Posted on December 3, 2014
As my three prior blogs have discussed (see parts I, II, and III), the State of New Jersey has responded to Hurricane Sandy’s devastation in 2012 by escalating its efforts to construct sand dunes on its beaches to protect the shore communities beach front properties from repetitive coastal flooding. These cases have attacked the failure of the ensuing takings awards as not giving adequate compensation for the resulting partial loss of ocean view by the impacted homeowners or, by failing to reduce such awards to reflect the benefit the dunes would provide against future flooding in the future.
Now comes along a shore community, the City of Margate (in which this author owns a 10th floor vacation condominium), which filed a 16 page complaint (with 149 pages of exhibits) and asked the U.S. District Court of New Jersey to enjoin the NJ Department of Environmental Protection (NJDEP) and the U.S. Army Corps of Engineers (Corps) from trespassing on its residents properties by constructing dunes on Margate’s beaches. Despite the proposed takings being grounded in the Government’s power to protect the public health, safety and welfare, the Court issued a temporary restraining order (TRO) on November 24 in response to Margate’s Complaint alleging an “unlawful taking of Margate’s beachfront property”, required a bond of [only] $10,000.00 and scheduled a December 4, 2014 hearing to determine whether a preliminary injunction should be issued.
Stay tuned for further updates on this litigation which constitutes a challenge to the propriety of using sand dunes as an appropriate storm protection strategy for Margate, acknowledging that some preventive measures are necessary to deal with what will probably be recurring coastal flooding.
Posted on December 2, 2013
On June 13, I posted the first blog, in what has now become a series, initially called “Doin’ The Dunes: What Will They Cost?”, exploring the way in which New Jersey’s three branches of government intended to treat compensation for the easement agreements for the construction of dunes – New Jersey’s response to climate changes (e.g., Superstorm Sandy). At the time, the New Jersey courts had determined that the landowner would be compensated for a partial obstruction of the ocean view without any reduction for the benefit received from the dune’s protection (called a “general”, not “special” benefit).
On July 19, I posted the second blog, which described the New Jersey Supreme Court’s unanimous decision in Borough of Harvey Cedars v. Karan, 214 N.J. 384 (2013) to reverse the prior precedents and recognize that dunes did confer storm protection as a “special benefit” to the subject landowner which would reduce the otherwise compensable amount for that portion of the award for the partial loss of the ocean view. Since the lower courts had not calculated the amount of the special benefit, the Court remanded the case to the trial court for a determination of the amount of the “special benefit” and its resultant reduction of the amount of the takings claim. (The case was reported to have settled with the Karans’ receiving $1.00 for the partial loss of ocean view and the parties “acknowledgement that municipalities cannot enact or enforce laws or regulations that would interfere with the state’s plans to build dunes as part of flood mitigation effort.” (Phila Inquirer, PP A-1, A-9 (Nov 9, 2013)).
In the aftermath of Karan, the Appellate Division had an opportunity to revisit the issue (of the amount of compensation to be paid for the dune’s reduction of ocean view) in Petrozzi v. City of Ocean City, argued on September 9 and decided on October 28, 2013. Although the facts in the Petrozzi case are critical to the decision, the Court was asked to determine whether a municipality’s failure to maintain a 3 foot above sea level elevation of the dunes justified the payment of additional compensation. In this case, Ocean City had obtained easement agreements with a number of its residents in which the City obligated itself to maintain the 3 foot elevation. Subsequent legislation in New Jersey, administered by the New Jersey Department of Environmental Protection (NJDEP), required municipalities to obtain a Coastal Areas Facilities Review Act (CAFRA) permit for the maintenance of dunes. Several of the plaintiffs, who signed agreements with Ocean City before the law changed, asked the trial court to determine whether the impossibility of the City to perform the maintenance (NJDEP having denied the City’s permit application) constituted “reasonable unforeseen circumstances beyond its control”, such as to relieve it of its duty to maintain the 3 foot elevation level but make no further payments for the additional partial loss of ocean view (due to the dunes exceeding the 3 foot “cap”). (City of Ocean City v. New Jersey Department of Environmental Protection, A-5199-06 (App. Div. September 26, 2008). Ocean City argued that it was relieved of its maintenance obligation without having to make any further payment; the plaintiffs disagreed and filed suit.
The Court acknowledged the general rule that where one party was excused from performing a contract due to unforeseen circumstances that made performance impracticable, the other party would generally be excused from its performance. In this case, however, since the plaintiffs had given up their rights to additional compensation for partial loss of ocean view, in reliance upon the City’s promise to protect their ocean views above the 3 foot level, they argued that were it not for this reliance, Ocean City would have had to pay plaintiffs additional money for the additional partial loss of ocean view (i.e., above the 3 foot elevation).
