Property Rights Foundation of America®

from the Sixth Annual New York State Conference on Private Property Rights
November 16, 2002, Albany, New York

by Jeff Williams and Leah Hurtgen
New York State Farm Bureau
Glenmont, New York

Private Property Rights of Farmers: Updates in Takings and Related Case Law

Farmers in New York State and across the United States are under significant pressure. Farmers and Farm Bureau have long held private property rights as a fundamental tenet of their belief systems. Farmers rely on the earth itself to pursue their livelihood. Without use of the land, farmers, and your food supply, would not exist. Farmers feel the crunch every day in the form of local, state, and federal regulations, which seek to chip away at a farmer's right to use their property as he or she sees fit. Over the last two years, significant cases have occurred in New York State and in other parts of this country, which impact agriculture, other land intensive business, such as logging, and will most likely eventually filter down in time to other businesses, large and small and touch individual property owners. Here is a broad over view of several of these cases. In all of the following casing New York Farm Bureau or its national counterpart American Farm Bureau Federation filed friend of the court briefs or were otherwise involved in the proceedings.

As we all know, takings law derived from the 5th Amendment of U.S. Constitution -
"... nor shall private property be taken for public use without just compensation."

1. The most significant recent case in the area of takings law is the Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 122 S. Ct. 1465 (2002). [which] was decided April 23, 2002.

The basic facts of the case are as follows:
a. Approximately 400 individual owners of residentially zoned vacant lots and the Tahoe Sierra Preservation Council, representing about 2,000 owners of both improved and unimproved parcels in the Lake Tahoe Basin sued for compensation when the Tahoe Regional Planning Agency (TRPA) imposed two moratoria, totaling 32 months, on development in the Lake Tahoe Basin. The moratoria blocked the property owners from building homes on their lands while the TRPA formulated a comprehensive land-use plan to protect the water quality of the lake.

b. The Supreme Court limited its review to the following question: "whether a moratorium on development imposed during the process of devising a comprehensive land use plan constitutes a per se taking of property?" In answering this question the Court failed to create a "per se" rule. While the Courts decision was complex, it can be distilled down to the following conclusions:

1) "Treating them all [moratoria] as per se takings would transform government regulation into a luxury few governments could afford." p. 19

2) In making decisions in this area there must be fact specific inquiry as to takings, no categorical rule that any deprivation of all economic use, no matter how brief, constitutes a compensable taking. The Supreme Court used the Penn Central Transport. v. New York City's ad hoc balancing approach instead of Lucas per se analysis to make this conclusion.

c. Although Court rejected a per se rule in this case, the Court stopped short of saying a moratorium on the use of land can never be a taking. "... we do not hold that the temporary nature of a land-use restriction precludes finding that it effects a taking; we simply recognize that it should not be given exclusive significance one way or the other." The court went on to say that if some of the petitioners "had challenged the application of the moratoria to their individual parcels, instead of making a facial challenge, some of them might have prevailed under a Penn Central analysis." Tahoe-Sierra, p. 30.

1) "It may be true that any moratorium that lasts for more than one year should be viewed with special skepticism." "... we could not possibly conclude that every delay of over one year is constitutionally unacceptable. Formulating a general rule of this kind is a suitable task for state legislatures." p. 38.

2) 11 states in U.S. have statutes authorizing interim zoning ordinances with specific time limits. See Cal. Govt. Code Ann. §65858 (West Supp. 2002) (authorizing interim ordinance of up to two years); Colo. Rev. Stat. §30-28-121 (2001) (six months); Ky Rev. Stat. Ann. §100.201 (2001) (one year); Mich. Comp. Laws Ann. §125.215 (2001) (three years); Minn. Stat. §394.34 (2000) (two years); N.H. Rev Stat. §674:23 (2001) (one year); Ore. Rev. Stat. Ann. §197.520 (1997) (10 months); S.D. Codified Laws §11-2-10 (2001) (two years); Utah Code Ann. §17-27-404 (1995) (18 months); Wash. Rev. Code §35.63.200 (2001) Wis. Stat. §62.23(7)(d) (2001) (two years).

d. The Supreme Court elaborated on moratoria saying that Moratoria are an essential tool of successful development. Tahoe-Sierra, p. 34.

