Maryland Port Administration v. QC Corp.

RODOWSKY, Judge. Maryland Constitution, Art. Ill, § 40 prohibits the General Assembly from enacting any law “authorizing private property, to be taken for public use, without just compensation____” Taking private property for public use without compensation is also barred by the Fifth Amendment to the United States Constitution. This case involves whether, by operating a hazardous waste disposal facility on its own land, the State of Maryland has taken adjacent leasehold property of the plaintiff. The Court of Special Appeals concluded that there was sufficient evidence from which a jury could find that a taking had occurred.

QC Corporation v. Maryland Port Administration, 68 Md.App. 181 , 510 A.2d 1101 (1986). We shall hold that there was no taking. In a comer of the Baltimore City harbor, between Curtis Bay and the Anne Arundel County line, lies Thoms Cove, an indentation of the Patapsco River between Leading Point and Hawkins Point. Motor vehicle access to the area is by way of Quarantine Road. 1 Arrayed along the west side of ³⁸² Thoms Cove in a roughly north to south fashion are four properties owned by the petitioner, Maryland Port Administration (M.P.A.), an agency of the State of Maryland within the Department of Transportation. 2 Northernmost of these parcels is a six acre lot (the North site).

Adjacent to the North site is a roughly two acre parcel leased by M.P.A. to a corporate predecessor of the respondent, QC Corporation (QC), under a lease most recently renewed in January 1979. The initial term of the renewal lease was for five years, with options in QC to renew for two successive terms, each of five years. The lessee covenanted to use the property “solely for the purpose of a chemical processing plant and for associated purposes[.]” Contiguous to the QC site on the south is Disposal Site Two, a twelve acre parcel, and south of that, across Thoms Creek, is a twenty acre parcel, Disposal Site One. At the times relevant to this case, Disposal Sites One and Two were used as landfills for hazardous wastes.

The substances deposited at Disposal Site One included, and at Site Two consisted exclusively of, chromium ore tailings from Allied Chemical Corporation (Allied). Approximately five percent of these tailings are hexavalent chromium (chrome), a carcinogen. In 1967 M.P.A. had contracted to dispose of chromium ore tailings for Allied until August 31, 2007, up to a maximum of six million cubic yards. Until February 1975 M.P.A. used the material from Allied as fill at the Dundalk Marine Terminal.

From February 1975 until July 1975 Allied disposed of its chrome refuse at a commercial landfill. Thereafter Allied delivered much of that material to Site One. Under 1977 legislation M.P.A. needed a license to continue accepting chrome and, when it stopped doing so, Allied in February 1978 sued M.P.A. On August 5, 1980, state health officials licensed Site Two for three years and Allied, which had been using a commercial ³⁸³ facility in the interim, resumed depositing chrome bearing material at the Hawkins Point facility of M.P.A. The disposal sites at Hawkins Point are divided into specially prepared subareas called “cells.” A cell is a large, elongated, earthen cavity with sloping sides. The sides and bottom are lined with a relatively impervious clay, two feet thick.

Tailings are brought to the disposal site in tarpaulin covered dump trucks. The material ideally should have about twenty percent moisture content so that it will neither blow freely in the air nor drip to the ground. The tailings are dumped into the current working area of a cell and bulldozed across the width of the cell. When approximately 100 feet down the length of the cell has been filled, that working area is covered with one foot of dirt and the process is repeated in the next working area.

Depending on the volume of deliveries, a working area can have tailings exposed to the air for as long as one week at a time. Each cell also contains one or more wells so that, when the cell is completely covered, it can be tested for leachate and excess liquid pumped out of the cell. When Disposal Site Two was approaching capacity under the 1980 permit, the state health department in November 1982 licensed Site Two to accept chrome in additional cells to be constructed overtop of the original, filled cells. During the process leading to the 1982 permits there were meetings between public officials and members of a small residential community in Hawkins Point.

During that period the City of Baltimore was interested in improving access to Hawkins Point by completing an interchange between the Baltimore Beltway and Quarantine Road and in acquiring land in Hawkins Point for a trash landfill. Because of the land use impact of these public improvements on the Hawkins Point residential community, the State agreed to relocate the residents. There is no evidence that public health officials ever recommended the relocation. A witness for the State who participated in the relocation decision denied that health concerns were a factor and that denial is unrebutted. ³⁸⁴ The 1982 hazardous waste disposal permit ran for three years.

