UPPER DELAWARE RIVER VALLEY — Wayne County landowners with signed gas leases have threatened the Delaware River Basin Commission (DRBC) with a lawsuit if the commission does not vote to end its moratorium on gas drilling in the basin at meetings scheduled for July 9 and 10, or at least set a date for when its members will vote on the issue before the end of the year.
The executive committee of the Northern Wayne Property Owners Association (NWPOA) wrote that it would also be acceptable if the DRBC steps aside and abandons any plan to regulate natural gas drilling in the basin. If the status quo holds, with the moratorium remaining in place after three years, NWPOA will be “forced to begin litigation against the Commission, its member states and executive staff and others who may have acted in concert with them to regain our right to access our mineral estates.”
The “takings” argument is essentially the same one that was used in lawsuits in two towns in New York that banned drilling; the lower and appellate courts in New York ruled against the pro-drilling interests and the bans were upheld.
In any case, Pennsylvania Governor Tom Corbett, a member of the DRBC, agrees with the NWPOA that the DRBC’s moratorium could be seen as a taking. He wrote a letter on June 27 to the DRBC executive director Carol Collier, averring that to be the case and also saying, “This moratorium has done more than prohibit the citizens of Pennsylvania who reside within the basin from enjoying their property rights. It has depressed economic growth in the region, discouraged the investment of private capital in the Commonwealth, and reflected poorly on the DRBC’s ability to function effectively.”
Corbett or his appointee is one of five voting members of the DRBC; the others are the governors or their appointees of New York, New Jersey and Delaware, and a representative of the U.S. Army Corps of Engineers (USACE).
At the end of the year in 2010, the DRBC released proposed new regulations for drilling in the basin. In May 2011 New York Attorney General Eric Schneiderman filed a lawsuit charging that if the regulation were allowed to go forward, this would be a violation of the National Environmental Policy Act.
Then in August of 2011, National Parks Conservation Association (NPCA), the Delaware Riverkeeper Network (DRN) and the Columbia Environmental Law Clinic also filed a lawsuit against DRBC and USACE. The groups argued that the impacts of hydraulic fracturing needed to be better understood before regulations regarding them could be adopted.
The representatives from New York and Delaware indicated later in 2011 that they were opposed to adopting the regulations, and since then DRBC has not voted on the matter; the two lawsuits are dormant.
In reaction to the NWPOA announcement that they are now close to bringing a lawsuit, Maya van Rossum, the Delaware Riverkeeper, issued a statement that said, “The threat of legally dubious litigation should not compel the Commission to take unwarranted action. Especially knowing that if they were to act, that the last time they did so the Delaware Riverkeeper Network (DNR) and the New York Attorney General both filed very strong, legally valid, and likely successful legal challenges.”
DNR sent a memo to the DRBC explaining why NWPOA “likely do not have a taking claim,” which can be viewed at www.riverreporter.com .
Re: Regulatory Takings: Northern Wayne Property Owners Alliance Letters to DRBC
Whether a gas rights leaseholder has a claim for uncompensated regulatory takings due to the Delaware River Basin Commission temporary moratorium on shale gas development? Would a leaseholder have a claim if the moratorium were permanent?
Leaseholders likely do not have a taking claim because the DRBC’s moratorium on drilling within the Delaware River Basin pending the promulgation of final regulations constitutes neither a total taking under the Lucas Test, nor a partial taking under the factors articulated in Penn Central. Furthermore, it is likely that this case is not ripe for consideration as no “unreasonable delay” in promulgating final regulations on DRBC’s part can be established.1
The DRBC should, of course, perform its own legal research and analysis on the issues.
REGULATORY TAKINGS OVERVIEW
The Takings Clause of the Fifth Amendment to the Constitution states that private property shall not be “taken for public use, without just compensation.” U.S. Const. Art. 5 Ultimately, the “purpose of the Takings Clause . . . is to prevent the government from ‘forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.’” Palazzolo v. Rhode Island, 533 U.S. 606, 617-18, (2001) (quoting Armstrong v. United States, 364 U.S. 40, 49 (1960)). A disproportional burden borne by the property owner does not automatically indicate a taking. See Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124 (1978) (stating that there is no “set formula” to determine when the imposition of a disproportional burden requires compensation). Instead, “[t]he Takings Clause  preserves governmental power to regulate, subject only to the dictates of ‘justice and fairness.’” Andrus v. Allard, 444 U.S. 51, 65 (1979) (quoting Penn Central Transp. Co, 438 U.S. at 124) (emphasis added).
