Brandt Revocable Trust v. United States, (United States Supreme Court, March 10, 2014) involved the allocation of property interests in a former railroad right-of-way when the railroad subsequently abandoned its use. Plaintiff trust succeeded to the interests of Melvin and Lulu Brandt, who purchased 83 acres of land in Wyoming by patent from the United States in 1976, subject to, among other things, an easement for railroad purposes. The successor to that railroad formally abandoned the right-of-way and tore up the tracks and ties in 2004. The United States claimed a reversionary interest in the former right-of-way in the form of an easement by virtue of a 1988 statute and settled with all landowners other than the Trust to convert that land to a public path, also known as rails to trails. The Trust claimed that any government claim to the land was extinguished when the easement was abandoned by the railroad.
Both lower federal courts sided with the federal government, but in an 8-1 opinion authored by Chief Justice John Roberts, the Supreme Court reversed. Chief Justice Roberts traced the historical relationship of railroads to settlement of the West, noting that from 1860-1971, when there was a need to build a transcontinental railroad and very little money available (mostly due to the Civil War), the federal government granted lands to railroads outright to encourage transcontinental service. This was the practice when the “O&C Lands” were granted from 1866 to 1872 under the Oregon and California Railroad Act and related legislation.
The practice of granting fee title to lands to railroads ceased by 1875, when Congress enacted the General Railroad Right of Way Act and adopted a new practice to grant right-of-way easements for railroads (although those easements frequently did not deal with what happened if the easements were no longer used for railroads). This was the type of easement granted for the subject lands. The Trust claimed that to the extent any easement existed, the easement was extinguished by abandonment, while the United States claimed a reversionary interest that it grant to other public agencies, among other things, for hiking and bike trails.
Chief Justice Roberts’ opinion relies on a case previously decided in 1942 by the Supreme Court in Great Northern Railway Co. v. United States in which the federal government defeated a private claim to oil rights under a railroad right-of-way by claiming the railroad’s interest was merely an easement and did not entitle it to mineral rights under the tracks. When the United States granted title by patent to the Brandts in 1976, the land was “subject to those rights for railroad purposes” to a predecessor railroad and the court found that, when the beneficiary railroad abandons the right-of-way, the easement disappears and the landowner has an unencumbered interest in the land. Chief Justice Roberts characterized the federal government’s position in the present case as suggesting that the Great Northern opinion did not really mean what it said, calling its arguments based on the 1875 Act an “improbable (and self-serving) reading” of that legislation.
The court noted that Congress again changed its policy in 1922 to grant all property interests in forfeited or abandoned railroad rights-of-way to the municipality or private person who owned the underlying land. But in 1988, Congress declared that title to abandoned or forfeited railroad rights-of-way would vest in the United States. The court said that the nature of the property interests in the former railroad right-of-way turned on the date of the original grant of that interest, rather than subsequently enacted legislation. Thus, if all the railroad had was an easement, the federal government could not acquire a greater interest by changing the rules after the fact. The Brandt Trust owned the property subject to the easement and when the easement was abandoned, that interest simply went away.
This is not to say there may be other ways to acquire easements over these former rights-of-way for pedestrian or bicycle trails – by purchase, gift, or condemnation for example. Perhaps there are cases to be made that title has been lost by adverse possession. Nevertheless, those owning lands crossed by now-abandoned railroad rights-of-way now have something to talk about to public agencies asserting that those owners have no legal interest in that land.
Contractual clauses to help limit the impacts of the Discovery of Historical Structures or Items during Construction
Over the last sixty years, significant legislation has been enacted with the underlying goal of preserving our historic heritage. Following the passage of the National Historic Preservation Act in 1966 at the federal level, many states and tribes enacted state and tribal level legislation to create the position of State Historic Preservation Officer (SHPO) or the Tribal Historic Preservation Officer (THPO) as contemplated by NHPA. The SHPO or THPO is responsible for administering the state or tribal level program and coordinating with a number of federal agencies consistent with the responsibilities established under NHPA. While many potential statutes are implicated by discovery of historical items, this post focuses on one portion of the NHPA.
