Opinion ID: 220720
Heading Depth: 2
Heading Rank: 1

Heading: fishery leases

Text: Next we examine Plaintiffs' claims with respect to the shore fishery leases. The Alaska Supreme Court held that leases of submerged land, of the kind that two Plaintiffs in this case hold, confer a limited property interest in submerged land, although that interest does not include the right to harvest fish free of state regulation. Vanek, 193 P.3d at 294-95. We need not decide whether the state impaired Plaintiffs' limited property interest under the leases, [7] though, because Plaintiffs contractually waived any takings challenge to the regulations at issue. The Supreme Court has instructed that a person may agree contractually, in advance, to accept without compensation what otherwise would be a compensable taking under the Fifth Amendment. In United States v. Petty Motor Co., 327 U.S. 372, 374, 66 S.Ct. 596, 90 L.Ed. 729 (1946), tenants sued the federal government for temporarily condemning a building for governmental purposes during the term of the tenants' lease of the building. One of the tenants had signed a written lease agreement with the owner, which included a clause for its termination on the Federal Government's entry into possession of the leased property for public use. Id. at 375, 66 S.Ct. 596. The Supreme Court held that the foregoing clause extinguished any claim that the tenant otherwise would have had against the United States under the Takings Clause: The [tenant] had contracted away any rights that it might otherwise have had.... With this type of clause, at least in the absence of a contrary state rule, the tenant has no right which persists beyond the taking and can be entitled to nothing. Id. at 376, 66 S.Ct. 596. Although the facts in Petty Motor Co. concerned the extinguishment of an interest in the lease, rather than the extinguishment of a right to compensation during the pendency of the lease, that distinction does not suggest a different result, nor does it suggest that a different rule would apply here. Indeed, application of the rule in the present context makes sense, because the Takings Clause does not prevent the government from taking private property for public use; rather, the Takings Clause requires compensation when such a taking occurs. [8] Compensation can be fixed in advance, or it can be waived, by contract. Applying the Petty Motor Co. principles here, we conclude that Plaintiffs expressly waived their right to mount a Takings Clause challenge to the Board's regulations. See also Alamo Land & Cattle Co. v. Arizona, 424 U.S. 295, 304, 96 S.Ct. 910, 47 L.Ed.2d 1 (1976) (recognizing that [a] number of factors... could operate to eliminate the existence of compensable value in [a] leasehold interest, including when the statute authorizing the making of the lease provided... that any lease of trust land was revocable at will by the State without compensation, or when a provision of [that] kind[is] included in the lease); United States v. Right to Use & Occupy 3.38 Acres of Land, 484 F.2d 1140, 1144 (4th Cir.1973) (holding that a lessee waived her right to just compensation for a government taking through a valid condemnation clause written into her lease). Plaintiffs' lease agreements run for a 10-year term and call for payment of $300 per year. The third unnumbered paragraph of each agreement provides: This lease is subject to all applicable state, federal, and municipal statutes, regulations, and ordinances in effect on the effective date of this lease, and insofar as is constitutionally permissible, to all statutes, regulations, and ordinances placed in effect after the effective date of this lease. A reference to a statute, regulation, or ordinance in this lease includes any change in that statute, regulation, or ordinance, whether by amendment, repeal and replacement, or other means. This lease does not limit the power of the State of Alaska, its political subdivisions, or the United States of America to enact and enforce legislation or to adopt and enforce regulations or ordinances affecting, directly or indirectly, the activities of the lessee or its agents in connection with this lease or the value of the interest held under this lease. In case of conflicting provisions, statutes, regulations, and ordinances take precedence over this lease. This lease shall not be construed as a grant or recognition of authority for promulgation or adoption of municipal ordinances that are not otherwise authorized. (Emphasis added.) The next paragraph of each agreement, numbered paragraph 1, states that the lease is issued under the authority of Alaska Statutes section 38.05.082. As we quoted earlier, that statute provides that a lease of submerged land conveys no interest... in the fish in the water. Id. § 38.05.082(e). Further, paragraph 11 of Plaintiffs' lease agreement sets out provisions related to condemnation of all or part of the physical area of the leasehold, or the improvements on it, by means of eminent domain. If eminent domain proceedings result in a reduction of 30 percent or more of the ground area of the leasehold, the lessee may elect to terminate the lease. Finally, each of Plaintiffs' lease agreements provides (in numbered paragraph 26) that the lessee shall comply with all existing and later-enacted environmental laws, at the lessee's own expense. Read together, those provisions of Plaintiffs' leases show that the parties clearly distinguish between condemnation of the physical location covered by the lease (or condemnation of tangible improvements thereon), which results in compensation to the lessee, and regulation of the lessee's activities ... in connection with th[e] lease, which does not. Fishing is just such an activity in connection with the lease. Stated another way, under the terms of their contractual arrangement, the lessees intended to preserve their right to receive compensation for a taking of the physical area of the leasehold but not for a regulatory taking of activities conducted at the leased location. The lease plainly exempts regulatory takings of the kind challenged here from the requirement that Plaintiffs receive just compensation. Moreover, the very small amount of the annual lease payment suggests that the lessees took the risk that more stringent regulation of their fishing activities in the future might reduce the commercial value of their leases. In summary, we hold that Plaintiffs contractually waived their right to challenge the regulations when they signed their lease agreements. For that reason, we need not and do not analyze this claim on the merits.