Opinion ID: 900919
Heading Depth: 1
Heading Rank: 4

Heading: Permanent or Temporary Taking

Text: [¶ 24.] Takings jurisprudence, having developed over three-quarters of a century, is still in a state of flux. [5] Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, ___ U.S. ___, 122 S.Ct. 1465, 152 L.Ed.2d 517 (2002); Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015, 112 S.Ct. 2886, 2893, 120 L.Ed.2d 798, 812-13 (1992). Serious discussion of the equities in takings cases must begin with Justice Holmes's maxim that, while property may be regulated to a certain extent, if regulation goes too far, it will be recognized as a taking. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 160, 67 L.Ed. 322, 326 (1922). The problem, of course, is to know what is too far in any given case. Generally, the U.S. Supreme Court has avoided a formulaic answer to this question, opting instead for essentially ad hoc, factual inquiries. Penn Central Transportation Co. v. New York City, 438 U.S. 104, 124, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631, 648 (1978). [¶ 25.] The Supreme Court has, however, described at least two discrete categories of regulatory action as compensable without the case-specific inquiry into the public interest advanced in support of the restraint. The first encompasses regulations that compel property owners to suffer a physical `invasion' of their property.... The second is where regulation denies all economically beneficial or productive use of land. Lucas, 505 U.S. at 1015-16, 112 S.Ct. at 2893, 120 L.Ed.2d at 812-13. In its most recent case, Tahoe-Sierra, the Court reaffirmed the case-specific analysis of Penn Central as the default procedure. [T]he categorical rule in Lucas was carved out for the `extraordinary case' in which a regulation permanently deprives property of all value; the default rule remains that, in the regulatory takings context, we require a more fact-specific inquiry. ___ U.S. at ___, 122 S.Ct. at 1484, 152 L.Ed.2d at ___ (emphasis added). [¶ 26.] In the case before us, neither of the Lucas exceptions applies: there was never any question of the State's physically invading SDDS's property, nor was SDDS denied all economically beneficial or productive use of its land, since SDDS purchased the Lonetree site as rangeland, later sold it as such for $53,000, and could have so used it until a final decision on the proposal to use the site as a landfill had been made. Rather, we have to consider a circumstance in which the State unconstitutionally denied the exercise of a property right legally granted to SDDS, namely, the right to use the Lonetree site as a landfill. As we held in SDDS V, the principle of stare decisis mandates that we not reopen the question whether the voters' action in precluding SDDS from developing the site did in fact constitute a taking: the Eighth Circuit already decided that question in the affirmative. With that matter settled, we have before us a more limited question: should this case be remanded for a new trial, in accordance with the trial court's order, because the jury instructions on damages were flawed? [¶ 27.] Courts have arrived at no single measure for damages to be paid in compensation for a temporary taking. In San Diego Gas & Electric Co. v. City of San Diego, Justice Brennan explained that the Constitution does not embody any specific procedure or form of remedy that the states must adopt: The Fifth Amendment expresses a principle of fairness and not a technical rule of procedure enshrining old or new niceties regarding `causes of action' when they are born, whether they proliferate, and when they die. U.S. v. Dickinson, 331 U.S. 745, 748, 67 S.Ct. 1382, 1384, 91 L.Ed. 1789, 1794 (1947). Cf. U.S. v. Memphis Cotton Oil Co., 288 U.S. 62, 67-69, 53 S.Ct. 278, 280, 77 L.Ed. 619, 622-23 (1933). The States should be free to experiment in the implementation of this rule, provided that their chosen procedures and remedies comport with the fundamental constitutional command. 450 U.S. 621, 660, 101 S.Ct. 1287, 1306, 67 L.Ed.2d 551, 578 (1981) (Brennan, J., dissenting). The just compensation for a permanent taking is generally the fair market value of the property taken, whereas the recovery for a temporary taking is generally the rental value of the property. Bass Enterprises Production Company v. United States, 133 F.3d 893, 895 (Fed.Cir.1998) (Bass II) (citing Yuba, 821 F.2d at 641 (Fed.Cir.1987)). Just compensation for a temporary taking does not take into account the fair market value of the property either before or after it is taken. Bass Enterprises Production Co. v. United States, 48 Fed.Cl. 621, 623-24 (2001) (Bass IV) (citation omitted). Thus, as a preliminary matter, we have to determine whether the taking was permanent or temporary. [6] [¶ 28.] In Bass II, the Federal Circuit considered an appeal of a Federal Claims Court decision, Bass Enterprises Production Co. v. United States, 35 Fed.Cl. 615 (1996) (Bass I), that Bass had suffered a permanent taking in a situation in which Bass had been prevented for forty-five months from exercising its rights to oil and gas production from a federal lease. Bass had held the lease since 1952, but had not attempted to make use of it until the early 1990s. Id. at 616. In the meantime, the United States had condemned the surface of the leased land to ensure the possibility of constructing the Waste Isolation Pilot Plant (WIPP), a facility to be located 2000 feet below the surface in an ancient salt formation. Id. Then, in 1992, Congress passed the WIPP Land Withdrawal Act to obtain land from the public domain for waste disposal and to establish a regulatory framework to govern the site. The Act generally prohibits drilling through and underneath the site from outside the withdrawn lands. It exempts rights existing at the time of withdrawal. Plaintiffs' existing rights were not to be affected unless the Environmental Protection Agency [EPA] determined that it had to acquire plaintiffs' lease in order to comply with final disposal regulations or with the Solid Waste Disposal Act. Id. As of the date of Bass II's issuance (January 7, 1998), the EPA had not made a final determination. Nonetheless, the Bass II court concluded