The Court agreed with the plaintiffs and remanded the case to the trial court to determine the additional compensation to be paid; however, citing Karan as precedent, it acknowledged that any such amount needed to be reduced by the “special benefit” conferred by the additional storm protection provided by the increased elevation of the dune.
In its conclusion, the Court, referring to “the admonition in [Karan] that the quantifiable decrease in the value of their property – loss of view – should [be] set off by any quantifiable increase in its value – storm protection benefits.” The bottom line is that the special benefit principle upheld in Karan is now the “law” in New Jersey.
Posted on August 29, 2013
My prior post about the impacts of Storms Irene and Sandy on Connecticut noted some of the policy challenges presented in the storms’ aftermath for state government in Connecticut and elsewhere in the Northeast. The tremendous destruction of property resulting from these events brought home to many coastal property owners a previously unappreciated but significant conflict between property owners’ rights and state coastal policy.
Many property owners seeking to protect their property from future storm events learned to their consternation that regulatory policies adopted in the Connecticut Coastal Management Act (“CCMA”) more than 30 years ago largely precluded those activities. During the past year, the legislature has taken some small steps to address this conflict and armor the shorefront where developed property is at risk of flooding.
Property rights advocates were successful in substantially modifying the CCMA’s strong policy bias against the use of structural solutions to prevent damage to property from coastal flooding. Prior to this session’s amendments, the CCMA provided that structural solutions were to be avoided in order to maintain the natural relationship between eroding and depositional coastal landforms.
The only exceptions previously allowed were for those structural solutions which were “necessary and unavoidable” for the protection of infrastructure facilities (undefined but generally construed to mean roads, bridges and other public infrastructure), cemetery or burial grounds, water-dependent uses, or inhabited structures constructed as of January 1, 1995.
These narrow exceptions provided no avenue for protection of commercial property, unless it met the “water-dependent use” definition. Moreover, the exceptions provided only very narrow relief for residential property, because residential use is not defined as a “water dependent use.” In addition, the Department of Energy and Environmental Protection generally interpreted the term “inhabited structure” as applying only to the house, not accessory buildings, landscaping, etc. As a result, homeowners were left with no ability to protect their property unless and until the house itself was in jeopardy, which in a storm scenario like Sandy came too late.
The General Assembly addressed these concerns in part by expanding the exceptions to include “commercial and residential structures and substantial appurtenances that are attached or integral thereto,” constructed as of January 1, 1995. Structures built after the cut-off date presently have no options other than to elevate the structure.
How the DEEP will interpret these new provisions remains to be seen, but if the past is any indication, I would expect that the agency will construe them narrowly.
Posted on July 19, 2013
On June 13, 2013, I posted a blog regarding how to compensate New Jersey beach owners who have an easement condemned on their property to allow the Corps of Engineers to construct dunes. In the blog, I indicated that the trial court and Appellate Division in New Jersey had excluded testimony on the value that the dunes would bring to the property as a “special benefit”, determining that dunes provided a “general benefit” for not only the property owner but all of the other owners who may be affected, as well as the state of New Jersey, and therefore would not be taken into account in determining the condemnation value for the easement. At the same time, the New Jersey legislature was considering a bill that would specifically require recognition of these “special benefits” and Governor Christie was criticizing beach owners who would not cooperate in helping forestall the damages that such beachfront owners would incur from future “Sandy” storm events.
On Monday, July 8, 2013, the New Jersey Supreme Court, in a unanimous decision, reversed the Appellate Division and remanded the case for the jury to consider the value of the protection afforded by the dune, a “special benefit”, which obviated the need for the legislature to speak to the issue.
The bottom line is that in constructing dunes on the 127 mile coastline, the property owners are “not going to be paid a windfall for [their] easement[s]”, according to Governor Christie.
While it remains to be seen how the lower court will now value the easement, from the standpoint of protection against rising sea levels and catastrophic floods, the recognition that dunes will benefit coastal owners appears to this author to be a step in the right direction.
Posted on June 13, 2013
How appropriate was the name “Sandy”, which hit the New Jersey shore, leaving in its wake a $30 billion cleanup/rebuild price tag. Climate change experts agree that such catastrophic storms will continue to occur in the future and that adaptation is essential to confront repetitions.
So it is in New Jersey where all 3 branches of government have suggested ways in which to do so. First, Governor Christie has gone on record as being “not in favor of using eminent domain to kick people out of their homes”. He therefore proposes to spend $300 million to acquire key beach homes on the Ocean and Monmouth County shorelines.
