Takings law and appellate decision making.
When I was a law professor, I joined my colleagues in the wonderful sport of pointing out the ignorance and intellectual limitations of those members of the bar who somehow slipped into the judiciary. I think that was, and remains today, one of the great entitlements of being a law professor. Sometimes I wondered if there were any other entitlements--other than grading exams--but it was certainly a sport in which we all engaged. When I went on the court--which came as a surprise to me, since I had never really harbored any expectations of becoming a judge--I knew in my heart that I lusted after better opinions. I was confident that I could produce them and that they would be clear, bright, and so insightful that any law professor could do nothing but just sit there in awe. Unfortunately, there are several difficulties with that aspiration. First, there is a tension between deciding the case before you and reaching beyond its narrow facts. In many cases that come before us at the appellate level, we really do not know what the facts are. What we have is a distilled version of a record in which there was considerable conflict over who did what to whom, and, as Professor Blumm has noted,l some of these cases go through several rounds--by the time you read through four or five previous decisions, to say nothing of 150 pages of briefing, what you discover is that neither the parties nor the lower courts can really agree on exactly what happened and to whom it happened.
Second, there is the related problem of trying to fit the issue you want to write about to the case that is before you. And sometimes, the opposite is the problem: How you can fit the case to the issue you thought was in it. It is not unheard of to hear a case argued, to think you understand the case, to agree among the panel immediately after the arguments as to what the outcome should be, what the basic theory of our opinion will be, even which judge gets the writing assignment. Then, the judge, some months later while writing the opinion discovers that the case just won(*) Circuit Judge, United States Court of Appeals for the Federal Circuit. LL.M. 1961, Columbia University; J.D. 1958, University of Florida; B.A. 1952, University of North Carolina. (1) Michael C. Blumm, The End of Environmental Law? Libertarian Property, Natural Law, and the Just Compensation Clause in the Federal Circuit, 25 Envtl. L. 171, 176 (1995). (2) Fed. R. App. P. 363 (3) James L. Huffman, Dolan v. City of Tigard: Another Step in the Right Direction, 25 Envtl. L. 143, 148 (1995)'t write because there is a gap in the record. Now, one resolution of that problem is what we call a Rule 36, which is a summary affirmance of the trial court.(2) That resolves some of the cases, but more often than not, we have to go back and try to unscramble the facts. The upshot is what Dean Huffman mentioned as the dicta of the case.(3) And what is and is not dicta. And the answer is that we often don't always know because sometimes we aren't quite sure we know the right issue. Professor Blumm noted that he wondered whether the partial takings issue in Florida Rock Industries v. United States(4) had been fully briefed and argued,(5) and the answer to that is no: It hadn't. And the reason it hadn't was because I don't know that anybody recognized the implications of that issue in the case until we discovered that the real problem was that the parties (and, unfortunately, the good trial judge) misunderstood our remand. The result was that evidence of the fair market value that shouldn't have been excluded was, and that distorted the whole decision below.(6) So we had to remand again with instructions as to what to do with the case at trial.(7) We could have withheld giving those instructions and simply remanded it, but then the case would have come back one more time, and the chances of the trial judge or the parties focusing on the issue which we now knew was at the heart of the case was sufficiently small, or at least it was a gamble we were unwilling to take. So, we laid out for the trial judge what we saw as the central issue and said: go back and straighten this mess out, and we will review it one more time. My point simply is that it is not always so easy to decide what is the case before you, what issues must be dealt with, and what is dictum.
There is a third problem that arises in the jurisprudence of opinion writing. As a law professor I could write an article with the words glistening and perfect and with which nobody could quarrel (except the editor of the law review who thought he or she always knew better). But when I write an opinion now, I have sitting over my shoulder two other judges, either one of whom, or both of whom, can say to me: "I would love to join your opinion, but you have to rewrite the first eight pages because I think it ought to go this way." The result is that I edit, I revise. There is a piece by now Supreme Court Justice Ruth Ginsburg about the judicial process in which she points out that this process of collegial decision writing almost invariably leads to a built-in softening of the opinion because when we cannot agree on exactly what ought to be said, we say something that is not exact.(8) Thus, we end up with opinions that oftentimes look rather obscure, look rather like we didn't know what we were talking about and that may, in fact, be the case. However, it also may be the fact that we knew what we wanted to say, but that we simply couldn't say it.
