California Eminent Domain Report : a blog following condemnation, inverse condemnation, and regulatory takings written by attorneys with Nossaman LLP.

We reported several months ago about the property owner impacted by the expansion of the Everglades National Park petitioning the US Supreme Court to determine how to treat the government's enactment of tougher zoning standards that decrease the value of property which the government may want to acquire in the future.  The issue presented was whether the government's actions must be the primary cause of the precondemnation depression of the property's market value, or whether there must only be a nexus between the government's actions and the depressed market value.

This is an interesting debate, and according to a recent blog post by the Cato Institute's Ilya Shapiro, the US Supreme Court declined to hear the case.  Shapiro was clearly disappointed, explaining:

[t]he case involved the federal government maneuvering to unjustly drive down property values before taking land for (legitimate) public use — in this case expanding the Everglades — thus greatly diminishing the compensation it was obligated to pay the owners."

I think most people will agree that if the government is taking steps to drive down the acquisition price of property it eventually seeks to acquire, and those government activities result in the property's losing value, such actions should be disregarded when valuing the property.  California's eminent domain law addresses exactly this issue, and courts routinely hold that in such circumstances, the property is to be valued without considering such "project-related impacts."  

The issue becomes tricky, however, when a property owner is trying to prove why the government undertook certain actions that resulted in the property's losing value.  Were the government's actions really in an effort to reduce the property's eventual acquisition price, part of the project for which the property is being taken, or for some other legitimate, but unrelated, purpose?  

I have seen government agencies attempt to avoid paying compensation at all by simply enacting tougher zoning standards on a property, or designating a property for potential conservation (see, for example, the Western Riverside County Regional Conservation Authority's conservation efforts), which actions essentially make it impossible for the owner to make a viable use of the property.  A nexus standard, as argued by the property owner in the Everglades case, would make proving compensable government impacts much easier.  As it now stands, however, there is no bright-line rule, at least in California, as to whether the "primary cause" or "nexus" test should apply in determining whether the government's actions should be disregarded in determining a property's fair market value. 

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One of the big eminent domain stories of the last few weeks involved the oral argument at the U.S. Supreme Court in the Florida beach case.  That case involves whether a government program to add sand to parts of the Florida coastline, creating new public beaches in front of private property that had been beach front constitutes a taking.  For more information about that case, see my December 15 article, "Erosion Control, or Coney Island South?" published in the Los Angeles Daily Journal. 

Now, two other water-related takings issues are making news.  The first, as reported December 14 by Fox News in "Not So Private Property?: Clean Water Restoration Act Raises Fears of Land Grab," involves a proposed amendment to the federal Clean Water Act that would, if adopted, remove the word "navigable" from the definition of the water bodies falling within the Act's scope.  What makes the elimination of one word so controversial?

As currently written, the Clean Water Act regulates discharges into certain bodies of water, including any "navigable waters."  (What constitutes "navigable waters" is a whole different can of worms, especially since the Act has been interpreted to encompass not only navigable waters, but also waters with a "significant nexus" to a navigable waterway -- and because the definition of "navigable waters" has been the subject of recent litigation.)  

Some claim that eliminating "navigable" from the Clean Water Act's scope will create major problems:

The Clean Water Restoration Act currently pending in the U.S. Senate could reach to control even a "seasonal puddle" on private property. . . .

This bill is described by opponents as a sweeping overhaul of the Clean Water Act that could threaten both physical land and jobs by wiping out some farmers entirely.

Not surprisingly, the Act's proponents feel differently, claiming the amendment contains sweeping exemptions to ensure that it does not unduly impact existing agricultural uses.  

The second issue comes from a December 15 Fox News story, "Not So Private Property?: Florida Man Takes Eminent Domain Case to High Court."  It involves a case my colleague Brad Kuhn reported on last month in In Determining Just Compensation, Should Zoning Regulations Enacted to Depress a Property's Market Value for Future Acquisition be Ignored?   The question there is whether an effort to down-zone a property, deflating its value in anticipation of a future government acquisition qualifies as compensable.  The case arises from efforts to expand the Florida Everglades National Park and has a factual history dating back to the 1960s. 

One of the homeowners impacted by those efforts has fought his case through the Eleventh Circuit Court of Appeals, which sided with the government and found the down-zoning is not compensable.   However, the owner has petitioned the U.S. Supreme Court to take the case.  As reported by Fox News,

The high court hasn't decided yet whether it will hear the appeal in the potentially landmark property rights case -- 480 Acres of Land and Gilbert Fornatora v. U.S.

So is there a thread that ties together beach protection, navigable waters, and an expanded everglades park?  Maybe this:  if the global warming scientists are correct, the world is facing rising sea levels and changing weather patterns.  If this is the case, the importance of clear jurisprudence concerning the interrelationship among property lines, property rights, and the location of water bodies will similarly rise.  Whether these cases ultimately create that clarity or simply add to the existing confusion remains to be seen.  

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The Cato Institute's blog has an interesting post concerning the government's ability to induce local government agencies to enact tougher zoning standards that decrease the value of property which the government may want to acquire in the future. 

The post, titled "A Special Kind of Eminent Domain Abuse," deals specifically with the federal government's actions with respect to property it has contemplated acquiring for 30 years in order to expand the Everglades National Park.  The post  by Ilya Shapiro reports that in the case of 480.00 acres of Land v. United States, the government has forced a property owner

to watch the value of his . . . property decline until the federal government finally condemned it — and paid him much lower compensation than he would otherwise have received.

The question posed is whether the federal government's actions must be the primary cause of the pre-condemnation depression of the property's market value, or whether there must only be a nexus between the government's actions and the depressed market value.  The Eleventh Circuit sided with the government, but the property owner petitioned the Supreme Court to review the case.  The Cato Institute filed an amicus brief in support of the property owner.  The Supreme Court will decide early next year whether to hear the case.  Stay tuned.

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