Takings jurisprudence “aims to identify regulatory actions that are functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain.” Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 539 (2005) (emphasis added). Additionally, the Supreme Court has denied takings challenges “in a wide variety of situations when the challenged governmental action prohibited a beneficial use to which individual parcels had previously been devoted and thus caused substantial individualized harm.” Penn Central Transp. Co, 438 U.S. at 125. A taking stemming from a moratorium is known as a “regulatory taking” and was first acknowledged in Pennsylvania Coal Co. v. Mahon. 260 U.S. 393 (1922). Given a protected property interest, the types of regulations that constitute total or partial takings fall into three categories: a regulation requiring a physical intrusion onto the owner’s property, a regulation that totally eliminates any productive use for the property, and a regulation that does not wholly eliminate the property’s productive use but is found to be severe in light of a balance of relevant factors. Lingle, 544 U.S. at 538-39.
In non-appropriation/non-physical invasion cases, such as a regulatory taking case, there are two different tests to determine whether a taking has occurred: the first test addresses the “relatively rare” situation in which a land use regulation deprives the owner of all use of his or her property. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1017, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992). The second “test” is the more traditional takings analysis, which becomes applicable if the regulation does not rise to the level of a Lucas taking, known as the Penn Central test. Penn Central, 438 U.S. at 124.
Lucas stands for the proposition that regulations that deprive an owner of “all economically beneficial or productive use of land” are takings unless the use constitutes a public nuisance or are caused by the nature of the use and the owner could have expected that the government might prohibit it. Lucas, 505 U.S. at 1027-1029, 112 S.Ct. 2886. Therefore, to conduct a Lucas analysis, courts determine whether the subject regulation “deprives a landowner of all economically beneficial” use of his or her property. If so, the regulation will constitute a taking unless state property law independently prohibits the use. Id. at 1027. More recently, in Lingle v. Chevron U.S.A. Inc., the Supreme Court again noted that one of the situations “that generally will be deemed per se takings for Fifth Amendment purposes” occurs when a regulation or regulatory action “completely deprive[s] an owner of ‘all economically benefit us[e]’ of her property.” 544 U.S. 528, 538 (2005). Courts have denied Lucas-type takings claims when the regulation at issue left the claimant with beneficial uses. Palazzolo, 533 U.S. at 630- 31, 121 S. Ct. at 2464 (claimant could build a “substantial residence”); Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470, 501, 107 S. Ct. 1232, 1250 (1987) (claimants retained right to mine mineral estates, and only some of the support estates were restricted under the challenged statute); Briarcliff Associates, Inc. v. Town of Cortlandt, 272 A.D.2d 488, 491 (2d Dep't 2000) (claimant retained right to operate emery mine as legal nonconforming use; residential development remained a possibility).
In the absence of a physical, per se takings claim, the claimant may fall back on the default rule laid out in Penn Central. Lingle, 544 U.S. at 538, 125 S. Ct. at 2081; Friedenburg v. DEC, 3 A.D.3d 86, 95, 767 N.Y.S.2d 451, 458 (2d Dep’t 2003). The analysis “necessarily entails complex factual assessments of the purposes and economic effects of government actions.” Tahoe-Sierra Preservation Council, 535 U.S. at, 122 S. Ct. at (quoting Yee v. Escondido, 503 U.S. 519, 523, 112 S. Ct. 1522, 1526 (1992)). In Penn Central, the Court decided there was no taking when a Landmarks Preservation Law prohibited the owner of Grand Central Terminal from building a multistory office structure on top of the terminal. Since the regulation did not deprive the owner of all economically beneficial use, the Court used a three-pronged analysis that included the economic impact of the regulation, the interference with reasonable investment-backed expectations, and the character of the government action in coming to this decision. Palazzolo, 533 U.S. at 617, 121 S. Ct. at 2457 (citing Penn Central Transp. Co, 438 U.S. at 124, 98 S. Ct. at 2659). The third factor is explained as whether the action resembles a physical intrusion into the property interest or whether it more resembles a “public program adjusting the benefits and burdens of economic life to promote the common good.” Penn Central Transp. Co, 438 U.S. at 124, 98 S. Ct. at 2659; see also Lingle, 544 U.S. at 539, 125 S.Ct. at 282.
