Appendix B — Kelly v. Tahoe Regional Planning Agency

as.

FILED

No

"90 JUL 13 P4:39

BARBARA REED Clerk

By D. DALEY Deputy

Case No. 18325

IN THE NINTH JUDICIAL DISTRICT COURT

OF THE STATE OF NEVADA

IN AND FOR THE COUNTY OF DOUGLAS

WILLIAM CODY KELLY, TRUSTEE

Under Trust Dated December 12 1962,

Plaintiff,

vs.

TAHOE REGIONAL PLANNING AGENCY,

Defendant.

DECISION

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TABLE OF CONTENTS

[All page references herein are to this Appendix B]

I. INTRODUCTION 3

II. BRIEF HISTORY OF THE CASE 4

III. WHAT HAPPENED AT TRIAL 9

IV FIRST CONCLUSION 51

V. FIRST DISCUSSION 51

Vi. SECOND DISCUSSION;

THE TAKINGS ISSUES ta

Vil. SECOND CONCLUSION 89

VIII. THIRD DISCUSSION; THE “ADJU-

DICATED RIGHTS” CONTROVERSY 89

IX. THIRD CONCLUSION 100

X. CONCLUSION 10

3.

Case No. 18325

IN THE NINTH JUDICIAL DISTRICT COURT

OF THE STATE OF NEVADA

IN AND FOR THE COUNTY OF DOUGLAS

WILLIAM CODY KELLY, TRUSTEE

Under Trust Dated December 12 1962,

Plaintiff,

VS.

TAHOE REGIONAL PLANNING AGENCY,

Defendant.

DECISION

I, INTRODUCTION:

On the surface, this case involves six or seven lots on a

ridgeline above the eastern shore of Lake Tahoe. In another

sense, it also impacts upon the future of the Tahoe Regional

Planning Agency, and perhaps even upon the future of Lake

Tahoe. The attorneys tried the case in a manner suggesting

that they were ever mindful of these deeper implications.

Appearing on behalf of Plaintiff William Cody Kelly were

Daniel R. Walsh, Esq. and Jon Yaple, Esq.; appearing for the

Tahoe Regional Planning Agency was Gary Owen, Esq.;

appearing for the State of California was Deputy Attorney

General, Richard Skinner, Esq. From time to time Marta

Adams, Esq. and other deputies from the Nevada Attorney

General’s Office appeared for the State of Nevada. Dozens

of witnesses were called; hundreds of Exhibits were marked

and admitted; the parties and their counsel have been through

the ordeal of an extensive briefing schedule, both before and

-B 4-

after trial. Assuming it can ever claim to be in such a

position, the Court considers itself to be sufficiently advised

in the facts and the law to render this Decision.

A section containing a “Brief History of the Case” and a

section entitled “What Happened at Trial” precede three

Discussion sections. Each Discussion section either begins

or concludes with a pivotal Conclusions statement disposing

of a major issue. Because of the nature of the case, this

decision is lengthy.

Il. BRIEF HISTORY OF THE CASE:

The hilltop lots the subject of this controversy are located

in a planned unit development called Uppaway, just south of

historic Glenbrook, Nevada. In a way, the relevant history of

Uppaway goes back to the start of planning and development

in the Tahoe basin.

The Max C. Fleischmann Foundation first commenced a

cooperative planning association for the whole lake basin in

1957. Somewhat ironically, Mr. Kelly acquired his forty-

four (44) acre parcel, popularly known as the old

Fleischmann estate, from the heirs of Sara Hamilton

Fleischmann almost ten years later.

In the late fifties local authorities were approving about

1000 lots a year at the Lake. Then, during the early sixties

this figure almost doubled, and by 1963 there were almost

15,000 lots on subdividers’ maps. Concerned over pollution,

the Lake Tahoe Area Council, formed in 1959, began work

on a plan they called the “1980 plan”, dubbed such because it

purported to look forward to how the basin would look in

that year.

By the time Mr. Kelly acquired his property, the Califor-

nia counties had adopted the “1980 Plan”, which foresaw a

basin with a population (including tourists) of 313,000

people (up from 126,300 in 1962). But the Nevada counties

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refused to consider a development “freeze”, and Washoe

County in particular rejected the “1980 Plan”.

The same year that the Nevada and California legislatures

passed the TRPA legislation, (1968) no less than 3,462 lots

were created by landowners, and this surge in development

continued over the next three years while Congress was

ratifying the TRPA legislation and the initial Plan was being

drafted.

Mr. Kelly did not join this early “push” toward develop-

ment, however, since he didn’t proceed with his plans for

development at Uppaway until 1973 when he first appeared

before the Douglas County Planning Commission. His

development called for the creation of thirty-nine so-called

“lots” or 2,500 square foot building “envelopes”; it was

approved by Dougias County in 1974 and Mr. Kelly went on

to the TRPA where he presented his proposal to the Board in

1975. All of the remaining acreage in his subdivision was

dedicated to common area and common amenities such as a

pier, a barbeque and a tennis court. The subdivision was

then, and is now, characterized by three relatively discrete

sections —— the Lakeshore parcels, the mid-level or so-called

tennis court lots, and the hilltop lots.

The TRPA Compact at that time had an amended “dual

majority” feature which curtailed affirmative planing con-

trols by the Agency unless a majority of both state repre-

sentatives approved. Mr. Kelly didn’t win a majority vote

before the TRPA, but he claimed his subdivision was

“deemed approved” under the Compact language. The TRPA

thought differently and sued.

On October 24, 1975, Federal District Court Judge Bruce

Thompson agreed with Mr. Kelly’s interpretation of the

Compact and held that TRPA’s failure to take action on the

subdivision application within sixty (60) days caused it to be

“deemed approved.”