I say all this, not by way of defense for opinions of my court or those of the Supreme Court, because one of the advantages of being an Article III judge with a lifetime appointment is that you never have to say you are sorry. I say this merely to illustrate the point that what we are looking at in the cases that we are discussing today is an evolving and moving target. The cases themselves sometimes are slippery, the concepts are slippery, so the judges may find it necessary also to be a little slippery because they are aiming at a moving target, and we don't always know exactly where it is going.
Professor Karl Llwellyn described the process of appellate decision making some years ago.(9) He pointed out that when appellate judges look at cases, they should not look at only the facts of the case--the widows with six children; in Dolan v. City of Tigard,(10) a widow with a plumbing shop--but rather they should look at the sense of the situation. I think he was right. But the problem is that I don't think we as appellate judges always know what the sense of the situation is. What we are doing in many of these cases is putting little pins up on the wall, one at a time, as each case is decided, and at some point, lines will be drawn from pin to pin and we may be as surprised as you are by the picture which actually emerges. Sometimes we think we know what that picture is likely to be, but we don't always control it, and one reason we don't control it is because we cannot control the cases that bring the issues up. As Justice Souter pointed out in his dissent in Dolan, it is very hard to make a cohesive takings jurisprudence out of cases that don't raise the right issues.(11)
In my remaining time, I am going to explain what in this murky mess we call takings jurisprudence we now know. Then I want to suggest some unresolved issues. The "do not know" list is considerably longer than the "know" list.
Here is what we know. First, physical takings are compensable. Just compensation is demanded by the Fifth Amendment if you have a physical taking; it does not matter how big, how small, or what the underlying public policy, how important, or how unimportant. If you have a physical taking by government, you get paid. That is what the Fifth Amendment says; that is what Loretto v. Teleprompter Manhattan CATV Corp.(12) says; that is what Hendler v. United States(13) says.
Second, regulatory takings exist; if you have a regulatory taking, you also are entitled to just compensation. That is a dramatic new idea, and it still is being questioned. But I do not think we will undo that reality. First English Evangelical Lutheran Church v. County of Los Angeles(14) finally settled that issue. Third, a regulatory imposition that constitutes a total deprivation of all "economic use" is essentially the same as a physical taking. That is, it is compensable without any balancing of the property owner's interest with the government's interest. The Supreme Court gave this a new name, called a "categorical" taking, in Lucas v. South Carolina Coastal Council.(15) Total deprivations of economic use are permissible, however, when government regulation merely duplicates common law nuisance concepts.(16)
Fourth, when you have a categorical taking by regulatory imposition, it need not be a taking of the entire fee simple. Compensation is due for whatever the interest that is taken, and for however long it is kept by the government. This is again a result of First English, where the court upheld a "temporary" taking.(17) Actually, all takings are "temporary" because the government can always give the property back or rescind the regulation. But First English says the government must pay for the period in which the regulation applies.
Fifth, if the regulatory imposition is in the nature of a development exaction; that is, if the regulatory imposition is said to be consideration for a building permit, or a condition for it, there has to be both 1) an "essential nexus" between the proposed development and the exaction,(18) and 2) a "rough proportionality" between the amount of the exaction and the amount of harm being done.(19) The latter, of course, is Dolan, and I am not going to say much more about it except to say: I agree with much of what Professor Funk said about it.(20) Dolan is hardly a revolutionary case. There was no challenge to the city's right to restrict building or use, Dolan's use, to that part of the tract outside the floodplain. No one questioned the ability of the city to say that the floodplain must be kept undeveloped.
The mistake that the City of Tigard made, the Supreme Court made clear, was to insist not only on limiting the use, but on taking title as part of the exaction.(21) From the viewpoint of the city, I cannot imagine why it went that extra step because, as you saw from the pictures that Larry Watters was so kind to show us,(22) Fanno Creek is not the sort of place where most of us go to romp on a sunny afternoon. Why the city wanted to own that piece of riverbank is a little bit beyond me. There cannot be much question that it could preserve the riverbank--the floodplain--from development. So, I do not know why the city should have asked to get title because that meant the city would become a co-tenant in possession with the owner; you cannot become a co-tenant in possession with an owner unless you take the property physically. So Dolan really is not a regulatory taking case at all; it is a physical taking case, as several people have noted.(23) And if it is a regulatory taking case, that is even more puzzling, because the city did not take the whole of Dolan's property, only that piece of the property--ten percent or fifteen percent of the total--that was on the riverbank. Is not this a partial taking? If Dolan is a partial regulatory taking or if it is a physical taking, why didn't the Court just say so? It could have disposed of the case in a page-and-a-half by declaring it a physical taking, and noting that Loretto controls.(24) This remains a puzzle and perhaps reflects the way the case was briefed and argued.
