The Strong Expropriation Power Of Louisiana's Deep-Water Public PortsThe Louisiana Supreme Court has issued its decision (4 to 3) in St. Bernard Port, Harbor & Terminal District v. Violet Dock Port, Inc., LLC, 2017-0434 (La. 01/30/2018), ___ So.3d ___, re-affirming the strong expropriation powers of Louisiana’s deep-water public ports.
The Louisiana Constitution has long-recognized, consistent with federal law, that “[p]roperty shall not be taken or damaged by the state or its political subdivisions except for public purposes and with just compensation ….” La. Const. art. I, §4(B)(1) (emphasis added). Both of these elements were at issue in the case.
The Court initially had to determine whether there was a public purpose in the expropriation of 75 acres of property owned by Violet Dock Port, Inc., LLC (“Violet”) along the Mississippi River near the St. Bernard Port, Harbor & Terminal District (“Port”), a public cargo facility.
The Court quickly disposed of this issue based upon the constitutional amendment adopted by Louisiana voters in 2006 following the United States Supreme Court’s decision in Kelo v. City of New London, 545 U.S. 469 (2005) expressly upholding a taking for purposes of economic development. In that amendment, specific permissible “public purposes” were enumerated for a political subdivision to expropriate private property. One of those specifically defined public purposes authorizes expropriation by “[p]ublic ports and public airports to facilitate the transport of goods or persons in domestic or international commerce.” La. Const. art. I, §4(B)(2)(b)(vi).
Given that the Port’s express purpose for the expropriation was to “build and operate a terminal to accommodate transport of liquid and solid bulk commodities into national and international commerce to and from St. Bernard”, the Court easily concluded that the expropriation was for a public purpose.
BUSINESS ENTERPRISE CLAUSE
The Court then had to address the issue of whether, even if there is a public purpose, the expropriation violated La. Const. art. I, §4(B)(6), providing in pertinent part that “[n]o business enterprise or any of its assets shall be taken for the purpose of operating that enterprise or halting competition with a government enterprise.”
Violet argued that the Port’s true purpose in expropriating its property was to take over its berthing facilities at which vessels were moored, including a lease with the Navy for its vessels. The Court quickly disposed of part of this argument finding that the Port’s intent was solely for land that would accommodate its expanded cargo facility, not for the mere berthing of vessels and that the Navy lease was “an afterthought”.
The Court then disposed of the remainder of Violet’s argument finding that Violet’s cargo operations were “negligible” and that it was actually in the layberthing business, while the Port was in the cargo business.
When it came to the trial court’s determination of just compensation for the taking, the Court held that the incorrect standard had been used for evaluating experts’ valuation testimony.
The trial court had chosen a valuation provided by an expert advanced by the Port and in so doing stated that it did not have the discretion to “split the baby” and decide upon a valuation between the Port’s expert and Violet’s expert. The Court rejected the trial court’s pronouncement of the law, holding that the trial court is empowered to weigh the strengths and weaknesses of both experts – whose opinions are merely advisory – and independently determine the amount of just compensation due.
Based upon the trial court’s legal error in its determination of just compensation, the Court remanded solely for the purpose of fixing the amount of just compensation based on the record evidence and in accordance with the principles set forth in its opinion.
IMPACT TO THE PORTS AND LANDOWNERS
We have always known that public ports have special constitutional authorization to expropriate property for the development of port facilities, and even lease that land to another entity to physically handle operations. La. Const. art. VI, §21(A). But now the Court has made clear that despite the constitutional amendment limiting the state’s expropriation powers, a public purpose authorizing a public port to expropriate exists “to facilitate the transport of goods or persons in domestic or international commerce.” Ports will be able to use that expropriation power and landowners along the Mississippi River need to be remain aware.