1) Decision supports existing NY case law and generally case law in the U.S. that a moratorium is a valid tool to be used by municipalities to control development in land use planning, if used properly.

a) "...the interest in protecting the decisional process is even stronger when an agency is developing a regional plan than when it is considering a permit for a single parcel. Tahoe-Sierra," p. 36-37.

b) "A rule that required compensation for every delay in the use of property would render routine government processes prohibitively expensive or encourage hasty decision-making. Such an important change in the law should be the product of legislative rulemaking rather than adjudication." Tahoe-Sierra, p. 31.

c) The interest in informed decision-making counsels against adopting a per se rule that would treat such interim measures as takings regardless of the planners' good faith, the landowners' reasonable expectations, or the moratorium's actual impact on property values. See, p. 35.

d) "To the extent that communities are forced to abandon using moratoria, landowners will have incentives to develop their property quickly before a comprehensive plan can be enacted, thereby fostering inefficient and ill-conceived growth."

e) " ... with a temporary ban on development, there is a lesser risk that individual landowners will be 'singled out' to bear a special burden that should be shared by the public as a whole." Tahoe-Sierra, p. 37 citing Nollan v. California Coastal Comm'n, 483 U.S. 825, 835 (1987).

f) The affected landowners are also financially protected by a moratorium by preventing "immediate construction that might be inconsistent with the provisions of the plan that is ultimately adopted" by the municipality. Tahoe-Sierra, p. 37.

2. Another recent takings decision, Palazzolo v. Rhode Island, was a greater victory than Lake Tahoe. In this case, Petitioner Anthony Palazzolo has been attempting to develop coastal property in Rhode Island for more than 40 years, the majority of his 18-acre parcel consists of "wetlands." After the denial of his 4th application for development, Palazzolo sued in state court, claiming 1) the State had stripped his property of any reasonable uses; and 2 it amounted to a "regulatory taking" which also stripped his land of any meaningful commercial value. The Rhode Island Supreme Court said his claim was not yet "ripe" for a decision, because, according to the Rhode Island Court, there was some doubt as to how much development the State of Rhode Island would allow. The United States Supreme Court disagreed, weakening the common "ripeness" argument common in takings cases.

The U.S. Supreme Court found that the case was ripe, stating that there was "no doubt" that the State would deny him permission to fill his property for any ordinary land use. And that it would be "futile" to continue to apply for permits. (Argument made in AFBF's brief)

The court went on to find that the takings claim was "not barred by the mere fact the title was acquired after the effective date of the state imposed restriction. Future generations have the right to challenge unreasonable limitations on the use and value of land." Such cases would have to be decided based upon individual factors. But there is no expiration date on the takings clause. The Supreme Court did not reach the question as to what formula is used to determine takings cases.

Mr. Palazzolo went back to state court to make his case again.

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

a. provides a categorical rule that compensation is required when a regulation deprives an owner of "all economically beneficial uses" of his land. Lucas at 1010.

b. provides holding limited to "the extraordinary circumstance when no productive or economically beneficial use of land is permitted." Lucas at 1019.

4. Penn Central Transportation v. New York City, 438 U.S. 104 (1978)- used when there is anything less than a "complete elimination of value," or a "total loss," Lucas at 1019-1020.

a. Ad hoc balancing of three-pronged test:

1) The owner's reasonable investment backed expectations in the property;

2) The economic impact of the regulation; and

3) The character of the governmental regulation.

a) "A 'taking' may more readily be found when the interference with property can be characterized as a physical invasion by government than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good." Penn Central at 124.

b. in regulatory takings cases the courts must focus on "the parcel as a whole." Penn Central at 130-131.

4. First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304 (1987)- used for whether compensation is an appropriate remedy for a temporary taking and not whether or when such a taking has occurred.

Because of huge pressure from neighbors and local governments, NYS farmers have had to seek legislative protection just to stay in business. Created in 1971, The NYS Agricultural Districts Law provides various protections for agricultural operations located in county-adopted and state-certified "agricultural districts." One such provision found in Agriculture and Markets Law Section 305-a provides that local governments are prohibited from enforcing ordinances that are "unreasonably restrictive" of agricultural operations unless public health and/or safety is threatened. The NYS Commissioner of Agriculture and Markets has the authority to enforce Section 305-a. Over the last few years over a dozen municipalities around the state have attempted to pass and enforce ordinances, which unreasonably restrict agricultural operations in violation of Section 305-a, many of these ordinances sought to prohibit certain agricultural practices or place moratoria on the start up or expansion of agricultural businesses. Surprisingly in many of these cases the local government did not think enough regulations already existed to address agriculture. One of these cases went to NYS's highest state court, the Court of Appeals and resulted in the first Court of Appeals decision interpreting the Agricultural District Law.