Second, and most interesting to environmental and land use attorneys, is the U.S. Army Corps of Engineers’ (Corps) pursuit of acquiring easements along the New Jersey shore lines on which to construct and maintain 2-story high sand dunes. This program, begun in 2003 and contemplated to last 50 years, is focused on 14 miles of New Jersey’s barrier islands at an estimated cost of $144 million. (The Corps’ estimate does not recognize the issues raised here.) The wild card in the Corps’ approach is how much needs to be paid in compensation for the property owners’ easement, including a partial loss of ocean view. This is the issue moving through the New Jersey legislature and, more importantly, its courts. In the most recent case, Borough of Harvey Cedars v. Harvey Karan and Phyllis Karan, Judge E. David Millard, the lower court judge, was faced with the question whether the compensation award for an easement on 1/3 of the Karans’ beachfront property, on which the Corps built a 22 foot high sand dune which partially obstructed their ocean view, should be reduced by the resultant benefit of protection from future storms provided by the dunes – or whether the general benefit to others, and the entire state of New Jersey, made such a “special benefit” to the Karans not recognizable under existing New Jersey case law. Finding such “special benefit” not consistent with prior law and extremely speculative to calculate, Judge Millard instructed the jury not to make any such reduction in the $375,000 award. The New Jersey Superior Court Appellate Division affirmed the result, Borough of Harvey Cedars v. Harvey Karan and Phyllis Karan, 45 A.3d 983 (2012) . The New Jersey Supreme Court granted certification to the Borough and heard two hours of argument on May 20, 2013.
Third, while all this was going on, a bill was introduced in the New Jersey Senate in March 2013 which, if enacted, would allow the Court to consider the “special benefit” which dunes would afford to the affected homeowners. Whether the bill ever becomes law, as well as questions as to its constitutionality and its effect on New Jersey case law would certainly emerge – as will be the question as to whether the New Jersey Supreme Court will take notice of the bill in rendering its decision.
Issues such as these will clearly impact the cost of climate change adaption, especially so with the threat of the anticipated rising of sea levels and recurring coastal storms to island properties. Stay tuned.
Posted on December 18, 2012
A prior post by Michael Rodburg described New Jersey’s coastal regulatory programs, Sandy’s impact on that state and the policy choices it now must face. This alert will focus on Connecticut’s experience with Storm Irene and Super-storm Sandy and the challenges for government at all levels that the storms have presented.
Connecticut is known as the “land of steady habits,” but after being hit by two significant storms within a fourteen month period, many people are beginning to question the sustainability of the state’s historic coastal growth patterns and the ability of the current regulatory scheme to address the challenges that climate change is bringing to coastal states like Connecticut.
The impact on Connecticut from Sandy was not as great as the impact on New Jersey, because the storm atypically turned West as it approached Long Island, and the eye of the storm hit the New Jersey coast head on. However, Connecticut was not spared, because Sandy’s peak easterly winds occurred during a spring high tide event. This combination of factors pushed a record high storm surge into western Long Island Sound, which narrows as it approaches its westerly outlet through the East River separating Manhattan from Brooklyn.
Due to this constriction, the water had no where to go but up in the western Sound, and it over-topped seawalls and flooded many residential areas in Fairfield County which had not historically been subjected to flooding. It also threatened several utility sub-stations in Bridgeport and other urban centers, which were only saved by emergency flood proofing efforts. Sadly, for many East-facing shorefronts, Sandy flooded out structures that had just been re-built following the ravages of Irene.
Ironically, like the programs in New Jersey discussed in Michael Rodburg’s post, Connecticut has had a decades old and robust coastal regulatory program. The first legislation in 1939 was prompted by the deadly 1938 Hurricane. In 1969, legislation was adopted to regulate and protect tidal wetlands. These two programs have evolved since their initial passage and now require State permits respectively for dredging, installation of structures, and placement of fill in tidal and navigable waters, and for similar regulated activities in tidal wetlands. The legislature strengthened the coastal programs in 1979 by authorizing a comprehensive coastal zone management program which required government agencies to make permit decisions in the coastal area consistent with the goals and policies of the Coastal Management Act (“CMA”).
Despite this expansive regulatory edifice designed to provide natural resource protection, minimize armoring, and offer preferred regulatory status to water-dependent uses in the coastal area, Sandy clearly challenged the adequacy of the current scheme. One problem is that the statutes, particularly the CMA, have come decades too late to effectively steer development away from the coast. A second is that the CMA’s goal of encouraging only water-dependent uses to be located in the coastal area has not been followed by the 34 towns in the coastal area which have the power to determine land use patterns through zoning.
The flaws in the current regulatory scheme prompted some environmental groups after Irene to call for a phased “retreat from the coast,” which immediately drew fire from property rights advocates in the legislature, and a legislative Shoreline Protection Task Force was created in the 2012 legislative session to study the issues.