One of the significant portions of NHPA is the review contemplated by Section 106 of NHPA (often referred to as a Section 106 review). This review is often part of the planning process on any federal project (typically during the reviews required by the National Environmental Protection Act), but it is also required on any project which receives federal funding – meaning that a project funded in part by federal grants or federal loans will also need to comply with the Section 106 requirement.
When triggered, a Section 106 review is a requirement during the planning process, and the related regulations are focused on evaluation, coordination, and planning during that phase. In very broad terms, Section 106 contemplates identification of historic properties, analysis of whether they will be adversely effected by the project, and consideration of alternatives or other methods of avoiding, minimizing, or mitigating any adverse effect.
Section 106 contains several key definitions that expand the review process significantly. The first is Section 106’s broad reach. The historic properties analyzed under Section 106 extend beyond just those historic structures that are included on the National Register they also incorporate those that are eligible for inclusion. One of the first steps (after identification) is analysis. If a structure is deemed eligible, even if it is not a “recognized” historic structure, the potential for adverse effects must be evaluated. Of next significance is the scope of adverse effect, which includes more than just the obvious adverse effect of demolition, but also extends to anything that would “diminish the integrity of the Property’s location, design, setting, materials, workmanship, feeling, or association.” This means that alterations to the surrounding property – including the viewshed or the audio experience – can create an adverse effect, even if the structure itself is not touched.
If no finding of adverse effect is issued by the agency official, and no objection is received within the requisite timeframes, the project can move forward. If the agency official determines there is an adverse effect, then continued consultation is necessary to consider alternatives or modifications that can “avoid, minimize, or mitigate” the adverse effects.
When adverse effects are recognized during the planning process, they are easier to manage. Although they may significantly alter the project, considering these evaluations during the planning process maximizes the options available. Presuming a Memorandum of Agreement (or a programmatic agreement when discovery is contemplated) is reached between the various agencies, the agreement(s) may address the process if additional items are discovered during the project. These provisions help mitigate the risks associated with discovery during the project.
Hillcrest Property LLP v. Pasco County, 2013 WL1502627 (M.D. Fla.) involved defendant’s “Right of Way Preservation Ordinance” as a means of avoiding payment to landowners through whose property designated existing and future transportation corridors ran. If no development were requested, the County may acquire the property through traditional eminent domain means, but if a development application were filed, the Ordinance requires uncompensated dedication of the land. The county attorney declared that the Ordinance saved millions of dollars annually for the County through this scheme of “voluntary” dedication. Plaintiff challenged the scheme inter alia under the due process and just compensation clauses and state constitutional grounds. A federal magistrate found the Ordinance unconstitutional and recommended issuance of an injunction to a federal judge.
The court said that the challenged Ordinance was adopted to implement the County Comprehensive Plan and allowed interim use by the landowner of the dedicated property until the County needs it. If the landowner believes the rough proportionality of the dedication is excessive, she may apply for a discretionary waiver, but must provide extensive appraisal and other information at her own expense for determination of a County review committee which may pay the differential, grant credits on systems development charges or provide for other waivers of costs of associated improvements, or any combination thereof. A landowner may also apply for a variance from the waiver by showing that the application of that waiver causes a hardship; however, the variance is highly discretionary. Plaintiff owns 16.5 acres of land zoned commercial. Under the challenged Ordinance, there was a 50-foot right-of-way overlap of a future public road along one side of the property for approximately 1400 feet. Plaintiff applied for site plan approval for a shopping center. Defendant demanded the right of way, while the Florida Department of Transportation (“FDOT”) demanded a further 90-foot setback. Plaintiff resubmitted the site plan with the reservation of right objecting to the dedication and setback and did not appeal the grant of the site plan approval with those conditions. Nor did Plaintiff seek a waiver or variance; instead Plaintiff filed this action in Federal District Court.
Oregon courts have a long-standing practice of giving deference to an agency's interpretation of its own administrative rule if the interpretation is “plausible” and not “inconsistent with the wording of the rule itself, or with the rule's context, or with any other source of law.” This type of broad deference is given not only to agencies in interpreting their own rules but also to local governments when applying their own land use plans and land use regulations. This approach seems to work well, especially in cases of local government interpretations, where the local government is an elected body and presumably can be voted out if their interpretations are viewed by the public to be inconsistent with adopted codes. Agencies, by contrast, are not elected but are typically run by governor-appointed commissions or boards. Deference to agency interpretations stems from a belief that the agency has knowledge of and will act to further the original intent of its own rules.
