Vulcan Materials Co v. City of Tehuacana ( 2004 )

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED June 4, 2004
May 21, 2004
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk
_____________________
No. 02-51182
_____________________
VULCAN MATERIALS COMPANY,
Plaintiff - Appellant,
versus
THE CITY OF TEHUACANA,
Defendant - Appellee.
__________________________________________________________________
Appeals from the United States District Court
for the Western District of Texas
_________________________________________________________________
Before JOLLY and WIENER, Circuit Judges, and WALTER, District
Judge.1
E. GRADY JOLLY, Circuit Judge:
Vulcan Materials Company (“Vulcan”) owns a land lease with the
right to mine limestone. The problem is that a substantial part of
the land and the mining is within the boundaries of the City of
Tehuacana (“the City”) in Limestone County, Texas. The City passed
an Ordinance in 1998 forbidding quarrying or mining activities
within the City limits. Vulcan contends that the Ordinance
constitutes a public taking and violates its rights under both the
1
District Judge of the Western District of Louisiana sitting
by designation
United States and Texas Constitutions. All that remains to be
decided in this appeal, however, is the propriety of the district
court’s grant of the City’s Motion for Summary Judgment dismissing
Vulcan’s takings claim under the Texas Constitution. We ultimately
hold that the case turns on whether the quarry mining constitutes
a public nuisance and consequently remand for a jury determination
on this issue.
I
The City of Tehuacana has a population of approximately 300 to
350 people and occupies a small geographical area in Limestone
County, Texas.
In 1993, Smith Crushed Stone, Inc. (“SCS”) leased limestone
quarry rights on three contiguous tracts of land (Tracts 1-3)
adjacent to Tehuacana’s City limits and also leased four additional
contiguous tracts of land within the City limits. It did no
mining, however, on these tracts. In October 1997, Vulcan
purchased the assets of SCS in Limestone County, including the
limestone quarry rights leased by SCS. This leasehold interest
allows Vulcan to prospect, explore, mine, operate for and produce
“by strip mining or open pit mining all rock, stone, limestone and
similar rock like materials” and grants Vulcan the right to exclude
all other uses of the Tracts as necessary to enable the quarrying.
Before its acquisition of SCS’s assets, Vulcan hired local
attorney Bobby Reed to determine whether any ordinances would
prevent Vulcan from quarrying, including those tracts located
2
within the City. Reed attested that both the Mayor and City
Secretary advised him that no ordinances existed nor were in the
planning stages that would prevent Vulcan from pursuing quarrying
operations within the City.
The leases cover land both within and outside the Tehuacana
City limits. Vulcan sought to mine approximately 48 acres located
inside City limits, described as Tracts 4-7. This property is
2/3 to 3/4 of a mile wide and abutted by several public roads that
access several homes, some of which are located just across the
street from the property. Outside Tehuacana City limits, Vulcan
currently mines and operates a rock crushing facility on an
approximate additional 250 acres of land located immediately
adjacent to Tracts 4-7.
In early 1998, Vulcan began planning active quarrying on
Tracts 4-7. Vulcan determined access points and ramp sites,
determined where in that area it wanted to quarry, cleared land,
stripped overburden, and otherwise prepared the tracts for physical
use. There has been no recent mining on these tracts.
In October 1998, Vulcan sought and obtained permission from
the Texas Railroad Commission to construct berms on Tracts 4-7.
Vulcan also prepared the quarry floor and removed overburden on
Tract 6 to prepare for a blast (“shot”) to loosen limestone in the
quarry. The City residents began to express opposition to the
proposed operations and soon the City Council began to consider
adopting an ordinance to regulate Vulcan’s quarrying activities.
3
Vulcan conducted a test shot on Tract 6 on October 25, 1998,
in an abandoned pit. Another shot and similar preparatory
activities were conducted on Tract 6 on November 25 and 26, 1998.
Although approximately 400-500 tons of limestone were processed
through Vulcan’s plant as a result of these two blasts, this amount
was only a small percentage of what Vulcan normally retrieved and
processed during one day in its regular operations. Some of the
finished product was tested, and some was put into inventory and
sold in the ordinary course of business.
Before it passed the contested ordinance, the City held public
hearings. Numerous citizens complained about Vulcan’s operations
outside the City as well as the two blasts conducted inside the
City limits. Specifically, the citizens complained that Vulcan’s
activities caused shaking of houses, lifting furniture off the
floor, rattling windows, shaking and jostling people in their
homes, noise, dust, smoke, property damage, fear, interference with
enjoyment of property and life, interference with the use of public
roads and streets, and exposure to fly and throw rock. The City,
and the district court, cite one flyrock incident in particular
that had occurred when SCS was conducting quarrying activities on
the tracts outside of the City in which a 500-pound boulder was
propelled into a Tehuacana resident’s yard. Residents also
complained that the mining activities caused springs and wells in
the area to dry up.