On the bikeway issue in the Dolan case, it would appear that this issue is simply a failure of proof problem. The city did not develop the kind of record that it needed to make in order to satisfy the Court.(25) We all have heard stories about planners not being particularly neat in hiding the way they exert power over landowners in order to get done the city's work at the least cost to the city. I think the Supreme Court in Dolan was sensitive to this reality. So the Court, in response to the city's demand for the bikeway resurrected the hard look doctrine we thought was laid to rest by Chevron U.S.A. v. Natural Resources Defense Council.(26) Maybe what we are seeing is that courts will demand more careful process until these administrative agencies get their act together. Until then, the courts are going to take a hard look to ensure that agencies make satisfactory records. Dolan may not be terribly revolutionary, but it might prompt local governments to be much more careful in the records they compile.
What are the open issues? First, do we look at the problem of regulatory takings as measuring the impact of the regulatory imposition on the entire parcel, or do we divide the issue into discrete segments and determine whether rights in a particular segment have been affected? Justice Stevens emphasized this issue in his dissent in Dolan.(27) This issue was central in both Florida Rock(28) and in Loveladies Harbor.(29) In Florida Rock, the government's refusal to allow the landowner to strip back the wetland meant that the company could not get to its mining property, use its mining rights. One way to have decided Florida Rock would have been to say: it is a taking of the right to mine. Another way to have decided Florida Rock would have been to say: you have to look at total market value before and after the imposition.
In Loveladies Harbor, as Professor Blumm pointed out, there were at Least three possible ways to describe what we call the "denominator problem," that is, the relationship between the owner's interest and the impact of the restriction.(30) If you make it one-to-one and the restriction is total, the government will lose. If, on the other hand you say it is 250 acres that the owner has and we are only here talking about what turns out to be a restriction on 12.5 acres, then you either get into the partial taking problem, or you say it is no taking at all. So that is a key question: Whether you ]look at these cases as a total big picture, look at the whole situation--or whether you parse it down to specific interests or parts. The answer to that may vary from case to case--and yet there are no bright-line rules.
The second open issue relates to allocating the burden of proof. Some people think Dolan has done something dramatic about this, but I do not interpret the Court in that way. The reason I don't is the presumption that a governmental exercise of the police power is a valid and constitutional act arose out of a history of legislative enactments. If you go back in time to the enactments of state legislation, not very many states had any kind of legislative record pointing out the purposes of particular legislation. When these statutes were challenged in the courts, particularly in the federal courts, as being violative of the Constitution--how did anyone know what the legislature's purpose was? The answer was: the lawyers made it up when they argued the case because there was no record in the legislature. So, along came a presumption that said, in effect, we do not know why the legislature acted, but legislative acts are presumed valid unless they have no rational relationship to a public purpose. That is where all that business of presumptions of constitutionality of legislative acts originated.
Is the action in Dolan a legislative action that deserves any kind of presumption? Or is it an adjudicative action? Justice Rehnquist recognized that distinction early in the case,(31) although it did not get further developed. I suggest this is an important distinction. Because what may happen over the next period of years is that courts will have to wrestle with the following problem. A city or county council adopts a zoning or subdivision regulation as a legislative act. A landowner can challenge that if she wants to, but she is not likely to get very far because of the presumption of valid public purpose, established since Village of Euclid v. Ambler Realty Co.(32) But suppose that the application of the zoning map, or the subdivision regulation, to a specific piece of property by the city council is seen as really an adjudicative decision being made by a body that is functioning not as a legislature but as an administrative agency under its own delegation of authority. That was Nectow v. City of Cambridge.(33)
In Nectow, the Supreme Court overturned a specific zoning decision.(34) There is a critically different distinction between the legislative action of writing zoning regulations and the adjudicative act of applying zoning to specific pieces of property, whether that application is made by a city council, by a zoning commission, or by a variance board. Do we concern ourselves with the nature of the board that makes it, or with the function of that decision? The reason that this is going to be extremely important in the future is because to some extent modern takings law, the hard look doctrine suggested in Dolan, is a hard look not at what legislatures do but at what administrative agencies do. And if a local legislature is engaged in administrative conduct, it might be treated as an administrative agency.
