Eminent Domain on the Crops of California Raisin Growers?

The takings clause of the Fifth Amendment does not only apply to the government’s use of eminent domain to take real estate.  This was emphasized by the United States Supreme Court in last week’s opinion entitled Horne v. Department of Agriculture, 569 U.S. ___ (2013).

Horne is about a California raisin grower based in the counties of Fresno and Madera, who challenged a federal regulatory scheme which has been applied to California raisin growers since 1949.  The regulations, “adopted to stabilize prices by limiting the supply of raisins on the market”, require raisin growers to frequently turn over a percentage of their crop to the Federal Government. 

The government took action against the grower for failing to participate in and comply with the regulatory scheme.  The government assessed significant fines and civil penalties against the grower.  As a defense, the raisin grower argued that the statutory scheme, known as the Agricultural Marketing Agreement Act of 1937 and the California Raisin Marketing Order, violated the Fifth Amendment as an unconstitutional taking of their private property without just compensation.  The grower’s argument was that “it would be unconstitutional for the Government to come on their land and confiscate raisins, or to confiscate the proceeds of raisin sales, without paying just compensation.” 

The grower first went through an administrative hearing process where the first administrative law judge rejected the takings defense, and the appellate administrative officer declined to deal with that constitutional defense.  The raisin grower then filed a lawsuit in Federal District Court, where they lost a motion for summary judgment filed by the government.  The District Court held that there was no physical taking of the crop.  The Ninth Circuit Court of Appeals affirmed, but held that it lacked jurisdiction to hear the grower’s Fifth Amendment takings defense. The Supreme Court of the United States agreed to hear the case in order to decide the jurisdiction issue.

The government argued that the raisin grower’s claim was premature, because it should have first pursued its takings claim in the Court of Federal Claims, under the Tucker Act.  The Supreme Court disagreed, explaining that under the statutory scheme at issue, Tucker Act jurisdiction was withdrawn.  In fact, the regulatory scheme specifically gives the Federal District Court jurisdiction to review administrative rulings.  Therefore, the raisin grower’s Federal District Court claim was not premature.  The Supreme Court further held that a “takings-based defense” can be raised by the raisin grower in connection with the government’s action to enforce the regulatory scheme. 
The Supreme Court unanimously ruled that the raisin grower “raised a cognizable takings defense”, and that the Ninth Circuit Court of Appeals made a mistake when it declined to resolve that defense.  The ruling of the Ninth Circuit was reversed, and the case was remanded back to the Court of Appeals for further proceedings, where a determination will have to be made as to whether the government’s imposition of fines and penalties on the raisin grower violated the Fifth Amendment to the Constitution. 

It will be interesting to see what the Ninth Circuit Court of Appeals does with this case on remand.  Will the Court of Appeals put a stop to the confiscation of the crops or proceeds of the crops of California raisin farmers that has been happening since 1949?   Will this case eventually wind up back with the Supreme Court?

San Bernardino County Eminent Domain Update

Last week, the Victorville City Council held a vote on a settlement with a local church, for a partial taking of the property belonging to First Assembly of G-d of Victorville for a road improvement project. The Daily Press reports that the church will receive a total settlement of $2.5 million for the partial condemnation, which affects access to the property as well as reducing available parking spaces.

Read the full article here: http://www.vvdailypress.com/articles/city-40693-settles-victorville.html

In Ontario, the City Council voted on a resolution to initiate eminent domain proceedings against several businesses for a project that is intended to improve traffic conditions at a rail crossing on Milliken Avenue. The city is seeking easements on two businesses, including a distribution center for Sears and Kmart stores. The Daily Bulletin provides this description of the project:

“The Milliken grade separation will eliminate the at-grade crossing by elevating the thoroughfare over the trains adjacent to Mission. As part of the project the city is seeking the easements to relocate Southern California Edison poles.”

Read more: http://www.dailybulletin.com/news/ci_23397329/grade-separation-project-could-land-ontario-litigation-dispute#ixzz2VZvpuSGO

Bay Delta Conservation Plan Administrative Draft is now complete - Eminent Domain may be used in Northern California

On May 29, 2013, the California Natural Resources Agency released chapters 8-12 of the Bay Delta Conservation Plan (“BDCP”), thereby completing the administrative draft available for public review. According to a brochure on the BDCP official website, the estimated cost of this project is 24.54 billion and it will span the course of 50 years. Chapter 8 of the BDCP, which provides a detailed outline of costs and funding opportunities, also estimates the cost for land acquisition at $166 million. The project, led by California Department of Water Resources and supported by other public water agencies, will affect counties in Northern California. The BDCP’s objective is conservation and water quality improvement in the San Joaquin Delta.