4
On December 8, 1998, the City Council passed the “Ordinance
Forbidding Quarrying or Blasting Operations within the City Limits”
(the “1998 Ordinance”) and on December 15, 1998, Vulcan filed its
complaint in federal district court, under both the United States
and Texas Constitutions.2 As mentioned above, the only claim
2
The 1998 Ordinance states, in pertinent part:
AN ORDINANCE FORBIDDING QUARRYING OR BLASTING
OPERATIONS WITHIN THE CITY LIMITS
WHEREAS, the City of Tehuacana is
predominantly a residential city, with little
of no industry inside city limits; and
WHEREAS, a rock quarry operating near the
city limits has indicated its intention to
begin quarrying and blasting operations within
the city limits of the City of Tehuacana; and
WHEREAS, the quarrying and blasting
operations would constitute a public nuisance
and result in excessive noise and vibration to
city residents; and
WHEREAS, the quarrying and blasting
operations could constitute a physical danger
to residents of the city due to the
possibility of overfly of rock or other
materials from blasting onto residents of the
city or property of residents of the city; and
WHEREAS, the blasting and quarrying
operations would have a detrimental effect on
the quality of residential life in the city
due to vibration, excessive noise from
blasting, excessive noise from the operation
of heavy equipment, the potential for injury
or death from overfly of rock, (flyrock), air
blast damage, ground motion damage, and
excessive dust from operations.
NOW THEREFORE, BE IT ORDAINED BY THE CITY
COUNCIL OF THE CITY OF TEHUACANA:
5
remaining in this appeal is Vulcan’s takings claim under the Texas
Constitution.
In its September 25, 2002 Memorandum Opinion and Order, the
district court granted the City’s Motion for Summary Judgment,
holding that the 1998 Ordinance is not an unconstitutional taking
or an inverse condemnation under Texas law. The district court
held, as a matter of law, that the 1998 Ordinance substantially
advances a legitimate state interest. The court also made the
following determinations with regard to Vulcan’s regulatory takings
claims:
SECTION I. It shall be unlawful for
any person, company, entity, or corporation to
engage in the following activities within the
city limits of the City of Tehuacana,
Limestone County, Texas:
A. the quarrying or mining of rock
utilizing blasting operations or use
of explosives, or surface mining;
B. the use of explosives for the
purpose of blasting rock, or in
connection with mining or quarrying
operations;
C. the use of heavy equipment in
connection with quarrying or mining
operations within the city limits of
Tehuacana, Limestone County, Texas;
D. the use of explosives for any
commercial or industrial activity or
for any other reason except the use
of fireworks in connection with
celebrations as may be allowed by
law from time to time.
Tehuacana, Tex., Ordinance 12898 (Dec. 8, 1998).
6
[T]he activities the 1998 Ordinance seeks to
regulate constitute a nuisance under Texas
law. The 1998 Ordinance therefore restricts
no legitimately owned property right. Even if
the Court were to assume that the 1998
Ordinance did somehow restrict a recognized
property right, a taking under Texas law would
not occur because Vulcan has not been deprived
of all economically viable use of its
property. Only a small portion of its
property is affected by the Ordinance, and the
property still has an economically viable use.
Although Vulcan argues that high explosives
and heavy equipment are required to extract
the limestone from the ground, the Court notes
that neither were required to extract the
stone used to build the pyramids. Obviously,
while extraction of the limestone without
explosives and heavy equipment may be more
expensive and labor intensive, it is not
impossible to operate such a quarry without
violating the 1998 Ordinance. Accordingly,
judgment will be entered to the effect that
the 1981 Ordinance does not prohibit
quarrying, and that the 1998 Ordinance is not
an unconstitutional taking or an inverse
condemnation under Texas law.
Mem. Opin., p. 20. Vulcan appeals. We vacate the district court’s
grant of summary judgment to the City and remand.
II
This Court reviews the granting of summary judgment de novo,
applying the same standards used by the district court. Thomas v.
Barton Lodge II, Ltd., 174 F.3d 636, 644 (5th Cir. 1999); Norman v.
Apache Corp., 19 F.3d 1017, 1021 (5th Cir. 1994). Summary judgment
is proper when no genuine issue of material fact exists and the
moving party is entitled to judgment as a matter of law. FED. R.
CIV. P. 56(c). Summary judgment is only appropriate if no
reasonable jury could differ in weighing the evidence. Peel & Co.
7
v. Rug Mkt., 238 F.3d 391, 398 n.37 (5th Cir. 2001). The Court
views the evidence in the light most favorable to the nonmoving
party. Gillis v. Louisiana, 294 F.3d 755, 758 (5th Cir. 2002).
Under Texas law, although determining whether a property
regulation is unconstitutional requires consideration of a number
of factual issues, the ultimate question of whether there has been
a regulatory taking is a question of law. Mayhew v. Town of
Sunnyvale, 964 S.W.2d 922, 932-33 n.3 (Tex. 1998).
III
Before we evaluate whether the Ordinance constitutes a taking
under the Texas Constitution, we must first address the City’s
arguments that the Ordinance is not a land use regulation.
Instead, the City contends that the Ordinance is a health and
safety regulation that redresses an activity under its police power
and is not subject to the public takings law of Texas.3 The
district court was obviously unpersuaded by the City’s argument
because it addressed the takings issue presented in this case.
