• Landowners Can Sue For Loss of Property Value Due To Listing of Stream as “Impaired Water Body” Under Clean Water Act
  • February 14, 2011 | Author: Janet K. Goldsmith
  • Law Firm: Kronick Moskovitz Tiedemann & Girard A Law Corporation - Sacramento Office
  • A decision by the Ninth Circuit Court of Appeals has overturned a procedural ruling that prevented landowners from suing the United States for diminution of property value resulting from the listing of a stream as an impaired waterbody under Section 303(d) of the Clean Water Act. Barnum Timber Co. v. U.S. EPA, (Docket No. 08-17715, February 3, 2011).

    Background
    Under the federal Clean Water Act, the listing of a stream as “impaired” triggers a requirement that the State identify maximum pollution levels for the water, known as “total maximum daily loads” or TMDLs, and create a plan to attain those levels. If the State does not do so, then the federal Environmental Protection Agency (EPA) will regulate the stream. In California, any stream included on the § 303(d) list is also subject to state regulations.

    Barnum is the owner of timber property within the Redwood Creek watershed in Humboldt County, California. In 1992, the State of California listed Redwood Creek as impaired by both sediment and temperature, and retained it on the 303(d) list in 2006. EPA approved the listing, and Barnum sued EPA in federal court, alleging that EPA’s decision was invalid because it was arbitrary and capricious. EPA sought dismissal of the complaint, arguing that Barnum had not satisfied the constitutional requirement of “standing” to bring the suit. The district court ruled that Barnum had not demonstrated such standing in its complaint and could not, therefore, bring suit. It found that the alleged injury was not “fairly traceable to EPA and would not likely be redressed by a ruling in Barnum’s favor. The Ninth Circuit decision examined all three requirements for constitutional standing and found otherwise.

    “Standing” Criteria
    The U.S. Constitution requires that, in order to sue in federal court, a plaintiff must have standing to sue ¿ that is, must be able to allege (1) a “concrete and particularized” injury or “actual or imminent harm” to a legally protectable interest, (2) a causal connection between the action being complained of and the injury, and (3) that the court has the power to remedy the injury.

    Injury in Fact
    Although neither the EPA nor the district court had contested Barnum’s allegation of injury, the Ninth Circuit examined Barnum’s claim and found it sufficient. The harm alleged to Barnum’s property value met the first hurdle for standing. Barnum had submitted two declarations of forestry experts testifying to property value reduction. The Ninth Circuit accepted these as sufficient, noting that the Supreme Court has been satisfied by even a lesser showing.

    Causal Connection
    Barnum alleged that the 303(d) listing had reduced the value of its property by “feeding the public’s and the market’s perception that Barnum’s timber operations are restricted by the listing.” Barnum’s forestry experts explained: “When a listing occurs, the public perceives - whether accurately or not - that the subject property will be subject to additional and onerous regulation. . . . In this case, the market reaction is such as to deem Barnum’s property to be devalued because of the §303(d) listing.” The Ninth Circuit held that the allegation of the dampening effect of EPA’s action on the market met the requirement of causality. Barnum’s allegation of specific facts plausibly explaining causality and supported by competent declarations was “more than sufficient” to satisfy the standing requirement of a causal connection between the defendant’s actions and the injury claimed by the plaintiff. The court further clarified that a plaintiff need not allege that the regulatory action “is the sole source of devaluation of its property,” only that there is a “link between the challenged action and the alleged injury [that] is not tenuous or abstract.”

    Redressability
    The court also found that the injury could be redressed by the requested injunction removing Redwood Creek from the § 303(d) list of impaired waterbodies, thus satisfying the third and final criterion for standing to sue. The removal of Redwood Creek from the impaired waterbody list would resolve the injury Barnum has allegedly suffered from its inclusion on the list.

    Dissent
    A long dissenting opinion, filed by Justice James S. Gwin, reveals the difficult road that plaintiffs have in establishing standing. Justice Gwin labeled Barnum’s claimed injuries as “at best, conjectural or hypothetical” and found “no causal connection between EPA’s acts and the injuries.” He noted that because TMDLs are imposed only under state law; the federal EPA listing does not directly impact any use of Barnum’s property. Further, he found that any restriction on Barnum’s use of its property would only occur after further occurrence of a “long chain of future events” ¿ the actual development and implementation of a TMDL restricting uses of timberland.

    The dissent dismissed the majority’s finding of sufficiency in Barnum’s allegation that public perception of such future restriction had already affected Barnum’s property value. In assessing causation, Justice Gwin said the court should have considered “whether EPA’s action had some ‘determinative or coercive effect’ upon the state of California” that induced the inclusion of Redwood Creek on the impaired waterbody list. Finally, Justice Gwin noted California has implemented a comprehensive system of regulations for timber harvesters that would regulate Barnum’s use of its land “irrespective of Redwood Creek’s Section 303(d) listing.” Because the Justice found that “California regulations would continue to impose costs potentially affecting property values near Redwood Creek,” he concluded that even if a court were to overturn EPA’s approval of the impaired waterbody listing, Barnum’s claimed injury would not be remedied.

    The dissent demonstrates that establishing a right to sue continues to pose a major hurdle that must be overcome in seeking redress in the courts. And the right to sue is just the first hurdle.

    Success on the Merits Irrelevant to Standing
    As the Ninth Circuit court noted, “The questions of whether Barnum will win . . . or would be able to sue California in a similar action are not before us.” However, it confirmed Barnum Timber’s right to sue, an indispensable first step in vindicating its claim of a property rights injury. And importantly, the court also provided clear guidance to litigants on the specific allegations they will need to make to establish standing in a suit for regulatory damages to property rights.