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To members of the International Academic Association on Planning, Law, and Property Rights:

This is the first time I have reduced to writing the ideas in this essay infused with more muse than scholarship. I am pleased to have the opportunity to surface my thoughts at your meeting in Portland, Oregon. I not only welcome but strongly encourage your feedback and criticism in order that I might learn that I have unknowingly reinvented the wheel that you have already seen turn elsewhere, abandon the idea as unworkable or foolish, or refine it to the point where I might take it to a wider audience. My direct dial telephone number is 860-275-8228 and my email is dmerriam@rc.com.

GETTING PAST “YES OR NO”

LINKING POLICE POWER DECISION-MAKING WITH JUST COMPENSATION

Dwight Merriam, FAICP

Land-use and environmental decision-making under the police power is usually a zero-

sum game. When neighbors complain about the negative externalities of a development

project, public decision-makers end up weighing the police power objectives of

promoting the public health, safety, and general welfare against the private losses,

which may be substantial, yet small relative to the public benefit. Such decision-making

characterizes many types of traditional developments, the siting of wind farms,

development of low-level radioactive waste sites, and virtually all other activities with

adverse off-site impacts, but which are land uses essential to the greater good. The same

problem is inherent in public and private nuisance actions, trespass, and protective

legislation, such as right-to-farm laws.

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There has to be a better way to get to a more equitable result in terms of aligning those

who benefit from public regulation with those who are burdened. I have been thinking

about this problem for many years and I propose a system by which those who suffer

negative externalities would be able to make their claims to be compensated with

funding provided by the beneficiaries of the development. In terms of public decision

making, officials would no longer need to consider, or be biased in their decision-

making by the economic impacts on surrounding property owners, but would be able to

make their determinations solely on the basis of whether the use is appropriate for the

site and in the public interest.

When I step back from the thoughts I will share with you today, my own self-critique

takes me in two different directions. I am afraid my musings will be received with the

same serious consideration as Jonathan Swift's satirical essay written and published

anonymously in 1729, "A Modest Proposal for Preventing the Children of Poor People in

Ireland from Being a Burden on Their Parents or Country, and Making Them Beneficial

to the Publick.” Swift was Irish, and although he preferred to live in England, he

directed much of his writing to the struggle for Ireland against the English hegemony.

In a letter to Alexander Pope in the same year he published “A Modest Proposal” he

wrote, "Imagine a nation the two-thirds of whose revenues are spent out of it, and who

are not permitted to trade with the other third, and where the pride of the women will

not suffer them to wear their own manufactures even where they excel what come from

abroad: This is the true state of Ireland in a very few words."1

I had not thought about “A Modest Proposal” for a long time nor read it since I was in

high school a half-century ago. In the rereading recently in preparation for this talk I

must say enjoyed it even more than I remembered it. You will recall that his seemingly

1 http://andromeda.rutgers.edu/~jlynch/Texts/modest.html;

http://www.litencyc.com/prize/Essays2010/essay1.php

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reasoned proposal, with six considered arguments for it, suggests the poor should

simply eat their children.2 When you hear what I suggest as a new approach to solve

this disconnect between benefit and burden, you may think it is palatable as Jonathan

Swift's proposal. To be clear, I am serious not satirical.

My other thought, in this Woody Allen-ish self-critique, was whether I might be trying

to take us all to the brink of, shall I call it in the vernacular of the most current crisis in

Washington, a new "takings cliff.” It could be that in proposing a new formulation to

improve our public land-use decision making that I might be instigating more mischief

than amelioration. What I propose will not cost society more in dollars and cents than

the present way of doing business, though it has more overhead. It does have dramatic

redistributive effects and for that reason may be maligned by those who currently are

winners in the land use wars. Martin Luther was right as he interpreted Exodus 21:29

and 31 in defending himself at the 1521 Diet of Worms – it does matter whose ox is

gored.3

2 “I have been assured by a very knowing American of my acquaintance in London, that a

young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricassee or a ragout.

I do therefore humbly offer it to public consideration that of the hundred and twenty thousand children already computed, twenty thousand may be reserved for breed, whereof only one-fourth part to be males; which is more than we allow to sheep, black cattle or swine; and my reason is, that these children are seldom the fruits of marriage, a circumstance not much regarded by our savages, therefore one male will be sufficient to serve four females. That the remaining hundred thousand may, at a year old, be offered in the sale to the persons of quality and fortune through the kingdom; always advising the mother to let them suck plentifully in the last month, so as to render them plump and fat for a good table. A child will make two dishes at an entertainment for friends; and when the family dines alone, the fore or hind quarter will make a reasonable dish, and seasoned with a little pepper or salt will be very good boiled on the fourth day, especially in winter.” http://andromeda.rutgers.edu/~jlynch/Texts/modest.html

3 http://law2.umkc.edu/faculty/projects/ftrials/luther/lutheraccount.html

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The U.S. Supreme Court's Takings Case Docket

Before I turn to some of the historical basis for the takings compensation problem for

which I want to suggest a new approach, let us look at the U.S. Supreme Court's takings

case docket for this term. This is the first year since 2005 that the court has taken more

than one takings case. It has three, just as it did in 2005. You may recall that 2005 was

the year of the notorious Kelo eminent domain decision.4 It was also the year the court

decided Lingle v. Chevron,5 the most readable of takings decisions ever and Justice

O'Connor's last opinion written for the Court. I recommend it to anyone interested in

getting a fix on the Court's view of its takings jurisprudence. It was also the year that the

court decided San Remo Hotel v. City & County of San Francisco, 6 which is absolutely

the very last takings case you should ever read; in fact you should never read it, because

it is among the most opaque treatments of the exceedingly arcane question under the

full faith and credit statute of whether a takings claimant, having lost a takings claim

under state law in state court, can pursue that very same claim under federal law in

federal court.

Of this term’s three takings cases, as of this writing one has been decided, a second has

been argued but not yet decided, and a third is still being briefed and virtually no one

seems to be talking about it, perhaps because it has to do with some Great Depression-

era law regarding the sequestering of raisins to support market prices, mostly in

California because that is where most raisins are produced. Taking a look at these three

cases, the issues they address, how they came to the Court, and where the Court has

ended up or will likely be when it decides these cases illustrates what a mare's nest the

takings issue and just compensation remedy have become, and how the judicial

4 Kelo v. City of New London, 545 U.S. 469 (2005)

5 Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005)

6 San Remo Hotel v. City & County of San Francisco, 545 U.S. 323 (2005)

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decision-making doctrines and compensation approaches have shaped federal, state,

and local planning and administrative decision-making in ways that are suboptimal.

I have used the term "mare's nest" a couple of times before in writing about messy

problems and the copy editors have come back with "Dwight, where did you get this

wacko expression?" Of course, I turn to my Merriam-Webster Dictionary for the

definition that is first that of "a false discovery, illusion, or deliberate hoax." The second

definition, completely apt for what we have with compensation in takings claims, is "a

place, condition, or situation of great disorder or confusion." Merriam-Webster gives us

this example of the use of the term: "the lack of planning had resulted in the city’s

evacuation being a mare's nest of epic proportions."

The term apparently was first used in 1576 by Robert Peterson in a translation of the

Italian John Della Casa’s Galateo: “Nor Stare in a mans face, as if he had spied a mares

nest.”7 This goes to the first definition having to do with an illusion, because of course

mares do not have nests.

