|
Regulatory "Taking" Claim Upheld
on Less than Entire Parcel by Oregon Court of Appeals
By Eugene
L. Grant and Dean
M. Phillips
[March 2004]
Landowners and governmental entities may all feel the impact
of a recent Oregon Court of Appeals decision relating to a regulatory
“taking” (inverse condemnation). Coast Range
Conifers, LLC v. State of Oregon, 189 Or App 531, 76 P3d
1148 (2003), hereinafter referred to as “Coast Range.”
The decision reconsideration was filed Feb. 11, 2004. The court
upheld its decision that a compensable “taking”
occurred when a state forester denied logging on a nine-acre
parcel based on an alleged bald eagle habitat which was no longer
occupied. The decision is based on the Oregon State Constitution’s
prohibition against a “taking” of property without
the payment of just compensation. While this case also involves
a number of other issues relating to jurisdictional and procedure
issues, this advisory only deals with the state constitutional
(inverse condemnation) aspect of the decision.
Summary of Facts: Coast Range Conifers, LLC
(CRC) purchased a 40-acre parcel. Based upon two sightings of
bald eagles and an unoccupied bald eagle nest by state and federal
government employees, CRC filed a plan with the Oregon Department
of Fish and Wildlife to restrict logging within a specified
area of the nest leaving approximately 31 acres for logging.
The state forester approved the plan. Following the nesting
season, CRC observed that the nest was no longer occupied and
filed a revised plan proposing to log the remaining nine acres.
After a contested case hearing, the Board of Forestry upheld
a denial of the plan to log the remaining nine acres (the “Board
Decision”). CRC then sued for inverse condemnation arguing
that there was no economic viability to the remaining nine acres.
Regulatory Takings In Oregon
To prevail on a regulatory taking claim, Oregon courts have
historically held that a claimant must show that the subject
regulation has deprived the claimant of all substantial beneficial
or economically viable use of the subject parcel of property.
The Oregon courts had not been clear on whether a regulation
that impacts less than the whole parcel can result in a regulatory
taking claim (inverse condemnation) or whether, to serve as
the basis for an inverse condemnation claim, the regulation
must deprive the claimant of all economic viable uses of the
entire parcel.
In addition to the state constitutional claim, there may also
be a federal constitutional claim based on a similar prohibition
under the federal constitution. In Coast Range, the
court reiterated its position that federal constitutional issues
are not considered if the court can decide the matter on state
constitutional grounds.
Significance of Coast Range Decision
Because Coast Range dealt with a nine-acre portion
of a larger 40-acre parcel, the court discussed the “whole
parcel” rule as it applies to Oregon. The state did not
refute that the Board’s Decision resulted in a complete
deprivation of value with respect to the nine-acre area. Instead,
the state, relying upon federal case law, argued that there
was not a compensable “taking” because the “whole
[40-acre] parcel” was not deprived of value. The rule
pronounced in the federal case law is often referred to as the
“whole parcel” rule. Significantly, in Coast
Range, the Court refused to apply the federal case law
cited by the state and held that the “whole parcel”
rule does not apply in Oregon. The Court found that Oregon courts
consistently reject the “whole parcel” rule. Citing
a prior holding of the Oregon Supreme Court, the Court of Appeals
reasoned that courts in Oregon look to each parcel separately
from the larger whole, examining only the individual portions
of the claimant’s property that were subject to the use
restrictions without reference to the use or value of the property
as a whole. Based on this analysis, the court held that CRC
has sustained its regulatory “takings” (inverse
condemnation) claim under the state constitution.
This case may be appealed by the state, but if upheld by the
Supreme Court, it will have a significant impact on existing
as well as potential governmental regulations. Because the Coast
Range decision cited prior Oregon Supreme Court decisions
with respect to the “whole parcel” rule, it is anticipated
that the Supreme Court will uphold the Court of Appeals decision.
Of course, the Supreme Court could overrule its earlier decisions
to align Oregon’s takings jurisprudence with federal law.
Why is the Coast Range Decision Important to You?
If you are a landowner and regulations restrict development
of only a portion of your land, e.g., a wetland, then you might
be entitled to compensation for such restrictions on use. Likewise,
governmental agencies may want to exercise caution in enforcing
or adopting new use restrictions that affect only a portion
of parcels where such restriction would have the result of depriving
the owner of all substantial beneficial and economical use of
the portion of the parcel. Clustering of development density
such as is common under planned unit development ordinances
and transferable development rights may be necessary to avoid
inverse condemnation claims due to natural resource protection
regulations.
If you have any questions relating to this important
case, please feel free to contact any of the following at Davis
Wright Tremaine:
Eugene
L. Grant, Portland, (503) 778-5427, genegrant@dwt.com
Dean
M. Phillips, Portland, (503) 778-5284, deanphillips@dwt.com
Christopher
P. Koback, Portland, (503) 778-5382, chriskoback@dwt.com
We remain ready to assist you with
similar issues.
This Advisory is a publication
of the Real Estate & Land Use Group of Davis Wright Tremaine LLP. Our
purpose in publishing this Advisory is to inform our clients
and friends of recent developments in real estate, land use
and construction law. It is not intended, nor should it be used,
as a substitute for specific legal advice as legal counsel may
only be given in response to inquiries regarding particular
situations.
Copyright ©
2004, Davis Wright Tremaine LLP.
return to Advisory
Bulletins main page
|