5. Town of Lysander v. Hafner (October 18, 2001). This case involved a fruit and vegetable farm in the Town of Lysander, Onondaga County. Mr. Hafner wanted to use mobile homes to house his seasonal labor. Using mobile homes is a common and cost-effective labor housing method and is important in rural areas, which generally suffer from a lack of affordable residential rental space. Thus, affordable on-farm housing is a vital component to keep a farm economically viable. (As a side note, both the state and federal government strictly regulate farm labor housing.) The Town had in place a local ordinance providing for minimum square footage requirements for single family residences. The 1,100 square foot minimum was larger than most single-wide mobile homes, effectively "zoning out" mobile homes for any purpose. Mr. Hafner was prohibited by the town from using mobile homes as farm labor housing, and attempted to force him to remove his mobile home. Mr. Hafner challenged the Town and with the support for his interpretation of Section 305-a from the Commissioner of the Department of Agriculture and Markets and Farm Bureau, Mr. Hafner won. Section 305-a was upheld by the Court of Appeals, allowing Mr. Hafner to use mobile homes to house farm workers and the local law was invalidated against the use of mobile homes in farming operations. The decision was a victory for the private property rights of farmers, but it relied on a very particular statutory structure only available to farms in agricultural districts. The Hafner case does show, however, that all property owners must be vigilant and take responsibility for defending private property rights. A favorable statutory regime is not enough to protect private property rights; it takes the willingness of all interested parties to step to the plate and act!

Unfortunately, other decisions affecting private property rights have not been as positive. On October 24, 2002, the NYS Court of Appeals declined to hear a case entitled, Long Island Pine Barrens Society v. Town of Riverhead, et al. in which the NYS Appellate Division Second Department threw out a town SEQRA review determination finding that the Town did not properly follow the SEQRA process. In this case, a family wanted to develop former agricultural property into a world class golf course, and went through all of the steps as required by state and local law. The Town, not bowing to aggressive environmental pressure, issued the necessary permits pursuant to local and state law. The Town's decision was challenged by the Long Island Pine Barrens Society, for various reasons, including the "inadequacy of the SEQRA" process, because the Town allegedly did not adequately consider condemnation as an alternative to development; or consider steps to keep the course "organic." Condemnation as an alternative to development. If such a requirement is made in every development permitting decision, this could, not only stifle development, but could crush local governments under its weight. How this decision is used in the future by environmental groups will be followed by NYFB.

Another case being closely watched by farmers, loggers, and other businesses involved in land intensive businesses is Pronsolino v. EPA. In this case a small logging operation is fighting EPA implementation of regulations affecting non-point source pollution, after being told to put into place non-point-source control methods which will cost and additional three-quarters of a million dollars to further reduce erosion. According to the California Farm Bureau, the federal Clean Water Act non-point source pollution limits, called total maximum daily loads or "TMDL"s, are only considered advisory to the states, and the states, not the federal governments, have the authority to decide if and how the limits get enforced. The Ninth Circuit Court of Appeals based in San Francisco agreed, but went on to say that, if a state fails to enforce the EPA's limit it can lose EPA funding, creating a huge incentive for the state to defer to the EPA. The logger and interested organizations including the California and American Farm Bureau's have petitioned for a rehearing of this case before the Ninth Circuit Court sitting en banc (all 21 judges, rather than just the three who rendered the decision). No determination has yet been made.

The TMDL issue has relevance in New York for a couple of reasons. First, we have found that California farmers generally have legal issues or difficulties about eight or ten years before similar conflicts arise in NY. Second, the application of the EPA's TMDLs across the county could result in 40,000 TMDL actions in country and agriculture, other land intensive businesses, even municipalities will be identified as contributors to erosion and other "non-point source" pollution and made part of the equation determining TMDLs. Farmers nationwide could end up with needing a permit to farm. To date, the Pronsolino decision is only mandatory within the Ninth Circuit.

Another Ninth Circuit Clean Water Act case has been accepted by the U.S. Supreme Court on June 10, 2002. This case, Borden Ranch v. Army Corps of Engineers, et al. revolves around whether a farm can continue to use a practice commonly known as "deep ripping" plowing, a traditional agricultural technique, which is used to prepare root beds for plants, grape vines, and fruit trees without a Clean Water Act Section 404 permit. The Ninth circuit has ruled that deep ripping constituted an "addition" of "pollutants" to wetlands, requiring a Section 404 permit. Normal agricultural activities, such as plowing, are exempted from Section 404, and there is clear statutory provisions and a strong legislative history to back that up. Nevertheless, the Ninth Circuit 1) narrows a longstanding statutory exemption for normal farming practices, 2) finds that a plow can be a "point source"; 3) normal agricultural plowing can result in a discharge of a pollutant; and 4) expanded the scope of Clean Water Act Section 404 by interpretation to cover what has been up until now a normal farming practice. Oral argument on this case is expected before the U.S. Supreme Court next month.

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