The second definition of confusion and a muddled state, which has no connection with

the first, arose in the mid-19th century and was well established by the 1920s when

Agatha Christie used both of the meanings in her story, The Mysterious Affair at Styles:

a misunderstanding... "In my opinion the whole thing is a mare's nest of

Bauerstein's! ... Bauerstein's got a bee in his bonnet. Poisons are his hobby, so of

course he sees them everywhere."

and, a muddle... "A pretty mare's nest arresting him would have been."8

I am so pleased that I finally get the use "mare’s nest" because the copy editors have yet

not had the chance to exercise the delete key on my work. What a perfect term it is to

7 http://www.phrases.org.uk/meanings/mares-nest.html

8 http://www.phrases.org.uk/meanings/mares-nest.html

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define the unfortunate current state of the takings issue, the problems in providing just

compensation, and the dysfunctional administrative decision-making we have all

experienced. Indeed, as I shall argue, the present determination of what is a taking,

what is a compensable property interest, and how to make decisions is somewhat

illusory and a hoax, and unnecessarily muddled.

The U.S. Supreme Court handed down its decision on December 4, 2012 in Arkansas

Game & Fish v. U.S.9 holding that, well, yes, maybe, property owners would have a

takings claim for compensation against the federal government if the federal

government intentionally flooded their property causing some degree of damage in the

face of reasonable investment-backed expectations and with the balance between the

government’s interest and those of the private sector tilting in the direction of the

property owner. I do not know about you, but I am not about to buy, at least for any

substantial price, any futures in what Arkansas Game & Fish will recover on remand

after reading this final, definitive proclamation by the court:

We rule today, simply and only, that government-induced flooding temporary in

duration gains no automatic exemption from Takings Clause inspection. When

regulation or temporary physical invasion by government interferes with private

property, our decisions recognize, time is indeed a factor in determining the

existence vel non of a compensable taking. … Also relevant to the takings inquiry

is the degree to which the invasion is intended or is the foreseeable result of

authorized government action. … So, too, are the character of the land at issue

and the owner’s “reasonable investment-backed expectations” regarding the

land’s use. … Severity of the interference figures in the calculus as well.

Were Neil Armstrong still live and had picked up a little part-time employment as a

commentator on U.S. Supreme Court decisions, he might have said of this holding:

9 http://www.supremecourt.gov/opinions/12pdf/11-597_i426.pdf

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"one small step for property owners, one more bumbled attempt to add some clarity to

takings law."

Back in the late 1940s, the U.S. Army Corps of Engineers built a dam at Clearwater

Lake way up in Missouri to help control floods and potentially to protect croplands

while also providing an opportunity to enhance downstream habitat for waterfowl.

Over 100 miles downstream to the south along the banks of the Black River in

northeast Arkansas, the Arkansas Game & Fish Commission assembled 23,000 acres in

the David Donaldson Black River Wildlife Management Area.

Following three years of study after the dam was completed, the U.S. Army Corps of

Engineers adopted a definitive plan for managing the discharges of water at the

Clearwater Dam. This Water Control Manual, similarly developed for all of the

projects of the same type, provides as to the Clearwater Dam for seasonally varying

release rates, and possible deviations from the plan to meet agricultural, recreational,

and other purposes.

Everything was copacetic for 40 years more or less. The downstream farmers grew

their crops, the Corps released water during the non-growing season in the late fall,

winter and early spring which made all the waterfowl happy and welcome, and

provided hunters with lots of opportunities to pursue their sport. Importantly, the

Wildlife Management Area was also a timber preserve with bottomland hardwood oak

species including nuttall, overcup, and willow constituting 80% of the trees.10

These hardwood oaks do not seem to mind a little flooding now and again, particularly

during the winter when they are dormant, so long as the flooding is not sustained.

Flooding is a significant problem during the growing months of the late spring,

summer, and early fall, and the impact on the trees is worse when the flooding is

sustained because the roots are deprived of oxygen when flooded over. Too much

10 No, I never heard of nuttal or overcup trees before, either. You learn something every day.

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water for too long during the growing season damages and kills these bottomland

hardwoods.

In 1993, the Corps of Engineers began deviating from their Water Management Plan by

releasing water from the dam during the growing season at a slower rate to enable

farmers to have more time to harvest their crops. Before the deviation, there actually

were larger amounts of water released but they were in big spurts so that the water

came down into the Wildlife Management Area, flooded the oaks, but then ran off

quickly causing little or no damage to the trees. That changed, of course, when the

releases were at a slower rate which caused water to accumulate behind the dam and

resulted in a longer period of time during which water was released to eliminate that

accumulation and longer periods during which the trees were flooded.

From 1994 through 2000, the Corps continued its deviations from the Water

Management Plan, varying it some over the years and attempting to assess what the

impact was on everyone downstream, including the Wildlife Management Area. At one

point, as part of the environmental assessment process regarding these deviations, the

Corps even determined that the deviations had no significant impact.11 It reversed

course later, but by then, in the year 2000 when the Corps ceased its deviations, the

damage had been done. The Arkansas Game & Fish Commission, which had opposed

the deviations all along, ultimately sued for a taking claiming a loss of the hardware

bottomland oaks. In the flooded areas, the Commission claimed a loss of 15 to 60% of

the oaks and a severe die-back in 30 to 40% of the remaining trees, as compared to 1 to

2% mortality and die-back prior to the deviations. The Commission claimed timber

damage to 6,900 acres totaling $4.754 million, additional timber damage to 11,000

acres, 633 acres with mortality and decline above background levels for a loss of

$1.961 million, and regeneration damages of $5-$6 million. "Regeneration damages"

result from the fact that non-hardwood species take over the areas where the hardwood

11 Reply Brief of the Petitioner, March 8, 2012 http://sblog.s3.amazonaws.com/wp-content/uploads/2012/03/11-

597-Arkansas-Game-and-Fish-Commission-v.-U.S.-Reply.pdf at footnote 2.

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oaks died off making it impossible for the oaks to regenerate on their own. Foresters

must clear the areas of the invasive species and plant hardwood oaks in order to get

them to regenerate. They cannot recolonize on their own where the wetland species

have taken over.

In the Court of Federal Claims, the Commission won after a 12-day trial and, in a 61-

page opinion, Judge Lettow held that the Commission "has suffered a temporary taking

for which compensation is due." The court awarded damages for the timber of

$5,602,329.56, and regeneration damages of $176,428.34 for a total of $5,778,757.90.

The Federal Circuit in a 2-1 decision reversed solely on the ground that "the deviations

were by their very nature temporary and, therefore, cannot be 'inevitably recurring' or

constitute the taking of a flowage easement." The Federal Circuit in a 7-4 decision

denied a rehearing. There was no majority opinion. A concurring opinion argued that

a "blanket rule under which any flood-causing policy that is labeled temporary by the

government will allow the United States to avoid takings liability."

The Commission petitioned for certiorari with this question: "whether government

actions that impose recurring flood invasions must continue permanently to take

property within the meaning of the Takings Clause."

Considering these facts, what type of taking might this be? As Justice O'Connor

describes in the Lingle decision, takings may be partial regulatory takings as in the

Penn Central case,12 they may be categorical takings as in the Lucas case,13 or they may

be physical invasion takings by regulatory action as in the Loretto case.14 What the

government did here was to put into motion a physical thing -- a column of water --

which invaded the property of the Arkansas Game & Fish Commission, stayed there for

12 Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978)

1 3 Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992)

14 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)

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a while, and killed off or seriously damaged physical things, namely the bottomland

oaks. How is this any different from Mrs. Loretto getting a shoebox-size cable junction

box on the roof of her apartment building in New York City? Is water truly different

because it is water and as such can evaporate, percolate into the soil, or run off and be

gone? If it is a physical taking and the government intentionally placed it on private

property without permission, it is a per se taking and compensable without more.