3
The district court refrained from holding that the Ordinance
is not a land use regulation and went on to evaluate Vulcan’s
claims under Texas takings law. However, the court indicated its
doubt that this was a taking and commented that the Ordinance did
not prohibit the mining of limestone; instead, according to the
district court, the ordinance merely prohibited the mining of
limestone by using blasting and heavy machinery. The district
court noted that the Egyptian Pyramids were built without the use
of explosives or heavy machinery. However, we hesitate to compare
Vulcan’s land use activities to those of the ancient Egyptians.
See U.S. CONST. amend. XIII.
8
No one doubts that a municipality may enact reasonable
regulations to promote the health, safety, and general welfare of
its people. College Station v. Turtle Rock Corp., 680 S.W.2d 802,
805 (Tex. 1984)(citing Ellis v. City of West University Place, 141
Tex. 608, 175 S.W.2d 396 (1943)). However, “if a governing body,
in the exercise of its police power, enacts a regulation that goes
too far in the regulation of private property, that governing body
may be held to have taken the property, thus requiring it to pay
compensation to the owner.” 32 TEX. JUR. 3D Eminent Domain § 9
(1998). The following factors are relevant in determining if the
Ordinance has “gone too far” and effected a taking of Vulcan’s
property: “(1) whether the property was rendered wholly useless;
(2) whether the governmental burden created a disproportionate
diminution in economic value or caused a total destruction of the
value; and (3) whether the government’s action against an economic
interest of an owner was for its own advantage.” Id.
In the instant case, we think that the Tehuacana Ordinance
goes too far to be considered a mere exercise of the City’s police
power. The only property interest at issue here is Vulcan’s lease
of the right to mine limestone from these tracts and Tehuacana’s
Ordinance effectively prohibits any and all mining of limestone
within City limits.
The Ordinance makes clear that its purpose is to prohibit the
very activity that Vulcan’s leasehold permits. First, the
Ordinance is entitled “AN ORDINANCE FORBIDDING QUARRYING OR
9
BLASTING OPERATIONS WITHIN THE CITY LIMITS.” Second, the Ordinance
makes clear that it is targeting “a rock quarry operating near the
city limits [that] has indicated its intention to begin quarrying
and blasting operations within the city limits.” Finally, the
Ordinance expressly prohibits “the quarrying or mining of rock
utilizing blasting operations or use of explosives” and “the use of
heavy equipment in connection with quarrying or mining operations.”
In sum, it is simply undeniable that the Ordinance
specifically was adopted to completely prohibit Vulcan from
engaging in mining on Tracts 4-7, and that the only right possessed
by Vulcan in Tracts 4-7 was the right to mine limestone. We
therefore hold that the Ordinance is a land use regulation.
IV
We now turn to address the district court’s holding that the
Ordinance does not constitute a public taking of Vulcan’s leasehold
interest under the Texas Constitution. The Texas Constitution
provides that “[n]o person’s property shall be taken, damaged or
destroyed for ... public use without adequate compensation being
made[.]” TEX. CONST. art. I, § 17.4 Texas classifies takings into
4
Vulcan disputes the applicability of federal takings
standards in evaluating whether a taking has occurred under the
Texas Constitution. Generally, Texas constitutional standards have
been considered more protective of property owners than federal
standards. City of Glenn Heights v. Sheffield Development Co.,
Inc., 61 S.W.3d 634, 644 (Tex.App.-Waco 2001, pet. granted).
However, in Mayhew v. Town of Sunnyvale, 964 S.W.2d 922 (Tex. 1998)
the Texas Supreme Court assumed, without specifically holding, that
the Texas and federal takings standards are coextensive. Mayhew,
964 S.W.2d at 932. Like the Mayhew court, in the absence of clear
10
one of two categories: physical takings or regulatory takings.
Mayhew, 964 S.W.2d at 933. A physical taking occurs when “the
government authorizes an unwarranted physical occupation of an
individual’s property.” Id. Because there is no allegation that
Tehuacana has physically occupied Vulcan’s property, if Vulcan is
to be compensated the Ordinance must constitute a regulatory
taking. Id.
A regulatory taking can occur in two ways: (1) when the
regulation does not substantially advance legitimate state
interests, id. at 933-34, or (2) when the regulation either denies
the owner of all economically viable use of his property -- a
categorical taking -- or unreasonably interferes with a property
owner’s rights to use and enjoy his property -- a partial taking.
Id. at 935 (citing, inter alia, Lucas v. South Carolina Coastal
Council, 505 U.S. 1003, 1015-19 & n.8 (1992)).
“The ‘substantial advancement’ requirement examines the nexus
between the effect of the ordinance and the legitimate state
interest it is supposed to advance.” Id. at 934. Numerous
governmental purposes and regulations may satisfy the
“substantially advance” prong including enhancing the quality of
Texas authority, we will evaluate Vulcan’s claims under the more
established federal standards, keeping in mind that greater
protection of property rights generally may be afforded under the
Texas constitution.
11
life and protecting the community from the ill effects of
urbanization. Id. at 934-35.