-B 6-

For the next several years, TRPA kept busy revising its

Compact to assert more direct authority over development,

and Mr. Kelly kept busy revising and preparing his subdivi-

sion for residential sales.

He created the Uppaway Development Company, a

Nevada corporation, and had the family trust, which owned

the land, deed 28 of the 39 lots to the company, retaining

ownership of eleven (11) lots and the common areas. He

also completed the first two phases of the subdivision — the

lakefront and the tennis court area —— with no less than six

amended maps that had the effect, among other things, of

reconfiguring many of the box-like building “envelopes” on

the lakefront so that they would be more suitable for execu-

tive homes.

In the meantime, the TRPA had embarked upon a tortuous

path leading eventually to the 1987 Regional Plan. By 1982

and Environmental Impact Statement had been drafted and

the TRPA had adopted “carrying capacities” for the Lake.

The early eighties also marked the establishment of the Lake

Tahoe Interagency Monitoring Program (hereafter LTIMP)

which created monitoring stations on selected streams and

buoys to record changes in the environment.

In 1982, Mr. Kelly began to focus on the hilltop and after

extensive discussions with Agency staff, he filed a Seventh

Amended Map which eliminated lot 39 and changed the

manner of access to the hilltop. By this time, TRPA Or-

dinance 81-5 was in effect. A planning team implementing

this ordinance and evaluating all subdivisions in the basin

had not felt that Mr. Kelly’s third phase — the hilltop —

was adequate under the Water Quality Management Plan.

The significance of this adverse rating prevented individual

building site applications at the hilltop from being processed

on a case-by-case review basis. Serious penalties attended

violations of the ordinance.

Without formally withdrawing its finding of inadequacy,

the Agency accepted Mr. Kelly’s mid-summer applications

-B 7-

for case-by-case review concerning the six remaining hilltop

lots, 33 through 38, but by the time they got around to

opening the files (hundreds of such reviews were pending), it

was wintertime and snow prevented the necessary on-site

inspections.

In 1983, further negotiations were being conducted and

the off-site improvements for the hilltop lots were being

completed but no action had been taken on Mr. Kelly’s

applications by late August when the TRPA, fearing litiga-

tion, placed a moratorium on its processing of all building

applications.

By the spring of the following year the TRPA adopted its

Amended Regional Plan and moved toward lifting its self-

imposed moratorium, only to be met with a lawsuit brought

by the State of California. The Federal District Court in

California issued a temporary restraining order and, even-

tually, a preliminary injunction, which froze all applications

in place pending the outcome of the lawsuit.

Over three years elapsed before the lawsuit was dismissed

by agreement. Settlement talks in 1984 led nowhere until

something called Consensus Building Workshops were held

in 1985 and 1986. These extensive workshops led to revised

goals and policies which were adopted by the TRPA in 1986

and 1987. They also gave birth to “IPES” or the Individual

Parcel Evaluation System which is being challenged by the

instant lawsuit.

Realizing that “IPES” would let him apply for a building

permit on perhaps only one of his hilltop lots and having

spent several years battling to get the hilltop open for a sales

program, Mr. Kelly filed this lawsuit on July 24, 1987. Ina

multi-count complaint against the TRPA and the states of

Nevada and California, Mr. Kelly alleged that he had been

effectively denied the protections of the due process and

equal protection clauses under both state and federal con-

Stitutions,; he claimed that his property has been inversely

condemned; he claimed that the IPES rating system which

-B &-

continues to further postpone his building plans has no

rational basis in science or logic and for this reason is

constitutionally defective; he claimed civil rights violations

under 42 USC section 1983; he claimed vested rights and

estoppel; and, finally he claimed that the Tahoe Regional

Planning Agency has become an agent of the states who are

vicariously responsible in damages for TRPA’s allegedly

confiscatory activities.

In a twenty-two page order dated August 23, 1989, this

Court granted partial summary judgment and indicated its

intent to dismiss the state defendants (that decision will be

confirmed at the end of this opinion). The Court also

dismissed a number of counts. Left for trial were three

major issues with a number of subtopics. Basically, they are:

1. Whether there is a legally substantive rational basis for

the TRPA’s administrative regulations;

2. Even assuming the rationality of TRPA’s rules, has its

conduct given rise to a cognizable “takings” claim. A major

subtopic here concerns the economic impact of the regula-

tions on the Plaintiff’s particular investment expectations for

his property; and

3. Whether the Plaintiff, who has been ruled not to have a

vested right to building permits, nonetheless has an already-

adjudicated position which exempts him from some, but not

all, of the TRPA’s current administrative regulations govern-

ing construction on the hilltop.

This concludes the Brief History section which has

remarked on events transpiring over the last forty years or

so. The next section, which remarks upon what happened at

trial, concerns man’s efforts to understand what has

transpired at Lake Tahoe during the Quatenary period of the

last two million years, or so.

-B 9-

Ill. WHAT HAPPENED AT TRIAL:

The controversy between William Cody Kelly and the

TRPA is defined by trial exhibits and by trial testimony of

witnesses who were for the most part experts in one field or

another. There were almost five weeks of testimony and

thousands of pages of exhibits. To place the Discussion

Sections which follow into proper context, the Court is going

to go through a somewhat tedious process of summarizing

the testimony of every witness who appeared. A few pre-

liminary comments are in order, however, so as to acquaint

unfamiliar readers with some of the special lexicon used by

these witnesses.

“Nutrients”, for example, have a negative meaning in this

case. Basic nutrients such as nitrogen and phosphorous are

the elements which cause lake-fouling algae to flourish in an

otherwise inhospitable or “infertile” Tahoe basin environ-

ment. The TRPA’s premise is that man’s activities are

bringing these unwanted nutrients as well as_ inorganic

sediments to the lake, causing loss of water clarity and

accelerating the “eutrophication” process, or the gradual

deterioration of water quality in the lake.

