This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-511

 

Housing and Redevelopment Authority

of the City of Saint Paul, Minnesota, petitioner,
Respondent,

vs.

ExxonMobil Oil Corporation, et al.,
Appellants,

City of Saint Paul, et al.,
Respondents Below

 

Filed April 18, 2006

Affirmed

Peterson, Judge

 

Ramsey County District Court

File No. C6-04-1291

 

Lisa M. Agrimonti, Gregory M. Bistram, Briggs and Morgan, P.A., 2200 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402; and

 

Forrest D. Nowlin, Jr., Lindquist & Vennum, P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402; and

 

Peter J. McCall, Assistant City Attorney, City of St. Paul, Civil Division, 400 City Hall, 15 West Kellogg Boulevard, St. Paul, MN  55102 (for respondent Housing and Redevelopment Authority of the City of St. Paul)

 

Eric J. Magnuson, Diane B. Bratvold, Rider Bennett, L.L.P., Suite 4900, 33 South Sixth Street, Minneapolis, MN  55402; and

 

Daniel N. Rosen, Parker & Rosen, L.L.C., 133 First Avenue North, Minneapolis, MN  55401 (for appellants ExxonMobil Oil Corporation and Mobil Pipe Line Company)

            Considered and decided by Klaphake, Presiding Judge; Peterson, Judge; and Crippen, Judge.*

U N P U B L I S H E D   O P I N I O N

PETERSON, Judge

            In this condemnation dispute, appellant-land owner ExxonMobil Oil Corporation argues that (a) the record does not support the finding of a public purpose for a taking by respondent Housing and Redevelopment Authority of St. Paul (HRA) when contaminated land is to be taken for residential use and it is uncertain whether the contamination can be successfully remediated; and (b) there is no public purpose for removing restrictive covenants that prohibit using the land for residential purposes.  We affirm.

FACTS

            HRA seeks to use a 37-acre parcel of land owned by Exxon as part of a residential development project.  For more than 40 years, ending in 1995, Exxon and its predecessors used the property for storing and distributing petrochemicals.  After HRA considered developing the land, Exxon put restrictive covenants on the land, precluding its use for residential purposes.  When Exxon refused to voluntarily convey the parcel to HRA, HRA sued to condemn it.  After a hearing, the district court issued an interim order suspending the condemnation because HRA had not adequately investigated the extent of the contamination on the land and how to sufficiently remediate the contamination to safely use the land for residential purposes.[1]  HRA performed additional testing and, after a second hearing, the district court ruled that HRA had adequately addressed the concerns noted in the interim order.  The district court then found that a public purpose existed for the portion of HRA’s project involving Exxon’s land and granted the condemnation petition.  Exxon appeals.

D E C I S I O N

            Generally,

[b]efore condemning private land, a condemning authority . . . must determine that there is a public use for the land and that the taking is reasonably necessary or convenient for the furtherance of that public use.  Although we have said that questions of public use and necessity are “judicial questions,” the scope of judicial review of the condemning authority’s determination of these questions is actually narrower than that characterization might imply.  This is because the determinations of the condemning authority are regarded as legislative decisions which will be overturned only when they are “manifestly arbitrary or unreasonable.”  Thus, there are two levels of deference paid to condemnation decisions: the district court gives deference to the legislative determination of public purpose and necessity of the condemning authority and the appellate courts give deference to the findings of the district court, using the clearly erroneous standard.

 

Lundell v. Coop. Power Ass’n., 707 N.W.2d 376, 380 (Minn. Jan. 5, 2006) (citations and footnote omitted).  The terms “public use” and “public purpose” are treated as interchangeable.  Lundell, 707 N.W.2d at 381 n.2; City of Duluth v. Minnesota, 390 N.W.2d 757, 763 (Minn. 1986).  Thus, the burden of showing a public purpose is on the condemning authority, and this court must determine whether the district court clearly erred in finding that the condemning authority’s finding of a public purpose is not manifestly arbitrary or unreasonable.  When determining whether a finding of fact is clearly erroneous, an appellate court (a) “takes the view of the evidence which is most favorable to the trial court’s findings” (Trondson v. Janikula, 458 N.W.2d 679, 682 (Minn. 1990)); (b) defers to district court credibility determinations (Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988)); and (c) will not rule the finding “clearly erroneous” unless the appellate court is “‘left with the definite and firm conviction that a mistake [was] made.’”  Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quoting Gjovik v. Strope, 401 N.W.2d 664, 667 (Minn. 1987)).

