Committee Discusses Potential Bill Funding Billions in Water Infrastructure Improvements

As recently reported by Jason Plautz at E&E in his article "Bipartisan lawmakers seek $13.8B for infrastructure improvements," members of the Transportation and Infrastructure Committee are discussing a potential bipartisan bill that would provide approximately $13.8 billion in funding for wastewater infrastructure projects, and several billion in alternative financing for clean water infrastructure projects. 

According to the draft bill summary, the bill would "create thousands of new, domestic jobs in the construction and wastewater-support sectors through increased investment in wastewater infrastructure . . . ."  There is also hope that the funding of water infrastructure will help provide the kind of basic services needed to attract new and grow existing businesses.

The bill is sponsored by Reps. Nick Rahall (D-W.Va.), Tom Petri (R-Wis.), Steve LaTourette (R-Ohio), and Tim Bishop (D-N.Y.).  It also has the support of the National League of Cities and the Water Infrastructure Network, a coalition that includes the American Society of Civil Engineers, Natural Resources Defense Council and National Association of Clean Water Agencies.

Can Applying the Endangered Species Act Result in a Taking?

The U.S. Court of Appeals for the Federal Circuit recently issued an interesting opinion which addresses the question of whether or not a government agency's application of the Endangered Species Act can trigger a property owner's Fifth Amendment Takings Claim.

My colleague Ben Rubin has a more detailed post about the case, Klamath Irrigation District v. United States, on our firm's Endangered Species Law and Policy Blog.  More generally, the Klamath Irrigation District case analyzes whether the US Bureau of Reclamation's decision to reduce water delivery to farmers utilizing the Klamath River Basin in order to comply with the Endangered Species Act (ESA) can result in a taking of the farmers' water rights. 

The Bureau claimed it was required to reduce the water supply in order to avoid harming upstream threatened and endangered species, and if it did not undertake the reduction, it would face liability under the ESA.  The farmers, on the other hand, claimed that they had a compensable property interest in receiving the water, and the reduction in the water supply resulted in a taking.

While the case has a long procedural history, the bottom line is that the US Court of Appeals for the Federal Circuit at least acknowledged that (1) the Bureau could be liable for a taking even if it did so in order to comply with the ESA and (2) the farmers had a compensable property interest in receiving the water.  The case has currently been remanded to the district court with these concepts guiding the case going forward.

The case, while still left to be ultimately decided, is still a major victory for property rights advocates.  Nancie Marzulla, counsel for the Klamath water users, stated that "the government's decision not to deliver any water at all to the farmers in the Klamath Basin was devastating. We are extremely pleased that the Federal Circuit and Oregon Supreme Court have confirmed that these farmers have a property interest in water that they have put to beneficial use for over 100 years."

San Joaquin County Plans Eminent Domain for Water Reservoir

According to an article on Recordnet.com, "Water fight goes to court," San Joaquin County water officials are planning to use their eminent domain powers to take thousands of acres of ranch land for a proposed reservoir.  Officials say the project -- called MORE WATER -- is needed to satisfy the County's growing population and to reduce dependence on wells which are depleting the groundwater supply.

The County recently filed a lawsuit in order to gain access to the ranchers' property to conduct surveys and drill test holes.  14 of the 16 landowners have granted the County permission to access their property. 

Whether this project ultimately gets off the ground is still in question.  Some are skeptical of the project given the shortage of water supply.  A timeline on the MORE WATER Project website suggests that construction of the project will not begin until 2015.

Sanitation Company Intends to Utilize Eminent Domain to Acquire Golf Course Property

Sorry you haven't seen a post from me in a few weeks.  My wife and I just had our first child (a future super star eminent domain attorney, of course), and I've been on "dad duty."  My colleague Rick Rayl has been holding down the blog fort, although upon my return I see he's been blogging about things such as Canadian companies and mining rights in Nevada.  Now that I'm back, how about some California eminent domain news?

