State, Dept. of Health v. The Mill

Citation887 P.2d 993
Decision Date19 December 1994
Docket NumberNo. 93SC418,93SC418
PartiesSTATE of Colorado, DEPARTMENT OF HEALTH, Petitioner, v. THE MILL, a limited partnership, Respondent.
CourtSupreme Court of Colorado

Gale A. Norton, Atty. Gen., Stephen K. ErkenBrack, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., Jerry W. Goad, First Asst. Atty. Gen., Natural Resources Section, Denver, for petitioner.

Holley, Albertson & Polk, P.C., George Alan Holley, Eric E. Torgersen, Denver, for respondent.

Justice MULLARKEY delivered the Opinion of the Court.

This case is a consolidation of two cases. The first was a regulatory taking action initially brought by respondent, The Mill, against petitioner, the Colorado Department of Health (CDH). While that case was pending in the court of appeals, it was consolidated with an appeal by The Mill in an eminent domain action brought by CDH pursuant to the federal Uranium Mill Tailings Radiation Control Act (UMTRCA), 42 U.S.C. sections 7901 to 7942 (1988), and the corresponding state statute, sections 25-11-301 to -305, 11A C.R.S. (1989).

In the regulatory taking action, the court of appeals upheld the trial court. It ruled that use limitations recommended by CDH in correspondence with the Mill during 1983 constituted a total regulatory taking and remanded for a new determination of just compensation. The Mill v. State of Colorado, Department of Health, 868 P.2d 1099 (Colo.App.1993). In the eminent domain action, the court reversed the trial court and held that Colorado's rule against enhanced value 1 did not apply in condemnation actions under UMTRCA and that evidence of the decontaminated value of the Mill's property must be admitted in order to determine its fair market value. Id. For the reasons discussed below, we reverse the court of appeals' rulings on both issues and remand with directions.

I.

The property at issue in this case is a 61-acre parcel on which uranium milling operations were once conducted pursuant to an Atomic Energy Commission (AEC) license. Thirty-six acres of the property were covered by uranium mill tailings. The remaining twenty-five acres were used as the mill yard. After milling operations ceased, the property was used as an uranium mill tailings disposal site, also pursuant to an AEC license. In 1968, the AEC delegated authority to the State of Colorado to regulate radioactive materials and jurisdiction over the AEC license was transferred to the state. Then, in 1971, the state terminated the license. The tailings pile remained subject to state uranium mill tailings regulations. In 1973, after reviewing the available state records, 2 The Mill purchased the entire 61-acre parcel. From 1973 to 1983 the site was used for storage. During this time, CDH actively monitored The Mill's maintenance of the tailings pile and the condition of the mill yard.

In 1978, Congress passed the Uranium Mill Tailings Radiation Control Act. UMTRCA mandated the designation and clean up of uranium processing sites. Pursuant to UMTRCA, the entire 61-acre parcel belonging to The Mill was designated as a uranium processing site. In 1980, testing on the entire parcel indicated that contamination existed in both the tailings pile and the mill yard sufficient to qualify the site for clean up under UMTRCA.

In 1983, The Mill leased the mill yard to O.C. Coal Company for $7,000 per month for coal storage. The Mill notified CDH of the lease and CDH met on March 11, 1983, with both parties to discuss certain precautions to avoid the spread of radioactive contamination from the property. The agreed-upon precautions were confirmed in letters sent by CDH to The Mill and O.C. Coal Company on March 15, 1983. These precautions limited the area available for storage to those portions of the property where contaminated soils would not mix with the coal. On July 15, 1983, CDH sent The Mill a summary of a routine inspection which indicated non-compliance with CDH tailings regulations including failure to post warning signs on the property, no gates to secure the tailings pile, and signs of horses grazing on the piles. In addition, CDH notified The Mill that coal had been stored contrary to the terms of the agreement documented in the March 15 letter. These letters are the basis for the alleged regulatory taking.

O.C. Coal prematurely terminated its lease in May 1984. After that time, under the use restrictions urged by CDH, the income from the mill yard fell to between $500 and $700 per month. The Mill argues that this was not a reasonable economic return on the property.