The third issue to which we don,t yet have an answer is, when we talk about a denial of economically viable use, how do we measure it? What do we mean by denial of "economically viable use"? Is this the same thing as measuring overall value? In a way, this is another question related to the one about what is the size of the property interest we are examining. The courts talk about denial of economically viable use. Do they mean all economically viable use? Do they mean some? Do they mean denial of an economically viable use of the particular stick in the bundle, like the right to mine? Or do they mean denial of the value of the total parcel. The dissent in Florida Rock objected to the majority's viewing the problem as one of diminution in overall value, the market value before and after the permit denial; she argued that denial of economically viable use is not value.(35) But if it is not, what is it? I do not know what else we have with which to measure, unless we are going to focus on the sticks in the bundle, such as the right to mine, which re-raises the problem of the "denominator."
The fourth unanswered issue concerns whether there exists some universal tipping point in regulatory takings law, such that when the value of a property is decreased below the tipping point, there is a total taking under the Fifth Amendment. That is an alternative to the partial taking idea. In other words, a regulation is not a taking until you hit a tipping point, and then the whole thing is a taking. That was in essence the dissent in Florida Rock.(36) If you read Justice Scalia's footnotes in Lucas, he talks about this problem--he does not answer it but he sure tells us what the problem looks like.(37) This is a difficult problem because, if there is a tipping point, how is it to be identified? Who gets to identify it? There are a number of bills in Congress on the issue--one in particular by Representative Touzan says that if fifty percent of the market value or economically viable use is diminished by the regulation, it is a taking entitling the land owner to compensation.(38) And there is Executive Order No. 12,630, which mandates that federal agencies have to consider the takings implications of every rule, regulation or action.(39) That order is uniformly ignored by the federal agencies, but it might come back to haunt if people start taking this area seriously.
The fifth unanswered question is: Given partial taking, how do we differentiate between permissible regulations for which no compensation is available and permissible regulations for which compensation is due under the Fifth Amendment? Professor Blumm rightly perceives in Florida Rock the first effort to make a cut at that problem, to introduce into takings jurisprudence the debates that are going to be necessary to figure out where the line is that separates a compensable taking from those regulatory impositions that do not constitute a compensable taking because, in the language of the Supreme Court, they involve an average reciprocity of advantage adjusting the benefits and burdens of economic life.(40)
A sixth question, which has not really surfaced yet, is: Do property rights transmogrify over time? That is, as the regulatory environment changes in response to changes in public policy, do the rights of property owners change along with the public policy? What is the role of owners, expectations? Are reasonable expectations necessarily limited to what the regulatory environment permits at the time one acquires the property? One of the issues that obviously troubled the court in Loveladies was that the developer purchased his 250 acres and started developing his property after investing a lot of money in it when suddenly the regulatory environment changed.(41) Even though he had a design plat for the whole development and had been working on it for years, getting permits regularly, suddenly the government said, "wetlands," you cannot develop. The question was: is he caught in the changing public policy? The New Jersey Natural Resources Department said, no, you can have your permits.(42) But then the state agency went to the federal government and whispered, "we didn't,t mean it, don,t give them a federal permit."(43) And the federal government walked right into that sandbag. Loveladies Harbor says that individuals caught in that situation need not lose their property rights as our knowledge of society's needs grow.(44)
