In Zimmerman v. Wabaunsee County, Kansas, 293 Kan 332, 264 P3d 989 (Kan. 2011), the Kansas Supreme Court considered Plaintiff landowners appeal of the county’s decision to adopt zoning regulations that expressly prohibited the placement of commercial wind farms. Each of the Plaintiffs had entered into written contracts for the development of commercial wind farms on their properties. Plaintiffs raised two federal constitutional challenges to that ordinance, using the Takings and Commerce Clauses.
On review, the Kansas Supreme Court found that in order to prevail on a takings claim, a party seeking compensation must first establish that the property in question is one in which a vested interest exists. A mere expectancy of future benefit does not constitute a vested right.
Prior to the adoption of the prohibition on commercial wind farms, the county only allowed such use through a conditional use permit process. The Kansas Supreme Court concluded that there were no takings because Plaintiffs had no vested right in a conditional use permit, where issuance of the permit depends upon the discretionary approval of the Board of County Commissioners. Further, Plaintiffs did not have a vested right in the continuity of zoning in a particular area.
The Court was much more sympathetic to Plaintiffs argument that the prohibition violated the “dormant” Commerce Clause of the United States Constitution. The dormant Commerce Clause is implicated when the county 1) discriminates against interstate commerce, and 2) burdens interstate commerce. In essence, the dormant Commerce Clause prohibits regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.
Allegations of violations of the dormant Commerce Clause are subject to a two-step inquiry. First, a court asks whether the challenged law discriminates on its face against interstate commerce. Second, if the law is not facially discriminatory, the court then engages in a balancing test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 90 S. Ct. 844, 25 L.Ed.2d 174 (1970).
The Court considered whether the prohibition was facially discriminatory but was unable to discern any differential treatment of in-state and out-of-state-economic interests because the zoning regulations prohibited all commercial wind farms, regardless of whether the producer planned to sell the electricity in other states.
The Court next considered the Pike balancing test. The test requires that the court consider 1) the nature of the local benefits advanced by the statute; 2) the burden placed on interstate commerce by the statute; and 3) whether the burden is “clearly excessive” when weighed against these local putative benefits. Although the Court recognized that a municipality, when acting in its traditional purview (e.g. exercising its police powers), will be a factor to consider in the balancing, it would not rule as a matter of law that such exercise of power is per se valid. On the contrary, the Court remanded the case to the trial court to consider whether the local interests are substantially outweighed by the burdens on interstate commerce.
Municipalities should beware of adopting wind regulations that could be construed to prohibit commercial wind farms because the dormant Commerce Clause may provide the basis for potential legal challenges.
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