THE DENOMINATOR PROBLEM
Pursuant to either analysis, there is a threshold question, frequently referred to as the “denominator problem,” which must be answered: what is the parcel against which the takings tests are applied? See Keystone, 480 U.S. 470 at 479, 107 S.Ct. 1232, 94 L.Ed.2d 472. If the area is defined broadly, almost no government action-no matter how intrusive-will be found to be a taking. See John E. Fee, Unearthing the Denominator in Regulatory Takings Claims, 61 U. CHI. L.REV. 1535, 1536 (1996). Similarly, if we define the land too narrowly, virtually all government action that affects private property will be a taking that requires compensation and government will be inhibited from enacting necessary legislation. Id. Because property is conceptualized as a “bundle” of “property rights.” see Loretto v. Teleprompter Manhattan CATV, Corp., 458 U.S. 419, 435, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982), courts have had to struggle with what has been referred to as “severance” issues in defining the relevant parcel. See Marc R. Lisker, Regulatory Takings and the Denominator Problem, 27 RUTGERS L.J. 663, (Spring 1966) (“the Lisker Article”). In other words, the courts have been called upon to consider whether some of the property rights in the bundle may be severed from the others and viewed separately as the relevant parcel. Severance issues have involved the following: (1) the horizontal, physical division of property - is the relevant parcel all the land in a given geographic area that one owns or some smaller portion of that acreage? See, e.g., Florida Rock Industries v. United States, 791 F.2d 893 (Fed.Cir.1986); (2) the vertical division of property - can the parcel be divided among air rights, surface rights, and mineral rights? See Penn Central, 438 U.S. at 130, 98 S.Ct. 2646 and Keystone, 480 U.S. at 470, 107 S.Ct. 1232; or (3) the temporal division of property - can the property be viewed in discrete temporal units? See Tahoe-Sierra Pres. Council Inc. v. Tahoe Reg. Planning Agency, 535 U.S. --
--, 122 S.Ct. 1465, 152 L.Ed.2d 517 (2002).
When a regulatory takings claim involves the ownership of a fee simple estate in land, it is well established that the owner cannot break that fee estate into segments in order to establish a taking of the regulated segment. E.g., Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 130-31 (1978) (“‘Takings’ jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated”); Andrus v. Allard, 444 U.S. 51, 65-66 (1979) (“At least where an owner possesses a full ‘bundle’ of property rights, the destruction of one ‘strand’ of the bundle is not a taking, because the aggregate must be viewed in its entirety”); Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 500 (1987) (rejecting plaintiff’s attempt to vertically define the relevant parcel as only its “support estate” even though that segment was recognized as a legally distinct property interest under state law). From 1978 until recently, the lower federal courts and state courts have generally utilized the whole-parcel analysis, usually to defeat a taking claim. Appolo Fuels, Inc. v. U.S., 54 Fed. Cl. 717, 56 Env't. Rep. Cas. (BNA) 1393 (2002); Naegele Outdoor Adver. v. City of Durham, 803 F. Supp. 1068 (M.D.N.C. 1992); Ciampitti v. United States, 22 Cl. Ct. 310 (1991); Dufau v. United States, 22 Cl. Ct. 156 (1990), Zilber v. Town of Moraga, 692 F. Supp. 1195 (N.D. Cal. 1988); Moore v. City of Costa Mesa, 678 F. Supp. 1448
(C.D. Cal. 1987); Jentgen v. United States, 657 F.2d 1210 (1981); Deltona Corp. v. United States, 657 F.2d 1184 (1981); Palazzolo v. State ex rel. Tavares, 746 A.2d 707 (R.I. 2000).