The lake basin is relatively “infertile” because most of its

soil types are “granitic”, or evolve from the granite and

granite-like rock outcroppings which dominate the landscape

in this region of the Sierra Nevada Mountains. Eons ago,

glacial advances and retreats ground and scoured Tahoe’s

basin clear to baserock. As a consequence most deposits of

offending nutrients as well as their transport, uptake and

transformation take place in a relatively clean and thin

veneer of sandy soil, pine needles, and “humus”, or so-called

“grus” which overlies the scoured granite. This is Tahoe’s

rather poor excuse for topsoil. In this sense the Tahoe basin

is impoverished because it lacks rich, fertile, loamy soil, but

it is also for this exact reason that Tahoe itself is so magi-

cally pristine and free of fouling organisms.

-B 10-

TRPA’s Individual Parcel Evaluation System, or “IPES”

is based on theories of prospective nutrient transport from

individual lots. Thus, the whole IPES system talks in terms

of “erosion hazard”, “runoff potential”, proximity to the lake

itself or to streamzones, slope, lot size, vegetation, etc. IPES

makes certain conclusions or assumptions; assumptions about

erosion in “granitic” and relatively sandy soil types such as

“Cagwin” or “Toem” soils; assumptions about slope and

vegetation; assumptions about runoff potential; assumptions

about primary “nutrient-loading” sources. These assump-

tions and others are the very subject of the attack by

Mr. Kelly and his experts.

One final preliminary thought. The summaries which

follow highlight the Court’s recollection of key pieces of

testimony. They are not meant to be comprehensive and are

offered for context, not as findings. They are prone to

human frailties of memory loss and limited recall, and they

are probably specially deficient in a number of areas, particu-

larly those involving science and mathematics.

For reasons which become clear later, not too much

attention is given to testimony involving Mr. Kelly’s invest-

ment decisions and realizations. Many of the sketches are

very summary in nature, but it is hoped that they collectively

show how this unusual case is now “at issue”, to use legal

parlance.

-_*s* * * &

PLAINTIFF’S CASE

The first witness called for the Plaintiff, and declared an

adverse witness, was MR. GORDON BARRETT, who has for

many years been the Senior Planner for the Tahoe Regional

Planiiing Agency. He traced his understanding of the history

of the Uppaway development leading up to a subdivision site

plan which he signed off on July 22, 1982. Mr. Barrett took

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the position that the Federal Court decision which “deemed

approved” Mr. Kelly’s subdivision, did not exempt the

developer altogether from compliance with existing and

changing TRPA regulations. This was especially true, he

felt, for any major changes in the coverage of the subdivi-

sion, such as changing the hilltop access from a funicular

tram to a paved roadway. It was also his position that

Ordinance 81-5 required the case by case review of the

building plans for each of the individual homes to be con-

structed on the hilltop. Thus, applications to approve plans

for houses differed, in his mind, from the already approved

configuration for roads, curbs, gutters, etc. He denied any

intent to single out Mr. Kelly’s subdivision for harsh treat-

ment during the application process.

*-_*x* * * *&

Next to testify was Ernie Jones, who is a registered civil

engineer with considerable experience in the Lake Tahoe

Basin. Mr. Jones designed most of the drainage and erosion

control measures for the Uppaway subdivision, utilizing Ray

Smith’s Report (Exhibit 39).

In Mr. Jones’ design, hard roadway surfaces tilt inward

toward specially designed infiltration trenches, working

together with slope stabilization measures on both sides of

the roadways. This design feature decreases the amount of

siltation which might reach the Lake. The infiltration system

itself was purposefully “over-designed” to protect against

fifty year storm events, since the TRPA regulations at the

time (and still) only required twenty year, one hour storm

event mitigation measures.

On cross examination, Mr. Jones admitted that the ac-

cumulation of silt and sediment in the infiltration trenches

and junction tubes would render the entire system !ess

effective. Theoretically, both the top and bottom of the

trench could eventually fill with relatively impervious

material and cause the system to overflow. He stated that

this phenomena could be avoided, however, by periodic

-B 12-

cleaning or replacement of the trapped sediments following

inspections conducted at least semi-annually.

**s* &@ &

MR. RONALD W. TURNER, a professional land sur-

veyor was called by Mr. Kelly to support his contention that

some of the hilltop lots were repositioned for the primary

reason that they would be placed on ground having a 30% or

less slope, which Mr. Barrett had testified as being one of the

four major criteria under the old Bailey land use capability

system in force until 1982. In other words, the lots were

relocated for environmental, not economic, reasons to show

Mr. Kelly’s sensitively to TRPA’s concerns.

*s* &£ * *

MR. ROBERT F. LAHMAN had known Mr. Kelly since

1976, in his engagement as the on-site manager of the

subdivision. His tasks were to bring the project to comple-

tion, but he constantly encountered obstacles placed in the

way of the project by TRPA staffers.