Finally, related to the above point are the following questions: Who defines what is property? Is that a state law definition or a federal law definition? Are property rights protected by the Fifth Amendment subject to manipulation by the states, or is there some kind of fundamental, natural law meaning of property? Indeed, is there a federal common law meaning of property? Could any new regulation be said to inure in common law nuisance principles? Could all new regulations be said to inure in common law nuisance principles? This leads to the question, could a state judiciary find within the scope of its common law nuisance principles virtually any new regulation that came along? Will the same judges who favor nationalizing (or naturalizing, if you will) property rights respond when they have to cut a big lump out of traditional federalism notions? My point is this: Traditionally the definition of property was a state law function. Indeed, the Supreme Court has said as long ago as Erie Railroad Co. v. Tompkins,(45) that the source of law is state law.(46) Does that mean that in the Lucas case, on remand, the South Carolina Supreme Court could have said that the regulation precluding Mr. Lucas from building inures in our common law principles of nuisance? If they had, and it was again appealed, what would the Supreme Court have said? Is the state the final arbiter of what is in its common law nuisance law, or is there some sort of federal common law that restricts states from doing so? A principle that says there are some values that states cannot change? If the state did not have the power to change property definitions, why did the Supreme Court remand Lucas back to the South Carolina Supreme Court to decide whether those regulations inured in South Carolina's common law of nuisance?(47)
As I said at the outset, takings law is an exciting and challenging area and, as you can see, has many issues with which we will be occupied for some time to come. (1) Michael C. Blumm, The End of Environmental Law? Libertarian Property, Natural Law, and the Just Compensation Clause in the Federal Circuit, 25 Envtl. L. 171, 176 (1995). (2) Fed. R. App. P. 363 (3) James L. Huffman, Dolan v. City of Tigard: Another Step in the Right Direction, 25 Envtl. L. 143, 148 (1995). (4) 18 F.3d 1560 (Fed. Cir.), cert. denied, 63 U.S.L.W. 3268 (1994). (5) Blumm, supra note 1, at 178. (6) Florida Rock, 18 F.3d at 1565-70. (7) Id. at 1572-73. (8) See Ruth Bader Ginsburg, Speaking in a Judicial Voice, 67 N.Y.U. L Rev. 1185, 1193 992) (9) Karl N. Llwellyn, The Common Law Tradition: Deciding Appeals (1960). (10) 114 s. ct. 2309 (1994). (11) Dolan, 114 s. ct. at 2330-81 (Souter, J., dissenting). (12) 458 U.S. 419, 441 (1982). (13) 952 F.2d 1364, 1375 (Fed. Cir. 1991). (14) 82 U.S. 304 (1987). (15) 112 S. Ct. 2886, 2893 (1992). (16) Id. at 2897-2902. (17) 482 U.S. at 317-320. (18) Nollan v. California Coastal Comm'n, 483 U.S. 825, 837 (1987). (19) Dollan, 114 S. Ct. at 2319. (20) See William Funk, Reading Dolan v. City of Tigard, 25 Envtl. L. 127 (1995). (21) Dolan, 114 S. Ct. at 2316, 2320-22. (22) See Lawrence Watters, Dolan v. City of Tigard: Inroduction and Decision, 25 Envtl. L. 111, 113 (1995). Professor Watters presentation Lncluded slides of the property at issue in Dolan. (23) See Blumm, supra note 1, at 172; Funk, supra note 20, at 134. (24) See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982). (25) Dolan, 114 S. Ct. at 2321. (26) 467 U.S. 837 (1984). (27) Dolan, 114 S.Ct. at 2324 (Stevens, J., dissenting). (28) Florida Rock Indus. v. United States, 18 F.3d 1560 (Fed. Cir.), cert. denied, 63 U.S.L.W. 3268 (1994). (29) Loveladies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1994). (30) Blumm, supra note 1, at 184 (31) Dolan, 114 S. Ct. at 2316. (32) 272 U.S. 365, 387 (1926). (33) 277 U.S. 183 (1928).34 (34) Id. at 188-89. (35) Flonda Rock, 18 F.3d at 1573 (Nies, C.J., dissenting). (36) Id. at 1577-79. (37) Lucas, 112 S. Ct. at 2894 n.7. (38) H.R. 3875, 103d Cong., 1st Sess. (1993). (39) Exec. Order No. 12,630, 53 Fed. Reg. 8859 (March 15, 1988). (40) Blumm, supra note 1, at 179. (41) Loveladies Harbor, 28 F.3d at 1181. (42) Id. at 1174 (43) Id. (44) Id. at 1183. (45) 304 U.S 64 (1938). (46) Id. at 78. (47) Lucas, 112 S. Ct. at 2901.
Jay Plager (*) Circuit Judge, United States Court of Appeals for the Federal Circuit. LL.M. 1961, Columbia University; J.D. 1958, University of Florida; B.A. 1952,
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|Title Annotation:||Colloquium on Dolan: The Takings Clause Doctrine of the Supreme Court and the Federal Circuit|
|Date:||Jan 1, 1995|
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