The U.S. Supreme Court recently reaffirmed the validity of the property as “a whole rule.” Tahoe-Sierra Preservation Council v. Tahoe Reg. Planning Agency, 535 U.S. ----, 122 S.Ct. 1465, 1480-81, 152 L.E.2d 517 (2002). In Tahoe-Sierra, Petitioners sought to divide their interests in land into temporal parts to claim that the statute, which imposed a temporary moratorium on development of private property surrounding Lake Tahoe, caused the restricted temporal portion of their property to become valueless. Id. at 1482-83. The Court declined to allow Petitioners to so divide their property. Id. It held that the moratorium did not constitute a Lucas taking because a fee simple interest in property may not be temporally divided for the purpose of takings analysis. Id. at 1482-84. The Court held that, when viewed as a whole the properties at issue retained value and that the temporary development prohibition did not rise to the level of a Lucas taking. The Court explained:
Petitioners' “conceptual severance” argument is unavailing because it ignores Penn Central's admonition that in regulatory takings cases we must focus on “the parcel as a whole.” We have consistently rejected such an approach to the “denominator” question.... Thus, the District Court erred when it disaggregated petitioners' property into temporal segments corresponding to the regulations at issue and then analyzed whether petitioners were deprived of all economically viable use during each period....
In some courts, a trend contrary to Tahoe-Sierra has appeared, arising principally from decisions of the Court of Federal Claims under the statute known as the Tucker Act, which governs tort claims against the federal government. In Loveladies Harbor, Inc. v. United States, the court held that the denial of a United States Army Corps of Engineers permit for the development of the last 12 acres of what had been a 250-acre subdivision was a taking; the court permitted analysis of the 12-acre parcel instead of the entire parcel as it had been developed during more than 20 years. Loveladies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1994). Rather than adopting a firm rule, however, the court held that each case would have to be reviewed on its own facts in order to determine what the proper numerator and denominator of the takings analysis should be. Id.
Less than eight months after the United States Supreme Court decision in Tahoe-Sierra, supporting the "parcel as a whole" rule, the Ohio Supreme Court rejected the rule in State ex rel. R.T.G., Inc. (“R.T.G.”). State ex rel. R.T.G., Inc. v. State, 98 Ohio St. 3d 1 (2002). The court concluded that mineral rights were separate property interests from land surface rights. In segmenting the property interests, the court concluded that the restriction of coal mining on a portion of the property constituted a taking of that particular piece of property. In rendering its decision, the Ohio Supreme Court acknowledged that the U.S. Supreme Court had twice rejected this kind of segmentation, but it ignored these precedents by claiming certain Supreme Court justices had questioned the application of the parcel-as-a-whole rule. However, in the same year that R.T.G. was decided, the Pennsylvania Supreme Court in Machipongo Land and Coal Co., Inc. v. Com. reached the opposite conclusion on similar facts as R.T.G. The Pennsylvania Supreme Court has consistently relied upon the decisions of the U.S. Supreme Court when considering takings issues, and as such, flatly rejected the argument that surface rights could be segmented from mineral rights, thereby supporting the parcel-as-a-whole rule. See Machipongo Land and Coal Co., Inc. v. Com., 569 Pa. 3, 799 A.2d 751, (2002) (court examined the whole parcel in light of the individual portions of the property subject to logging restrictions and found no taking).
Ultimately, while there has been some dissension, the Supreme Court has refused to allow: vertical severance of the mineral estate in Keystone; vertical segmentation of air and surface rights in Penn Central; or temporal division of property in Tahoe-Sierra. Thus, the relevant parcel cannot be segmented, and must be defined to include both the surface and mineral rights.
ANALYSIS: LANDOWNERS DO NOT HAVE A TAKING CLAIM
To properly bring a successful takings claim, first the claimant must identify the property interest allegedly taken. Northwest La. Fish & Game Pres. Comm'n v. United States, 79 Fed. Cl. 400, 408 (2007). A Leaseholder has a recognized property right, lease rights, subject to 5th Amendment takings clause. Love Terminal Partners v. United States, 97 Fed. Cl. 355, 371 (2011). “As a general proposition, a leasehold interest is property, the taking of which entitles the leaseholder to just compensation for the value thereof.” Sun Oil Co. v. United States, 215 Ct. Cl.
716, 769 (1978) (Sun Oil held lease for oil and gas rights from Department of Interior). The property interest allegedly taken through the DRBC moratorium is a natural gas leasehold.