During one conversation with Mr. Barrett in 1980, he

alleges that Mr. Barrett said “you will never build the

hilltop”. Later on, he sent a feeler out to Mr. Owens office,

for the purpose of trying to start negotiations which would

settle for all time a number of issues, including the reloca-

tion of some hilltop lots, the reconfiguration of some of the

Shoreline lots, or square-shaped building “envelopes”, and

the elimination of lots and other coverage which he felt

would be attractive to the TRPA. The end result, he hoped,

would be complete build-out, but these efforts never led to a

binding and enforceable agreement.

ss &¢ * &

FROM THE DEPOSITION OF PAUL HOGAN:

Through a deposition transcript former Dan Walsh associ-

ated PAUL HOGAN testified, much like Mr. Robert Lahman,

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that he was present during a meeting held on June 4, 1982, in

the Ferrari law offices in Incline Village. He understood that

the parties had reached an accord which would allow the

permitting of the hilltop lots to be consented {6 by the staff

of the TRPA, and he thought that recommendations for

approval would go before the governing board on a Consent

(uncontested) Agenda. The quid pro quo to TRPA for the

approval of changes benefiting the subdivision was the

elimination of lot 38 and the elimination of the funicular, as

well as the other environmentally sound management prac-

tices. Because of the give and take on both sides, he fully

expected that all procedural roadblocks to further develop-

ment would shortly be removed, but, like Mr. Lahman, he

was in error.

*~_* k& * *

WILLIAM CODY KELLY:

William Cody Kelly testified that he was the principal

trustee and sole life beneficiary of the Plaintiff Trust which

was established in 1962. Mr. Kelly’ family members are the

remainder beneficiaries of the trust. In 1966, the Trust

acquired 44 acres known as the Old Fleischmann estate, part

of which was later transferred to Uppaway Development Co.

The stock in the development company was then gifted to his

children.

The parcel originally included three residences — the

Fleischmann main house, the caretaker’s house and the guest

house. Prior to the purchase of the property, Mr. Kelly was

concerned with his ability to recoup a $500,000 cash invest-

ment and employed Previews, Inc. as a consultant. That firm

determined that a $500,000 to 1 millicn dollar profit could be

reasonably anticipated if the property was further subdivided.

Mr. Kelly moved into the main house in 1966 on a four

month lease with option to purchase the property and lived in

the house with his family until 1984.

-B 14-

In 1972 Kelly commenced to subdivide the lakefront

property (phase 1). Raymond Smith was hired as a planning

consultant. Exhibit 39 was submitted to TRPA in November

of 1974. After several hearings concerning land coverage

(excessive by Bailey standards), Mr. Kelly sought and

obtained county approval. TRPA then sued Douglas County

and the Trust. Judge Thompson granted a motion to dismiss

because of some unique “deemed approved” language in the

Compact mentioned earlier. TRPA decided not to appeal to

the 9th Circuit and Mr. Kelly commenced his subdivision and

improvements, hastened by his impression that a proposed

ordinance might prohibit lakefront building, The lakefront

building “envelopes” were on the market in 1977.

By then, the Uppaway Development Co. was formed and

received title of 28 to 39 lots, and the Trust received stock in

exchange for the 28 lots. Mr. Kelly retained title to 11 lots.

1977 marked the beginning of the development of Phase 2

— the middle tier or so-called “tennis court” lots.

Also in 1977, Judge McKibben (then sitting in the 9th

Judicial District) allowed Douglas County to issue a permit

for the repair work on the pier and the construction of a

barbecue pit, over vigorous objection from TRPA.

In 1981, Mr. Kelly planned to develop the hiiltop lots, the

final phase. Mr. Jones updated the 1976 hilltop drawings and

added a number of features, including a different sized

infiltration trench and drainage system which accommodated

flows from the rooitops of proposed residences. Offsite

improvements (streets, trenches, etc.) for phase III were not

built until 1982. After extensive discussion with TRPA staff,

one hilltop lot was eliminated from the subdivision and some

of the remaining hilltop lots were relocated to more level

ground. Douglas County issued building permits in Decem-

ber of 1982. Kelly felt then (as he feels now) that his

subdivision was exempt from emerging regulations.

-B 15-

In July of 1982 Kelly submitted applications for hilltop

lots to a case-by-case review. He felt his applications would

be expedited and easily placed in line for approval because

of the give and take during the settlement discussions

mentioned earlier. The TRPA, however, never acted on the

applications, and over a year later, the Northern California

District Federal Court Order and consequent moratorium

went into effect. Mr. Kelly was truly disappointed by what

he felt was TRPA’s lack of good faith in failing to process

his building permit applications.

After the moratorium was lifted, Mr. Kelly received IPES

scores in the summer of 1988. He was again greatly exer-

cised when he realized that building still would not be

permitted on the hilltop.

Mr. Kelly feels that he has done far more than he was

required to do under TRPA rules. He installed an expensive

infiltration trench, removed the dead trees and planted 1500

new trees to absorb nutrition in the ground and prevent

seepage into Lake Tahoe. During storms he feels that runoff

will be captured and silt will cling to the drain rocks in his

infiltration trenches. The cinder rocks will be taken out of

the trenches every few years and cleaned.

The caretaker’s house (lot 7) is owned by the Trust and is

not for sale. William Kelly has no opinion as to the reason-

able value of the lot. The guest house (lot 17) is on the

market for $195,000. The Fleischmann House (lot 19) sold

for 1.1 million and lot 22 sold for $522,500. Exhibit 30

shows the expenses he claims to have incurred on the con-

Struction of Hilltop - $169,006.22 in offsite expenses, plus

approximately $81,000.00 in legal fees. Since all of the

remaining lots were owned by the company; since the offsite

costs for the remainder of the subdivision significantly

exceed the revenues from lot 22; and since the Fleischmann

buildings were there in the first place, Mr. Kelly feels that he

has actually lost money on the subdivision by reason of

TRPA’s effort to thwart him.

-B 16-

One of the Plaintiff’s two major expert witnesses was

called on Thursday morning, February 8th. PROFESSOR

CLARE N. MAHANNAH is a hydrologist and civil engineer

with both a Bachelor’s Degree and a Master’s Degree

covering subjects including plants and soils as well as water.