Even assuming, however, that the Ordinance substantially
advances Tehuacana’s legitimate interests, a taking can still occur
if the Ordinance denies Vulcan all economically viable use of its
property or unreasonably interferes with its right to use and enjoy
the property. Id. at 935 (citing, inter alia, Lucas, 505 U.S. at1015-19 & n.8).
Determining whether a regulation unreasonably interferes with
the landowner’s right to use and enjoy his property requires a
court to consider “the economic impact of the regulation and the
extent to which the regulation interferes with distinct investment-
backed expectations.” Id. at 935 (citing, inter alia, Lucas, 505
U.S. at 1019 n.8). “The first factor, the economic impact of the
regulation, merely compares the value that has been taken from the
property with the value that remains in the property.” Id. at 935-
36. The second factor, the landowner’s investment-backed
expectations, considers the “existing and permitted uses of the
property” as the “primary expectation” of the landowner. Id. at
936 (citing, inter alia, Lucas, 505 U.S. at 1017 n.7). In
contrast, “[d]etermining whether all economically viable use of a
property has been denied entails a relatively simple analysis of
whether value remains in the property after the governmental
action.” Id.12
Given the facts of this case and the limited nature of
Vulcan’s property interest, i.e., a lease for the sole purpose of
mining limestone, it is clear that the “denial of all economically
viable use” inquiry will be dispositive for the reasons set forth
below.
In resolving whether “value remains” in Vulcan’s lease, we
must first examine which particular limestone mining rights are
relevant to this determination -- all of Vulcan’s leasehold
interests or only Tracts 4-7.5 The district court held that the
relevant parcel in this case included not only the small acreage
leased within the City limits (48 acres), but also the adjacent 250
acres that is also part of the lease.6 Vulcan attacks this
5
The City argues that the right to mine limestone possessed by
Vulcan is merely one of a “bundle of sticks” and that the value of
the entire bundle of sticks, as opposed to just one stick --
Vulcan’s leasehold interest -- must be totally diminished before a
categorical taking has taken place. This argument is misplaced in
this case.
Clearly, “where an owner possesses a full ‘bundle’ of property
rights, the destruction of one ‘strand’ of the bundle is not a
[categorical] taking because the aggregate must be viewed in its
entirety” -- i.e., the relevant parcel includes all of the rights
possessed by the owner. Keystone Bituminous Coal Assn. v.
DeBenedictis, 480 U.S. 470, 497 (1987) (quoting Andrus v. Allard,
444 U.S. 51, 65-66 (1979)). Vulcan, however, does not possess a
“full ‘bundle’ of property rights” and, therefore, the relevant
parcel for the purposes of its takings claim is the only estate in
which it has an interest -- the limestone lease -- and the value of
other interests -- i.e., surface agricultural uses -- cannot be
considered in determining whether all economically viable use of
the property has been destroyed. See generally The City of Whitney
Benefits, Inc. v. United States, 926 F.2d 1169 (Fed. Cir. 1991).
6
This issue has been referred to as the “denominator problem”
and has been described as follows:
13
characterization of the relevant parcel and contends that the court
should consider only those tracts that the City had the authority
to regulate -- Tracts 4-7.
Neither party has cited a Texas case directly on point and we
therefore must make an Erie "guess" and follow the rule that we
conclude the Texas Supreme Court would adopt. American Indem.
Lloyds v. Travelers Property & Cas. Co., 335 F.3d 429, 435 (5th
Cir. 2003).
The City is correct that, under federal takings jurisprudence,
when the owner of property intends to use a parcel of property as
an integrated part of the whole of a larger tract, the entirety of
Essentially, the denominator factor works as
follows: if the amount of Blackacre owned by
Landowner is 2 acres, and the amount of
Blackacre affected by the government
regulation is 1 acre, the denominator is 2 and
the numerator is 1; thus, the property's use
is diminished by fifty percent. The Lucas
rationale relied on a one hundred percent
deprivation of all economically viable use of
the property. If a one hundred percent
deprivation is required, then the regulation
of property in the above example is not a
taking because Landowner may continue to use
one-half of Blackacre.
Stephanie E. Hayes Lusk, COMMENT: Texas Groundwater: Reconciling
the Rule of Capture With Environmental and Community Demands, 30
ST. MARY'S L.J. 305, 339 (1998). In this case the numerator would
be the tracts of land affected by the regulation -- Tracts 4-7. If
the denominator is limited to Tracts 4-7, then Vulcan has been
deprived of one hundred percent of its property. On the other
hand, if the denominator includes the land outside Tehuacana City
limits in addition to Tracts 4-7, then Vulcan’s leasehold interests
retain value even after the regulation, and consequently no
categorical taking has occurred.
14
the property is treated as one tract for purposes of a takings
analysis. Keystone Bituminous Coal Assn. v. DeBenedictis, 480
U.S. 470, 497, 500-01 (1987); Penn Central Transp. Co. v. New York
City, 438 U.S. 104, 130-31 (1978). The Supreme Court explained
this rule in Concrete Pipe, in which it stated:
[A] claimant’s parcel of property [can] not
first be divided into what [is] taken and what
[is] left for the purpose of demonstrating the
taking of the former to be complete and hence
compensable. To the extent that any portion
of property is taken, that portion is always
taken in its entirety; the relevant question,
however, is whether the property taken is all,
or only a portion of, the parcel in question.