In 1986, The Mill filed an action against CDH claiming that, because of the restrictions placed on the use of the mill yard, the property could not be put to any reasonable economic use. The Mill pled as grounds for relief inverse condemnation, regulatory taking, and estoppel. The trial court dismissed the inverse condemnation claim but found that the state had effected a regulatory taking and awarded $200,000 to The Mill in lost-use value during the period necessary for decontamination. On appeal, the court of appeals reversed the dismissal of the inverse condemnation claim and held that all other claims were subsumed in the inverse condemnation claim. The Mill v. Department of Health, 787 P.2d 176 (Colo.App.1989) (The Mill I ). This court reversed the court of appeals' decision and remanded the case for consideration of The Mill's regulatory taking and estoppel claims. Department of Health v. The Mill, 809 P.2d 434 (Colo.1991) (The Mill II ).

While those issues were on appeal, CDH filed an action to condemn The Mill's property under section 25-11-303(1)(d), 11A C.R.S. (1989). In this action, the parties stipulated that the market value of the property in its contaminated state was zero, and the trial court entered a judgment vesting title to the property in the state. The Mill appealed the judgment. The condemnation action and the regulatory taking action were consolidated for consideration by the court of appeals.

In the consolidated action, the court of appeals found that both The Mill's regulatory taking and estoppel claims were "subsumed" in its disposition of the eminent domain proceeding because the monetary award arising from any of the claims could not exceed the fair market value of the property. The court found that the regulatory taking issue was relevant to the eminent domain action only as it determined at what point the property was taken. The court (1) affirmed the trial court's ruling that there had been a regulatory taking; (2) sua sponte set aside the stipulation of zero value on grounds that, for purposes of condemnation pursuant to UMTRCA, fair market value must take into account the decontaminated value of the property; and (3) remanded for a new determination of just compensation. The Mill v. Department of Health, 868 P.2d 1099, 1105 (Colo.App.1993) (The Mill III ). CDH petitioned for review and we granted certiorari to review both the regulatory taking and eminent domain rulings.

II.

The court of appeals affirmed the trial court's ruling that CHD correspondence issued to O.C. Coal and The Mill effected a total regulatory taking of The Mill's property. The Mill III, 868 P.2d at 1110. On certiorari review to this court, CDH argues that its letters to O.C. Coal and The Mill did not rise to the level of regulation and thus The Mill's regulatory taking claim must fail because it is not ripe. Furthermore, CDH argues, The Mill's inability to put the property to reasonable economic use was not a result of CDH's actions, but rather of the contamination on the property. For that reason, it argues, the claim should fail for lack of causation. CDH also contends that viable economic uses for the property remain, but, even if there were no remaining economic uses, any restrictions placed on the property by CDH did not effect a compensable taking under Lucas v. South Carolina Coastal Council, 505 U.S. 1003, ----, 112 S.Ct. 2886, 2901, 120 L.Ed.2d 798 (1992), because (1) the restrictions were consistent with background principles of nuisance and property law, and (2) the restrictions reflected recent scientific recognition of the hazards presented to human health by radioactive materials.

The Mill counters that because CDH records indicated that its property was not under license by CDH at the time of purchase and that the property had no use restrictions in place, the restrictions later imposed by CDH did not inhere in its title to the property. Furthermore, The Mill argues, its actual use of the property did not constitute common law nuisance because it complied with all of the CDH guidelines. The Mill also argues that even if CDH action did not effect a per se taking by depriving The Mill of all economic use of its property, a court must balance the competing public and private interests to determine whether a regulatory taking nevertheless occurred. Under this balancing test, The Mill asserts that the letters issued by CDH constituted a regulatory taking.

The court of appeals rejected CDH's ripeness argument and, upon weighing the public and private interests affected by regulation of The Mill's property, found that the restrictions placed on the use of the property by CDH effected a regulatory taking. We do not agree with the court of appeals' analysis.

A land-use regulation constitutes a taking under the Colorado and United States constitutions if it prevents all economically viable use of the property. Lucas, 505 U.S. at ----, 112 S.Ct. at 2893; Van Sickle v. Boyes, 797 P.2d 1267, 1271 (Colo.1990). Regulation which does not prevent all economic use may also constitute a taking if it goes "too far." Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 160, 67 L.Ed. 322 (1922). The determination of whether a regulation goes "too far" for purposes of the Fifth Amendment is essentially an "ad hoc, factual" inquiry. Golden Pacific Bancorp v. United...

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