It could not be a Lucas-type categorical taking because there was never any claim that

all reasonable and beneficial use of the property had been taken. If it were a Lucas-

type taking, it too would be treated as a per se taking with no further discussion other

than how much money is to be paid.

In Arkansas Game & Fish Commission, the U.S. Supreme Court held the temporary

flooding to be a possible partial, regulatory taking of the Penn Central variety requiring

consideration of the three-part test of the loss of value, the interference with

reasonable investment-backed expectations, and the balancing of the public interest

against the private burden. This case is far from over. It has been remanded back

because there are issues to be addressed given that the Federal Circuit sent the

Arkansas Game & Fish Commission packing on the narrow, single issue that there

could not possibly be a compensable taking because the flooding was not "inevitably

recurring." On remand the courts below will need to consider the preserved issues

which include “causation, foreseeability, substantiality, and the amount of damages" as

well as the application of the Penn Central three-part test.15

15 On remand, the Federal Circuit issued an order on January 29, 2013, for additional briefing on these now-unresolved issues and ended it with: "The parties are invited to consider mediation of the issues remaining in the case following the Supreme Court’s remand." It sounds like the Federal Circuit does not relish wrestling with these issues. http://www.inversecondemnation.com/files/09-5121-order.pdf

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For purposes of our discussion of a new way of thinking about takings and

compensation, what is there to take away from this decision? Here it is -- the Court

wants to avoid bright line rules for takings, except in the rare circumstances of the per

se takings of physical invasions and categorical takings of the Lucas variety:

We have recognized, however, that no magic formula enables a court to judge, in

every case, whether a given government interference with property is a taking.

In view of the nearly infinite variety of ways in which government actions or

regulations can affect property interests, the Court has recognized few invariable

rules in this area.16

I respectfully submit that the Court in Arkansas Game & Fish drives what looks on its

face to be a physical invasion taking17 into the murky swamp of partial regulatory

takings solely so that all these factors will be up for debate on remand. The Court, for

itself and all courts, wants largely unfettered discretion and relief from any rule of law

based on a bright line because fundamentally the Court, like most of us, is searching for

a better way to allocate the benefits and burdens of actions taken by the government

ostensibly in the public's interest. Let me repeat that for emphasis: because

fundamentally the Court, like most of us, is searching for a better way to allocate the

benefits and burdens of actions taken by the government ostensibly in the public's

interest. Justice Ginsburg gives comfort to those wanting the room to find an equitable

way out by promising no big shifts in the law:

16 At 6-7.

17 The Pacific Legal Foundation, a pro-property rights group, certainly thought it was a physical taking and

expected the court to decide it on those grounds. Back on July 10, 2012, in announcing its filing of an amicus brief in the case, the Pacific Legal Foundation described the pending case in the headline to the press release: "U.S. Supreme Court set to determine viability of temporary physical takings." http://blog.pacificlegal.org/2012/u-s-supreme-court-set-to-determine-viability-of-temporary-physical-

takings/ On September 5, 2012, the Pacific Legal Foundation noted the federal government’s attempts to elbow the case into the Penn Central corner. http://blog.pacificlegal.org/2012/is-the-federal-government-shifting-the-focus-in-arkansas-game-fish-commission/

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We have rejected this argument when deployed to urge blanket exemptions

from the Fifth Amendment’s instruction. While we recognize the importance of

the public interests the Government advances in this case, we do not see them as

categorically different from the interests at stake in myriad other Takings Clause

cases. The sky did not fall after Causby, and today’s modest decision augurs no

deluge of takings liability.18

It is remarkable that the court cites Causby19 and fails to distinguish it in any way from

the flooding. In Causby overflights were found to cause a taking when the court said

that such overflights were fundamentally the same as any other type of physical

invasion:

The fact that he does not occupy it in a physical sense—by the erection of

buildings and the like—is not material. As we have said, the flight of airplanes,

which skim the surface but do not touch it, is as much an appropriation of the

use of the land as a more conventional entry upon it. We would not doubt that if

the United States erected an elevated railway over respondents' land at the

precise altitude where its planes now fly, there would be a partial taking, even

though none of the supports of the structure rested on the land.20

The Court characterized Causby as a physical invasion taking case in its Penn Central

decision: “A 'taking' may more readily be found when the interference with property

can be characterized as a physical invasion by government, see, e.g., United States v.

Causby, 328 U.S. 256 (1946), than when interference arises from some public program

adjusting the benefits and burdens of economic life to promote the common good."

18 At 12. She could not resist the word play.

19 United States v. Causby, 328 U.S. 256 (1946)

20 At 264-65.

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You can see how wary the Court is about opening the door to bright line rules for

compensation most remarkably in the next property rights case before the Court this

term, Koontz v. St. John’s Water District21 in which day seems to have turned into

night, call it a takings issue total eclipse of the sun. Coy Koontz, Sr., now deceased,

owned a 14.2-acre parcel in Orange County in a developed area zoned for commercial

use. He sought to develop 3.7 acres, 3.4 acres of which is wetland. He applied to the

Water District for permission to fill 3.25 acres of those wetlands. As mitigation, he

agreed to dedicate the rest of his land, about 11 acres, to the state for conservation

purposes. The Water District asked for more, requiring Koontz to enhance the habitat

in an area of about 50 acres elsewhere by replacing drainage culverts and closing up

some ditches. The “elsewhere” was some district-owned property 4.5 miles and 7 miles

away. Presumably, that distant mitigation site was still in the same protected habitat

area, though Koontz argued that his development site and environs had long ago

ceased to provide any habitat.

Koontz said those improvements would cost him between $90,000 and $140,000. The

Water District apparently figured the cost with a sharper pencil, reckoning that a mere

$10,000 would cover it. Koontz refused to agree to the condition of providing the off-

site mitigation, the Water District denied the application for filling, and Koontz set off

on the long and uncertain road to just compensation for a taking of his property.

There is a phrase, and it appears in Koontz’s certiorari petition, that keeps popping up

in the takings decisions about such exactions. Its origin is sometimes forgotten,22 but I

remember the original decision when it was first handed down. The phrase is “an out

and out plan of extortion” and the case was J.E.D Associates, Inc. v. Atkinson, decided

by the New Hampshire Supreme Court in 1981.23 J.E.D. was a residential subdivider

21 Coy A. Koontz, Jr. v. St. Johns River Water Management District, No. 11-1447

http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/11-1447.htm

22 It was cited in Nollan v. California Coastal Commission, 483 U.S. 825, 837 (1987)

23 J. E. D. Associates, Inc. v. Atkinson, 121 N. H. 581, 584, 432 A.2d 12, 14-15 (1981)

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required to dedicate 7.5% of its land as a condition of approval. The New Hampshire

Supreme Court ruled the blanket requirement unconstitutional under its state

constitution:

Regulation H requires the dedication of seven and one-half percent of the total

land comprising the subdivision without any consideration of the town's need

for the land. Moreover, there is evidence, that was improperly excluded, which

indicates that some developers would be permitted to pay the town the value of

the land in lieu of its dedication. This appears to us to be an out-and-out plan of

extortion whereby developers are required to pay for the privilege of using their

land for valid and reasonable purposes even though it satisfies all other

requirements of the town's zoning and subdivision regulations.