In February 1983 the Allied-M.P.A. litigation was settled. Pursuant to that settlement M.P.A. leased the landfills at Hawkins Point to Maryland Environmental Service (M.E.S.), a state agency in the Department of Natural Resources which had been operating the landfills for M.P.A. since 1980. M.E.S. was created by the General Assembly to provide water supply and waste purification and disposal services in compliance with State laws, regulations, and policies governing air, land, and water pollution to public and private instrumentalities, and with safeguards to protect the autonomy of the political subdivisions and the rights of the private entities it serves. [Md.Code (1974, 1983 Repl.Vol.), § 3-102(a) of the Natural Resources Article.] QC and its predecessors have operated a chemical processing plant at the QC site since 1965. For many years the business bought moist ferrous sulfate crystals from Glidden Corporation, dried the crystals, packaged them, and sold them for treating drinking and waste water and for use in fertilizers and animal feeds.

Due to changes in the availability of raw materials and concern that Phizer Incorporated would become a competitor, QC began reducing the processing of moist ferrous sulfate at Hawkins Point in April or May of 1982 and began buying a finished product from Phizer which QC at Hawkins Point bagged under its own label. By approximately April of 1983, QC had discontinued all processing at Hawkins Point. 3 On July 21, 1983, the instant suit was filed. The plant was kept in operational readiness until September or October 1983 when it was manned by not more than two employees. In January 1984 QC began dismantling the Hawkins Point plant and by April ³⁸⁵ of that year had removed all salvagable equipment to its other plant in Missouri.

QC’s position in this litigation is that, but for the adjoining hazardous waste landfill, it would have continued to do business out of Hawkins Point until the expiration of the last renewal term under its lease. The president of QC testified, in essence, that QC closed the Baltimore plant out of concern for the integrity of its environmentally sensitive product and for the health of QC’s employees. There was evidence that material from the landfill, as well as material which dripped from the truck beds or fell from the truck tires, dried and blew onto QC’s property. The evidence based on air monitoring reveals no measurement at the QC plant or at Disposal Site Two which exceeded two micrograms of chrome per cubic meter of air.

The maximum permissible exposure to chrome under state health and safety regulations applicable to workplaces is fifty micrograms, i.e., twenty-five times higher than the measured quantities. QC’s complaint sounded in (1) breach of the implied in law covenant of quiet enjoyment, (2) constructive eviction, (3) inverse condemnation, and (4) nuisance. The trial court sustained a demurrer to the nuisance claim due to QC’s failure to give the notice required under the statutory waiver of sovereign immunity. That determination has not been challenged on appeal.

A directed verdict was granted on the quiet enjoyment and constructive eviction claims. The unconstitutional taking issue was submitted to the jury, but it was unable to agree. Thereupon the circuit court granted judgment n.o.v. in favor of M.P.A. on that claim. The Court of Special Appeals reversed as to all three of the claims appealed.

We issued the writ of certiorari on the State’s petition but limited our review to the taking question. We deemed that issue to be of general public importance, as contrasted with the factually unique questions of constructive eviction and quiet enjoyment arising where a landlord both limits the use of the demised premises to ³⁸⁶ chemical processing and also operates a hazardous waste landfill on adjoining property. The Court of Special Appeals believed that the trial court had incorrectly concluded that QC’s property could not have been taken unless QC had been deprived of all beneficial use thereof. The intermediate appellate court articulated the standard as “substantial” interference.