Aside from the property rights issues involved in a governmental strategy of retreat, a significant problem in Connecticut would be that many coastal communities have a limited industrial/commercial tax base. As a result waterfront properties comprise a disproportionately large share of the municipal grand list. For government to try to force property owners out, or buy them out would leave many communities with a major revenue hole. At a time of declining state revenues and a looming budget shortfall, it will be interesting to see how Connecticut’s General Assembly reacts to the impacts of Irene and Sandy in the legislative session beginning in January of 2013.
Posted on November 26, 2012
Perhaps the most surprising aspect of Superstorm Sandy’s destruction of the Jersey Shore is that some people were taken by surprise. For decades, a central focus of coastal zone management and waterfront development restrictions has been to protect the fragile and shifting barrier islands, wetlands, and estuaries of the 130 miles of New Jersey at the intersection of land and ocean. New Jersey’s Coastal Areas Facilities Review Act and its Waterfront Development Act contain among the toughest limitations in the nation to control growth and development and protect an environmentally sensitive ecosystem. Over the decades, thousands and thousands of decisions have been made by legions of bureaucrats on projects big and small regarding application of land use regulations and the terms of permits and other approvals intended to preserve dunes, reduce beach erosion, prevent flooding and avoid loss of life and property as well as protect the environment. Sandy seems to have made a mockery of the effort in the blink of an eye.
Sandy was not a black swan event—something heretofore not even contemplated and hence, unforeseeable. The USGS modelers and their European counterparts had it right almost from the beginning. Scientists have modeled not only storm tracking itself with better and better forecasts and therefore more warnings, but even the severity and effects of storm events. These models have predicted the height and location of the storm surges and the resulting erosion and flooding with reasonable accuracy. Plug in the real time coordinates and other data, and the models told us that the waves would attack the dunes and erode them back into the sea; that storm surge would carry the sand inland and that inundation would occur once the beach and dunes had surrendered to the sea and storm.
In Sandy’s immediate aftermath, two related themes have emerged to justify rebuilding in place. Many have advocated continuing business as usual; after all, if this was the storm of the millennium, we have a thousand years before we have to worry about a similar event occurring again. Others have suggested that by undertaking protective measures, we humans are still capable of living anywhere we choose. We just need bigger and better sea walls, flood gates, and other barriers; let the engineers figure it all out. Eventually, however, these views will inform a more deliberate discussion about our ability to adapt to changing climate conditions—how and where shall we choose to confront Nature and how and where will we let her do as she is wont to do. With billions of dollars at stake, this debate will get contentious, to be sure. Climate change and weather volatility will not be easily accommodated. The role of government in the process—as regulator, facilitator, first responder and insurer of last resort—will come under review. The two character Chinese pictograph for the word “crisis” consists of the characters for “danger” and “opportunity.” The crisis that is Sandy should remind us that we should not squander the opportunity to rethink our priorities and arrive at a better way to confront this danger in the future.
Posted on December 28, 2011
In Village of Bald Head Island v. U.S. Army Corps of Engineers, plaintiff Village of Bald Head Island and intervenor North Carolina beach communities sought to compel the U.S. Army Corps of Engineers to implement the Wilmington Harbor Dredging Project and to deposit beach quality dredged spoils on nearby beaches. The court dismissed the case on the ground that implementation decisions made by the Corps in the course of performing a project are not final agency actions reviewable by a federal court.
As part of its planning of the harbor deepening project, the Corps first performed an environmental assessment (EA) pursuant to the National Environmental Policy Act (NEPA) in 1996, and modified the EA in 2000 due to changes in the project. In response to community objections, the Corps committed to certain measures to protect the adjacent beaches from excessive erosion. These measures were incorporated into the EA, the Coastal Zone Management Act Consistency Determination, and the Finding of No Significant Impact (FONSI).
For ten years the Corps generally complied with the Commitments. When budget constraints in 2010 and 2011 caused work to be delayed the Village of Bald Head Island brought an action under the Administrative Procedure Act (APA) seeking a mandatory injunction to force dredging and disposal this winter and thereby prevent erosion from harming homes and Village infrastructure.
The APA allows a Court to review "final" agency actions, including failures to act when there is a duty to act: 5 U.S.C. §§ 701(b)(2) and 551(13). The Court determined that the Corps’ Commitments were not final agency actions that can be challenged or enforced under the APA. Instead, notwithstanding the specific Commitments the Corps had made, the Court characterized the Corps’ decision of when to dredge or when to prepare studies as implementation decisions.
The Plaintiff and the other beach communities filed a Notice of Appeal to the Fourth Circuit on December 9, 2011, contesting the district court’s holding that the Corps’ method of implementing the project is discretionary and unreviewable. Appellants contend that the Corps must either implement the Project in a manner consistent with the FONSI and the Commitments, or perform another environmental review.