What do you think? Should Koontz bear all or any of the cost of protecting the habitat

through mitigation? What if Koontz could show no “essential nexus” between the

denial and the required mitigation? What if the mitigation was so great as to have not

even “rough proportionality” to the impact on the habitat from the proposed filling?

Should Koontz then be relieved of the condition and compensated for the years he

waited? And wait he did, from the first imposition of the proposed condition in 1994,

until his death in 2000, until the Water District issued the permit without the off-site

mitigation in 2005, until the U.S. Supreme Court granted certiorari to his estate in

2012.

The Florida trial court was good to Koontz. It held that the off-site exaction of

improvements was a taking applying the nexus tests of Nollan24 and Dolan.25 The

court gave the Water District three choices: issue the permits, pay damages, or modify

its decision to avoid the unreasonable exercise of its police power. The Water District

chose to issue the permit but delayed in doing so until December 2005. The trial court

24 Nollan v. California Coastal Commission, 483 U.S. 825 (1987)

25 Dolan v. Tigard, 512 U.S. 374 (1994)

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awarded damages under a Florida statute. The appellate court upheld the trial court's

judgment.

The Florida Supreme Court reversed, holding that Nollan and Dolan do not apply to a

monetary exaction and do not apply where a permit is not issued and no dedication of

any improvements is made. To put it the other way, the Florida Supreme Court said

that Nollan and Dolan should only apply when the government imposes a condition on

a permit, when the government actually issues the permit with that condition, and the

condition requires that the applicant dedicate (convey its interest in) the exaction to

the government, as in requiring the developer to convey by deed to the government a

residential lot as J.E.D. was required to in New Hampshire to meet the open space set

aside.

The questions presented in Koontz are:

1. Whether the government violates the Takings Clause when it refuses to issue a

land-use permit on the sole basis that the permit applicant did not accede to

permit condition that, if applied, would violate the essential nexus and rough

proportionality tests set out in Nollan and Dolan; and

2. Whether the nexus and proportionality test set out in Nollan and Dolan apply to

a land-use exaction takes the form of a government demand that a permit

applicant dedicate money, services, labor, or any other type of personal property

for public use.

You would think after Arkansas Game & Fish the Court would be on a property rights

roll, but at oral argument, it was more like a property rights rout. Koontz’s lawyer was

lambasted, even Justice Scalia jumped on the dog pile of criticism:

Here, there's nothing that happens. The permit was denied, unlike in -- unlike

in -- in Dolan, where the permit was granted, and it was understood that, if she

went ahead with it, she was going to lose -- lose some land rights, here, the

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permit's been denied. I can't see where there's a taking here. Nothing's been

taken.26

In exasperation, Justice Sotomayor asked: “…why are we even in this case?27

Who is willing to wager the outcome? The pundits, even those who are seen as

encamped with protectors of property rights, more or less have given it to the

government by a TKO in a 5-4 decision.28

How can that be? How can the same Court in a span of one month go from a

unanimous holding that intentional government flooding may be compensable as a

partial, regulatory taking, to such wariness of potential government liability that a

justice of the Court would proclaim during oral argument “I see an enormous flood

gate here, and one in which we are sending a signal that perhaps States should be more

quiet rather than more engaging.” 29

Simple – the Court desperately eschews bright line, categorical rules for takings that

will preclude the courts from being able to make fact-driven and existential

assessments, which case-by-case assessments -- call them ad hoc if you must, the

courts see as enabling them to more equitably impose burdens and confer benefits.

This avoidance of formulaic rules is forward looking. The Court is obviously concerned

about giving up that discretion. That is why Justice Ginsburg said in Arkansas Game

26 Transcript at 25, January 15, 2013

http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-1447.pdf

27 At 6.

28 For our readers from afar, a TKO is boxing lingo for technical knockout when a fighter is so bludgeoned

into dazed submission that he surely cannot go on. http://www.ringsidebygus.com/boxing-terms.html#k http://www.volokh.com/2013/01/15/koontz-oral-argument/ ; http://www.inversecondemnation.com/inversecondemnation/2013/01/koontz-oral-argument-round-up.html ; http://gideonstrumpet.info/?p=4798 ; the transcript is here http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-1447.pdf

29 Justice Sotomayor at page 54.

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& Fish we should not fear a “deluge of takings liability” because the Court so limited its

decision and it is why Justice Sotomayor at oral argument in Koontz warns of opening

“an enormous floodgate” should the Court allow the more rigorous Nollan and Dolan

tests to apply over a broad range of exactions

Either-Or Rules in the Common Law

Rejecting the categorical rule, I respectfully submit, is influenced in substantial

measure by the experience of all concerned when property rights issues are forced into

the Procrustean Bed of the either-or, the winner-take-all, and the zero-sum game of

other types of claims with centuries-long histories of common law. Procrustes was

quite a fellow, a villainous metal smith and bandit. The son of Poseidon, he took his

guests of varying size and either stretched them to fit his bed or neatly chopped them

down to appropriate dimensions. As clever as he was evil, he secretly had two beds so

no guest ever fit. Either-or rules can work their own cruel results.

What we can learn from the evolution of either-or rules of the common law parallels

what we are in the process of learning about the takings issue. The dissatisfaction with

either-or rules in the common law because they simply do not fit the complex problems

of land-use which are iterative and interactive has resulted in refinements to the

common law that have taken us beyond either-or rules to more fact-specific decision-

making. The results have proved more satisfactory to the applicants/developers, the

opposing neighbors, and the public at large.

Take the nonfeasance-misfeasance/malfeasance dichotomy as an example from the

common law that has evolved to some extent but in its straightforward application often

leaves us feeling dissatisfied with the result.

Liability generally does not lie where someone has not undertaken a task. Nonfeasance

is when you do nothing and your failure to act results in some harm. Historically, courts

have found no liability for nonfeasance, though the trend is away from that to a more

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flexible approach. The distinction remains one, however, that can be the center of

debate over our obligations one to another.30

Misfeasance is an act that is legal but improperly performed. Malfeasance is any act that

is illegal or wrongful.

The distinction between nonfeasance on the one hand and misfeasance/malfeasance on

the other is still in play today in many instances. In a recent decision involving the

possible duty to warn another of danger, the Minnesota Supreme Court described the

differences between nonfeasance and misfeasance:

The distinction between the specific duty to warn and exercising reasonable care

by giving a warning likely stems from the historical divergence of liability for

misfeasance and nonfeasance. Misfeasance is "active misconduct working

positive injury to others" while nonfeasance, or nonaction, is "passive inaction or

a failure to take steps to protect [others] from harm." W. Page Keeton et al.,

Prosser and Keeton on the Law of Torts § 56 (5th ed.1984); see also H.R. Moch

Co. v. Rensselaer Water Co., 247 N.Y. 160, 159 N.E. 896, 898 (1928) ("The hand

once set to a task may not always be withdrawn with impunity though liability

would fail if it had never been applied at all. A time-honored formula often

phrases the distinction as one between misfeasance and nonfeasance.”). We have

recognized the confounding complexity of characterizing a defendant's action or

inaction as misfeasance and nonfeasance. See Brower v. N. Pac. Ry. Co., 109

Minn. 385, 388, 124 N.W. 10, 11 (1910) ("[T]he distinction between misfeasance

and nonfeasance is sometimes fanciful."). But we have continued to recognize

that generally "[i]n law, we are not our brother's keeper." Lundgren v. Fultz,

3 0 John Culhane, "Duty Per Se: Reading Child Abuse Statutes to Create a Common Law Duty in Favor of Victims," Weidner Law School Legal Studies Research Paper Series No.12- 17 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2063850 Generally speaking, tort law does not impose duties in nonfeasance cases (that is, where the defendant has failed to act), but only in cases of misfeasance (where the defendant’s negligent act affirmatively causes harm to the plaintiff). Thus, the plaintiffs’ task was to convince the judge that this case should fall within one of the recognized exceptions to the no duty rule. Several of these exceptions are set forth in the Restatement (Second) of Torts, and are widely accepted in many jurisdictions, including Delaware.”

