Rhode Island Property Law : Rhode Island Real Estate & Environmental Attorney & Lawyer John Boehnert for Development & Permits in RI

An American Bar Association Webinar will bring to a national audience Rhode Island’s and Massachusetts’ experience with the proposed development of a LNG facility as part of a discussion of issues facing states in the siting of potentially hazardous facilities in their communities.

Recall the political furor that developed when Weaver’s Cove Energy LLC proposed constructing a LNG (i.e. liquefied natural gas) facility in Fall River, Massachusetts, which would bring LNG  through Rhode Island and Massachusetts coastal waters in ships similar to the one pictured here.

I would be the first to argue that all of that furor was not justified, but by way of disclosure I should also note that I represented Weaver’s Cove Energy in its federal consistency review filing with the Rhode Island Coastal Resources Management Council.

I will moderate the panel discussion and will be joined by veteran litigator Terrence Tierney, Esq., now with the University Of Massachusetts School Of Law and formerly with the Rhode Island Attorney General’s Office, where he was involved in litigation opposing siting of the LNG facility.

Also on the panel is an experienced planner, David Westcott, AICP, the chief planner and environmental scientist with Mason & Associates, Inc. in North Scituate, Rhode Island, who will be discussing the siting of locally unwanted land uses, also known as LULUs.

For my part, I will be discussing how the 34 coastal and Great Lakes states can use the Coastal Zone Management Act’s federal consistency program to protect its communities in the siting of potentially hazardous facilities.

And relying on Rhode Island’s first in the nation ocean zoning program, I will also be discussing how other states can follow Rhode Island’s lead and actually strengthen the protections available under the federal consistency review program.

So all and all Little Rhody is going to have the opportunity to showcase lessons learned here and how this may help other states.

The Webinar airs October 19^th at 1:00 pm – 2:30 pm Eastern, 12:00 pm – 1:30 pm Central, 11:00 am – 12:30 pm Mountain, and 10:00 am – 11:30 am Pacific.

Registration information is available here.

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To all those developers rushing off to federal court to sue because state regulations preventing development have “taken” your property without just compensation—NOT SO FAST!

And to all those real estate investors who can’t wait to get into real estate development to make the really Big Money—NOT SO FAST!

That first warning was the clear and unequivocal message from the First Circuit Court of Appeals on a Rhode Island inverse condemnation case, issued just days ago. Downing Salt Pond Partners  v. State of Rhode Island and Providence Plantations, No. 10-1484  (1st. Cir. May 23, 2011).

And the second warning may be buried within the pages of the Court’s decision.

Developer’s Worst Nightmare

The facts are every real estate developer’s worse nightmare.

The developer, Downing Salt Pond Partners, acquired real estate in Narragansett for a residential development, and in 1992 received a Coastal Resources Management Council (CRMC) Assent to develop the property for a 79 lot residential subdivision.

After building 26 homes from 1992 through 2007, the Rhode Island Historic Preservation and Heritage Commission determined that artifacts found during construction indicated the property was the site of a Narragansett Indian settlement. The Historic Commission urged CRMC to withdraw the Assent.

While CRMC did not formally invalidate the Assent, it wanted to assess the issues raised by the Historic Commission.

Construction was halted, and Downing alleges the Historic Commission wanted to either prevent further development of the project or require the developer to undertake an archeological data recovery project that Downing asserted would cost it $6 million.

So there the developer sat, with the uncertainty of whether it could ever complete its project, after having purchased the land, gotten its permits, installed infrastructure to support development, and built less than a third of the houses it expected to sell.

By June, 2009 the issue had not been resolved, Downing started development, CRMC issued a cease and desist order, and Downing headed to federal court, claiming its property had been taken without just compensation, and also alleging denials of constitutional due process and equal protection provisions.

The Court Speaks—And Things Get Even Worse For The Developer

The federal District Court found against Downing, saying the developer was required to bring its claims in State court. Downing/Salt Pond Partners, L.P. v. Rhode Island, 698 F. Supp. 2d 278 (D.R.I. 2010)  On May 23, 2011, the First Circuit Court of Appeals affirmed.

In essence, the Court held that the United States Supreme Court’s decision in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), establishing ripeness requirements for such suits in federal court, required that the suit be brought in state court because Rhode Island had an adequate remedy for inverse condemnation claims and the claim must therefore be pursued in State Court.

The First Circuit refused to address the argument that even if the inverse condemnation claim was not ripe for hearing in federal court, the due process and equal protection claims were ripe. And while it did not address that argument substantively, it did suggest it did not find it a compelling argument.