Concrete Pipe & Prods. v. Construction Laborers Pension Trust, 508
U.S. 602, 644 (citing Penn Central, 438 U.S. at 130-31, and
Keystone, 480 U.S. at 497).
Although these cases require the court to look at the
integrated whole of the landowner’s property, they do not extend to
support the City’s contentions; although each case held that the
relevant parcel included the entirety of the property, the
regulating authority had the power to regulate all of that
property. For instance, in Penn Central the New York Landmarks
Preservation Commission designated Grand Central Station as a
“landmark” and the landmark site was designated as the tax block
occupied by the Station. Penn Central, 438 U.S. at 115-16. In
conducting its analysis, the Supreme Court only considered other
holdings of Penn Central in the Station’s tax block -- not its
other holdings in the City. Penn Central, 438 U.S. at 130-31.
15
Similarly, in Keystone, the Pennsylvania Subsistence Act only
regulated a small fraction of Keystone’s property -- the support
coal -- but all of its interests -- mineral and support estates --
in Pennsylvania were subject to the Act. Keystone, 480 U.S. at 499
n.27 (stating that “[t]he question here is whether there has been
any taking at all when no coal has been physically appropriated,
and the regulatory program places a burden on the use of only a
small fraction of the property that is subjected to the regulation”
(emphasis added)).
Thus in each of these cases the Supreme Court rejected the
plaintiff’s attempts to segregate the adversely affected property
from the regulated whole, and to claim it is the only relevant
parcel. See Penn Central, 438 U.S. at 130-31; Keystone, 480 U.S.
at 499. Vulcan, unlike the property owners in Penn Central and
Keystone, however, is not arguing that the takings analysis should
segregate only the adversely affected parcel from the regulated
whole; it contends that the relevant parcel should include only the
property “subject to” the regulation and not its remaining property
outside the City limits, which is beyond the regulator’s reach.7
The City cites Appolo Fuels, Inc. v. United States, 54 Fed.
Cl. 717 (2002), and argues that the court in that case considered,
as part of the relevant parcel, property beyond the reach of the
7
Indeed we would be presented with a different question if
Vulcan owned other adjacent land in the City which, although
subject to the Ordinance, would be unaffected by it.
16
regulating body’s jurisdiction. Appolo owned several adjacent
tracts of land, some of which were in the Little Yellow Creek
watershed and others that were not. The City of Middlesboro,
Kentucky and the National Parks Conservation Association filed a
petition with the Office of Surface Mining Reclamation and
Enforcement (“OSM”) seeking to have the area within the watershed
designated as unsuitable for mining under the Surface Mining
Control and Reclamation Act (“SMCRA”), 30 U.S.C. §§ 1201 et seq.
The Director designated the entire petition area -- all of
Appolo’s leases within the watershed -- as unsuitable for surface
mining but agreed to allow underground mining from outside the
watershed. In response to this designation Appolo filed a
regulatory takings claim.
Appolo, contending that a categorical taking had been
effected, argued that the relevant parcel, or denominator, should
include only those areas within the watershed -- those areas where
mining was prohibited. Appolo, 54 Fed. Cl. at 724. The court,
however, rejected Appolo’s argument and held that the relevant
parcel included other holdings of Appolo outside the watershed
area, on which mining was allowed. Id. at 728-30.
Contrary to the City’s argument, the court does not appear to
have included property over which the regulating authority had no
jurisdiction; all of Appolo’s property was subject to the SMCRA, an
Act of nationwide force. See Hodel v. Va. Surface Mining &
Reclamation Ass’n, 452 U.S. 264, 268 (1981) (noting that the SMCRA
17
was intended to establish a nationwide program to protect society
and the environment from the adverse effects of strip mining). In
any event, even if the City’s interpretation of Appolo is correct,
we hesitate to conclude that the Texas Supreme Court would be
persuaded by a single Federal Court of Claims case.
Because the City has not cited any authority, Texas or
federal, that considers property outside the regulator’s
jurisdiction in determining a taking, we cannot conclude that the
Texas Supreme Court would adopt that position. Indeed, it appears
self-evident that when a regulator exercises its regulatory
jurisdiction to the fullest extent possible -- stripping all value
from the property within its reach -- it has acted categorically --
i.e., absolute or unqualified. WEBSTER’S THIRD NEW INTERNATIONAL
DICTIONARY 352 (1993). Furthermore, it would seem incongruous to
say that when the regulating body has “seized” through regulation
all value possessed by the owner it has acted non-categorically;
instead, when the regulating body takes all that the owner
possesses there is perforce a categorical, not a partial, taking by
that body.8 Accordingly, we hold that the relevant parcel in this
case is Vulcan’s leasehold interest on the property within the City
limits -- Tracts 4-7.
8
The situation would be different, of course, if the City of
Tehuacana were unincorporated without a governing authority, and it
were Limestone County that prohibited all quarrying on Tracts 4-7,
while allowing quarrying on the remainder of Vulcan’s property.
The county would have exercised its authority in a non-categorical
manner.