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23*23 354 N.W.2d 25, 27 (Minn. 1984). Inaction by a defendant—such as a

failure to warn—constitutes negligence only when the defendant has a duty to act

for the protection of others. See Ruberg v. Skelly Oil Co., 297 N.W.2d 746, 750

(Minn.1980); Dan B. Dobbs, The Law of Torts § 314 (2000) ("[T]he rule [of

nonaction] is embedded in the question whether the defendant owes a duty to

protect the plaintiff from harms inflicted by others.").31

The hypothetical typically put to law students, with a bit of our own elaboration, goes

something like this. A person walking along the waterfront alone suddenly hears a cry

for help from a little girl 100 feet offshore struggling to stay afloat. There is a rope and a

flotation ring nearby, maybe enough to reach the girl; certainly enough flotation to allow

the person to go into the water and swim out and rescue the child. Is the passerby liable

if he or she does not attempt to rescue the girl by throwing the life ring and the girl

drowns? Is the passerby liable in any way, assuming that attempting to swim out with

the life ring would not endanger the passerby, for failing to at least attempt to undertake

a rescue? Most courts would find no liability for the passerby because of the either-or

rule.

One of the more frequently-cited cases of this type is Yania v. Bigan, a Pennsylvania

Supreme Court decision from 1959.32 Bigan was mining coal on his land and making

deep cuts of 16 to 18 feet which became flooded with water 8 to 10 feet deep. Yania,

another coal miner, came to Bigan’s property to discuss some business. Bigan asked for

Yania’s assistance in starting a pump to evacuate the water from the cuts. In the

process, Bigan allegedly taunted Yania, urging him to jump into the cut, which Yania

eventually did. Bigan did not come to his rescue, Yania drowned, and Yania’s widow

sued Bigan claiming that he should have attempted a rescue.

31

http://scholar.google.com/scholar_case?case=16000886429984948576&q=nonfeasance+misfeasance&hl=en&as_sdt=2,10&as_ylo=2009

32 Yania v. Bigan, 397 Pa. 316, 155 A.2d 343 (1959).

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The court found no duty to rescue:

Lastly, it is urged that Bigan failed to take the necessary steps to rescue Yania

from the water. The mere fact that Bigan saw Yania in a position of peril in the

water imposed upon him no legal, although a moral, obligation or duty to go to

his rescue unless Bigan was legally responsible, in whole or in part, for placing

Yania in the perilous position: Restatement, Torts, § 314. Cf: Restatement, Torts,

§ 322. The language of this Court in Brown v. French, 104 Pa. 604, 607, 608, is

apt: “If it appeared that the deceased, by his own carelessness, contributed in any

degree to the accident which caused the loss of his life, the defendants ought not

to have been held to answer for the consequences resulting from that accident. …

He voluntarily placed himself in the way of danger, and his death was the result

of his own act. … That his undertaking was an exceedingly reckless and

dangerous one, the event proves, but there was no one to blame for it but himself.

He had the right to try the experiment, obviously dangerous as it was, but then

also upon him rested the consequences of that experiment, and upon no one else;

he may have been, and probably was, ignorant of the risk which he was taking

upon himself, or knowing it, and trusting to his own skill, he may have regarded

it as easily superable. But in either case, the result of his ignorance, or of his

mistake, must rest with himself – and cannot be charged to the defendants”. The

complaint does not aver any facts which impose upon Bigan legal responsibility

for placing Yania in the dangerous position in the water and, absent such legal

responsibility, the law imposes on Bigan no duty of rescue.

Note the distinction the court makes between a legal obligation and the moral one. That

may be at the center of our current problems with takings jurisprudence, just

compensation, and police power decision-making. What may be legal may not be moral.

The same winner-take-all approach to responsibility comes closer to the problems with

just compensation for takings in the nuisance and trespass cases. Nuisances may be

public or private. A public nuisance “is an activity (or a failure to act in some cases) that

unreasonably interferes or obstructs a right that is conferred on the general public, such

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as the enjoyment of a public park or other public space. A public nuisance may also

exist where there is a condition that is dangerous generally to members of the public

(such as a health hazard) or is in some way offensive to accepted community standards

(such as loud music late at night).”33 A private nuisance “is one that affects an

individual’s right to enjoyment of some property or activity, but does not necessarily

affect the community as a whole. For example, a large tree overhanging a neighbor’s

yard may be a private nuisance where it affects the neighbor’s enjoyment and use of her

backyard.”34

A nuisance may be enjoined and the property owner who is enjoined is not

compensated.

A holding by a court that a public regulation is a proper exercise of the police power to

prevent a public nuisance has been held to defeat a due process claim and a claim for

compensation. In the often-cited case of Mugler v. Kansas, the U.S. Supreme Court in

1887 denied a claim by the owner of a brewery for any compensation when he was

prosecuted by the state for “having sold, and … having manufactured, spirituous,

vinous, malt, fermented, and other intoxicating liquors [beer], in Saline County,

Kansas without having the license or permit required by the statute.” The court held

that “[i]t cannot be supposed that the states intended, by adopting that Amendment

[the Fourteenth], to impose restraints upon the exercise of their powers for the

protection of the safety, health, or morals of the community." In cutting off the taking

claim, the court said that "[a] prohibition simply upon the use of property for purposes

that are declared, by valid legislation, to be injurious to the health, morals, or safety of

3 3 Minnesota’s Public and Private Nuisance Laws (July 2008) http://www.house.leg.state.mn.us/hrd/pubs/nuislaws.pdf

3 4 http://www.house.leg.state.mn.us/hrd/pubs/nuislaws.pdf

Page 22 of 36

the community cannot, in any just sense, be deemed a taking or an appropriation of

property for the public benefit."35

That is an either-or rule. If it is a valid police power regulation to prevent a public

nuisance, it cannot be a compensable taking.

In Hadacheck v. Sebastian, the U.S. Supreme Court also found that there could be no

taking because the use of the property as a brickyard, predating zoning, was essentially a

nuisance:

To so hold [to find a vested right] would preclude development and fix a city

forever in its primitive conditions. There must be progress, and if in its march

private interests are in the way they must yield to the good of the community. The

logical result of petitioner's contention would seem to be that a city could not be

formed or enlarged against the resistance of an occupant of the ground and that if

it grows at all it can only grow as the environment of the occupations that are

usually banished to the purlieus.36

Indeed, the first case before the U.S. Supreme Court on the validity of zoning, Euclid V.

