Property's "Professor's Corner"--a free monthly teleconference featuring scholars' takes on important new property cases and issues--will feature a really hot topic, the proposal for municipal governments to take property by eminent domain to combat the mortgage/foreclosure crisis.  The info, via David Reiss (who also recently posted a related public comment):

 FREE Professors’ Corner teleconference, sponsored by the ABA Real Property, Trust and Estate Law Section and its Legal Education and Uniform Laws Group.

The program is Wednesday, October 10, at 12:30 pm EDT; 11:30 am CDT; 10:30 am MDT; 9:30 am PDT.

Call-in number: 866-646-6488
Participant Passcode: 5577419753

This month’s topic is Can/Should Municipalities Use Eminent Domain to Take Mortgages to Facilitate Mortgage Modifications? This conference call will be moderated by Professor James Geoffrey Durham, University of Dayton School of Law. Professor Steven J. Eagle, Professor of Law, George Mason University School of Law, is one of the nation’s leading scholars on eminent domain and regulatory takings. Professor Eagle will discuss whether it is possible for local governments to use eminent domain to acquire notes secured by mortgages in order to resell them to a private party which will then modify them, both under the 5th Amendment to the U.S. Constitution and also under state constitution taking clauses as they have been limited by amendments and statutes seeking to define what is a public use. Professor Robert C. Hockett, Professor of Law, Cornell Law School, is the scholar who in June proposed that municipalities could use eminent domain to acquire mortgages, in order to facilitate mortgage modifications to benefit underwater homeowners, in his article: It Takes a Village: Municipal Condemnation Proceedings and Public/Private Partnerships for Mortgage Loan Modification, Value Preservation, and Local Economic Recovery (download paper). Professor Hockett will discuss his proposal, which has received widespread attention. Professor Dale A. Whitman, James E. Campbell Missouri Endowed Professor Emeritus of Law, University of Missouri, Columbia, School of Law, is one of the premier experts on American property law and one of the nation’s foremost mortgage law scholars. Professor Whitman will discuss the impact that implementation of Professor Hockett’s proposal might have on the mortgage markets.

Check out the free telecast on this very interesting and current issue.

Matt Festa

October 9, 2012 in Conferences, Eminent Domain, Financial Crisis, Housing, Local Government, Mortgage Crisis, Mortgages, Property, Real Estate Transactions, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Thursday, October 4, 2012

Reiss on the Use of Eminent Domain to Restructure Mortgages

David J. Reiss (Brooklyn) has posted Comment on the Use of Eminent Domain to Restructure Performing Loans, which was submitted to the Federal Housing Finance Agency (No. 2012–N–11) (2012).  The abstract:

There has been a lot of fear-mongering by financial industry trade groups over the widespread use of eminent domain to restructure residential mortgages. While there may be legitimate business reasons to oppose its use, its inconsistency with Takings jurisprudence should not be one of them. To date, the federal government’s responses to the current crisis in the housing markets have been at cross purposes, half-hearted and self-defeating. So it is not surprising that local governments are attempting to fashion solutions to the problem with the tools at their disposal. Courts should, and likely will, give these democratically-implemented and constitutionally-sound solutions a wide berth as the ship of state tries to right itself after being swamped by a tidal wave of mortgage defaults.

A concise and thoughtful public comment on what is emerging as a hot, hot issue.

Matt Festa

October 4, 2012 in Constitutional Law, Eminent Domain, Finance, Housing, Local Government, Mortgage Crisis, Mortgages, Property Rights, Real Estate Transactions, Scholarship, State Government, Takings | Permalink | Comments (0) | TrackBack (0)

Monday, September 24, 2012

Klass on Takings and Transmission

Alexandra B. Klass (Minnesota) has posted Takings and Transmission, forthcoming in the North Carolina Law Review.  The abstract:

Ever since the Supreme Court’s controversial 2005 decision in Kelo v. City of New London, courts, state legislatures, and the public have scrutinized eminent domain actions like never before. Such scrutiny has focused, for the most part, on the now-controversial “economic development” or “public purpose” takings involved in the Kelo case itself, where government takes private property for a redevelopment project that will benefit another private party as well as increase the tax base, create new jobs, assist in urban renewal, or otherwise provide economic or social benefits to the public. By contrast, until recently, there has been little change in law or public opinion with regard to takings involving publicly-owned projects such as hospitals or post offices or “use by the public” takings that involve condemnation for railroad lines, electric transmission lines, or other infrastructure projects. However, recent changes in electricity markets and the development of the country’s electric transmission system have raised new questions about the validity of “use by the public” takings in the context of electric transmission lines. With some transmission lines now being built by private, “merchant” companies rather than by publicly-regulated utilities, and with the push to build more interstate transmission lines to transport renewable energy to meet state renewable portfolio standards, what was once a classic public use is now subject to new statutory and constitutional challenges. This Article explores the potential impact of these developments on the use of eminent domain for electric transmission lines. Ultimately, it suggests that states should ensure that their eminent domain laws governing transmission lines are consistent with their policy preferences surrounding energy development in the state, and it outlines some ways for states to accomplish this goal.

I think you could make some analogous analysis about the newly-hot issue of eminent domain and pipelines, for example the controversy over the acquisition of rights of way for the Keystone Pipeline.  Interesting issues.

Matt Festa

September 24, 2012 in Caselaw, Constitutional Law, Economic Development, Eminent Domain, Oil & Gas, Property Rights, Scholarship, State Government, Takings | Permalink | Comments (0) | TrackBack (0)

Friday, September 21, 2012

Martinez on Cognitive Reconstruction of Local Government Authority

John Martinez (Utah) has posted From Pyramids to Stories: Cognitive Reconstruction of Local Government Authority.  The abstract:

This article describes a cognitive science approach to law, uses it to critically evaluate conventional "pyramid" legal analysis of local government authority, and suggests stories as alternative models for defining such authority. The article suggests that stories better reveal what is at stake in regard to local government authority and thus helps us to arrive at better solutions. The article illustrates the storytelling analytical approach in three situations: a local government's condemnation of private property for resale to a private developer, the delegation of land use control authority to neighborhood groups, and local government attempts to zone out nontraditional families.

The paper offers an alternative approach to classic local government questions about land use.  Interesting ideas to ponder while some of us are here at the Local Government Law Workshop in Milwaukee. 

Matt Festa

September 21, 2012 in Eminent Domain, Local Government, Property Rights, Scholarship, Takings, Zoning | Permalink | Comments (0) | TrackBack (0)