No. 90-377 IN THE SUPREME COURT OF THE STATE OF MONTANA 1991

MARY W. McELWAIN, Plaintiff and Appellant,

THE COUNTY OF FLATHEAD, a political subdivision of the State of Montana, Defendant and Respondent. CLERKOFSUPREMECOURT STATEOFMONTANA

.PPEALFROM: District Court of the Eleventh Judicial District, In and for the County of Flathead, The Honorable Leif B. Erickson, Judge presiding.

COUNSEL OF RECORD: For Appellant: Marshall Murray, Esq.; Murray & Kaufman, P.C., Kalispell,Montana For Respondent: Thomas J. Murphy, Esq. ; Conklin, Nybo & Leveque, P.C., Great Falls,Montana

Submitted on Briefs: November 15, 1990 Decided: May 2, 1991 Filed:

### Justice William E. 

### Hunt, Sr. delivered the Opinion of the Court.
Plaintiff and appellant,Mary McElwain, appeals the judgment of theDistrictCourt,EleventhJudicial District,Flathead County, denying her claim for damages for the reduction in value of her property caused by the enactment of septic regulationsby Flathead County. The District Court, sittingwithout a jury,held that the regulations served a legitimate State interest in protecting the health and safety of the public, and that appellant was not entitled to any compensation. We affirm. The issue on appeal is whether the District Court erred in finding that the regulations imposed on appellant's property did not constitute a taking of property. Appellant purchased approximately fourteen acres of real property along the Flathead River in 1979 for the purpose of building a home in which to retire. At the time of the purchase, the property was subject to the 1975 county regulations for subsurface sewage treatment systems. These regulations made it unlawful to construct or alter an individual sewage systemwithin Flathead County without first obtaining a valid permit for the specific constructionproposed. The regulations further set forth

a setback requirement of 100 feet from the Flathead River,aswell

as other requirements dealing with septic tank capacity,minimum absorption area standards, and quality of material used for construction of the system. Nowhere in the 1975 regulations is there a setback requirement from the 100-year flood plain. The appellant would have been able to build her home substantially asoriginally contemplated, with a 200-foot setback from the edge of the Flathead River, withoutviolating any of the 1975 regulations. OnAugust 6,1984,Flathead County adopted a resolution,known as the Flathead County Flood Plain Regulations, and official flood plainmapswhich showed appellant'sproperty to lie within the 100- year flood plain. These 1984 regulations required a 100-foot setback between the septic systemdrain field and the floodplain. On August 23, 1984, appellant applied for a permit to install a below-ground septic system on the property in order to begin construction of the retirement home. Her application was denied

on the grounds that all of her property was in or within 100 feet of the 100-year flood plain as designated by the floodplain maps. On July 21, 1986, after appellant had hired a civil engineer to prove that a portion of her property was outside the flood plain, the Flathead County Flood Plain Manager agreed that a portion of the appellant's property did in fact lie outside the flood plain. Appellant reapplied for a below-ground septic system permit on November 6,1986. The applicationwas denied on the basis that a 100-foot setback between the septic system drain field and the 100-year flood plain could not be attained on the appellant's property. Appellant's drain field as proposed would have been 80 feet from the floodplain. Her request for a twenty foot variance

was denied by the county onMay 13, 1988. Flathead County advised appellant that the only proposal that may be permitted would be a mounded septic system. Testimony at trial revealed that the home initiallycontemplated by appellant was a three-bedroom home and that a properly designed drain field for a three-bedroom home could have been configured to fit within appellant's property without violatingthe 100-foot setback fromthe flood plain requirement and without the need for a mounded septic system. Theplans denied by Flathead County contemplatedadrain field fora four-bedroomhome. Appellant appealed the denial of hervariance request through the entire administrative process before pursuing this action in District Court. No issue as to the appropriateness of the denial of the variance has been raised. The sole issue on appeal is whether the District Court erred in finding that the reduction in value of appellant's property is not a taking for which compensation is due. Before we can directly address this issue, however, a brief discussion of the proper standard to be used in police power actions where "takingsf1 challenges are raised is necessary. TheUnited States SupremeCourthaswrestled with thequestion of what the proper standard should be in police power actions for quite some time. In Penn Central Transportation Co. v. New York City (1978), 438 U.S. 104, 124, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631, 648, the Court said, [Tlhis Court, quite simply,has been unable to develop any ''set formula1'for determining when lljusticeand fairness1' require thateconomic injuries causedbypublic action be compensated by the government. The Court settled on a standard that states if the regulation is llsubstantially related to the promotion of the general welfare, it does not constitute a taking. Penn Central, 438 U.S. at 138, 498S.Ct. at 2666, 57 L.Ed.2d at 657. The Court added a second half to this standard, requiring that the owner not be denied 