that any taking here is not a permanent taking. Congress has expressly established a mechanism for condemning the leases at issue if deemed necessary to ensure the integrity of the WIPP facility. Such events are statutorily mandated to occur. Thus, in the interim, the denial of the permits is at best a temporary taking. The statutorily mandated end to the regulatory process will result in a decision whether or not to condemn the leases. Although the precise date is unknown, it is clear that such a decision is required to be made. Thus, we conclude that the denial of the drilling permits at this time does not constitute a permanent taking. Bass II, 133 F.3d at 895-96. The Bass II court then remanded the case to determine whether a temporary taking had occurred. [¶ 29.] In our case, the regulatory and legal struggle over SDDS's right to use Lonetree as a landfill came to an end with the Lonetree III court's ruling that the popular veto of SB 169 by referendum was unconstitutional. [7] Suppose, however, that the Lonetree III court had ruled the veto constitutional. Clearly, if the Lonetree III court had so ruled, SDDS would have suffered a loss of some sort. In First Evangelical, the Supreme Court defined `temporary' regulatory takings [as] those regulatory takings which are ultimately invalidated by the courts. 482 U.S. 304, 310, 107 S.Ct. 2378, 2383, 96 L.Ed.2d 250, 260-61 (1987). Taken together, the Supreme Court's definition of temporary and the condition of our hypothetical suffice to confirm that SDDS would not have suffered a temporary taking: its right to make use of its permit would not have been postponed for a definite period of time, but invalidated for the foreseeable future. Indeed, the distinction between `permanent' and `temporary' takings refers to the nature of the intrusion and not its temporal duration. Skip Kirchdorfer, Inc. v. United States, 6 F.3d 1573, 1582 (Fed.Cir.1993). Under the condition of our hypothetical, then, SDDS would have suffered something other than a temporary taking. And although we do not, of course, have to decide the measure of damages under the hypothetical condition, [t]he just compensation for a permanent taking is generally the fair market value of the property taken.... Bass II, 133 F.3d at 895. [¶ 30.] Interestingly, the Eighth Circuit used fair market value in calculating the damages in a situation where the plaintiff was prevented from exercising a vested right to continued light industrial zoning on land that a county government had rezoned to preclude that use of the property. Nemmers v. City of Dubuque, Iowa, 716 F.2d 1194, 1197 (1983) (Nemmers I). Although in a subsequent case, the Eighth Circuit denominated the loss Nemmers suffered a temporary taking between the date of the taking (October 22, 1980) and the date of the district court's entry of judgment (April 30, 1980), Nemmers remained unable to exercise his vested right because the County retained the new zoning that he had challenged. Nemmers v. City of Dubuque, Iowa, 764 F.2d 502 (1985) (Nemmers II). As in the situation that would ensue under our hypothetical condition, the plaintiff in the Nemmers cases could not exercise his right for the foreseeable future. It is, of course, not our intention to mince words by claiming that the taking Nemmers suffered was permanent, but it is relevant to point out that, had the Eighth Circuit found the result of the referendum to have been constitutional, SDDS would have more closely resembled the plaintiff in the Nemmers cases than the plaintiff in the Bass cases, since, for the foreseeable future, SDDS could not have used the Lonetree site as it had planned. [¶ 31.] Before we decide whether SDDS suffered a temporary or a permanent taking, we have to consider the effect of the Lonetree IV court's ruling that South Dakota may not relitigate the question whether the referendum was the proximate cause of SDDS's dissolution. 97 F.3d at 1042. SDDS would have us read this holding of the Eighth Circuit and various dicta of that court to mean that a facility ... [was] unconstitutionally destroyed and no longer existed. We reject that interpretation. The Eighth Circuit was concerned to dismiss the State's argument that, because the [BME] permit had been revoked, the referendum had no impact, discriminatory or otherwise, on Lonetree. Id. at 1039. The court's rebuke was indeed sharp: if this court were to ignore South Dakota's intermediary actions and look only to the result, it would reward South Dakota for acting unconstitutionally. Moreover, the administrative permit was voided [because of] a procedural defect, not because of any finding that the Lonetree facility was environmentally dangerous. Id. (quoting Lonetree III, 47 F.3d at 270 n. 10). The court's point was that it was the vote on the referred question, not the voiding of the permit (especially since that voiding was on procedural rather than substantive grounds) that was the proximate cause of SDDS's dissolution. However, in the present context, the State's hypertechnical defense and the court's common-sense rebuke are both beside the point. [¶ 32.] What matters is that the Eighth Circuit found only that the referendum effectively vetoed SDDS's proposed use of the Lonetree site as a landfill. Supra, n7. Indeed, SDDS could reapply for the administrative permit, though, to be sure, the referendum at the very least made the Lonetree project more difficult and expensive to accomplish. Lonetree IV, 97 F.3d at 1039 (quoting Lonetree III, 47 F.3d at 270 n. 10). Thus, the Eighth Circuit concluded, not once, but twice, that SDDS could reapply for a permit and proceed with its construction and operation of the Lonetree site. The deduction is inescapable that no action of the State destroyed SDDS as a legal entity. The fact that the referendum was the proximate cause of SDDS's dissolution is evidence only of the house-of-cards nature of SDDS's financing. By contrast, the fact that Bass did not go out of business as a result of an even longer temporary taking of its property rights is evidence of the reverse. Therefore, we hold that SDDS suffered a temporary, not a permanent, taking of its right to construct and operate a landfill on the Lonetree site.