SCOTUS Arkansas Game Oral Argument: A New High Water Mark for 5th Amendment Takings?

The 1980s and early 1990s was a high-water mark for property owners asserting rights under the Fifth Amendment’s Takings Clause.  In a series of decisions during that period (including Loretto v. Teleprompter Manhattan and Lucas v. South Carolina Coastal Council), the U.S. Supreme Court expanded the rights of land owners to demand compensation from governments that interfere with their property rights and established certain categories of “takings” for which compensation is always required.  But more recent High Court decisions have been less favorable to land owners.  Indeed, some commentators have suggested that the Court’s 2002 Tahoe-Sierra decision makes it exceedingly difficult ever to obtain compensation when the government interference is temporary in nature.

Property rights appear poised to make a comeback, however, in connection with a case now before the Supreme Court.  Yesterday’s oral arguments in the case, Arkansas Game and Fish Comm’n v. United States (WLF’s amicus brief here) suggest that none of the Justices are buying the federal government’s contention that no compensation is due land owners whose property is damaged by government-induced floods so long as the flooding is only temporary in nature.

The case arises in connection with the federal government’s releases of water from a dam it operated on the Black River in Missouri.  Between 1993 and 2000, the government deviated from its normal release policy—a policy that had been in place since 1953.  According to findings by the U.S. Court of Federal Claims (following a lengthy trial), the actual and foreseeable result of this new policy was to cause unprecedented summer flooding of downstream wilderness property owned by Petitioner.  The government adhered to these “deviations” from its normal release policy despite the property owner’s repeated protests that the summer flooding was destroying valuable timber.  Only after the government recognized the full extent of the damage (losses of timber worth millions of dollars) did it cease its deviations.  The trial court awarded the Petitioner $5.8 million under the Takings Clause, which requires “just compensation” for property taken by the government.

On appeal, the U.S. Court of Appeals for the Federal Circuit did not question any of the trial court’s factual findings.  It nonetheless reversed, holding that a government-induced flood is never compensable under the Takings Clause when it is temporary in nature.  The Federal Circuit deemed the government-induced summertime flooding to be a mere “temporary” interference with property rights because, although it continued for seven years, the federal government never purported to adopt its new water-release policy on a permanent basis—it was always labeled a “deviation” from standard policy.

The Supreme Court last summer agreed to review the Federal Circuit’s decision.  Judging from yesterday’s oral arguments, it is highly likely to reverse, perhaps by a unanimous 8-0 vote (with Justice Elena Kagan recused).  The Justices simply were not buying the federal government’s contention that property owners downstream from a dam are never entitled to compensation for the damage that results when water released from the dam causes a temporary flooding of their property.  When the federal government’s attorney noted that Congress in 1928 passed a law exempting the U.S. from liability for flood damages caused by its operation of dams, Justice Scalia responded dismissively that the federal government is not entitled to exempt itself from the requirements of the U.S. Constitution.

The Court is highly likely to reinstate the case and then remand it to the Federal Circuit for reconsideration.  At that point, the federal government will be free to raise other defenses, including its assertion that other factors (including changing rainfall patterns) were the actual cause of the destruction of the property owner’s timber.

While a federal government loss seems assured, the importance of the decision to Takings Clause jurisprudence will depend to a great degree on the actual wording of the Court’s decision. What would be most helpful, from the standpoint of property owners, would be a re-affirmation of language from the Court’s 1987 First English decision.  In that case, the Court stated that “temporary” government invasions of private property that deny a land owner all use of his property are not different in kind from permanent invasions; in both instances, the land owner is always entitled to compensation from the government.  In later cases, the Court indicated that compensation is not necessarily required if the government imposes temporary regulations on use of the property—even if the property owner is deprived of all value while the temporary regulations remain in place—but does not actually undertake a physical invasion of the property.  In those instances, courts are to employ a balancing test that leaves them free to look at a variety of factors in deciding whether compensation is required; and the use of the balancing test is, in practice, usually fatal to the property owner’s compensation claims.

Perhaps recognizing that the Supreme Court is unlikely to accept the Federal Circuit’s no-compensation-for-temporary-flooding rule, the federal government is arguing in the alternative for a rule mandating the use of a balancing test for Takings Clause claims arising from government-induced flooding.

Whether the Court mandates use of a multi-factor balancing test in flooding cases ultimately boils down to whether it views government-induced flooding as more akin to a physical invasion of the property or to government regulation of the property.  While the issue is not free from doubt, it seems more logical to categorize government-induced flooding as a physical invasion (and thereby apply the per se takings rule normally employed in such cases).  Although government-induced flooding does not entail physical entry by government employees or agents, the flood waters that enter the property do so as a direct result of government policy; and in both instances the result is to render the property owner (at least temporarily) incapable of making any use of his property.  In contrast, when government regulations temporarily prevent an owner from making economically productive use of his property, he still generally has the right to occupy his property and exclude others—a right denied to the victim of government-induced flooding.

It is always possible, of course, that the Court will punt on this issue.  That is, it may simply reverse the decision below and allow the Federal Circuit to determine in the first instance what standard of review should apply to Takings Clause claims arising in flooding cases.  But if, as seems more likely, the Court addresses the issue and concludes that a per se rule (requiring compensation) applies to all physical invasions of property, regardless of whether the invasion is temporary and regardless whether the “invasion” entails actual occupation of the property by government agents, the decision in Arkansas Game and Fish Comm’n will represent a substantial re-affirmation of the rights of property owners.