He is a Professor at the University of Nevada at Reno and

has conducted studies in the Tahoe Basin generally, as well

as some studies and evaluations which are site specific to

Uppaway.

It is Prof. Mahannah’s opinion that with the type of

“Cagwin” soil which is pervasively present m Uppaway,

there is virtually no significant runoff or erosive potential,

given normal weather conditions. In fact, it is his opinion

that there is no runoff or erosive conditions in Uppaway even

during extraordinary weather conditions such as a hundred

year or more storm event.

Prof. Mahannah believes that te infiltration system

totally diverts water from impervious surfaces in this sub-

division. After testing portions of the system itself and

having observed it for several years since 1983, Prof.

Mahannah believes that no sediment will reach the Lake as a

result of building out Uppaway’s hilltop !ots.

In examining the region he found that the vegetation is

nutrient starved and it is his opinion that the vegetation will

absorb any nutrient runoff from the upper section of the

subdivision, as well as from elsewhere on the property.

His analysis of the non-erosive qualities of the Cagwin

soil borrow heavily from field tests done in the nearby Logan

Creek Water Shed area, where he and Douglas Guerrant, then

a Master’s candidate, conducted runoff experiments in the

forest and on a dirt roadway.

Prof. Mahannah also attempted to impeach IPES. His

primary criticism of IPES was that it fails to properly apply

the Universal Soil Loss Equation (USLE) factors which

-B 17-

constitute a universally recognized standard to measure

runoff. He stated that the TRPA has ignored two important

features of the equation, one being a “C” factor (taking into

account “cover” or vegetation) and the other being a “P”

factor (taking into account owner management practices such

as revegetation).

According to Prof. Mahannah, there is nothing fundamen-

tally wrong with the USLE, with the possible exception that

it wasn’t really designed for a western United States forest.

His major criticism of the way TRPA uses the formula is in

its failure to utilize the two factors noted above. The first

four factors “K” (soil erodibility), “R” (rainfall and runoff),

“L” and “S” (lengths and slope of the ground) are, according

to Prof. Mahannah, misleading without a “C” and “P” factor,

because they assume a clean, tilled, fallow condition which

is nowhere present at Tahoe.

Prof. Mahannah noted that the Agricultural Research

Division scientists, who prepared the formula in the first

place, have not revised the soil loss equation for natural

forests so that instead of generating several pounds of

sediment each year, lots such as those in Uppaway might

generate an infinitesimally small amount of sediment. Under

the revised formula, for example, the actual sediment loss for

an individual lot might be only 2.78 times 10 to the minus

11th.

Much of Professor Mahannah’s opinion is based upon

field work he did along with Mr. Guerrant utilizing several

versions of a rain simulator, predominately a device using a

rainbird sprinkler, which is called the “M-3”. On cross

examination Prof. Mahannah admitted that the M-3 has

received a great deal of criticism because of the uneven

manner in which it disperses water in a given area and

because it fails to take into account drop heights and kinetic

energy factors which do contribute to runoff problems.

-B 18-

More specific testimony on the “M-3” and other

simulators comes during the testimony of Douglas Guerrant,

which is next revisited.

In addition to the rainfall simulation tests and the work

which Prof. Mahannah did at Uppaway, Prof. Mahannah’s

private firm, known as WRD, undertook a study of five

major water sheds in the Tahoe Basin, measuring these water

courses both upstream, above any development, and

downstream, below development near or at the Lake’s edge.

His conclusion, after taking measurements for forms of

nitrates and phosphorus, was_ that the Tahoe Basin has

developed a natural system of nitrification and denitrification

which has not been interfered with to any great extent by

development. His conclusion, which borrows heavily from

Plaintiff's major expert, Timothy Durbin, is that most

nutrients are deposited as a result of atmosphcric conditions

instead of as the result of disturbances in the various

watersheds.

On cross-examination Professor Mahannah demonstrated

some frailty in his understanding of TRPA regulations. For

example, he did not know that the hydrologic area which is

available for IPES Transfer Rights is larger than a single

watershed and in the case of Mr. Kelly’s lots, extends from

Spooner Summit to Roundhill.

He also didn’t know whether or not the Soil Conservation

Service is now using the revised soil loss calculation formu-

las which apply to forest lands. Despite the storage capabili-

ties of the Cagwin soil he has extensively studied, when that

same soil becomes compacted, he admits that it is susceptible

to a great deal of runoff and in certain instances, may even

have a higher erodibility than does “toem” soil.

Further, in his study of five representative watersheds in

the Tahoe Basin, his own figures do not conclusively prove

the proposition that construction does not contribute to the

nitrogen and phosphorus loading because in many of his own

ata taeceniareaetean aaa

-B 19-

field studies those values a significantly increased below

development.

see &

The next expert called by Plaintiff was the soils man

identified earlier, DOUGLAS G. GUERRANT, a hydrologist

with a master’s degree from the University of Nevada. It

was basically Mr. Guerrant’s research using several different

rain simulator devices which was cited by Prof. Mahannah

for the proposition that Cagwin soils are not very erosive.

Each one of the four separate simulators, dubbed M1, M2,

M3, and M4, had their own Strengths and their own disad-

vantages form a research standpoint.

His conclusion, after utilizing these devices in Tahoe soil

environments, was that Cagwin soils have a high infiltration

capacity and a low erodibility factor. TRPA’s Bailey system,

which he disputes, concludes that the Cagwin soil has a

modest erodibility factor on slopes between O and 15 degrees

and a high erodibility factor on slopes above 15 degrees.

Mr. Guerrant feels that the Bailey system has substantially

over-estimated the erodibility of soil types in the Tahoe

Basin and the influence of the slope on the soil’s ability to

infiltrate water and sediment, and for this reason, it is

scientifically suspect.