Similarly, the federal courts have historically treated federal agency interpretations of statutes and administrative rules with a great deal of deference. Again, under the same premise that so long as the interpretation is not inconsistent with the plain language of the rule, it is entitled to be affirmed. But a few weeks ago, in the case of Decker v. Northwest Environmental Defense Center, the Supreme Court indicated a change may be coming soon.
In 2010, the 9th Circuit (the federal appellate court that includes most of the Western United States) ruled in a case involving the City of West Linn that conditions to development approval requiring off-site improvements, such as the installation of a pipeline or road improvement, were not subject to the same “rough proportionality” obligations imposed for when the government requires acquisition of land. West Linn Corporate Park, LLC v. City of West Linn. The Oregon Supreme Court responding to a series of questions asked by the 9th Circuit as part of its deliberations concluded that where a regulation requires that the owner pay a sum of money, “the regulation is not tantamount to acquisition.” The US Supreme Court declined further review and the West Linn case settled this matter until now.
This past month, however, the Supreme Court heard oral argument in Koontz v. St. Johns River Management District, requiring that court to grapple with the right of government to impose off-site conditions in return for permit approval. Coy Koontz Sr. wanted to develop 3.7 acres of wetlands and protected uplands located in a habitat protection zone controlled by the local St. Johns River Water Management District in Florida. Koontz applied for a permit offering to place his remaining 11 acres of his property into a conservation easement. The District determined that additional mitigation to offset the loss of wetlands was required in addition to dedicating the 11 acres. The District asserted Koontz would likely be required to pay for improvements for these off-site wetlands owned by the District but located elsewhere and said it was open to other alternatives. Koontz refused the District’s specific proposal and his permit was denied.
Koontz filed suit in Florida state court arguing that there was no “essential nexus” or “rough proportionality” between the government request for off-site improvements and the impacts from the proposed development. The state trial court ruled in favor of Koontz finding a taking but the Florida Supreme Court reversed finding that there was no “dedication of real property” and therefore, no taking occurred. In October, 2012, the US Supreme Court accepted the case.
As with the plaintiff in the West Linn case, Koontz argued that the off-site mitigation measures suggested by the district in order to allow the development on his property to go forward were not “roughly proportional” to the impacts from this development and further, these tests apply to conditions suggested by the government in a permit negotiation process but never actually imposed. The District and a number of amici argued that Koontz’s claim was inconsistent with the text and history of the Takings Clause, as well as the Court’s takings jurisprudence, and that no taking could have occurred because no property was actually taken. The brief filed by the amicus American Planning Association argued that “a ruling for Koontz would effectively constitutionalize all run-of-the- mill land use negotiations and risk grinding both the land use process and the judicial system itself to a halt.”
In November, we noted a pending US Supreme Court case, Arkansas Game and Fish Comm. v. United States, which involved continual but temporary flooding of the Arkansas Dave Donaldson Black River Wildlife Management Area, which allegedly reduced the timber harvest by 16 million board feet and disrupted the recreational use of that land. The trial court had found a taking but the Federal Circuit reversed, finding the temporary flooding was not a permanent or inevitably recurring situation and thus not a taking.
Since 1948, the US Corps of Engineers, owned and operated the Clearwater Dam about 115 miles upstream from the Management Area. The Corps uses a Water Control Manual to determine water release rates on a seasonal basis with planned deviations for agricultural, recreational and other purposes. In 1993, the Corps released the water more slowly in order to enable farmers to have a longer harvest season, but then released more water later, during the tree-growing season from April through October, resulting in more flooding over those months. From 1994 to 2000 similar deviations were authorized over Plaintiff’s objections. The Corps also considered, but abandoned, a permanent revision to the manual.
On October 3rd, the United States Supreme Court heard an unusual takings case, one brought by one public entity against another. Arkansas Fish and Game Commission v. United States involves the state’s claim for damages for loss of timber in its Dave Donaldson Black River Wildlife Management Area in northeastern Arkansas by flooding authorized by the federal Corps of Engineers over a six year period. The flooding was authorized to enable farmers on other parts of the Black River more time to harvest their crops. Not only was timber lost, but the area became less attractive to duck hunters and bird watchers.