I.

            Exxon argues that Minnesota lacks published authority addressing whether “public purpose” includes converting environmentally contaminated properties into housing sites and that City of Duluth could be read to weigh against allowing such a determination because, in that case, the supreme court affirmed a condemnation of contaminated mixed-use property for a project that was intended to relocate residents and to limit the use of the property to use by heavy industry.  We reject this reading of City of Duluth for two reasons.  First, contrary to the district court’s findings here, Exxon assumes that HRA’s remediation will not be sufficient to allow Exxon’s land to be used for residential purposes.  Second, City of Duluth is distinguishable.  There, the land involved a toxic- waste dump, and the object of the development was to economically rehabilitate the area by encouraging the construction of a paper mill, which was a use of the land that apparently did not involve remediating the existing contamination.  City of Duluth, 390 N.W.2d at 760-62.  Here, the land is contaminated, a remediation plan is in place, and the district court found that the plan adequately addressed the health-related concerns raised in the interim order.

            The core of Exxon’s appeal is that the finding of a public purpose is clearly erroneous because the finding is based on the district court’s underlying determination that sufficient remediation can be achieved to allow using the land for residential purposes, and the remediation determination is not supported by the record.  Exxon argues that HRA needed to show at least a “reasonable likelihood” that remediation sufficient to allow residential use of the property would be successful.[2]  There are four problems with this “reasonable likelihood” argument.[3]

            First, citing Minn. Canal & Power Co. v. Fall Lake Boom Co., 127 Minn. 23, 32, 148 N.W. 561, 564 (1914), and Minn. Canal & Power Co. v. Pratt, 101 Minn. 197, 226, 112 N.W. 395, 403 (1907), Exxon asserts that (a) “judicial review of a condemnation petition includes a determination of whether the public purpose is reasonably attainable”; and (b) a condemnation petition is “properly denied” when the condemning authority is unable to establish a “reasonable likelihood” that the condemning authority will achieve a public purpose. 

            When a city condemning land for economic-rehabilitation purposes had an ordinance that required entities doing business with the city to have an affirmative-action policy, and when the entity contemplated as the eventual owner-occupant of certain condemned land did not have an affirmative-action policy, it was argued that the condemnation was illegal under the Minnesota Canal cases.  This court rejected the argument, stating:

[T]he Minnesota Canal trilogy[[4]] stands for the proposition that a condemning authority cannot undertake a public project if the project itself is not permitted by law.  The public purposes for the present condemnation (obtaining a mid-priced retail store, increased public parking and employment, etc.) and the means of accomplishment (through tax increment financing for [the contemplated owner-occupant]) are all legal.  In the Minnesota Canal cases, however, the diversion of lakes and rivers, no matter how attempted, was not permitted by law.

 

In re Condemnation by Minneapolis Cmty. Dev. Agency (MCDA), 582 N.W.2d 596, 600 (Minn. App. 1998), review denied (Minn. Oct. 29, 1998).  Thus, to the extent Exxon relies on the Minnesota Canal cases to argue that the district court must predict whether remediation will be successful, rather than determine whether the proposed project is authorized, Exxon reads the Minnesota Canal cases more broadly than they were read by this court in MCDA and its progeny.  See Itasca County v. Carpenter, 602 N.W.2d 887, 890-91 (Minn. App. 1999) (discussing Fall Lake and MCDA in the context of “legal impossibility”). 

            Second, in a recent Connecticut case that did not involve remediation of contaminated property, the United States Supreme Court stated:

petitioners maintain that for takings of this kind [a taking of residential property for economic development purposes] we should require a “reasonable certainty” that the expected public benefits will actually accrue.  Such a rule, however, would represent an even greater departure from our precedent.  “When the legislature’s purpose is legitimate and its means are not irrational, our cases make clear that empirical debates over the wisdom of takings--no less than debates over the wisdom of other kinds of socioeconomic legislation--are not to be carried out in the federal courts.”  [Hawaii Housing Auth. v. Midkiff, 467 U.S. 229, 242, 104 S. Ct. 2321, 2329 (1984)].  Indeed, earlier this Term we explained why similar practical concerns (among others) undermined the use of the “substantially advances” formula in our regulatory takings doctrine.  See Lingle v. Chevron U.S.A. Inc., 544 U. S. ___, ___ 125 S.Ct. 2074, 2085, 161 L.Ed.2d 876 (noting that this formula “would empower--and might often require--courts to substitute their predictive judgments for those of elected legislatures and expert agencies”).  The disadvantages of a heightened form of review [as urged by the dissenting Justices in the Connecticut Supreme Court] are especially pronounced in this type of case[[5]].  Orderly implementation of a comprehensive redevelopment plan obviously requires that the legal rights of all interested parties be established before new construction can be commenced.  A constitutional rule that required postponement of the judicial approval of every condemnation until the likelihood of success of the plan had been assured would unquestionably impose a significant impediment to the successful consummation of many such plans.

