With the economy turning around, developers are beginning to feel more comfortable in starting new projects and lenders are more willing to lend on commercial development. New commercial development impacts local zoning regulations, which, may result in federal lawsuit when a local community allows a lawful use to proceed. Late last year, the United States Supreme Court issued a helpful unanimous decision recently favoring property owners that addresses the law of “takings” under the Fifth Amendment. This case is significant for property owners, developers and lenders as it is the first successful takings case before the Court in several decades.
In Arkansas Game & Fish Comm'n v. United States, 133 S. Ct. 511 (2012) https://www.supremecourt.gov/opinions/12pdf/11-597_i426.pdf the Arkansas Game and Fish Commission (Commission) brought suit against the United States (US) seeking damages for what it claimed was a taking of land by flooding which resulted in damage to the character and usage of the affected land.
The Commission owns and manages the Dave Donaldson Black River Wildlife Management Area (Area). The Area is made up of approximately 23,000 acres of land along the Black River. The Area is home to several different species of hardwood oak along other plant and animal species. From 1993 to 2000, the U.S. Army Corps of Engineers authorized periodic flooding of the Area which “extended into the peak growing season for timber on forest land.” The repeated flooding “damaged or destroyed more than 18 million board feet of timber and disrupted the ordinary use and enjoyment of the Commission’s property.” The Commission objected to the flooding multiple times on account of the aforementioned damage which was done to the Area. The US finally ceased the flooding practice in 2001.
The Fifth Amendment provides in relevant part: “[N]or shall private property be taken for public use, without just compensation.” This is commonly known as the “Takings Clause.” The Commission brought suit against the US alleging that the aforementioned flooding of the Area constituted a taking for which it was entitled to just compensation. The US defended by arguing that “government-induced flooding can give rise to a taking claim only if the flooding is ‘permanently or inevitably recurring’” which was not true here. This argument would essentially create a categorical exemption from Takings Clause scrutiny for temporary government-induced flooding. The Court of Federal Claims found for the Commission while the Federal Circuit reversed in favor of the US.
Justice Ginsburg wrote the opinion of the Court. The Court observed that there is no “magic formula” in determining when a taking has occurred and that each case must be evaluated in light of its own unique facts. The Court then went on to say that there have been several times where “regularly recurring flooding gave rise to a takings claim.” The Court then recited precedent supporting the proposition that temporary takings can be compensable depending on the circumstances. Following this reasoning, the Court declined to create an exception to the Takings Clause for temporary government-induced flooding. In doing so, the Court reversed the Federal Circuit Court and remanded the case for further proceedings.
The Court further notes that the argument of the US, based largely on the Supreme Court case Sanguinetti v. United States, 264 U.S. 146 (1924), tried to draw a bright-line rule from an opinion that imposed none. The Court allowed that the Sanguinetti case had found no taking on its own set of facts, but Justice Ginsburg pointed out that even if the Sanguinetti Court had meant to impose a rule (which she believed it did not), “that limitation has been superseded by subsequent developments in [Supreme Court] jurisprudence.” Perhaps the most telling comment from the Court was: “We resist reading a single sentence unnecessary to the decision as having done so much work.”
The lack of a dissenting opinion in this case is encouraging in that none of the justices were willing to create a bright-line rule exempting temporary government-induced flooding from Takings Clause.