18
In sum, the only property interest possessed by Vulcan is the
right to mine limestone on the land. Further, the only portion of
this property interest that is relevant to our takings analysis is
the quarrying right within the City. Finally, in accordance with
our discussion above, we find that the Ordinance effectively
prohibits all mining of limestone on Tracts 4-7. Consequently, the
Ordinance deprives Vulcan of all value of its property interest --
quarrying rights -- in the relevant parcel -- Tracts 4-7. We thus
hold that the Ordinance constitutes a categorical taking, which
renders Vulcan’s relevant leasehold interest valueless.9
V
Finally, the City argues that, under Texas law, Vulcan’s
proposed activities would constitute a nuisance precluding Vulcan’s
recovery of compensation. This argument finds its origins in Lucas
v. South Carolina Coastal Council, 505 U.S. 1003 (1992). There,
with respect to regulations that prohibit all economically
beneficial use of property, Justice Scalia states:
Any limitation so severe cannot be newly
legislated or decreed (without compensation),
but must inhere in the title itself, in the
restrictions that background principles of the
9
Because we have found that the Ordinance constitutes a
categorical taking, it is not necessary to address Vulcan’s
argument that the Ordinance constitutes a partial taking. Although
Vulcan’s interests outside the City are not part of the denominator
when determining whether a categorical taking has occurred, this is
not to conclude that these interests are irrelevant in the
calculation of the value of the taken property interests when
determining just compensation. Such matters are reserved for a
later time if and when such a determination is necessary.
19
State’s law of property and nuisance already
place upon land ownership. A law or decree
with such an effect must, in other words, do
no more than duplicate the result that could
have been achieved in the courts--by adjacent
landowners (or other uniquely affected
persons) under the State’s law of private
nuisance, or by the State under its
complementary power to abate nuisances that
affect the public generally, or otherwise.
Lucas, 505 U.S. at 1029. Thus, under federal law, even if the
current value of the claimant’s property has been destroyed, the
claimant cannot recover if the “background principles of the
State’s law of property and nuisance” would have prohibited that
activity as a nuisance (the “nuisance exception”).
The City contends that under the Lucas “nuisance exception”
the Ordinance is not a taking because the City could abate Vulcan’s
activities as a nuisance and such a property restriction “inhered
in the title itself” because “background principles” of Texas
property law allow the state, or adjacent landowners, to abate
nuisances. Thus, we must first decide whether the nuisance
exception -- found in federal law -- would be applied by the Texas
Supreme Court; if so, we must then decide whether the district
court properly held that the exception barred Vulcan’s recovery in
this case.
A
Neither party has cited a case in which the Lucas nuisance
exception has been adopted by the Texas Supreme Court; nor have we
found one. So, once again, we are required to predict whether the
20
principles set forth in Lucas would be adopted by the Texas Supreme
Court. American Indem. Lloyds, 335 F.3d at 435. We conclude the
Texas Supreme Court would adopt such a rule in the proper case.10
First, although Mayhew does not cite the specific “nuisance
exception” discussed in Lucas, it is evident in the court’s own
application of Lucas that the Mayhew court found the reasoning of
Lucas to be uniformly persuasive. The Mayhew court cited Lucas
multiple times for various propositions. Moreover, other Texas
courts have looked to Lucas when evaluating takings claims under
the Texas Constitution. See County Line Joint Venture v. City of
Grand Prairie, 2001 Tex. App. LEXIS 6000, *4 (Tex. App.--Dallas,
Aug. 31, 2001, writ denied); Texas Natural Resource Conservation
Comm'n v. Accord Agric., Inc., 1999 Tex. App. LEXIS 6898, *12-13
(Tex. App. 3d Dis.--Austin Sept. 10, 1999).11 Although this
10
Although we make this particular determination, we recognize
that it is speculative. However, because Texas courts have
repeatedly relied on Lucas in numerous cases, and heavily so in
Mayhew, and because we consider it to be the better rule, we
conclude that Texas courts would apply the Lucas nuisance
exception. We are fully aware of statements by Texas courts that
the Texas Constitution provides more protections to property owners
than the United States Constitution -- protecting against both the
taking and damaging of property. Even so, we do not see how the
application of this rule categorically negates such generalized
favorable treatment of property rights in takings cases.
11
We acknowledge that this court has previously held that Lucas
is of doubtful relevance when considering a takings claim under the
Texas Constitution. Hidden Oaks v. City of Austin, 138 F.3d 1036,
1042 (5th Cir. 1998). However, although Hidden Oaks cites the
Texas Court of Appeals opinion in Town of Sunnyvale v. Mayhew, 905
S.W.2d 234, 259 (Tex. App.–Dallas 1995, writ granted) (reversed by
Mayhew v. Town of Sunnyvale, 964 S.W.2d 922 (Tex. 1998)), it does
not cite the Texas Supreme Court’s opinion, Mayhew v. Town of
21
uncritical reliance on Lucas by the Texas Supreme Court is not
conclusive of whether the Texas Supreme Court would have looked
favorably on the “nuisance exception,” it does impress us when
making an Erie guess.
