Ninth Circuit Court of Appeal Rules Federal Government can Extinguish California Public Trust when Exercising its Eminent Domain Powers.

On June 14, 2012, the Ninth Circuit Court of Appeals issued its decision in United States v. 32.42 Acres of Land. In this case, the California State Lands Commission appealed from a district court’s final judgment in an eminent domain case where the United States took a fee simple interest in 32.42 acres of land on behalf of the U.S. Navy.

In 1911, the state legislature granted the property at issue to the City of San Diego, which leased the property to the Navy for 50 years, with the right to renew the lease for an additional 50 years. This land was later transferred to the San Diego Port District. When the Navy sought to exercise its exclusive option to renew the lease in 1996, the Port and Commission opposed the extension, and the United States brought a condemnation action. This action was settled and the lease was granted, but in 2005, the Navy determined it wanted to own the property in fee simple. The United States again filed a condemnation action. The Commission filed a motion for summary judgment, contending that the federal government could not extinguish California’s public trust rights. The trial court denied the motion, and the Commission appealed.

On appeal, the parties agreed that the federal government may take the property, and that it could put it to any use, including non-trust uses. The parties disagreed over the result of potential transfer of ownership of the property to a private party in the future. The Commission argued that the declaration of taking should not extinguish California’s public trust, but instead should only make it “quiescent” so that the public trust has no effect while the United States owns the property, but remerges if the land is later sold to a private party. The court rejected all of the Commission’s arguments in support of this position.

First, the Commission contended that the equal-footing doctrine required the federal government to offer a compelling reason for granting away submerged lands. Under the equal-footing doctrine, when a new state is admitted into the Union, it gains the same rights, sovereignty and jurisdiction as the original States; therefore, the doctrine provides a state presumptive title to its submerged lands when it joins the Union. The Commission argued that a compelling reason was required prior to granting these lands away because courts “did not ‘lightly infer’” such a grant when the United States held title to submerged land prior to statehood. As a result, the Commission asserted the federal government should not be able to grant away a state’s submerged land without being held to the same standard for granting away a territory’s submerged land. The court responded that the Commission misinterpreted the equal-footing doctrine. Under the equal footing doctrine, courts begin with a strong presumption against defeat of a state’s title. This presumption can be overcome, as the Constitution’s Property Clause gives the federal government the power to divest a future state of its entire title in submerged lands so long as the federal government makes its intention to do so plain, and the conveyance is for a public purpose.

Second, the Commission argued that the equal-footing doctrine prevented the federal government from extinguishing California’s public trust rights by eminent domain because “nothing but the Constitution can take away from the states what they received under the equal footing doctrine.” The court noted the Commission relied on cases to support this argument that were inapplicable. The court clarified that while the equal-footing doctrine prevents the federal government from granting property held by a state to a third party, it does not prevent the federal government from gaining new property through its eminent domain power.

Third, the Commission argued the law of federal navigational servitude supported its argument that the federal government could not extinguish state public trust rights because the law of navigational servitude defines “the extent to which the states have surrendered their public trust rights by the Constitution.” The court again pointed out that the Commission failed to distinguish between what the federal government may do with land when it does or does not have title to that land. The court held that the scope of the federal navigational servitude does not limit the United States’ power of eminent domain.

Fourth, the Commission invoked the seminal Illinois Central Railroad case to argue that the public trust doctrine restricts the ability of both federal and state governments to alienate public trust lands free of the public trust. The court rejected this argument, pointing out that the public trust doctrine remains a matter of state law. If California’s public trust interest in the property were to survive the federal government’s attempt to condemn it, it would improperly subjugate the federal government’s eminent domain power to state law. This would violate the Constitution’s Supremacy Clause.

Finally, the Commission unsuccessfully argued that the United States’ taking of the property subject to a “quiescent trust” would serve the Navy’s purpose equally well, so preserving California’s public trust would not frustrate the United States’ power of eminent domain. The court stated that the United States sought to extinguish the state’s public trust, and therefore, whether it could accomplish its objective by taking a lesser interest in the property is irrelevant. The Navy determined it wanted the property in fee simple and unencumbered by California’s public trust. The court noted it did not have the jurisdiction to review the wisdom of that determination. (By John Wheat)