As indicated in the February 2012 letter provided by NWPOA landowners to the DRBC, “all of NWPOA’s members owned unsevered natural gas rights.” Therefore, the “denominator” is unquestionably the entire parcel – both surface and subsurface rights. As such, NWPOA landowners likely do not have a taking claim because the moratorium on drilling constitutes neither a total taking under the Lucas Test, nor a partial taking under the factors articulated in Penn Central. Under Lucas, landowners retain other reasonable uses of their land, and therefore have not been deprived of “all economically beneficial or productive use of land.” Lucas, 505
U.S. at 1027-1029. In fact, in NWPOA’s June 2013 letter it is made abundantly clear that landowners may “timber their lands or subdivide them and open the subdivisions to development so they and their families can keep going financially.” Under the Penn Central analysis, the economic impact is mitigated by the potential use of the properties for other reasonable purposes. Additionally, the investment backed expectations of the landowners are in a heavily regulated arena and are not derived from traditional long-protected land uses. Lastly, the rare circumstance of extraordinary delay and bad faith are not supported by the DRBC’s crafting of a series of complex, permanent regulations that have the potential to impact the drinking water of over 15 million people.
Under the test in Lucas, the prohibition of particular uses does not constitute a taking if other uses are allowed. Andrus v. Allard, 444 U.S. 51, (1979); Thompson v. City of Red Wing, 455 N.W.2d 512 (Minn. App. 1990) (prohibition on gravel mining not taking where other economic uses remain); see also Adolph v. Federal Emergency Management Agency, 854 F.2d
732 (5th Cir. 1988) (FEMA floodplain regulations not taking because they only require elevation and floodproofing, and thus do not prevent all reasonable uses of land) Miller & Son Paving, Inc. v. Plumstead Township, 552 Pa. 652, 717 A.2d 483 (1998) (A taking does not result merely because a regulation ... deprive[s] the owner of the most profitable use of his property). For landowners who own drilling rights as part of their estate, the banning of mining activities does not extinguish all economic use of their property. William C. Haas & Co. v. City & County of San Francisco, 605 F.2d 1117 (9th Cir. 1979) (zoning ordinance valid even though reduced property value by more than 90%); see also Hadacheck v. Sebastian, 239 U.S. 394, 36 S. Ct. 143, 60 L. Ed. 348 (1915); Pace Resources Inc. v. Shrewsbury Tp., 808 F.2d 1023 (3d Cir. 1987) (In measuring diminution of value, as noted by the court in Pace Resources, the owner's loss of highest and best use is not the controlling factor).
Landowners here retain other reasonable uses of their land, such as for the construction of residences, farming, timber sales, conventional natural gas extraction, and mining. The Supreme Court has repeatedly criticized defining the property interest taken in terms of the regulation challenged as “circular.” Tahoe-Sierra Preservation Council, 535 U.S. at 331, 122 S. Ct. at1483. The Court looks instead to the parcel as a whole. Id. Therefore, NWPOA’s claim that “the value of natural gas development would dwarf the value of the surface estate,” is irrelevant. Under Lucas, landowners here simply do not have a total taking claim.
PENN CENTRAL TEST:
Turning now to the Penn Central test, the landowners regulatory takings claim here fail as well. Regulatory takings jurisprudence under Penn Central is characterized by “essentially ad hoc, factual inquiries,” designed to allow “careful examination and weighing of all the relevant circumstances,” Palazzolo v. Rhode Island, 533 U.S. 606, 636 (2001) (O'CONNOR, J., concurring). The Supreme Court has “identified several factors ... that have particular significance: ‘the economic impact of the regulation, its interference with reasonable investment backed expectations, and the character of the governmental action.”’ Eastern Enters. v. Apfel at 521 (citing Penn Central Transp. Co. at 124).
a) Economic Impact
Similar to the focus in the Lucas test, in evaluating the economic impact of a regulation on a plaintiff, a court focuses on the nature and extent of the interference with a plaintiff's rights in the parcel as a whole. Tahoe-Sierra Pres. Council Inc. v. Tahoe Regional Planning Agency at 327; Andrus v. Allardat 51, 66. The Supreme Court found a 94 percent diminution in value to leave more than “a token interest” that did not leave the property “economically idle.” Palazzolo
v. Rhode Island at 631. Similarly, a 91 percent reduction in value was found not to be a categorical taking. Rith Energy Inc. v. United States, 270 F.3d at 1349. Recently, the Federal Circuit found losses of 92 percent and 78 percent to be “manifestly insufficient” to establish a taking. Appolo Fuels Inc. v. United States at 1347; see also Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 384 (1926) (approximately 75 percent diminution in value); Hadacbeck v.