It distinguished between regulatory takings, to which the trial court’s standard is ordinarily more appropriately applied, and takings arising from other activities by government, which we shall call the eminent domain power. The court quoted from P. Freund, The Police Power § 511, at 546-47 (1904) the generalization that the “state takes property by eminent domain because it is useful to the public, and under the police power, because it is harmful____” Finding the same theme repeated in Sax, Takings and the Police Power, 74 Yale L.J. 36 , 62 (1964), the court quoted favorably the following rule proposed by Professor Sax: “[Wjhen economic loss is incurred as a result of government enhancement of its resource position in its enterprise capacity, then compensation is constitutionally required; it is that result which is to be characterized as a taking. But losses, however severe, incurred as a consequence of government acting merely in its arbitral capacity are to be viewed as a non-compensable exercise of the police power.” [ 68 Md.App. at 205 , 510 A.2d at 1113 (quoting 74 Yale L.J. at 63).] It is to be noted that the rule espoused by Professor Sax in his article at 74 Yale L.J. 36 (Sax I) treats any economic loss, unqualified as to degree, as a taking, if the loss results from an enterprise activity. The Court of Special Appeals saw the rule of Sax I “foreshadowed” in the Supreme Court cases involving overflights of airplanes or artillery shells, i.e., in Griggs v. Allegheny County, 369 U.S. 84 , 82 S.Ct. 531 , 7 L.Ed.2d 585 (1962), United States v. Causby, 328 U.S. 256 , 66 S.Ct. 1062 , 90 L.Ed. 1206 (1946), and Portsmouth Co. v. United States, 260 U.S. 327 , 43 S.Ct. 135 , 67 ³⁸⁷ L.Ed. 287 (1922).

The court then turned to a passage, quoted more fully below, from Hardesty v. State Roads Comm’n, 276 Md. 25 , 343 A.2d 884 (1975). In stating that the weight of authority does not support the view that a physical appropriation is prerequisite to a “taking” of property in the constitutional sense, Nichols [Eminent Domain (3d ed. 1970)] says at § 6.3: “The modern, prevailing view is that any substantial interference with private property which destroys or lessens its value (or by which the owner’s right to its use or enjoyment is in any substantial degree abridged or destroyed) is, in fact and in law, a ‘taking’ in the constitutional sense, to the extent of the damages suffered, even though the title and possession of the owner remain[ ] undisturbed.” [Id, at 32, 343 A.2d at 888 .] Reading Griggs, Causby, and Portsmouth to have applied a substantial deprivation of use test, the Court of Special Appeals then held that, under the evidence most favorable to QC, the jury could have found that the State had “substantially deprived] QC of the use of its property as a ferrous sulfate processing plant.” 68 Md.App. at 208 , 510 A.2d at 1115 . 4 ³⁸⁸ I To date courts have not developed a test which can be comprehensively and consistently applied to determine whether a government has taken property. 5 Legal commentators have attempted to distill the operative principle, or to construct an all inclusive decisional model. 6 Sax I is an effort of that type. We give no weight to the theory, therein expounded, that any and all loss caused by the enterprise function of government is compensable as a taking. Professor Sax has disavowed that aspect of the theory he advanced in Sax I. See Sax, Takings, Private Property and Public Rights, 81 Yale L.J. 149 (1971) (Sax II). 7 Further, emphasis on the nonregulatory or “enterprise” nature of the governmental activity which may be ³⁸⁹ involved in the particular taking claimed minimizes the distinction between a compensable taking and noncompensable damage which has long prevailed in takings jurisprudence and which is discussed in part II, infra.

Briefly, 2 J. Sackman, Nichols on Eminent Domain § 6.38[1], at 6-114-15 (3d ed. 1980) gives the following summary: [T]he Supreme Court of the United States and the great majority of the state courts have adhered to the old doctrine and hold that when the owner of property continues in use and possession as before, it is not taken in the constitutional sense, however much it may be depreciated in value. In other words, when a municipal or a public service corporation, or other party to whom the power of eminent domain can be constitutionally delegated, inflicts injury upon private land under authority of and in compliance with an act of the legislature, and there has been no want of reasonable care or skill in the execution of the power, such party is not liable in an action at law for such injury, even though the same act if done without legislative sanction would be actionable, unless the injury is of such a character as to deprive the owner of the use and possession of his land, or compensation is required by special statutory or constitutional provision whenever property is damaged by the construction of a public improvement. [Footnotes omitted. 8 ] II The Supreme Court considers its cases clearly to have established “that permanent occupations of land by such installations as telegraph and telephone lines, rails, and underground pipes or wires are takings even if they occupy only relatively insubstantial amounts of space and do not seriously interfere with the landowner’s use of the rest of his land.” Loretto v. Teleprompter Manhattan CATV ³⁹⁰ Corp., 458 U.S. 419, 430 , 102 S.Ct. 3164, 3173 , 73 L.Ed.2d 868, 878 (1982). Loretto involved the installation of thirty-six feet of cable, one-half inch in diameter, and of two, sixty-four cubic inch, metal boxes on the roof of an apartment building as part of a cable television service furnished under an exclusive franchise. The Court “affirm[ed] the traditional rule that a permanent physical occupation of property is a taking.” Id. at 441 , 102 S.Ct. at 3179 , 73 L.Ed.2d at 886 .