### economically viable use" of his or her land. Agins 

### v. Tiburon

(1980), 447 U.S. 255, 260, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106, 112. This is the standard currently used by the United States SupremeCourt inexaminingtaking challenges. Nollanv. California Coastal Commission (1987),483U.S. 825, 107 S.Ct. 3141,97L.Ed.2d 677. See also Keystone Bituminous Coal Asslnv. DeBenedictis (1987), 480U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472. Previous opinions by this Court have applied a standard of reasonableness to the question of whether a taking has occurred when a land-use regulation is imposed throughan exerciseofpolice power. Yellowstone Valley ~lectric v. ~stermiller (1980), 187 Mont. 8, 15, 608 P.2d 491, 496;Western Energy Co. v. Genie Land Co. (1987), 227 Mont. 74, 78, 737 P.2d 478, 481. We have stated that a regulation adopted through an exercise ofpolice power must be "reasonably adapted to its purpose and must injure or impair property rightsonly to the extent reasonablynecessarytopreserve thepublicwelfare. Yellowstone Valley ~lectric, 187 Mont. at 15, 608 P.2d at 496. Although "reasonableI1is the language this Court has applied to our analysis of taking issues, it is nonetheless a standard of equivalent merit and significance to the federal standard of flsubstantial."As the United States Supreme Court points out in Nollan, 483 U.S. at 835, 107 S.Ct. at 3147, 97L.Ed.2d at 688,the standards to be applied to taking challenges are 

## not the samestandards as those applied to due process or equal protection claims. "Reas~nableness~~ as used in the former situationdoes not necessarily carry the same distinction from llsubstantialll as it does when used in the latter situations. We applied our standard of reasonableness to a taking issue in Western Enerqy Co. and held that the statute in question did not meet the standard. Therewe said Ifthemeans chosen to advance the interestmust be reasonable,''and yet several paragraphs later stated, "[tlhe statute does not bear the requisite 'substantial relation to the public health, safety, morals, or general welfare.'I' (Emphasisadded; citations omitted.) Western Enerqv 

### Co., 227 Mont. at 78, 737 P.2d at 481. (See also Anderson Insurance 

### v. City of Belgrade (Mont. 1990), 803 P.2d 648, 47 St. Rep. 2287,where this Courtused llreasonablell and wsubstantialll in like context.) Therefore,to clarify this standard and further conform with the federal standard we expressly state that the question to determine whether a land-use regulation is properly invoked is whether the regulation i.ssubstantially related to the legitimateState interestofprotecting the health,safety,morals, or general welfare of the public, and utilizes the least restrictive means necessaryto achievethisendwithout denying the owner economically viable use of his or her land. Appellant contends that the regulation fails to meet either part of this standard. Appellant argues that the regulation fails to satisfythe firstpart because itdoes not substantially advance the legitimate State interest in public health in the FlatheadRiver Basin. In support of this argument appellant contends that the county has failed to demonstrate that the 100-foot setback requirement from the flood plain would be any more effective than

a lesser distance. Appellant maintains that the county has not presented any evidence or scientific data that would allow the court to determine that a 100-foot setback from a flood plain is necessary to substantially advance the State's interest in keeping sewage out of the river. There are several shortcomings in this reasoning. The first is appellant's assertion that the District Court applied the incorrect standard. Appellant contends that the issue is not whether the regulation is reasonable,as the District Court found, but whether the regulation substantially advances public health. As we stated above, the terms llreasonable" and llsubstantialll have been used by this Court and the United States Supreme Court interchangeably in the context of police power actions and taking challenges for many years. The District Court relied on the previous opinions by this Court that contain the language llreasonable,ll and the standard as read from these opinions is the correct standard. A second flaw in appellant'sposition is her belief that the county maintains the burden of proving that the regulation meets the necessary standard. TheDistrictCourt found thatappellanthad failed to overcome the presumption that the regulations as adopted were reasonable. Appellant asserts that the District Court erred in relying onWhistlerv. Burlington NorthernRailroad Co. (1987),228Mont. 150, 741 P.2d 422, to reach this conclusion. Appellant insists that such a presumption is inapplicable to this case, and it is the county that must demonstrate the regulation is substantially related to a legitimate State interest. It isher contention that Whistler does not apply here because the plaintiffs in Whistler