Sebastian, 239 U.S. 394, 405 (1915) (92.5 percent diminution); Lucas v. South Carolina Coast Council at 1019-1020 n.8 (suggesting that a 95 percent diminution in value would not constitute a categorical taking); Maritrans Inc. v. United States at 1358 (13 percent reduction in value does not constitute a taking); Brace v. United States at 337, 357 (14 percent diminution in value does not have the effect of a taking). However much a gas drilling moratorium diminishes the value of mineral rights, a court cannot find a taking unless the other Penn Central factors weigh heavily in favor of a taking, which they do not.
b) Investment Backed Expectations
In determining whether there has been a regulatory taking, it is well settled that courts must evaluate the extent to which the challenged governmental action has interfered with the reasonable investment-backed expectations of the property owner. Keystone Bituminous Coal Ass'n v. DeBenedictis at 495. NWPOA landowners have little reason for investment-backed expectations. No permit has ever been granted in Pennsylvania for the practice of horizontal high-volume hydraulic fracturing in the Delaware River Basin. Courts consider three factors for property that was acquired prior to regulation: (1) is it a highly regulated industry or activity; (2) was the plaintiff aware of the problem that spawned regulation when the property was acquired; and (3) could the regulation have been reasonably anticipated?
Gas development is a heavily regulated field everywhere in the United States and subject to a rigorous permitting process. In the area of mineral interests, such expectations are necessarily shaped by the fact that the development and extraction of natural resources through mining or drilling has a long history of heavy regulation due to the adverse environmental impacts that can result. See District Intown Props., Ltd. v. District of Columbia, 198 F.3d 874, 884 (D.C. Cir. 1999) (“[b]usinesses that operate in an industry with a history of regulation have no reasonable expectation that regulation will not be strengthened to achieve established legislative ends.”). Because hydrocarbon extraction and development is such a heavily regulated field, any landowner who acquired property in the Delaware River Basin for the purpose of resource extraction, as well as any gas driller, should be well aware that the economic prospects may be limited by regulations. However, since high-volume horizontal hydrofracking is a relatively new process for extracting gas, many landowners in the Marcellus Shale may have just recently discovered the profitability of their property for gas development. The third prong of the analysis addresses this situation by considering whether regulation could have reasonably been anticipated when the industry introduced a new practice. Because hydrofracking is more invasive and resource intensive than previous methods used to extract gas, imminent regulation should have been anticipated. This is especially true in the Delaware River Basin where dangers to surface waters have been targeted for rigorous regulation by the DRBC since the 1950s. A landowner can change the economic expectations of his or her property once a new practice is introduced that can suddenly change the land's profitability, but those expectations will only be considered in the context of the overall regulatory regime in place.
This case does not deal with traditional, long-protected land uses. Natural gas from mile deep shale formations is considered an “unconventional” fuel source. In turn, natural gas extraction by high volume slick water fracturing is an unconventional land use. Under these circumstances, fairness requires giving agencies with proper jurisdiction, such as the DRBC, the chance to determine the legal limits of the property interest associated with the new technology, before courts step in to require compensation for denying the exploitation of that interest.
c) Character of Government Action
An evaluation of the character of the government's action involves an inquiry into “the public purposes served by the [g]overnment's regulatory actions. ...” Bass Enterprises Prod. Co.
v. United States, 381 F.3d at 1369-1370. The assessment includes an analysis of “[t]he purposes served, as well as the effects produced, by a particular regulation,” Palazzolo v. Rhode Island at 633, and the “purpose and economic effect” of the government's actions. Tahoe-Sierra Pres. Council Inc. v. Tahoe Regional Planning Agency at 323. A government's traditional regulatory actions, such as those involving zoning, permits, moratoriums, and other land use provisions, as well as those affecting safety, often do not constitute takings if the duration of the regulatory restriction is within reasonable time limits. Id. at 329.