The Sacramento Bee reports on the following components of the project, which will affect a 10-mile stretch of Sacramento County farmland:

“• Three intakes, each consisting of a 40-acre site elevated 2 to 5 feet above the existing levee, with industrial buildings six stories tall.

• A 1,000-acre reservoir south of the town of Hood, called an intermediate forebay, to provide gravity flow to the two main tunnels.

• High-voltage electrical substations and miles of power lines.

• Barge landings on the river's edge, each as long as a football field, one near Walnut Grove and another along the north fork of the Mokelumne River, on Tyler Island.

• A soil "borrow" area north of Hood, totaling 610 acres, to provide earth fill for the intake sites and other facilities.

• Disposal areas totaling 717 acres for "tunnel muck," the mixture of soil and excavation chemicals dug from the tunnel bores.”

Read more here: http://www.sacbee.com/2013/04/28/5377328/delta-tunnel-project-to-radically.html#storylink=cpy

The Sacramento Bee further reports that prime farmland, including vineyards, will be affected by the BDCP, which also seeks to address the affects of climate change on California landscape. In addition to affected farmland, some California homeowners may see their property become the subject of condemnation for the tunneling portion of the project. The condemning authorities might use eminent domain against homeowners in the County of Sacramento.

More info: http://baydeltaconservationplan.com/Home.aspx

Despite Opposition, High-Speed Rail Authority Proceeds with Bullet Train Project in California

The High Speed Rail project has faced some setbacks lately, but a recent settlement with Central Valley farmers signals the elimination of a major obstacle.

 In a press release, Adam Gray, a member of the State Assembly from Merced stated:

 "This agreement between the farm bureaus and high speed rail removes one of the last major hurdles we had to overcome before we could realize this huge opportunity for our community"

Construction for the project is planned to start in just months, and new challenges have cropped up in court in the form of questions on the legality of the “blended approach” (described in more detail in this older post) which the Authority has had to adopt. Criticism is focused on the fact that this plan will not allow for the bullet train to make the LA-SF journey in the time provided for in the 2008 voter-approved bond measure.   

While the High Speed Rail’s voter-approved bond money is tied up in court, the Authority needs access to funds in order to begin construction on schedule. In an effort to address the bond-related legal concerns, the Authority filed a “validation action” which seeks to resolve all issues at once in court. But until the judge decides on whether the current HSR plan is true to what Californians approved in 2008, HSR will be receiving a loan in the amount of $26 million dollars, following a vote by the State Assembly budget committee.

High Speed Rail Update: Challenges Mount as Deadline to Begin Construction Approaches

Currently, two out of the three lawsuits that have been filed against the California High Speed Rail Authority have settled, but the Authority continues to face opposition, and with construction scheduled to start this summer. On March 7^th,  the High Speed Rail Authority agreed to a “Memo of Understanding” with a Joint Powers Authority in northern California, which allows for the High Speed Rail to share the track with Caltrain on its route between San Jose and San Francisco.

 Dan Walters’ recent article in the San Jose Mercury News provides the following analysis:

 “Merging the two services is designed to placate project opponents in the high-income neighborhoods on the peninsula. But opposition remains and critics say that a blended system cannot meet the bond measure's requirement that the bullet train carry passengers between San Francisco and Los Angeles in two hours and 40 minutes.”

The court thus far has been siding with the Rail Authority in its recent decisions which have revolved largely around whether the Authority met environmental standards in the planning of this project. The court is scheduled to hold trial in the remaining lawsuit in April 2013. As far as the takings of land, the California Board of Public Works, at its January 14, 2013 meeting, approved the parcels of land which the Authority requested for the project, in order to move forward even though litigation is ongoing. The Authority reasons that if the court does find in favor of the plaintiffs, any eminent domain proceedings or further plans can be put on hold until a resolution is reached.