The Loretto kind of taking has strong overtones of a continuing trespass. Here, the State has not excavated on QC’s land; the trucks hauling waste do not cross over QC’s land; the waste is not dumped on QC’s land; and the bulldozers do not spread the waste onto QC’s land. The alleged interference with QC’s use is dust blowing onto QC’s land. The jury could find that the dust included at times chrome originating from Disposal Site Two and that particularly in dry, hot weather, dust blew with some regularity, even if intermittently.

The alleged interference is not, however, that the dust itself is thick and choking; rather, the taking claim is based primarily on the fact that the ambient air over QC’s property contains chrome. Scientific measurements of the airborne chrome quantify it at two micrograms per cubic meter of air. A microgram is one-millionth of a gram. These microscopic particles do not constitute a physical invasion of QC’s property in the Loretto sense.

Nor does QC contend that the landfill is negligently operated or maintained. A claim bottomed on negligence would have produced the same legal hurdle which QC encountered with respect to the claim QC had expressly based on the tort of nuisance. 9 Consequently, the claim of taking in this case is based on the juxtaposition with QC’s chemical processing plant of the State’s hazardous waste disposal facility which, although operated with all due care, generates airborne particles of chrome. ³⁹¹ It is also clear that QC’s theory of its inverse condemnation case is that the State’s operation of the hazardous waste disposal facility has effected a taking of all of QC’s interest in its leasehold. QC does not claim a partial taking either in the extent of the land involved or as to the duration of the taking, other than as limited by the expiration of the leasehold itself. Pursuant to that theory of the case QC’s real estate expert opined that the present value of the leasehold was $296,962 on the date QC vacated the property.

QC’s accountant testified that the expense of dismantling and shipping to Missouri salvagable equipment at Hawkins Point was $30,021.45 while the book value of equipment abandoned at Hawkins Point was $87,916.50. Obviously QC does not contend that the State must purchase a servitude over QC’s leasehold because of the escape from the State’s land of particles of pollutant. In cases in which there was no physical invasion, but in which the claim of taking was based upon the adverse effect on the alleged condemnee’s property of some nearby public improvement or activity, the Supreme Court and this Court long ago developed the rule that no taking was effected by consequential damages. The impact on the plaintiff’s property had to be special to it and of a high degree.

Specific illustrations from the cases best communicate the degree of adverse impact required for that kind of a taking. When the City of Chicago was constructing a tunnel in order to carry LaSalle Street beneath the Chicago River, the work impacted on business premises located in one of the quadrants formed by the intersection of the street with the river. The street was excavated and a coffer-dam, erected in the river, left the business unable to use its pier. There was, however, no invasion of the business premises as such; the interference was not permanent; and the work progressed with reasonable diligence.

The Supreme Court in 1879 held there was no taking. Transportation Co. v. Chicago, 99 U.S. (9 Otto) 635, 25 L.Ed. 336 . The damage was “consequential.” The Court reasoned: ³⁹² [I]t is the prerogative of the State to be exempt from coercion by suit, except by its own consent. This prerogative would amount to nothing if it does not protect the agents for improving highways which the State is compelled to employ.

The remedy, therefore, for a consequential injury resulting from the State’s action through its agents, if there be any, must be that, and that only, which the Legislature shall give. It does not exist at common law. The decisions to which we have referred were made in view of Magna Charta and the restriction to be found in the Constitution of every State, that private property shall not be taken for public use without just compensation being made. But acts done in the proper exercise of governmental powers, and not directly encroaching upon private property, though their consequences may impair its use, are universally held not to be a taking within the meaning of the constitutional provision.

They do not entitle the owner of such property to compensation from the State or its agents, or give him any right of action. This is supported by an immense weight of authority. [Id. at 641-42, 25 L.Ed. at 338 .] On much the same reasoning, and at about the same time, this Court decided Cumberland v. Willison, 50 Md. 138 (1878). A mill owner in Cumberland claimed in inverse condemnation because the extension by the municipality of a paved street increased the amount of surface water collected on the street. That water carried mud and debris into a stream below the plaintiff’s property, and damned the stream at that point.