 

Kelo v. City of New London, ___ U.S.___, ___, 125 S. Ct. 2655, 2667-68 (2005) (footnote omitted).[6] 

            The Supreme Court’s reluctance to engage in “predictive judgments” regarding condemnation projects is also present in Minnesota case law.  In Carpenter, a plan to build a road had been approved and required both private land and tribal land.  The district court dismissed the petition to condemn the private land based on the private landowner’s assertion that the condemning authority lacked the power to condemn the necessary tribal land, and this court reversed, noting that “[r]egardless” of whether the condemning authority could complete the project “as presently planned,” the objecting landowner’s tract was “‘reasonably necessary’” to complete a “‘public purpose[,]’” and stating that “[t]o hold otherwise would enmesh the courts in an endless series of reviews of the practicability of executive and legislative plans and decisions and would be contrary to well-settled principles of eminent domain.”  Carpenter, 602 N.W.2d at 891.  Similarly, in rejecting the argument that a condemnation was illegal because the private entity contemplated as the eventual owner-occupant of property targeted for condemnation lacked an affirmative-action program, this court stated in MCDA:

Because there is no existing illegality affecting the project as a whole, we decline to speculate on the likelihood of a future violation of [the relevant city ordinance].  The condemnation is not barred by the fact that [the entity contemplated as eventual owner-occupant] does not have an affirmative action plan on file with the city.

 

MCDA, 582 N.W.2d at 601 (footnote omitted).  Because Exxon’s argument that the alleged lack of a “reasonable likelihood” of successful remediation requires a “predictive judgment” regarding the success of remediation, we cannot say that the argument is consistent with the state and federal case law indicating that courts generally avoid making predictions regarding determinations made by legislative bodies.[7]  Also, as the intermediate appellate court in this state, we decline Exxon’s invitation to change existing law by adopting a “reasonable likelihood” standard for cases involving contaminated properties.  See Sefkow, 427 N.W.2d at 210 (stating “[t]he function of the court of appeals is limited to identifying errors and then correcting them”) (citation omitted); Tereault v. Palmer, 413 N.W.2d 283, 286 (Minn. App. 1987) (stating “the task of extending existing law falls to the supreme court or the legislature, but it does not fall to this court”), review denied (Minn. Dec. 18, 1987).

            Third, Exxon cites Regents of the Univ. of Minn. v. Chicago & Nw. Transp. Co., 552 N.W.2d 578 (Minn. App. 1996), review denied (Minn. Nov. 20, 1996), to argue that the existence of a “public purpose” cannot be based on speculation about whether remediation will be successful.  In Regents, the University of Minnesota wanted to acquire contaminated land owned by a railroad, and, when the railroad tried to sell the land to an entity other than the University, the University sought to condemn the land.  The district court dismissed the petition, “concluding in part that the proposed condemnation was not ‘necessary,’ due to the University’s failure to articulate a purpose for which it intended to use the property.”  Regents, 552 N.W.2d at 580.  This court affirmed the finding that the University failed to show the taking to be necessary, stating:

First, the record indicates that the University has not included this property on its master plan for its anticipated development of the Twin Cities campus.  Second, although the University claims to have at least three potential uses for the land, the uses are mutually exclusive, and the Board of Regents has not yet approved a single project for the property.  Finally, because of soil contamination problems, it is undisputed that the University could not currently use the property for any of its proposed uses.  The parties have not yet agreed on a remediation plan; decontamination of the property will require from approximately two to seven years to complete.  At least one University official has described the time period before the University would use the property as ‘potentially indefinite.’  Based on this combination of factors, we conclude that the trial court did not clearly err in finding that the University had failed to demonstrate the required level of necessity for condemnation.  The University may well have the right to purchase this property, but it cannot acquire it for speculative future use (stockpiling) by condemnation.