were requesting that an administrative orderbe declared unlawful, and in this case appellant is not challenging the legality of the regulation, but rather is seeking compensation under the Fifth Amendment. The presumption of validity spoken of in Whistler refers to thegeneral rulethatall legislative enactmentsarepresumed valid and the burden of proving their invalidity is on the plaintiff. Reeves v. Ille Electric Company (1976), 170 Mont. 104, 109, 551 P.2d 647,650. Thisprinciple is equally applicable in caseswhere the legislation in issue is an exercise of thepolice power, as in this case. Goldblatt v. Hempstead (1962), 369 U.S. 590, 596, 82 S.Ct. 987, 991, 8 L.Ed.2d 130, 135. Therefore, this presumption is indeed applicable to the land-use regulation before us. Appellant's argument that appellant is not seeking a declaration that the regulation is invalid, as was the situation inWhistler, appears tobe anattempttodistinguishWhistlerbased solely on the fact that appellant is seeking a different remedy. Ifa regulation is notproperly invokedunder thepolicepower and is found to constitute a taking, the remedies available to the government include abandoning its position and discontinuing theregulation or compensating the landowner for the taking. First Lutheran Church v. Los Angeles County (1987), 482 U.S. 304, 317, 107 S.Ct. 2378, 2387, 96 L.Ed.2d 250, 265. It is when the government insists on retaining a regulation notwithstanding the fact it constitutes a taking that compensation will be required. Appellant is requesting this latter remedy and appears to have no interest in seeking to have the regulation declared invalid. Appellant isnevertheless challengingtheregulationonthegrounds of an unconstitutional taking, and requesting compensation as a remedy, rather than declaring the regulation invalid, cannot serve to distinguishWhistler. The burden of proof lies with appellant and appellant cannot expect to shift this burden of proof over to the county by merely requesting a different remedy. A review of the record shows the evidence supports a finding that the regulation is substantially related to the legitimate State interest of protecting public health and safety. Requiring a reasonable distancebetween sewage drain fields and the 100-year floodplain in order toallowadequate soil cleansing of the sewage prevents the public from the endangerment of sewage contaminants. The testimony supported a conclusionthat 100 feetwas a reasonable distance. In the event of a 100-year flood this regulationhelps make certain the river will still be adequately protected from septic systems that comply with theseregulations. It isappellant who has failed to show that some distance less than 100 feetwould be just as effective in cleansing the sewage. The facts here as applied to the standard to be met indicate a clear substantialrelation to the interest of preventing water contamination. Appellant'scontention that current regulationsdonotprotect the public from sewage contamination in any event, and therefore, the enforcement of the regulation cannotpossibly serve to advance the State interest in public health, is unpersuasive. Two wrongs have never made a right and do not do so now. The fact that contaminantsmay currently be entering the river does not prevent the county from initiating measures to help retard and attempt to eventually stop these problems. Appellant argues that the regulation in question has failed to satisfy the second part of the standard aswell. Specifically, appellant contends that the diminution in value of the property from $75,000to $25,000,clearly meets the constitutional standard of loss of economically viable use. Appellant cites Knight v. City of Billings (1982), 197 Mont. 165, 642 P.2d 141, in support of her argument that diminution in value of two-thirds is of sufficient constitutional magnitude to constitute a taking. However,past decisions thathave found landuse regulations substantially related to the State interest of public health, safety, and general welfare have rejected the argument that diminution in property value by itself establishes

a taking. Penn Central, 438 U.S. at 131, 98 S.Ct. at 2663, 57 L.Ed.2d at 653. Diminutions invalue of amountsmuch greater than the two-thirds found here have been held not to constitute a taking. See Euclid v. Ambler Realty Co. (1926),272 U.S. 365, 47 S-Ct.114, 71 L.Ed. 303; Hadacheck v. Sebastian (1915), 239 U.S.394, 36 S.Ct. 143, 60 L.Ed. 348. The issue of economic viability must be resolved by focusing on the remaininguse available to the landowner and the nature of the interference with the overall rights in the property, in addition to any reduction in value. Keystone Coal, 480 U.S. at 497, 107 S.Ct. at 1248, 94 L.Ed.2d at 496. In a careful reading of Knisht, it is evident that the conclusion reached in that casewasbased on consideration of these other factors, not solely on the 20 to 30 percent reduction in property value that had occurred. In view of these additional factors appellant fails to show she has been deprived of the economically viable use of her property. The evidence indicates appellant is still able to utilize theproperty for thepurposes originally intended, that of building home in which to retire, although not as near the river

as appellantwould have liked. The evidence also revealsthe fact that other options are available to appellant. A mounded septic system could be constructed which would allow the appellant more discretion in a building site. The 100-foot setback rule apparently does not apply if a four-foot vertical separation can be achieved between thebottom of thedrain field and the 100-year flood elevation. This vertical separation can be created through

a mounded system. We hold that the public interest involved here outweighs the encroachment upon appellant's property. As was stated in Pennsylvania Coal Co. v. Mahon (1922),260 U.S. 393, 413, 43 S.Ct. 158, 159, 67 L.Ed. 322, 325:

### Governmenthardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law. As long recognized, some values are enjoyed under an implied limitation and must yield to the police power. The landuseregulationin questionhasbeen properly invoked under the police power of the State. Affirmed.