(If you want to read an excellent commentary on the mess the Williamson County case has made for property owners claiming a taking, see the recent posting (May 30, 2011) by attorney Robert H. Thomas about the Downing Salt Pond case on inversecondemnation.com.)

So after four years of uncertainty, the developer still has no resolution, and no compensation, and presumably has to head back to court—this time State court—and perhaps back to the negotiation table.

Lessons Learned

It appears fairly clear that the federal courts continue to be reluctant to entertain land use regulatory takings cases, and your remedy is in State court.

There is a reason real estate developers expect to make Big Money; they take Big Risks, and the developer’s return is the compensation for those risks. And sometimes those Big Risks result in Big Losses.

So the next time you see a real estate developer driving a big fancy car, well, you may just want to wish him well!

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Many real estate developers and property owners got a significant break from the General Assembly late last year, when legislation passed to extend the expiration date of a broad range of governmental permits.

And many don't know it!

And the General Assembly recently improved on that substantial benefit.

And many still don't know it!

Because these measures passed with so little fanfare, many are unaware that hundreds of State permits which would ordinarily have expired get a new lease on life.

The first bill extended these permits until June 30, 2011. The second bill extended them even further, given the continuing economic slump.

The Legislature was concerned that because of  the economic crisis, banks were not lending and many real estate developers and ordinary property owners were in the position of not having sufficient funds to perform under governmental permits that had been issued to them.

Why Action Was Appropriate

The legislation first enacted says it well:

“The general assembly hereby finds that the current economic conditions in the real estate market demonstrate that there is little or no demand for new construction. In addition, the banking crisis has made it extremely difficult for real estate developers to obtain financing for new real estate construction. Currently there are real estate developers who have expended substantial amounts of money to obtain permits and approvals from various local and state agencies. Many of the permits and approvals will expire prior to an improvement in the economy and the financial and banking industries.”

The General Assembly’s first solution was simple and effective. All permits in effect at the time of passage, November 9, 2009, would not expire until June 30, 2011, regardless of what the permit terms say. (See the legislation.)

But in June of this year the General Assembly acted again, as the economy remained in the doldrums and no doubt there was concern that the original extension of permits may not be sufficient.

First, the new  legislation increased the number of permits protected from expiration by providing that it was not limited to permits in effect on November 9, 2009 but also included permits issued after November 9, 2009 and on or before June 30, 2011.

Secondly, the new legislation said that permits in effect on November 9, 2009 "will be recalculated as of July 1, 2011 by adding thereto the number of days between November 9, 2009  and the day on which the permit or approval would otherwise have expired".

This second bill went on to provide that the expiration date of permits issued between November 10, 2009 and June 30, 2011 "will be recalculated as of July 1, 2011 by adding thereto the number of days between the day the permit or approval was issued and the day the permit or approval otherwise would have expired". (See most recent legislation.)

Permits Affected

The legislation extends to permits issued by the Rhode Island Department of Environmental Management, the Rhode Island Coastal Resources Management Council, and by municipalities under subdivision and zoning ordinances. (See DEM’s Emergency Regulations.)

Not just professional developers will benefit from this legislation. For example, if a homeowner has obtained a variance to put an addition on his house, only to find that the local bank will not lend for the project, the homeowner’s permit will remain valid substantially beyond its normal expiration. Hopefully, lenders will then be in a feistier mood and the funds will be flowing.

A Tip of the Hat!

Given how costly it can be to get development permits, this has to be one of the smartest things the General Assembly has done in some time. And they not only did it right once, they actually improved upon it.  A tip of the hat to the folks on Smith Hill for this one!

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The Cape Wind project to construct 130 wind turbines in Nantucket Sound was recently approved by U.S. Secretary of the Interior Salazar over the objections of two Native American Indian tribes, which claimed the project would disrupt spiritual rituals as well as ancestral grounds.

People of the First Light

The Mashpee Wampanoag of Cape Cod and the Wampanoag  of Gay Head (Aquinnah)  explained that “Wampanoag” means “People of the First Light” and the turbines would adversely impact their ability “to continue their ceremonies in a way that ancestors have done for thousands of years”, including their sunrise ceremony.

It was reported that the historic preservation officer for the Aquinnah Wampanoag of Martha’s Vineyard said in a letter to federal officials that the view of the project site in Nantucket Sound “is where we still arrive to greet the new day, watch for celestial observations in the night sky and follow the migration of the sun and stars in change with the seasons”. (See news report)

The tribes have also expressed strong concern that the area of Nantucket Sound where the project will be located, known as Horseshoe Shoal, may contain ancestral artifacts and remains that will be disturbed or destroyed by the construction of the project.