On cross-examination, Mr. Guerrant admitted that none of

the simulators that he had used have been used extensively

before in a forested watershed except for the “M-3”. He

further admitted with certain qualifications relating to soil

type, that it was true that the greater the slope, the greater the

likelihood of erosion. The testing methods he employed

were not run on any soil type other than those shown in his

report, and some of his sediment calculations were made

difficult to impossible because sedimentation either blocked

or inhibited water running through hoses. Only on the

“M-1” simulator was he able to derive data with which he

was comfortable for sediment calculations.

-B 20-

He admitted that some of his data points on graphs were

predicted according to a mathematical equation instead of

representing actual field data. Finally, Mr. Guerrant con-

ceded that there are limitations to the “M-1” testing for

erosivity because the machine only produced 30% of the

kinetic energy associated with a normal rainfall; that is to

say, energy levels in rainfall sometimes play a role which he

was unable to calculate.

es © ©

MR. EDMOND NAPHAN testified on February 13th. He

graduated from the University of California in 1941. Follow-

ing a Stint in the service during WWII, Mr. Naphan became

the Chief Soil Scientist for the State of Nevada and repre-

sented the state in that capacity for some thirty years. His

work included developing technical standards for the United

States Dept. of Agriculture in quality controls and extensive

field investigations. He was very familiar with the USLE

equations for soil loss.

Under his direction, auger holes were bored into the soil

on several of Uppaway’s hilltop lots. The core samples were

tagged and bagged and presented to him for evaluation. His

analysis agreed in part and disagreed in part with the soils

evaluation reached by the IPES team, at least during its first

visit to lots 37, 47, 48 and 49.

According to Mr. Naphan, the procedure utilized by the

TRPA in determining the “K” value for soils involves the

auguring of only one hole, which he considers to be grossly

deficient because of the variability of the soils groupings at a

single hilltop location. In point of fact, he believes that a

detailed analysis of the soils allows an expert to conclude not

only that is it a mis-statement to characterize the soil groups

as just “Cagwin” or “Toem”, but also that new “K” values

should be assigned to this particular type of soil. In the case

of Cagwin-related soils, he feels that a .0S value should be

utilized instead of a .2 value, and in the case of the Toem-

related soils, a .02 value should be utilized instead of the .17

-B 21-

value used by the TRPA. He also feels that the TRPA failed

to take into account the amount of organic material present in

the soil.

In summary, he feels that there is very little runoff

potential for the Plaintiff’s lots. In fact, what little runoff

might be occasioned by an extraordinary storm event would

be easily handled by Mr. kelly’s infiltration system. In other

words, Mr. Kelly should not be denied a building permit for

any reason relating to the erodibility of the soil of his hilltop

lots because that soil is not very erosive.

Mr. Naphan’s testimony was the final piece in the Plain-

tiff’s backdrop. The stage was now set for the expert whose

testimony was the most coalescing and certainly the most

wide-ranging of any at trial, Timothy Durbin.

es e+ *& &

THE DIRECT TESTIMONY OF TIMOTHY DURBIN:

Mr. Timothy Durbin is the former director of the U.S.

Geological Survey in Nevada and California. His work for

USGS at Lake Tahoe included nutrient and soil transport,

steam flow erosion control, sediment sources, land studies

and related disciplines. The Court declared Mr. Durbin an

expert in Hydrology (being for these purposes the study of

water and how it occurs and moves through the

environment).

According to Mr. Durbin, there are about 100 tributary

watersheds of various sizes discharging into Lake Tahoe.

The yields of sediment, that is, the amount of sediment that

is derived from the watersheds and into the lake, is expressed

by weight: “tons per year.” Similarly, nutrient yield from the

watersheds into the Lake is also expressed by weight: “tons

per year” or “kilograms per year.” Hill slope erosion and

Stream channel erosion constitute two of the primary ways

for sediments and nutrients to be discharged into the Lake.

-B 22-

Mr. Durbin relied in part on the “Nolan Sediment Sources

Study”, involving four watersheds [Blackwood Creek,

General Creek, Edgewood Creek and Logan House Creek],

for the proposition that channel erosion may account for

somewhere between 65% and 90% of sediments reaching the

Lake. Mr. Durbin also testified that there was no showing in

the study that development had any measurable affect on

channel erosion. He concluded that sediment yields from

channel erosion is due primarily to natural causes.

Mr. Durbin testified that road cuts in some locations do

contribute to sediment into the lake, but he feels that they are

not a primary source.

As for nutrients, (mostly nitrogen [N] and phosphorus [P],

Mr. Durbin testified that basic in-put of N and P to water-

sheds comes from rain and snow fall (in other words, from

the atmosphere). The two pathways are: (1) run-off into the

Streams; and (2) infiltration (ground water pathways). Also,

nutrients fall directly on the Lake. In addition to these “wet

falls” are “dry deposits” or dust and other dry particles that

fall upon the watershed.

The four possible “fates” of nutrients once they reach the

Lake Basin are as follows: (1) nutrients can be stored in the

water, (2) nutrients can be stored within the algae; (3)

nutrients can be deposited to the bottom of the Lake where

they settle; and (4) nutrients can be discharged into stream

flows [i.e., the Truckee River] out of the Lake.

What happens when nutrient flow’ is_ increased?

Mr. Durbin hypothesizes a “steady state” condition, where

the inflow of nutrients into the Lake is balanced by the

outflow, i.e., there is an equilibrium achieved with the same

mass Of N and P coming in as is going out. Of course, there

will always be seasonal variations and yearly variations, but

if the trend is constant, science can say that there have been

no “storage changes.” See Exhibit 5-14, which shows

increasing inflow of N and Mr. Durbin’s notion of equi-

librium. Storage of N would increase over time with,

-B 23-

perhaps, a new steady state to be achieved some time in the

distant future.