The Federal Circuit first observed that neither a permitting process alone nor the mere assertion of regulatory jurisdiction, without more, can constitute a taking; nor can mere fluctuations in value during the decision-making process, absent extraordinary delay. Id. at 1098- 99 (citing Agins). see also Cooley, 324 F.3d at 1307 (“The length of the delay is not the only or necessarily the critical factor for finding a taking by extraordinary governmental delay.”); see also Williamson County Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985) (eight years is insufficient delay to effect a taking); Bass Enters., 381 F.3d at 1367 (45 months' delay is not extraordinary); Wyatt, 271 F.3d at 1098 (nearly ten-year permitting process including seven years' delay is not extraordinary); 1902 Atlantic Ltd. v. United States, 26 Cl.Ct. 575 (1992) (five years' delay not extraordinary); Dufau v. United States, 22 Cl.Ct. 156, 162-63 (1990) (16 months' delay is not extraordinary). The Federal Circuit explained that it is not the length of the delay alone that makes it “extraordinary,” but rather, the reasons for delay and the nature of the permitting process will determine whether a delay is extraordinary. Id. at 1099. The nature of the regulatory scheme is especially critical when the permitting process requires detailed technical information necessary to determine environmental impacts. Id. at 1098. If no extraordinary delay is found, this issue would be dispositive on grounds of ripeness. Courts have latched onto extraordinary delay as the trigger that, absent a “final” decision, ripens a takings claim. McGuire v. United States, 2011 WL 576060 at *7 (Fed. Cl. Feb. 18, 2011).
What is more, the Federal Circuit cautioned that only in rare circumstances can a delay be extraordinary without a finding of bad faith on the part of the government. Id.; see also Bay- Houston Towing Co. v. United States, 58 Fed. Cl. 462, 477-78 (2003) (holding that eleven-year dispute over whether the plaintiff was entitled to a CWA § 404 dredge and fill permit for mining
peat did not amount to bad faith or unreasonable delay, so no temporary taking occurred). In order for bad faith to be established the delay would need to be “so objectively unreasonable as to give rise to the inference” that the government was acting “solely for purposes of delay or some other illegitimate reason.” Landgate, Inc. v. Cal. Coastal Comm'n, 953 P.2d 1188, 1200 (Cal. 1998). The Court in Tahoe-Sierra offered very little on what may constitute bad faith. In dicta, the court included a sentence implying that had the agency not “acted diligently and in good faith” but had instead been “stalling,” such facts “arguably could support” a “bad faith” takings claim. However, this is a difficult burden to carry as the government is entitled to the presumption that its actions were lawful and authorized. That is because, in a takings case, “we assume that the underlying governmental action was lawful.” Appolo Fuels Inc. v. United States at 1351 n.7, citing M & J Coal v. United States at 1154. Furthermore, the DRBC could rightly claim it is justified using a moratorium to craft complex, wise, permanent regulations that have the potential to have a significant impact on a significant number of people.
Over fifteen million people benefit from the unfiltered drinking water supplied by the Delaware River Watershed. Clean drinking water is a quintessential public good that benefits everyone in the population. The burdens to the landowners, by contrast, are small and consist of no more than what any landowner must submit to in order to secure “the advantage of living and doing business in a civilized community.” Andrus v. Allard, 444 U.S. at 67, 100 S. Ct. at 328 (quoting Pennsylvania Coal Co, 260 U.S. at 422, 43 S. Ct. at 163 (Brandeis, J., dissenting)). The regulation of gas drilling has long been concerned with environmental protection, including the protection of drinking water supplies. The aim is not to conserve wild land in its natural state— this is a law specifically focused on drilling for natural gas. A narrowly drawn regulation
focused precisely on the injury to be prevented is one for which the burden should “in all fairness and justice” be borne by the property owner alone because he holds his property subject to reasonable regulation and the implied obligation not to use property in a way injurious to the community. See Mugler v. Kansas, 123 U.S. 623, 665, 8 S. Ct. 273, 299 (1887). For the aforementioned reasons, leaseholders in the Delaware River Basin likely do not have an actionable taking claim.