Eminent Domain Report

In the second flooding decision issued by the U.S. Court of Appeals for the Federal Circuit in the past two weeks, the court held that there was no physical taking because the property was never actually flooded and no de facto taking because no federal entity or regulation prohibited the plaintiffs from using their property.  (See Stueve Bros. Farms, LLC v. United States (No. 2013-5021, Dec. 11, 2013).)

In 1941, the U.S. Army Corps of Engineers completed the construction of the Prado Dam on the Santa Ana River near Corona, California.  Because the Army Corps anticipated that operation of the Prado Dam could inundate some of the properties in the flood control basin, it took a 565-foot flowage easement over plaintiffs' property and paid plaintiffs just compensation.  In 1970, the Army Corps developed plans to modify operations at the Prado Dam.  It was anticipated that the operations would raise the maximum flood inundation line by ten feet, from 556 feet to 566 feet.  After the Army Corps announced its intention to raise the maximum flood inundation line to 566 feet, local government agencies recorded a survey delineating the 566-foot flood inundation line over plaintiffs' property.  

Beginning in 1989, pursuant to an agreement with the Army Corps, a number of state and local government agencies began acquiring easements and properties necessary for the revised operations at the Prado Dam.  From 1993 to 2008, various local government agencies acquired a number of parcels in the vicinity of plaintiffs' property.  And, in 1999, the Orange County Flood Control District offered to purchase the plaintiffs' property.  However, because the parties could not agree on a purchase price, the offer was eventually withdrawn.  

In 2003, the Army Corps issued a flood-plain map showing the 566-foot inundation line.  Shortly thereafter, the City of Chino rezoned the portion of plaintiffs' property below the 566-foot line for "passive recreation and open space use."  In 2008, the Army Corps completed the planned modifications to the Prado Dam.  

In 2011, plaintiffs filed an action in the Court of Federal Claims, alleging that the federal government had physically taken a 10-foot flowage easement over their property without just compensation.  The Court of Federal Claims dismissed the complaint, however, holding that because there was never any actual flooding of plaintiffs' property, there was no physical taking.  On appeal, the Federal Circuit affirmed.  

In its opinion, the Federal Circuit found that the plaintiffs had relied solely on the claim that a physical taking had occurred, as opposed to a regulatory taking.  And as such, the U.S. Supreme Court's decisions in Danforth v. United States (1939) 308 U.S. 271, and United States v. Sponenbarger (1939) 308 U.S. 256, precluded the court from holding that a taking had occurred in the absence of actual flooding.  Therefore, because it was undisputed that no flooding had actually occurred on plaintiffs' property, the Federal Circuit held that no physical taking had occurred. 

The Federal Circuit also rejected plaintiffs' de facto takings argument.  The plaintiffs asserted that regardless of whether a flooding had actually occurred, a taking can be found when there is government delay in property acquisition accompanied by severe restrictions on the property owner's use during the period of delay.  The Federal Circuit pointed out in its decision, however, that no federal entity had restricted plaintiffs' use of the property.  Instead, it was solely a local government entity, specifically the City of Chino, that had rezoned the property and thereby restricted the plaintiffs' use of the property.  The Federal Circuit explained that the fact that the City of Chino rezoned the property because of the revised flood map issued by the Army Corps in 2003 did not impact its conclusion.  On this point, the Federal Circuit stated:  "The actions of state and local officials in voluntarily implementing zoning restrictions that affect the landowner's property do not become takings by the federal government just because the local officials act in cooperation with, or at the urging of, federal officials."  Accordingly, the Federal Circuit affirmed the dismissal of the action.  

While the plaintiffs were not entitled to just compensation from the federal government at this time, the decision clearly implies that if a flooding ever does occur on the property, and if the flooding exceeds the current 556-foot flowage easement, the plaintiffs will be entitled to just compensation from the federal government.  Also, with respect to the rezoning by the City of Chino, the Federal Circuit noted in its decision that the plaintiffs had filed a parallel state court action against various state and local governmental entities.  Therefore, it seems that if the rezoning does amount to a taking, plaintiffs should be able to obtain just compensation in state court.