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Virginia Supreme Court Rejects Oyster Bed Leaseholders’ Inverse Condemnation Claim

December 14, 2020

The Supreme Court of Virginia has reaffirmed its century old precedent that leaseholders of oyster beds hold limited property rights and are not entitled to make an inverse condemnation claim against a governmental entity when such entity’s actions cause damage to oyster grounds by way of causing the water running over the grounds to become polluted. 

In Johnson v. City of Suffolk, leaseholders of certain oyster grounds in the Nansemond River filed an inverse condemnation claim against the City of Suffolk and the Hampton Roads Sanitation District alleging that discharges from a sewer system polluted the waters in which the leaseholders raised their oysters.  The leaseholders argued that such pollution prevented them from planting or harvesting oysters and that such action deprived them of their property, for which they must be compensated.  The Court quickly rejected such a claim as untenable. 

The Court noted that it is indeed well understood, under both the U.S. Constitution and the Constitution of Virginia, that no private property may be damaged or taken for public use without just compensation.  However, what constitutes property and property interests is delineated by state law and must be carefully analyzed, as not all interests in property are interests capable of an inverse condemnation claim.  The Court went on to outline what rights a lessee who has a lease of publicly owned bottomlands actually holds. 

First and foremost, the Court reiterated that the Commonwealth of Virginia retains ownership of the beds of the bays, rivers, and creeks, and that a lessee does not actually own the bottomlands or have the right to control the waters that flow over them.  The Court interestingly noted the history of the Commonwealth’s rights by stating that the Commonwealth “has succeeded to all the rights of both the Crown and Parliament of England in the navigable waters within its limits, and in the soil under them.”  Newport News Shipbuilding & Dry Dock Co. v. Jones, 105 Va. 503, 513 (1906). 

Second, because oyster bed leases are a creature of state law, the Court analyzed the statutes passed by the legislature to determine what rights a lessee is entitled to.  Specifically, the Code of Virginia states that lessees have the right to occupy an oyster bed “for the purpose of planting or propagating oysters.”  Lessees do not take fee simple ownership in the oyster beds and the lease confers only a right to use the use the bottomlands.  Additionally, the Code of Virginia authorizes the State Health Commissioner to “analyze the water and bottom sediment in and adjacent to the crustacea, finfish, or shellfish growing areas for evidence of pollution” and that he can condemn areas where pollution renders shellfish unfit for market.  The statutes further dictate that oysters can only be harvested if sanitary conditions are sufficient to permit harvesting. 

Lastly, the Court relied on past precedent, Darling v. City of Newport News, where it stated that oyster farmers who hold a lease to grow oysters over public lands hold a limited right.  See Darling v. City of Newport News, 123 Va. 14 (1918), aff’d, 249 U.S. 540 (1919).  The Court held in Darling that an oyster famer was not entitled to compensation for the damage caused to his oysters caused by discharges from the City’s sewer system.  The Supreme Court of the United States affirmed this decision, noting that leased oyster grounds are subject to “the risk of the pollution of the water.”  Id. at 543.  The leaseholders urged the Court to overrule its prior holding in Darling citing significant changes to the laws intended to protect the environment.  The Court declined to take up their request. 

In this case, the Court held that the City of Suffolk and the Hampton Roads Sanitation District did not interfere with the leaseholders’ rights.  Because leaseholders generally only hold the right to exclude others from harvesting oysters, the City of Suffolk and the Hampton Roads Sanitation District did not violate the applicable right.  Additionally, the Court held that the leaseholders leased the bottoms and not the water running over top.  As such, the leaseholders had no right to pollution free water.  In fact, the Court noted that the statutory regime contemplated possible pollution of growing areas and granted state agencies the authority to remedy the situation and even prevent the sale of oysters harvested from polluted areas.  As such, just as was established by the United States Supreme Court one hundred years ago, leaseholders take the oyster bed leases subject to the risk of pollution. 

It must be made clear that the Court did not hold that the government has the right to pollute waterways.  Indeed, the Court noted that the Constitution of Virginia was amended to make it a policy of the Commonwealth to provide for clean water and air.  What the Court did rule is that the oyster famers could not make an inverse condemnation claim on the basis of pollution of the waters running over the oyster grounds, because the bundle of sticks held by the leaseholders is limited.  

This case of Johnson v. City of Suffolk, No. 191563, was decided December 10, 2020. Dave Arnold, Ross Greene, and Matthew Hull of Pender & Coward’s Eminent Domain / Right of Way Practice Group and Local Government Practice Group represented the City of Suffolk with regard to this matter on brief, with oral argument before the circuit court by Dave Arnold, and oral argument before the Virginia Supreme Court by Ross Greene. 

Jefferson Hunt is a Pender & Coward attorney focusing his practice on local government matters.

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