Court of Appeal Sheds Light on the Rules of Evidence in Eminent Domain Cases

On November 26, 2012, the California Court of Appeal filed an opinion in connection with an eminent domain case.  In County of Glenn v. Foley (2012) 212 Cal.App.4^th 393, the Court of Appeal shed additional light on the interpretation of California Evidence Code sections 822 and 816, which deal with the rules of evidence to be applied in property valuation cases.  The case is about a party named Foley, who had leased 200 acres of his land to the County of Glenn since 1971.  The County had been using Foley’s property as a landfill.  In 2009, the County filed an eminent domain action to acquire the land, plus a substantial amount of surrounding land, also owned by Foley.  

Before the trial, the County filed a motion in limine to exclude all of the testimony of Foley’s appraiser, based on Evidence Code sections 822(a)(4) and 816.  The trial court granted the County’s motion.  Without the testimony of his appraiser, which the trial court excluded from evidence, the property owner stipulated to the value of his property as determined by the County’s appraiser, and the trial judge entered judgment in that amount.  The defendant appealed the judgment, arguing that the exclusion of his appraiser’s testimony violated his constitutional right to a trial by jury. The Court of Appeal held that the constitutional right to a jury trial does not eliminate the requirement that the rules of evidence be followed in an eminent domain case.  However, the Evidence Code must be properly applied.

The defense’s appraisal came in at around $1,700,000.  Foley’s expert had determined that the highest and best use of the property was as an orchard.  The County’s appraiser valued the property at about $637,000, having determined that the highest and best use for the property was as grazing land.   

Evidence Code section 822(a)(4), one of the bases for the trial court’s decision to exclude the testimony of the defense’s appraiser, states that an opinion as to the value of any property other than that being valued, is inadmissible.  The Court of Appeal reversed the trial court’s ruling regarding the section 822(a)(4) issue, stating that excluding an appraiser’s opinion in an eminent domain case is a drastic remedy.  The Court of Appeal felt that the trial court was speculating that the defense appraiser would violate this Evidence Code section, and that instead, the trial judge should have let the jury see the evidence and just allow the County to challenge the weight that the jury should give to the evidence.

Evidence Code section 816, the other bases for the trial court’s decision to exclude the testimony of the property owner’s real estate appraiser, states that, among other things, a valuation witness can rely only on comparable sales that are sufficiently alike in respect to character, size, situation, usability and improvements, to make it clear that the property being sold and the property being valued are comparable.  The Court of Appeal said that section 816 of the Evidence Code is satisfied as long as a comparable sale “sheds light” on the value of the subject property.  As long as the comparable can provide any “rational inference” in support of value, it should be admitted.  The Court of Appeal concluded that in this case, because the comparable sales used by Foley's appraiser had “some tendency in logic to prove the value of the subject property”, the jury should have been able to see that evidence.  

High Speed Rail to Move Forward with Eminent Domain. Resolution Recently Passed for More Efficient Acquisition Process.

On January 14, 2013, the California State Board of Public Works (“SBPW”) approved the selection of the land necessary for the first section of the California High Speed Rail project. The SBPW gave the Authority the green light to start negotiating for full or part takes with the owners of more than 300 parcels.

At its meeting on November 6^th, the California State Board of Public Works voted to approve a resolution that will expedite the process of acquiring properties necessary to move forward with the construction of the High Speed Rail (“HSR”). The resolution was drafted by the Board in preparation for eminent domain proceedings that will affect over 1,000 properties as the first leg of the HSR moves forward, and then thousands more as construction continues through the Central Valley. In light of the difficulty this would present to the Board if it proceeded as it usually does approving each acquisition individually, the resolution delegates the ability to execute right of way contracts to the Board’s authorized agents.

The form contract that the Board approved will make it easier for the High Speed Rail Authority to proceed with condemnation of property. As stated in Board’s November 6^th meeting minutes, a certain set of circumstances will trigger the agent’s authority to enter into the acquisition agreement with affected property owners:

“a) That the contract proposed to be signed is the form of contract approved by the Board,

b) That the property in question is one where just compensation has been set,

c) The property has previously been included within the Board’s site selection approval, and

d) The contract has been executed by the Authority, the right of way agent, and approved by the Department of General Services consistent with Government Code section 11005.”

The full text of the SBPW’s November 6^th Minutes can be viewed here:

http://www.spwb.ca.gov/archives/minutes/documents/fM11_6_12.pdf

The next step for the Board is to consider bids from right of way agents to handle eminent domain negotiations with property owners on its behalf.