Moreover, although it is true that the analysis and holding of
Lucas now advocated by the City was not expressly adopted by
Mayhew, this failure certainly cannot be construed as a rejection
of the nuisance exception by the Texas Supreme Court. Mayhew
involved a takings claim against the Town of Sunnyvale based on
Sunnyvale’s refusal to approve Mayhew’s development plan and to
rezone property to accommodate his proposed subdivision. Mayhew,
964 S.W.2d at 926. It was not necessary for the court to address
the effect of the nuisance exception upon a categorical taking,
however, because the court found that Mayhew had not been denied
all economically viable use -- his property retained a value of
over $2 million. Mayhew, 964 S.W.2d at 937.12
Sunnyvale, 964 S.W.2d 922 (Tex. 1998), which heavily relies on
Lucas. Accordingly, it is now clear that Texas courts attribute
significant relevance to Lucas.
12
Although Mayhew did not consider the Lucas “nuisance
exception” with respect to a categorical taking, it did discuss a
similar principle with respect to Mayhew’s investment-backed
expectations. The Mayhew court noted the "primary expectation" of
the property owner is shaped by the existing and permitted uses of
the property. Mayhew, 964 S.W.2d at 936 (citing Penn Central, 438
U.S. at 136 and Lucas, 505 U.S. at 1017 n.7 (owner’s reasonable
expectations shaped by uses permitted by state law)).
22
Second, we are persuaded that the “nuisance exception” is
simply a sound rule. All property in Texas is held subject to the
valid exercise of the police power and the City is not required to
compensate Vulcan if its exercise of police power is reasonable.
City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 804
(Tex. 1984). “Although it is fundamental that the government
cannot destroy the property of private citizens at will and without
justification, the government is given, through its police powers,
the ability to abate public nuisances.” LJD Properties, Inc. v.
City of Greenville, 753 S.W.2d 204, 207 (Tex.App. - Dallas 1988).
Third, courts should be cautious in finding a taking where the
claimant’s activities “are tantamount to public nuisances.”
Keystone, 480 U.S. at 491. This approach is consistent with the
concept of reciprocity of advantage as described by Justice Stevens
in Keystone:
Under our system of government, one of the
State’s primary ways of preserving the public
weal is restricting the uses individuals can
make of their property. While each of us is
burdened somewhat by such restrictions, we, in
turn, benefit greatly from the restrictions
that are placed on others. These restrictions
are properly treated as part of the burden of
common citizenship. Long ago it was
recognized that all property in this country
is held under the implied obligation that the
owner’s use of it shall not be injurious to
the community, and the Takings Clause did not
transform that principle to one that requires
compensation whenever the State asserts its
power to enforce it.
Id. at 491-92 (citations and quotations omitted).
23
Justice Stevens only recognizes that all property owners are
required to use their property in a manner that does not constitute
a public nuisance.
Finally, it seems evident to us that the question whether the
Texas Supreme Court would formally incorporate the nuisance
exception as part of a takings analysis has no practical
significance: the existence of a nuisance, vel non, will
nevertheless be injected in this takings case at some point. We
arrive at this conclusion because “a right of recovery is
established by proof of injury to some right of the property, and
the damages are measured by the extent of the injury to that
right.” 32 TEX. JUR. 3D Eminent Domain § 161 (1998). Thus, Vulcan
cannot establish damages unless it has a property right to mine
limestone; if it has no such right it can suffer no injury and,
consequently, has not been denied “just compensation” by the public
taking. See Holly Doremus, Takings and Transitions, 19 J. LAND USE
& ENVTL. L. 1, 12 (2003) (stating that “[t]he term ‘taking’ implies
the loss of something once held, which means a change in one’s
property rights. There can be no taking without change.”). It is
only a matter of what point this element is introduced into the
case -- no taking has occurred because of the “nuisance exception”
or, assuming a taking, no damages were sustained because the
activity would be an abatable public nuisance. See LJD Properties,
24
753 S.W.2d at 207 (stating that the “the government is given,
through its police powers, the ability to abate public nuisances”).
Thus, we hold that if the effect of the Ordinance challenged
here -- the prohibition of Vulcan’s quarrying activities -- could
have been achieved through the courts via a nuisance action, no
property rights of Vulcan have been taken because Vulcan’s use of
its property was limited by the background principles of the Texas
police power right to abate a nuisance.
B
Having determined that the Texas Supreme Court would apply the
Lucas nuisance exception in the proper case, we now address the
district court’s holding that Vulcan’s proposed activities inside
Tehuacana City limits would constitute a nuisance under Texas law.
We believe that its grant of summary judgment on this issue was
error.
First, Texas law seems clear that the activities in which
Vulcan seeks to engage -- those incident to the quarrying of
limestone -- are not nuisances per se. City of Dallas v. Newberg,
116 S.W.2d 476, 478-79 (Tex. App.--Dallas, 1938, no writ); Stone v.
Kendall, 268 S.W. 759, 761 (Tex. App.--Waco, 1925, no writ).