This interrupted the stream flow on which the mill relied. There was no taking. The damage was consequential. Maryland cases in which a property owner has based a taking claim on a nontrespassory denial of access have presented some serious hardships which did not amount to takings.

Krebs v. State Roads Comm'n, 160 Md. 584 , 154 A. 131 (1931) involved a storekeeper whose business was a few hundred feet from the village which produced eighty percent of the store’s volume. Railroad tracks lay between ³⁹³ the store and the village and a state highway crossed the tracks. When the state relocated the highway to eliminate the grade crossing, the store was left one-half to three-quarters of a mile from the village by road. No part of the plaintiff’s land was acquired in the relocation.

The adverse economic impact on the plaintiff was simply consequential to the highway project and not compensable as a taking. In Mayor of Baltimore v. Bregenzer, 125 Md. 78 , 93 A. 425 (1915), the plaintiff owned a number of party wall townhouses, the faces of which abutted a public highway at the place where an approach to an overpass was constructed up to the edge of the highway right-of-way. The change in elevation of the street cut off light and air to window wells in the basements of the houses and also required the plaintiff to change the steps leading to the front doors of the houses. There was no taking.

Nor was there a taking by a similar change of grade requiring additional steps to be installed in Baltimore & O.R.R. v. Kane, 124 Md. 231 , 92 A. 532 (1914). And when the abutment for an elevated street railway line was placed nine feet eight inches from the curb in front of the plaintiff’s house, thereby preventing ordinary vehicular access, there was no taking. See Garrett v. Lake Roland R.R., 79 Md. 277 , 29 A. 830 (1894). On the other side of the taking line is DeLauder v. Baltimore County, 94 Md. 1 , 50 A. 427 (1901).

Access to the plaintiff’s farm from the public highway was over a right-of-way through the land of another. The county blocked the right-of-way by guardrails placed along the edge of the highway, the elevation of which had been raised as it approached a newly constructed culvert. The plaintiff could not use the right-of-way with a team of horses. This Court said that “[t]he injury inflicted upon Mrs. DeLauder is not the rendering the use of her right of way inconvenient or expensive, but it is the destruction of its use, and its destruction is a taking in as just a sense as the appropriation of a gravel bank for the repair of a public road would be a taking.” Id. at 8 , 50 A. at 429 (emphasis in original).

Because the plaintiff presumably could have climbed over ³⁹⁴ the guardrail by foot, one teaching of DeLauder seems to be that language in the takings opinions referring to “destruction” or to a deprivation of “all” use is not to be read in an absolutely literal fashion. A taking was also held to have occurred in Walters v. Baltimore & O.R.R., 120 Md. 644 , 88 A. 47 (1913), another case arising out of the elimination of railroad grade crossings in South Baltimore. In Walters the newly elevated street approaching the overpass was approximately five feet above the prior ground level and within three inches of the face of the plaintiffs house. The new roadway and sidewalk were supported by concrete columns, one of which stood twelve inches from the plaintiff’s front door.

The result “was to effectually bar all ingress to and egress from the premises, unless by means of a ladder from the second floor window to the newly constructed foot-way.” Id. at 652 , 88 A. at 50 . Factually more analogous to QC’s claim is Taylor v. Mayor of Baltimore, 130 Md. 133 , 99 A. 900 (1917) where the plaintiff owned a hotel on property lying approximately 1500 feet from the site of Baltimore City’s then newly constructed sewerage disposal facility at Back River. The odors were “ ‘simply unbearable,’ ” particularly when the wind blew from the direction of the plant. Hotel patrons became nauseated and would have to leave the table.

At times it was necessary to close the windows and even then the odors interfered with the sleep of some of the patrons. The plaintiff’s evidence showed a $10,000 depreciation of the property resulting from the siting of the disposal facility. This Court held that there was no taking. The City had not encroached upon or physically invaded the plaintiff’s property, there was no “substantial destruction of the rights of ingress to and egress from the property,” and no “deprivation ... of light and air[.]” Id. at 143 , 99 A. at 904 .

The City was liable, however, in damages for nuisance. See Clarke, Municipal Responsibility in Tort in Maryland, 3 Md.L.Rev. 159, 163, 171 n. 74 (1939). ³⁹⁵ The most recent Supreme Court counterpart to the class of Maryland cases reviewed above is Richards v.