Ambler, turned on the use of zoning as a proper method to avoid nuisances: “A

nuisance may be merely a right thing in the wrong place, — like a pig in the parlor

instead of the barnyard. If the validity of the legislative classification for zoning

purposes be fairly debatable, the legislative judgment must be allowed to control.”37 If

a land use would otherwise cause a public nuisance, then prohibiting by regulation is a

35 123 U.S. 623 (1887).

36 239 U.S. 394, 410 (1915).

37 272 U.S. 365, 388 (1926).

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valid exercise of the police power and there is no constitutional violation, regardless of

the loss in value, even a 75% loss as in Euclid.38

Trespass actions, like nuisance actions, have historically resulted in either-or results. A

half a century ago, we began to see the courts push back against the notion that all the

guests in their courtrooms had to be stretched out or cut to size to fit into the unique

bed of land-based impacts. My two favorites are Spur Industries39 and Atlantic

Cement.40

In Spur Industries, a 1972 decision of the Supreme Court of Arizona, the court had

before it a classic case of coming to the nuisance. Back in 1956, Spur Industries had

established a livestock feed lot 15 miles west of Phoenix in a farming area dating to

1911, which continued to expand over the years, and which, as you might readily

imagine, had negative externalities of the worst kind, including the odiferous smell of

manure and flies. In 1959 they had 8,000 cattle on 35 acres. In 1960, Spur purchased

an expansion area which became the subject matter of the litigation. By 1964 Spur had

expanded to 114 acres and was feeding 20,000-30,000 cattle, producing over one

million pounds of manure every day.

In the other corner –actually 2 ½ miles north of Spur, and coming onto the scene later

beginning in 1959, was the Del E. Webb Development Company, the developer of Sun

City, a community of older citizens. Sun City, Arizona also continued to grow with

450-500 houses built or under construction in the first four months. Eventually the

two uses closed in on each other to the point, 500 feet apart, where their

incompatibility became obvious, with Del Webb claiming it had 1,300 lots unfit for

3 8 Jan Laitos, LAW OF PROPERTY RIGHTS PROTECTION (1998, Supp. 2004)) at Section 11.06 note 2.

3 9 Spur Industries v. Del E. Webb Development Co., 108 Ariz. 178, 494 P.2d 700 (1972).

40 Boomer v. Atlantic Cement Co., Inc., 309 N.Y.S. 2d 312, 257 N.E.2d 87 (N.Y. App. 1970).

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development. Del Webb sued for an injunction against the further operation of the

feedlot. The trial court granted the injunction and ordered Spur Industries shut down.

The Arizona Supreme Court found that under the law of nuisance an injunction was

proper to abate the public and private nuisance. Under Arizona law, “[a]ny condition or

place in populous areas which constitutes a breeding place for flies…” is a public nuisance.

"Coming to the nuisance" is a doctrine that precludes relief for a property owner who

voluntarily purchases and moves in within the proximity of a nuisance: “the residential

landowner may not have relief if he knowingly came into a neighborhood reserved for

industrial or agricultural endeavors and has been damaged thereby….”41 Sun City, with

its expansion towards the feedlot, came to the nuisance in the face of the fact that the

nuisance was also expanding. The court at the same time recognized that the

residential use was more consistent with growth and development in the area. In the

end the court avoided the either-or result by fashioning the equitable solution the court

ordered that Del Webb indemnify Spur Industries for the cost of having to relocate or

shut down the facility.

In Atlantic Cement, landowners in New York brought an action claiming the nearby

cement plant constituted a nuisance because of the dirt, smoke and vibration coming

from it. The trial court awarded them damages, but denied an injunction to shut down

the facility.

The New York Court of Appeals, New York’s highest court, noted that "where a

nuisance has been found and where there has been any substantial damage shown by a

party complaining, an injunction will be granted." Shutting down the plant, said the

court, would be a "drastic remedy." The court balanced the investment in the facility of

about $45 million against the permanent damages won by the plaintiffs of a total of

41 At 184-85.

Page 25 of 36

$185,000. The court also noted that over 300 jobs would be lost if the plant was shut

down. The court observed that "[t]he parties could settle this private litigation at any

time if defendant paid enough money and the imminent threat of closing the plant

would build up pressure on the defendant."

The court was remarkable candid in explaining how it was departing from its normal

role:

But there is now before the court private litigation in which individual property

owners have sought specific relief from a single plant operation. The threshold

question raised by the division of view on this appeal is whether the court should

resolve the litigation between the parties now before it as equitably as seems

possible; or whether, seeking promotion of the general public welfare, it should

channel private litigation into broad public objectives.

A court performs its essential function when it decides the rights of parties before

it. Its decision of private controversies may sometimes greatly affect public

issues. Large questions of law are often resolved by the manner in which private

litigation is decided. But this is normally an incident to the court's main function

to settle controversy. It is a rare exercise of judicial power to use a decision in

private litigation as a purposeful mechanism to achieve direct public objectives

greatly beyond the rights and interests before the court.42

The court found a new way to force a proper allocation of the benefits and burdens of

allowing the plant to continue and to avoid the either-or, zero-sum game of the usual

draconian injunction: “to grant the injunction unless defendant pays plaintiffs such

permanent damages as may be fixed by the court seems to do justice between the

contending parties. All of the attributions of economic loss to the properties on which

plaintiffs’ complaints are based will have been addressed... It seems reasonable to

42 At 222.

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think that the risk of being required to pay permanent damages to injured property

owners by cement plant owners would itself be a reasonably effective spur to research

for proved techniques to minimize nuisance."43

What the neighbors received was payment for essentially an “easement” allowing

Atlantic Cement to adversely impact their properties with dirt, smoke, and vibration.

The public good was served by keeping the plant in operation and the neighbors were

compensated.

In a somewhat similar claim, property owners in Iowa challenged the state’s right-to-

farm law as a taking.44 All 50 states have some type of right-to-farm law protecting

farmers from nuisance suits by neighbors for ordinary impacts off-site from typical

farming operations. The claim in Bormann was that the right-to-farm law imposed an

easement over the neighboring properties by taking away their right to sue for ordinary

negligence.

The challengers won when the court held the law to effect an unconstitutional taking.

There was no attempt to find a middle ground with any type of compensation. It was

winner-take-all and the farmers lost. The court also invalidated corrective legislation.

The Iowa legislature enacted new corrective legislation in 2010.45 That new legislation

has many exceptions and exclusions. Most importantly, in terms of helping neighbors

and farmers come to the most equitable resolutions, it requires that any claim for a

nuisance arising from a farm operation must go first to mediation.

43 At 226.

4 4 Bormann v. Board of Supervisors In and For Kossuth County Iowa 584 N.W.2d 309 (Iowa 1998).

45 http://www.nationalaglawcenter.org/assets/righttofarm/iowa.pdf

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A Hypothetical and a Modest Proposal

A substantial portion of our federal, state, and local land-use and environmental

decision-making is based on the police power, the power to protect and promote the

public’s health, safety, and general welfare. At the federal level, most of us have

experienced U.S. Army Corps of Engineers permitting processes for dredging and

filling inland and coastal wetlands and watercourses. Arkansas Game & Fish is a ready

example of either-or; either the farmers get to plant and harvest longer or the

bottomland oaks suffer, or the oaks survive in their entirety and the farmers lose. The

accusations were that the famers influenced the process. Who knows? The facts are,

however, that for several years the Corps applying a public interest standard found no

substantial adverse impact from the increased flooding and allowed it to continue.

What would have been the more artful, equitable and economically rational decision?