Generally, a lawful business is not a nuisance per se; instead, “a
lawful business or other activity may become a nuisance in fact
because of the locality in which it is carried on, or because it is
conducted in an improper manner.” 54 TEX. JUR., Nuisances § 32
(2003); see also Storey v. Central Hide & Rendering Co., 226 S.W.2d
25615, 618 (Tex. 1950). Accordingly, if the City is to avoid payment
of just compensation under the “nuisance exception” Vulcan’s
activities must constitute a nuisance in fact.
A nuisance in fact exists when an act, occupation, or
structure becomes a nuisance as a result of its circumstances or
surroundings. 54 TEX. JUR. 3D, Nuisances § 5 (2003). There is some
confusion in Texas whether the determination of a nuisance is a
question of fact or law: “Whether a given act or condition is a
nuisance has been variously held to be a question of fact, a mixed
question of law and fact, or a question of law.” 54 TEX. JUR. 3D,
Nuisances § 73 (2003). However, there is authority holding that,
if the complained of activity -- here quarrying -- is not a
nuisance per se, “it is for the jury to determine whether a
particular thing, act, omission, or use of property ... is a
nuisance in fact.” Id.; see also Domengeaux v. Kirkwood & Co., 297
S.W.2d 748, 749 (Tex. App.--San Antonio, 1956, no writ) (stating
that “[t]he fact finder must determine whether a particular thing,
act, omission, or use of property is a nuisance in fact”); accord
Gulf Oil Corp. v. Vestal, 231 S.W.2d 523, 526 (Tex. App.--Fort
Worth, 1950), aff’d, 149 Tex. 487, 235 S.W.2d 440 (Tex. 1951). The
weight of authority is in agreement. See 58 AM. JUR. 2D Nuisances
§ 236 (2003)(stating that “it is the function of the trier of fact
or jury to determine whether a nuisance exists, that is, whether a
particular act, structure, or use of property which is not a
26
nuisance per se is one in fact, unless reasonable minds cannot
differ on the issue”); 66 C.J.S. Nuisances § 143 (2003)(stating
that “it is for the jury to decide whether a particular act or
structure or use of property, which is not a nuisance per se, is a
nuisance in fact”).13
As discussed above, summary judgment is proper when, viewing
the evidence in the light most favorable to Vulcan, no genuine
issue of material fact exists and the City is entitled to judgment
as a matter of law. FED. R. CIV. P. 56(c); Gillis, 294 F.3d at 758.
In this case, we conclude that summary judgment was inappropriate
because a reasonable jury could differ as to whether Vulcan’s
activities would constitute a nuisance under Texas law. Peel &
Co., 238 at 398 n.37.
Initially, we acknowledge that there is persuasive evidence
put forth by the City describing the negative impact quarrying has
had on the City of Tehuacana -- i.e., concussion, noise, dust,
vibration, shaking of houses and furniture, fly rock, depletion of
groundwater, etc. We also recognize that these activities are
occurring adjacent to public streets and near several homes.
13
Our holding that whether Vulcan’s quarrying activities would
constitute a nuisance is a question of fact for the jury, does not
conflict with our discussion supra that the ultimate question of
whether there has been a regulatory taking is a question of law.
Mayhew, 964 S.W.2d at 932-33 n.3. The existence of a nuisance is
simply one of the factual issues that must be made in resolving the
ultimate issue of whether a taking has occurred. Id.
27
Vulcan, however, challenges much of this evidence. For
instance, Vulcan disputes the consideration of flyrock as
contributing to the nuisance because the flyrock incident cited by
the district court occurred while Smith Crushed Stone was operating
the quarry. Instead, Vulcan contends that it has never had a
flyrock incident during its operations at the Tehuacana quarry.
Second, Vulcan also discusses proactive measures it has taken
to alleviate any adverse effects caused to Tehuacana residents as
a result of its quarrying activities. These include implementing
measures to effectively control dust, notifying neighboring
landowners of impending blasts and only conducting drilling
operations during regular weekday business hours, presumably when
neighboring residents are at work. Moreover, Vulcan contends that
it operates numerous quarries at other locations without complaint
and, in one instance, less than 500 feet from a school. Further
Vulcan contends that it has never been sued by anyone regarding its
operations at the Tehuacana quarry nor has it ever been found to be
in excess of state limits for vibration and noise.
For these reasons, we must conclude that summary judgment was
error in this case. As compelling as the City’s evidence of
nuisance may seem to be, the fact of a nuisance was also
contradicted by Vulcan’s proffer. Accordingly, a jury question was
presented on whether Vulcan’s quarrying activities on Tracts 4-7
constitute a nuisance under Texas law.
VI
28
In sum, the district court’s ultimate holding on summary
judgment that the Tehuacana Ordinance was not a regulatory taking
of Vulcan’s property is VACATED and the case is REMANDED to the
district court for a trial on whether Vulcan’s proposed operation
of the quarry on Tracts 4-7 constitutes a nuisance under Texas law,
and such other issues as in the district court’s judgment may
become appropriate including, if necessary, a determination of
Vulcan’s damages.14
VACATED and REMANDED.
14
We make clear that we are deciding this case under Texas law
and, because many of the issues discussed herein have not been
decided by the Texas Supreme Court, we are making an Erie guess.
Consequently, our holding here is likely to have limited
precedential value.
29