Mr. Durbin testified that the present state of the Lake is

one of “transition”. It has departed from a steady state and is

moving toward a new steady state — one that will have a

greater N weight. According to Exhibit 5-13, it is unclear

what is happening to the Lake regarding P; in other words,

Mr. Durbin can’t predict a distinct trend.

Increase of nutrients means that as mass_ increases,

concentrations will increase; algae is increasing in response

and water clarity is going down. By way of contrast, Durbin

feels that sediments have no long term affect on water clarity

as sediments ultimately settle to the bottom of the Lake.

Moreover, he opines that sediments tend to accumulate at the

mouth of the stream, and in sharp contrast to TRPA/

California experts, he feels that sediments do not bring N

into the Lake. Mr. Durbin’s entire thesis, which is examined

more fully in the First Discussion Section is based on

“Budgets”. A “Budget” is a listing or accounting of the

source of inflows, outflows and a statement about the fluc-

tuating rate. Budgets tell us the magnitude of the process

and what is important about the behavior of the system.

According to Mr. Durbin, his budgets disprove the effi-

ciency of “IPES”, see Exhibit 5-28, the purpose of which is

to protect and/or enhance water quality of the Lake by a

system of land development regulations involving a scoring

system. In Mr. Durbin’s opinion, the IPES score is not

related (or cannot be related) to erosion, nor can the score be

related to sediment yield. Moreover, cultural influences on

sediment yield are small as he feels that development gener-

ates very little sediment. According to the monitoring

program at Incline Village done in the 1970’s and then in

carly 1980, sediment yield was high shortly after develop-

ment took place but was low ten years later. According to

Mr. Durbin, even though there was an increase in sediment

caused by development, there was a “healing process” that

-B 24-

subsequently brought sediment yields back to what they were

prior to development.

Only seven watersheds constitute the basis of the USGS

watershed studies at Lake Tahoe, (see Exhibit 5-4) but they

represent 50% of the water going into the Lake. From

studies on and monitoring of these watersheds, Mr. Durbin

feels that he can demonstrate mathematically that develop-

ment contributes a small portion to the 24,000 tons of

sediment that reaches the Lake per year while the rest is

associated with other processes occurring in the watersheds.

Mr. Durbin makes assumptions from Vail maps and street

maps that depict road ways and then he correlates these

“improved” areas to areas of cultural sediment yield: total

area = 38 sq. miles of development; total sediment yield =

24,000 tons per year; the conclusion being that only 13% of

sediment yield can be associated with development (3,000

tons per year) while the rest (21,000 tons per year) is caused

naturally in the watershed, deposited from watersheds having

little if any development.

Having thus handled sediments, Mr. Durbin turned his

attention to nutrients. Are nutrients associated with erosion?

Mr. Durbin feels that they are not, because N is not in his

opinion related to sediment yield.

His conclusion, which he restates many times in many

ways through his various budgets, is that development

watersheds have little impact on reducing the overall quality

of the Lake.

He concedes that nitrogen is increasing dramatically in

the Lake. One of his predictions is set out in Exhibit 5-17.

He sees the Lake in balance in the late 1950’s and early

1960’s. Due to increasing atmospheric deposits on the Lake

surface (wet and dry fall) Nitrogen is increasing and will

work to a new “steady state” — nitrogen up by four times.

Nitrogen levels are now about 15 parts per billion and by the

year 2300 will be 42 parts per billion if development contin-

ues versus 40 parts per billion if development were to stop,

-B 25-

according to Mr. Durbin. In other words, development

generally, and residential development in particular, simply

cannot be viewed as a major culprit associated with

nitrogen-loading because it plays such a fractionally small

role.

Mr. Durbin used Exhibits 5-30 and 5-31 to illustrate his

opinion as to the source of increased nitrogen which he

blames for the greatest part on atmospheric transportation

from the urbanized coast of the Northwest.

Finally, Mr. Durbin gave the Court a synopsis of his

research of the logging history of the Tahoe basin to illus-

trate his contention that further development will have little

impact on the Lake’s quality. Mr. Durbin feels that the case

studies of Dr. Goldman, Dr. Byron and others have helped to

prove that all the land disturbance caused by late 19th

Century logging had no effect on the Lake. Again, if ground

disturbance is not the cause of increased nutrients into the

water, the atmosphere must be the source.

The stage was then set for the mathematical models which

Mr Durbin used to establish his nitrogen and phosphorus

“Budgets”. These budgets are reviewed in some detail in the

First Discussion Section, but for now, his preliminary

conclusions are worthy of note.

As for nitrogen into the Lake, Mr. Durbin concluded that

9% comes in via streams, 6% from “cultural activities”;

and 85% from the atmosphere. Regarding phosphorus,

Mr. Durbin concludes that 55% comes from streams, only 6%

from “cultural activities”, and 39% from the atmosphere.

In short, according to Mr. Durbin: (1) development

produces very little sediment; (2) sediment contains very

little nitrogen; (3) the majority of the Lake’s nitrogen arrives

via rain, snow and dry-fall landing on the Lake; (4) develop-

ment at the lake is not the cause of water clarity problems;

(5) IPES is faulty because it can not be justifiably related to

its purpose.

-B 26-

Because Mr. Durbin’s testimony is such a key to Plain-

uiff’s case, a separate section is devoted to his Cross-

Examination.