We concur: I



# 1 1 Justices

### Justice John C. Sheehy (retired, but called to participate) dissenting: This is a lltakingll case; that is, the issue on appeal is whether theplaintiff'sproperty has been inversely condemned for

a public use, which requires the payment to plaintiff of just compensation under federal and state constitutions. As the state and local regulationsare applied in this case, I 

### find a ''takingWof private property by thepublic has occurred, and so I

### dissent. There isno dispute as to the damages done to theplaintiffIs property. The findings of the District Court (No. 18) 

### show that

''plaintiffhas suffered damages toherproperty of apermanent and irreparable nature by means of the diminution of value of the property,based upon fairmarket value, in the sum of $50,000.00.11 These damages,theDistrictCourt found,resulted fromtheadoption and imposition on plaintiff's property of the limitations and servitude of the regulations. Thedamages representapproximately two-thirds of the fairmarket value ofplaintiff'sproperty without the servitude and limitations. Such damages must be compensated by the public authority unless, as the majority say, (1) 

### the land-use regulation is substantially related to the governmental interest of protecting the public health, and (2) 

### the regulation utilizes the least restrictive method to achieve that end without denying the owner

### economically viable use of the land. The regulation, and its applicationhere, do not meet either prong of the standard. The District Court founded its decision on a finding of fact thattheactivityprohibited, i.e., a septicsystemwithin 100 

### feet of the 100-foot flood plain, would be injurious to the health and safety of the community. The evidence in this record is completely lacking that the regulation (1) 

### is substantially related to the state's interest inprotecting public health, and (2) 

### is the least restrictivemethod to attain that end. The original regulation (the 1975 rules) required the septic system to be set back 100 feet from the stream. This provision agreedwith the later-adopted 1980Environmental protectionAgency DesignManual. Thatmanual setsout a 100-footdistance fromwater supply sources such as wells, surfacewater, springs, and so on, but makes no reference at all to 100-year flood plain boundaries. In other words, the EPA did not recognize a need for a set-back from flood plain boundaries. To justify such a rule, the record should show some degree of scientific study on which to base the need or a health basis for the floodplain set-back. None appears here. All other 100-foot space rules are related to some source of potable water. Adoption of a rule relating to a theoretical boundary, without reference to any studies showing danger to waters, is arbitrary and capricious. No issue of public health is presented.

### To escape the import of the lack of scientific basis for the 100-foot floodplain rule, themajority rely on the "presumption1' that all legislative enactmentsarevalid. As one judge has said, presumptions are the bats of the law; they disappear in the sunlight of evidence to the contrary, or the showing of no foundation for their existence. Nor is lljudicial deference" to the legislatingbody any excuse 

### for upholding a baseless regulation. Courts should jealously insist on the right to examine judicially the actions of public bodies without anydeferment or subordinationof judicial function to other branches of government. This dissenter was the author of the opinions in Knight 

### v. City of Billings (1982), 197 Mont. 165, 642 P.2d 141, and Western Energy Co. v. Genie Land Co. (1987), 227 Mont. 74, 737 P.2d 478. The majority attempt to distinguish Kniqht,where the plaintiffs suffereda 30

### percent loss inthevalue of their properties, on the basis that here the plaintiff still has a possibility of use for her property. Knisht cannot be so distinguished, for even there the plaintiffs still had use of their properties as residences. Here, theplaintiff is severely limited in theuse of her property under the 100-foot flood plain rule. Her only possibility is to build 1200 to 1400 feetback from the river, or to undertake very expensive devices for sewage disposal. Western Energy is not in accordwith thisdecision. Western Enerqvwasnot a lltakingll case.

### It related to the due process implication of the regulation involved. I find no evidence in the record which translates to a basis that the 100-foot flood plain set-back rule is substantially related to the public health. Under the record here, that rule couldhave been set at 30 

### feet or amile. Either is as justifiable here as the 

### 100-foot rule. No studies support the regulation. I 

### therefore dissent and would reverse and remand for judgment in favor of the plaintiff.

/" 

### Justice I

,/