A Question of View

One may be forgiven, however, for wondering whether this is perhaps more about political expediency than religious and cultural rituals.

For example, supporters of Cape Wind have noted that the land of the Aquinnah Wampanoag is on the western part of Martha’s Vineyard in the area known as Gay Head (pictured above), and does not have direct views of Nantucket Sound.

Also, an attorney who was a former member of the Tribal Council of the Aquinnah Tribe, and whose father and grandfather were life-long tribal medicine men, sent a letter to Secretary Salazar, stating:

“I am stating to you with complete honesty and knowledge that I never participated in, witnessed, or even heard of a sacred spot on the horizon that is relevant to any Aquinnah Wampanoag culture, history or ceremony. Nor did I see, or hear, either my father or grandfather conduct such ceremony. I do know that offerings to the Creator are made at ‘first light’, but first light is a period of time not a place. The notion that locating wind turbines in Nantucket Sound will impose on, impact or harm any cultural tradition is just plain false.”

The writer acknowledged in his letter that he worked for a law firm that represented the developer of Cape Wind but said that “my employer has not influenced my decision to write this letter in any manner whatsoever”.

The letter included a petition reported to dispute the claimed cultural value of the Cape Wind site to the Aquinnah tribe, which was signed by eight members of the tribe, including a former chairman of the tribe who originally opposed the project but now supports it. (See Letter) (See News Report)

Protecting Artifacts and Remains

As for the claims that construction of the project will disturb ancestral artifacts and remains, Department of Interior approval came only after detailed studies finding that such disturbance was unlikely, and the approval carries significant restrictions to guard against this. These measures include

•  requiring a “Chance Finds Clause” in the federal lease to the developer, halting operations in the event of an unanticipated archeological find and allowing the tribes to participate in analyzing the finds
• requiring additional and detailed marine archaeological surveys and other protective measures in the project area
• requiring geotechnical coring and analyses to aid in the identification of intact landforms that might contain archaeological materials 

My Way or the Highway

The tribes have refused millions of dollars offered to mitigate any impact the project may have on the tribes, and are continuing their opposition.

According to Secretary Salazar, from the tribes’ perspective, “there are no acceptable mitigation measures for the impacts to their traditional cultural properties”. In other words, build it somewhere else.

When Everyone Has Rights

In land use and environmental permitting, when everyone has rights, no one has rights. 

The Department of the Interior’s decision effectively recognizes this.

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Whether or not one agrees with Interior Secretary Salazar’s decision this week to remove the last federal regulatory barrier to the permitting of the Cape Wind Project, there should be far less disagreement on the Secretary’s view of the permitting process, which has taken nearly a decade.

“The time has come to bring the reviews and analysis of the Cape Wind Project to a conclusion…..The parties, the public, and the permit applicants deserve resolution and certainty,” the Secretary said in a March 1, 2020 statement. (See Secretary's Statement.)

A More Rational Permitting Process Needed

At his news conference announcing his approval of the offshore wind farm to be located in approximately 25 square miles of Nantucket Sound,  the Interior Secretary was far blunter in commenting on the protracted permitting process.

According to news reports, the Secretary said there was no reason “why an offshore wind permit should take a decade to review and approve”, and he promised a “more rational and orderly” process for subsequent offshore projects.

Secretary Salazar hit the bulls eye on that one.

A Nimbler European Regulatory Bureaucracy!?!

When the Europeans, not known for nimble and responsive governmental bureaucracies, are permitting offshore wind farms literally in months, it is clear that our permitting process is dysfunctional.

A recent report by the European Wind Energy Association finds that the average permitting time in Europe for offshore wind projects is 18 months. That is less than one sixth of the time for the permitting of the Cape Wind Project. (See press release on the EWEA website.)

The study also finds that while the permitting for European onshore wind farms takes about twice as long as the permitting of European offshore wind projects, the average of 42 months for the onshore projects is still about one-third of the time to permit the Cape Wind Project.

A Process That Discourages Investment

The permitting marathon is not over for the developer’s of the Cape Wind Project, who have already spent $45 million trying to get governmental approvals.   Lawsuits are pending, and more are threatened.

The environmental permitting process should not be the bureaucratic equivalent of the neutron bomb, leaving the infrastructure intact but wiping out the developers.

One wonders how many potential developers of alternative energy projects simply never enter the permitting process because of the extraordinary costs and time delays to get approvals, given that such capital can be deployed in less controversial projects for more secure returns.

I don’t know the answer to that—perhaps it is blowing in the wind!

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