The Corps argued that its temporary release program did not constitute a taking and that a contrary determination would endanger flood control programs across the country. The state won its case in the trial court, securing $5.7 million in damages, but a divided Federal Circuit reversed that ruling, finding no taking because the flooding was temporary and not inevitably recurring. The US Supreme Court granted certiorari and will rule by next June.
In their arguments before the Supreme Court, the advocates had very different views of the policy implications of their positions – and those of their opponents. The Deputy Solicitor General argued that riparian ownership entailed certain flooding risks and that the Corps required broad discretion in dealing with flood waters without being troubled by takings claims. The implicit suggestion was that federal or state governments would not build dams if by doing so they would be liable to one or another landowner for the consequences of flooding. On the other hand, the State of Arkansas argued that the practical difference between permanent or recurring flooding and the six years of flooding in this case that caused root rot and loss of timber and habitat values was imperceptible. A landowner would have been entitled to damages had her lands flooded permanently or every year as part of a government project.
Another issue in this case was that of damages. The timber and habitat at issue would have been subject to natural flooding. Thus, if the Supreme Court finds a taking, would the state be entitled to any flooding damages or merely those which were the result of the releases in this case – which would be an evidentiary nightmare for the state. Further, what would be the implications of a positive takings outcome for the state on future dam projects? Justice Scalia, the Lex Luthor of planning, observed during oral argument that the issue was whether the landowner or taxpayers absorbed the loss. If it will be taxpayers, then future congressional authorizations of these public works projects must then account for possible claims. Should the farmers or utilities, or city dwellers who benefit from these projects be required to pay the unknown amounts of these losses? It is no longer adequate to say “the government” will do so and it is unlikely the federal government will provide a blank check to underwrite these losses.
However, allocation of loss is not the issue before the court. Rather, it is whether the federal government is liable to a takings claim as a result of discretionary water releases where it must choose and balance damage done to multiple parties. The Corps chose to give farmers more time to harvest their crops at the expense of flooding state timberlands for a longer time. Would the Corps also be liable if it decided to preserve the timberlands and allow earlier flooding of the farmlands? If so, it appears that no public works good goes unpunished.
In February, President Obama signed into law HR 3630, also known as the “Middle Class Tax Relief and Job Creation Act of 2012,” which extended unemployment benefits and payroll tax deductions. Congress stuffed the bill with several additional provisions, including one that affects local government decisions regarding the siting of wireless facilities.
The legislation expressly requires that a local government may not deny, and shall approve, any eligible facilities request for a modification of an existing wireless tower or base station, so long as the modification does not substantially change the physical dimension of the tower or base station. This approval must be granted regardless of provisions in the Telecommunications Act of 1996 (Section 704) or any other provision of law. An “eligible facilities request” is any modification request that involves the collocation of new transmission equipment; removal of transmission equipment; or replacement of transmission equipment.
City of Arlington, Texas v. Federal Communications Commission, ___ F3d ___, 2012 WL 171473 (5th Cir.) involved certain new commission rules to assure timely, reasoned local decisions on the grant or denial of wireless communication facilities. The declaratory ruling was the result of a petition from a wireless trade association to clarify ambiguities in the law under the Telecommunications Act (“TCA”). Petitioner sought (1) time limits for acting on wireless applications for land use approval, (2) to deem the applications approved if not acted upon within a certain time, (3) a determination that if one provider already in the area, that other providers could also take advantage of the TCA to locate in the same jurisdiction and (4) the prohibition in the use of a variance to allow for the siting of a wireless facility. The FCC granted the petition in part.
American Electric Power Co., Inc. v. Connecticut, 131 S.Ct. 2527 (2011) involved Federal common law nuisance claims against the Tennessee Valley Authority and several private power companies emitting carbon dioxide and other greenhouse gasses, asking the federal courts to set caps and to reduce those amounts annually thereafter. The Supreme Court reversed the Second Circuit and determined that the Federal Clean Air Act displaced such claims.
We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.