 

Regents, 552 N.W.2d at 580.  Here, not only has HRA approved a development plan with a specific use for Exxon’s land, but also the MPCA has approved HRA’s proposed remediation plan, the portions of the plan using land other than Exxon’s land are proceeding, and there is no allegation that, if adequate remediation can be achieved, HRA will not use the land for the purpose for which it is being condemned.  Thus, Regents is factually distinguishable.  See Carpenter, 602 N.W.2d at 890 (noting “[t]he rule established in Regents . . . is limited by the extreme facts present in that controversy and has no application here”).  A similar analysis addresses Exxon’s argument that Daniels v. Area Plan Comm’n., 306 F.3d 445 (7th Cir. 2002), shows that a public purpose is not present because “there is no guarantee and no reasonable certainty that HRA can or will use this property for [residential] housing [due to the fact that it is unclear whether adequate remediation can occur].”[8]

            Fourth, viewing the evidence in the light most favorable to the district court’s findings and otherwise deferring to the district court’s credibility determinations, the underlying determination that adequate remediation will occur is not clearly erroneous.  At the second hearing, the doctor who prepared the health-risk assessment testified that (a) he used “conservative assumptions” in preparing the Health Risk Assessment and a Supplemental Health Risk Assessment; and (b) when the remediated goals are reached, the property “will not pose a health risk to humans in a mixed use residential development.”  The hydrogeologist who testified regarding HRA’s remediation plan stated that (a) the plan “establish[ed]” a commitment by HRA that, “prior to the construction of any residential/commercial structures,” the toxic contaminants would “pose a de minimus risk to human health and the environment”; (b) “the existing and proposed remedial actions or measures are all proven technologies for the remediation of soil and groundwater impacted with petroleum hydrocarbons”; and (c) monitoring would continue until the remediation goals “have been achieved[,]” and that if the remediation actions needed “supplementation either to more effectively deal with identified contaminants or to achieve more expedited remediation, the supplementation would be proposed to the MPCA . . . and implemented following approval.”  An MPCA hyrogeologist who has been involved with the clean-up efforts at the Exxon property since 1993, and who has “extensive experience with review and remediation of contamination at other large petroleum tank sites throughout the state,” testified that “the likelihood of finding other chemicals or compounds of concern which would pose risk to humans at the [Exxon] property was very low as was the likelihood of finding other unidentified areas of concentrated contamination at the [Exxon] property given the numerous investigations and the amount of environmental information which had been generated about the [Exxon] property.”  And another MPCA official involved with the HRA remediation plan testified that the plan “contains a continuing obligation to monitor and remove contaminants during the implementation of the remedial action and following development[.]”  On this record, taking the view of the evidence most favorable to the district court’s finding, and deferring to the district court’s implicit and explicit credibility determinations, we are not left with the definite and firm conviction that the district court made a mistake when it determined that HRA did not act in a manifestly arbitrary or unreasonable fashion by finding a public purpose for the development.

            Exxon also argues that the remediation plan is defective because it is “not a final plan but a ‘minimum approach’ and a ‘dynamic document’” that HRA is not legally obligated to satisfy.  But (a) to the extent part of the remediation plan is to allow it to be altered to address additional contaminants or sites of contamination that might be discovered as work progresses, the plan’s current form cannot be final; and (b) both the city’s project manager and the HRA’s hydrogeologist testified that HRA is committed to completing the remediation and achieving the goals in the remediation plan before constructing any structures on the Exxon property.  Also, Exxon’s assertion that “funding for the [remediation plan] is unknown” is addressed by the fact that HRA’s project manager stated that “even though the project budget did not contain a specific line item for the environmental clean up, the HRA had sufficient funds to pay for the [remediation plan].”

II.

            Exxon also challenges the taking of the restrictive covenants, arguing that there was no public purpose for the taking of those covenants.  HRA argues that this question was waived below and that, if it is properly before this court, it is a question of compensation, rather than the propriety of the taking.  For purposes of this appeal we will assume that the question is properly before this court: Because the district court did not clearly err in finding a public purpose for the taking of the Exxon parcel so that it can be used for residential purposes, it follows that there is a public purpose for removing the restrictive covenants precluding use of the property for residential purposes.

            Affirmed.