Assume that the farmers were neither advantaged nor disadvantaged by the flood

control project over their pre-dam situation when the Corps followed the Water

Management Plan, but that the farmers did much better during those years from 1994

through 2000 when the Corps intentionally deviated from the Plan giving them more

time to grow crops and harvest. What if the Corps were able to consider those

increased crop yields and profits, and monetize the habitat and timber loss from the

damage to the bottomland oaks, and then have the farmers pay for the damage?

Now assume that the 1994-2000 deviations simply put the famers back in as good a

position as they were before the dam was built. What if the Wildlife Management Area

were required to share some of the profits from its timber harvesting with the farmers

or the hunters and those who fished in the area paid some user fee that was used to

compensate the farmers?

Page 28 of 36

Monetizing and allocating the benefits and burdens among those affected reduces or

eliminates the winner-take-all gamble that occurs with typical governmental decision-

making based on the police power and the public interest. But, of course, the Corps

has no authority to do this.

Let us look at local decision-making and then turn to the state for a final example of the

problem and a possible alternative.

How many of you have experienced the knockdown, drag out, boisterous brawl known

also a site plan application hearing, perhaps for something so wondrous as a Wal*Mart

or a gravel pit or, as I have experienced in 27 nights of hearings, a 500-plus-unit

affordable housing project on chemically-contaminated farmland that would have

required the building of a new elementary school at great expense to the town? Ah,

this is the stuff great zoning battles are made of. What commands the decision-making

process? It is the quest for the zero-sum solution. In the latter case, it was the quest

for the utter defeat of the affordable housing proposal that would double, almost triple,

the density over the highest normally allowed by using a state override of local zoning

because of the affordability component. So there we had the double-whammy of

either-or – either the state statute permitted the override of the local zoning or not, and

either there was a compelling public health and safety reason for the local government

to deny the application as permitted by the statute. And all along, there was the police

power decision-making which would allow or deny the application with little room to

fashion something down the middle.

In a triangle of conflict, there was the developer in one corner, the town in another, and

the neighbors in the third. This, like so many battle royals, was a war of attrition, like

the Northwest Coast Indians of Canada and what is now the banned potlatch rituals of

destroying one’s own canoes, blankets and coppers to show power. In the end, I would

guess had all the legal fees, expert witness costs, transcriptions service for all those

hearings which ended in multiple court appeals been totaled, the neighbors and the

town could have purchased the property, assuming the developer was willing to

discount the price by maybe half of what was spent in the fight, with enough left over

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for all to party for three days straight with gourmet food and appropriately ample

libations.

Now, let us turn to the state level with a hypothetical based on some real life examples

that may most clearly illuminate the problem, and enable me to make my most modest

proposal. Imagine a commercial wind farm developer which applies to the state Public

Utilities Commission (PUC) for permission to develop a $50 million, 24 megawatt, 16

turbine facility on 1,000 acres in a bucolic rural community. That is enough power to

serve about 8,000 homes. The widely-uses GE 1.5 megawatt turbine proposed for use

in the project has 116-foot blades atop a 212-foot tower for a total height of 328 feet.

This small town of a few thousand people, some whose families have lived there for

generations and others who have second homes or recently retired there, has the

highest elevations in the region. The instrumentation on meteorological tower located

on the site for over a year prior to the application has confirmed that the ridgeline is a

near-perfect location for wind power, better than any other within 100 miles.

Although the homes in the area are few and far between, scattered around the site on

individual lots of from 2 to 30 acres, nearby is a large and eccentric old mansion,

known locally as The Hermit’s Castle, after the recluse who built the sprawling gothic

residence on the estate for his bride and lived their happily until his young wife’s

sudden and untimely death. He stayed on there, alone and with practically no contact

with anyone for half a century thereafter. A series of uncaring owners later owned the

mansion and ultimately it fell into disrepair and was abandoned. Five years ago a well-

to-do, visionary couple purchased and restored The Hermit’s Castle to its former glory.

It is now an especially upscale retreat and spa for the very wealthy. The Hermit’s

Castle has 30 suites, and there are another dozen cottages newly constructed on the

grounds. The Hermit’s Castle abuts the proposed wind farm site, but is almost 2,000

feet from the edge of the site and twice that the nearest proposed wind turbine.

There is no federal regulation affecting the siting of the facility, and state law preempts

local regulation. The fact that there is no local regulation, by the way, is probably not

important in terms of how the conflict might be resolved. It just means that it will be

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done at a certain level of government. Local regulation is more typical than state

preemption. The Kansas Supreme Court recently upheld a countywide prohibition on

commercial wind power facilities in the Flint Hills. 46

Let the games begin! The applicant, Wind Energy for All, has made its application and

the hearings commence. The standards for approval are typical and similar to those in

Oregon.47 In short, they are police power based -- will the wind farm promote the

public health, safety and general welfare?

There is no question that the location is ideal. There is no question that sustainable

energy is a public benefit in terms of rejecting the environment and promoting the

general welfare. There is no question that given the especially high cost of electricity in

the region, which presently is overly dependent on fossil fuel generating plants, that

electricity can be produced at the wind farm at a lower cost, and further benefit the

public.

As the PUC goes down a checklist of criteria, it finds nothing that would preclude

approval. But the individual homeowners scattered around the proposed wind farm,

and the owners of The Hermit’s Castle are vehemently opposed to the wind farm for

several reasons. First, they believe, and they have good cause to believe this, that the

value of their homes and of The Hermit’s Castle will be reduced because of the adverse,

off-site impacts of the wind farm. Economists call those adverse impacts on value

“negative externalities." Those negative externalities are of several types. There is that

of perception. For example, those thinking about a stay at The Hermit’s Castle might

ask” “Is this really is a getaway location when it is next to this enormous commercial

facility?" “Next to” in this context means over a half mile to the base of the nearest

turbines. The base is not visible because of intervening trees, though the blades are.

46 Zimmerman v. Board of County Commissioners of Wabaunsee County, Kansas (2011)

http://www.kscourts.org/cases-and-opinions/opinions/SupCt/2011/20111021/98487.pdf

47 http://www.oregon.gov/energy/Siting/Pages/standards.aspx;

http://www.oregon.gov/energy/Siting/docs/rules/div22.pdf

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Not more than about 30° of the horizon, that is one 12th of the 360° view, has any

portion of any wind turbines within view. Still, these turbines are big, and most of the

time the blades will be turning and attracting the attention of anyone taking in the

view.

Wind turbines have other impacts which may be felt off site and could affect value,

although the impacts in this situation are relatively small. They include flicker, which

is the effect of light being interrupted by the blades during certain times of the day and

during limited times of the year when the sun is at certain angles. So too is the noise

which is a low-level, but repetitive, and bothersome to some people. There is also the

potential, extremely remote, for blades to break and send fragments a long distance.

This wind farm is proposed in a northern location, and ice may form on the blades and

be thrown off. Electromagnetic signals, including broadcast radio and television, may

be disrupted. The neighbors claim that the transmission lines, like any electric

transmission lines, maybe of causing impacts off site. Again, the perception may cause

the impact on value, while the reality, based on scientific evidence, may be that there is

no impact or such little impact it should not affect value.

