Real Estate & Property Law

Federal Circuit: No Taking Due to "Federal Beet Lien Servitude"

By rht

In Bair v. United States, No. 2007-5049 (Feb. 5, 2008), the US Court of Appeals for the Federal Circuit held that a federal statute that effectively wiped out liens possessed by beet growers  was not a taking.  The court held that the liens -- which all parties admitted were recognized by state law -- were always subject to the federal statute, thus were not a compensable property interest that could have been taken.  Yes, the value of the liens were wiped out by the federal statute, but the liens were never viable to begin with.

The Federal Circuit held that the federal statute was a "background principle" of law under Lucas to which the state-recognized liens were always subject, much like the federal "navigational servitude," the background principle that private ownership of navigable waters is impossible:

The central dispute in this case is whether appellants possessed a compensable property interest in their right to lien priority over the CCC?s liens on PNSC?s refined sugar. The Supreme Court in Lucas made clear that property interests are acquired subject to ?background principles? of law, and that limitations on property rights that otherwise would effect a categorical taking are permissible if they ?inhere in the title itself.? 505 U.S. at 1029. The parties do not dispute that, under Washington law, appellants? interests were created in 2000, with the last date of creation being December 1, 2000. At that time both state law and federal law existed purporting to define the priority of the appellants? liens.

Slip op. at 6.  The Federal Circuit, citing a navigational servitude case, Scanton v. Wheeler, 179 U.S. 141 (1900), concluded that although state law is the source of property rights, the liens in question were subject to the federal statute, and thus federal law "created" and "defined" the property interest at stake.  Slip op. at 7-8.  Unlike the beet lien federal statute, however, the navigational servitude is a long-standing common law principle (to the days of Roman law) to which all riparian and littoral property has always been subject.  It looks like beet growers are now subject to a "federal beet lien servitude."

Full post as published by inversecondemnation on February 06, 2008 (boomark / email).