In the article "Sanitation Company Eyes Country Club Property," Tehachapi News is reporting that the Brite Canyon Resource Recovery (a division of the Golden Hills Sanitation Company) may use eminent domain to acquire the 160-acre Golden Hills Country Club and golf course in Kern County, California.  The sanitation company apparently wants the property to convert its septic plant into a sewer system, and has offered the property owner $2 million for the land.  The owner, on the other hand, has demanded $2.5 million.

The sanitation company believes the property is actually only worth $700,000 to $900,000, and as a public utility company, it intends to utilize its power of eminent domain to acquire the property.  The valuation dispute appears to come down to a difference of opinion on the highest and best use of the property, as the sanitation company believes the property's most profitable use is as open space for a park or for growing vegetables.  The owner, on the other hand, believes it could get $2 million just for the back 9 holes of the golf course.  Stay tuned to see which valuation approach prevails.

Recent Case Thwarts New Owner's Efforts to Recover for Inverse Condemnation Damages

A decision this week by the California Court of Appeal holds that a purchaser of property suffering damages through government conduct may not sue for inverse condemnation where:

  1. The buyer knowingly purchases property impacted by a government taking, and
  2. The purchase price reflects the property’s condition in light of the government impacts.

In Ridgewater Associates, Inc. v. Dublin San Ramon Services District (May 11, 2010) __ Cal.App.4th __, it was largely undisputed that the District's waste water treatment facility caused water intrusion damage on a neighboring warehouse property.  Unfortunately for the property's owners, they failed to account for the inverse condemnation claim when the property sold.  The buyer discovered the problem during due diligence, and the seller agreed to a price reduction to account for the damages. 

However, the seller did not clearly assign its inverse condemnation claim to the buyer as part of the transaction.  Thus, when the buyer closed escrow and proceeded to sue the District in inverse condemnation, the Court of Appeal upheld a summary judgment in the District's favor.  The court held that the buyer lacked standing to seek compensation for damages accruing before close of escrow but, more importantly, also held that the buyer could not recover for damages accruing after close of escrow because the buyer was not damaged.   The court concluded that the reduction in the purchase price qualified as "compensation" for the "loss." 

Had the parties cleanly assigned the seller's rights to the buyer, this should not have been a problem.  In Ridgewater, however, the parties’ failure to address these issues provided the government agency with a “free pass” for what amounts to an ongoing taking of the property.  

For more information about the case and its implications, take a look at our E-Alert, Buyer Beware: Improper Sale Documentation Results in Waiver of Inverse Condemnation Claim.

SEPTEMBER 1, 2010, UPDATE:  The California Supreme Court issued an order depublishing the Ridgewater opinion

Mojave Water Agency to Use Eminent Domain for Acquisition of Victorville Properties

Earlier this year, Nossaman sent out an E-Alert providing a status update on the use of federal stimulus dollars for California infrastructure projects.  Here on the blog, we've also recently reported on water-related property rights issues grabbing news headlines.  A recent Mojave Water Agency project -- backed by federal stimulus dollars -- ties the two topics together.    

According to a recent Victorville Daily Press article, "MWA uses eminent domain on land: Property is needed for R-Cubed project," the Mojave Water Agency is using eminent domain to acquire land necessary for its "Regional Recharge and Recovery Project."  The project, dubbed "R-Cubed," is a $60 million effort to expand existing ground water recharge basins, and will require the construction of 15 miles of pipeline, five to seven wells, and several turnouts for local water providers.  The project received over $13 million of federal stimulus funds earlier this year, and will have the initial capacity to supply enough water for 30,000 homes.  

Design of the massive project is essentially complete, and the MWA filed an eminent domain action to acquire four necessary Victorville properties earlier this month.  Utilities will run through two of the properties located on Mesa Street west of I-15; a street re-alignment will impact a third property on Mesa Street; and a turnout facility will be placed on the fourth impacted property located on the west side of Mesa View, south of Bear Valley Road. 

More details on the R-Cubed project can be found at www.r3project.com.  

 

Private-Property Rights Issues Involving Water Continue to Make News

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.