The homeowners and the owners of The Hermit’s Castle through their consultants

present scientific evidence of all the potential impacts on their property from the wind

farm. Their appraisers testify as to the loss in value of the properties which range from

just 10%, approximately $20,000, for an old farmhouse, almost half a mile away, to a

loss of almost $1 million for The Hermit’s Castle where the owners claim not only a

reduction in the value of its real estate, but a loss in value based on lower income

resulting from expected reduced occupancy at lower rates. As you would most

assuredly expect, Wind Energy for All strenuously rebutted all of the neighbors’ expert

testimony, including that of the appraisers. At most, the applicant says that only The

Hermit’s Castle will be adversely affected and the impact will be temporary, for not

more than six months to year, until people come to realize that the wind farm is a good

neighbor and does not detract from The Hermit’s Castle as a place to get away from it

all.

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What does the PUC do? Even if all of the testimony of the neighbors is accepted, the

total loss in value is less than $2 million. The total value in the construction, jobs

created in the construction, jobs created afterwards, coupled with the economic

benefits to the ratepayers over the life of a project which is figured at 50 years, and the

monetized health benefits of reducing fossil fuel burning is at least 100 times greater

than the claimed loss.

But the claimed loss is real. The owners of that small farmhouse, a husband and wife

each working two jobs to make ends meet, purchased it with a small down payment

near the end of the real estate boom, already find themselves like so many Americans

owning a home worth less than the remaining mortgage debt. Now that value may be

driven down further by the wind farm. Their options are diminished if the wind farm

goes forward.

The owners of The Hermit’s Castle have large debt on their property with three lenders.

The Hermit’s Castle is a unique property that has no other use and its value is highly

dependent on its location in the countryside. Clearly, there are winners and losers,

there is a zero-sum game being played here, and the PUC has only two choices:

approve the project, maybe with some modest reductions in size and the location of

turbines, which will not help much in terms of the impacts on the neighbors, but will

damage the project; or deny the project and take this outstanding wind power site away

from public use.

What did we learn from Spur Industries and Atlantic Cement? What do we see as

dysfunctional in the Procrustean bright line rules for nonfeasance and misfeasance, for

trespass, and for negligence?

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Those who benefit by the wind farm should compensate those who are burdened. The

PUC should be able to approve, approve with conditions, or deny the wind farm based

solely on public health, safety and the general welfare. Those who are burdened, and

can prove it, by scientific and other expert evidence and by appraisal testimony, should

have recourse -- not to stop the project, but to be fully compensated down to the last

dime for the impact on their private rights of what is essentially a public project.

The way to do this is to allow the PUC to act on a project like this without regard to the

impact on property values and to allow property owners to make claims to a separate

administrative adjudicatory agency, not the courts, for compensation. Those who are

benefitted by the project would provide be required to pay into that fund.

We have models for this. There are funds for cleaning up spills from underground

storage tanks where a gasoline station operator has experienced a catastrophic failure

not caused by the operator or where the operator is unknown, unwilling or unable to

do the cleanup.48 The fund is supported by a 0.1 cent tax on each gallon of motor fuel

sold nationwide. The motoring public needs gasoline stations, we benefit by having

those gasoline stations available and operating without polluting, and we as

beneficiaries pay for that. Some of the states have similar programs. Georgia, for

example, has an Environmental Assurance Fee of a fraction of a cent per gallon for

every gallon of petroleum products imported into Georgia which funds go to pay the

cost of "funding of emergency, preventive, or corrective actions necessary when public

health or safety is, or potentially may be, threatened from the release of regulated

substances from an UST and to provide compensation for third-party liability."49

The U.S. Department of Health and Human Services oversees the National Vaccine

Injury Compensation Program created in 1988 to "ensure an adequate supply of

48 United States Environmental Protection Agency, "Leaking Underground Storage Tank (Lust) Trust

Fund” http://www.epa.gov/oust/ltffacts.htm

49 391-3-15-.13 Georgia Underground Storage Tank (GUST) Trust Fund

http://rules.sos.state.ga.us/docs/391/3/15/13.pdf

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vaccines, stabilize vaccine cost, and establish and maintain an acceptable and efficient

forum for individuals found to be injured by certain vaccines. The VICP is a no-fault

alternative to the traditional tort system of resolving vaccine injury claims that

provides compensation to people found to be injured by certain vaccines. The U.S.

Court of Federal claims decides who will be paid."50 We need people to be vaccinated

to protect the public health and we need to have an efficient system for compensating

that very small percentage who may be injured by vaccines. The Vaccine Injury

Compensation Trust Fund is funded by a $0.75 excise tax on vaccines on each dose for

each disease that is prevented by the vaccine. The beneficiaries of the vaccine, which

include pharmaceutical companies and those who are vaccinated, end up paying

through the cost of the vaccine.

Just one more example, and I will bet there are many others that I have not stumbled

across in my search -- the Radiation Exposure Compensation Act Trust Fund.51 In

1990, Congress passed the Radiation Exposure Compensation Act to provide

compensation for individuals who developed cancer and other serious illnesses after

being exposed to radiation released during aboveground testing of atmospheric nuclear

weapons or as a result of exposure in their jobs while employed in the uranium

industry during the build-up to the Cold War. About 35,000 claims have been filed

with 34,476 adjudications including 9593 denials (only 12 of which have been appealed

to federal district court) and 24,883 approvals. Total awards have exceeded $1.64

billion. The funding comes from the federal government because all Americans shared

the benefits of the nuclear testing and uranium mining and processing programs.

So, who pays in our wind farm hypothetical? It may be that Wind Energy for All pays

part of the cost out of some of the profits otherwise payable to the stockholders, but the

50 U.S. Department of Health and Human Services, "National Vaccine Injury Compensation Program"

http://rules.sos.state.ga.us/docs/391/3/15/13.pdf

51 U.S. Department of Justice, Civil Division, "Radiation Exposure Compensation Act Trust Fund, FY

2013 President's Budget”. http://www.justice.gov/jmd/2013justification/pdf/fy13-reca-justification.pdf

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lion’s share of the cost of reimbursing those who are adversely affected should come

from those who enjoy the benefits of lower cost, sustainable energy. Those

beneficiaries are largely the ratepayers, the consumers of electricity. They could be

required to pay a fraction of a cent per kilowatt hour. The national average household

electricity use is about 940 kilowatts hours per month, call it 1,000 KWH, and the

average cost is 11.72 cents per KWH.52 To create a $2 million fund to compensate the

neighbors would require the 8,000 serviced households (actually the beneficiaries are

more numerous than that) to pay just $250 each spread out over a 30-year project life.

A back of the envelope present value analysis at a 3% discount rate yields a monthly

surcharge on their electric bills of $1.05 on top of their average monthly bill of $117.20.

If you assumed a larger benefitted ratepayer base statewide of say 800,000

households, each household would be paying one penny more per month. Other

beneficiaries may be the states in the region, where air quality will be improved as a

consequence of taking fossil fuel burning facilities out of service. However, the process

of determining a fair allocation on that basis may be more complicated than it is worth.

The advantage of this modest proposal is that our public decision-makers -- the state

PUCs, county commissioners, and city councils all across the country -- would be able

to make their decisions free of considering those who are severely damaged in relative

terms, like the owner of the old farmhouse, and those who will suffer large damages in

absolute terms, like the owners of The Hermit’s Castle, and instead make their

decisions solely on the basis of the greater public good and promoting the public’s

health, safety, and general welfare. In turn, those are damaged, whether only a little in

real or absolute terms or greatly by any measure, will have recourse, where the sole

issues will be that of causation and proof as to the negative externalities and the

monetization of the adverse impacts so that just compensation can be paid.

52 http://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3

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What am I missing here? Why don't we do this?