7 * ¢+ * &

CROSS-EXAMINATION OF MR. DURBIN

On Cross Examination, Mr. Durbin admitted that a

number of his conclusions were confirmed by him after his

November deposition was taken. He also admitted that the

numbers which he allocates to such important factors as

nitrogen loading, have changed since the time he appeared

before a legislative oversight committee. At the time he

testified before the sub-committee, he offered the opinion

that the total load of nitrogen was some 135 tons, whereas

the figures he now uses are 56.1 tons for atmospheric loading

and 9.8 tons of streamloading. He admitted also that initially

he did no calculations for ground water loading of nitrogen

and primarily discounts its effect. Moreover, his studies

concentrated on dissolved inorganic nitrogen and soluble

reactive phosphorus, and he did not take into primary ac-

count any accretions in the amount of nitrogen or phosphorus

caused by organic materials.

His study did not take particular account of the fact that

the rainfall levels vary in different “contours” of the Basin,

although he feels that doesn’t make much of a difference to

his overall calculations.

He feels that core samples which arguably lead to the

conclusion of increased sediment occurring after 1960 should

be re-examined for the plausible hypothesis that a great deal

of mixing among the sediments has occurred on the top

layers of the core samples, thus invalidating the conclusion

reached by others that sediment loading has been increased

by recent development.

He admits to not subjecting his nitrogen and phosphorus

loading analysis to the rigors of standard error studies nor to

individual regression co-efficients, but (after reflecting on

the matter overnight) he was able to subject his figures to

what he called a “sensitivity” study. This study showed

variances of his nitrogen estimates which could lead to

plausible error of plus or minus 1.9 tons per year and as to

phosphorus, plus or minus .3 tons per year. This changes

nitrogen and phosphorus contributions by several percentage

points.

For example, under his Exhibit 59, if the atmospheric

contribution to nitrogen loading is 42.8 tons rather then 56.1

tons, then the effect of development equal 9% and not 6%.

Under Exhibit 64, if the atmospheric loading of nitrogen Is

added to a figure for ground water loading of nitrogen and

the out-flow at the Truckee River is changed to 3.8 tons, then

the effect of development is as much as 16%, according to

these revised calculations.

The area where Mr. Durbin showed perhaps the least

amount of knowledge and training had to do with the details

of atmospheric migration and deposition. He admits that he

did not plot any wind trajectories coming from California,

nor had he subjected them to any kind of a systematic study

over time, even though he claims that the single most

important contribution of nitrates comes from __ the

Sacramento and San Francisco area to the west of Lake

Tahoe. His overall opinion, however, does not change.

According to Mr. Durbin, atmospheric contributions ol

nitrogen and phosphorus are far more important than all

other sources of algae-forming nutrients. Particularly

insignificant is the contribution of residential development.

Most infinitesimal of all are the contributions from

Mr. Kelly's engineered subdivision.

*s* * * *€

Two witnesses testified on the afternoon of February 21st.

The first was RAYMOND M. SMITH, a professional

-B 28-

planning consultant who undertook his undergraduate work

at Stanford and received a Master’s degree from Harvard

University. With extensive service in Northern Nevada,

Raymond M. Smith was the first planner for the State of

Nevada, and he is the author of Exhibit 39, which is the

report that details Mr. Kelly’s planned unit subdivision in

Uppaway. It was prepared in 1974 and submitted to the

Federal District Court for the District of Nevada prior to that

Court’s order in October of 1975.

Mr. Smith does not fully understand the new IPES regula-

tions despite his extensive credentials and feels that the

TRPA should operate for the benefit of the public by opting

for mitigation measures which would allow further building.

In fact he feels that Article II1(D) of the Compact requires

such mitigation measures.

On cross-examination he admitted that the IPES system is

more site specific than the Bailey system that preceded it.

Ae S

The second witness was MR. FRED DANIELS, JR.

Mr. Daniels is a consulting mechanical engineer with degrees

from UNR-Reno, and he served for several years as the

Chairman of the State Board of Professional Engineers.

After examining the credentials of some of the IPES team

members, Mr. Daniels feels that they are distinctly under-

qualified to do the work they are called upon to do by the

TRPA. Worse yet, he feels that the performance of the work

by those unqualified persons represents an illegal act under

Chapter 625 of Nevada Revised Statutes. The Court,

however, held that the Federal law pre-empted the issue and

that the Compact permitted the TRPA staff to conduct work

pursuant to the Compact without complying with the registra-

tion provisions of Chapter 625.

*-es et & ©

On the morning of February 22, 1990, STEVEN R.

JOHNSON, an MAI and SREA qualified real _ estate

-B 29-

appraiser, was allowed to offer limited opinion testimony

regarding the value of Plaintiff’s hilltop lots.

He formulated an opinion as to values in 1982, prior to

the enactment of the revised plan and after the development

of the revised plan. He also had opinions as to value in

1989, including a value of the lots following the amended

IPES scores.

Those valuations are as follows:

1982 Prior to the Plan:

$566.250.00

1982 After the Kelly Plan:

$815,000.00

Before the IPES appeal in 1989:

$555,000.00

In 1989 after the IPES appeal

$622.020.00

Mr. Johnson also testified that the total retail sales of lots

within the Uppaway subdivision to date has produced gross

sales in the amount of $5,236,000.00. There is an additional

preliminary unsold mid-level inventory of lots on Kelly

Circle having a value, he feels, of $710,000.00.

And that, with some reservations, summarizes the Plain-

tiff’s case.

DEFENDANT'S CASE

On the afternoon of February 22, the TRPA chose to call

DR. CHARLES GOLDMAN, perhaps the world’s leading

expert on Lake Tahoe, as its first witness. As a “lim-

nologist” or an inland lake ecologist, Dr. Goldman has

studied the Lake and its environs since 1959. He helped

i i

-B 30-

formulate the Tahoe Research Group which has a series of

on-going studies at the Lake. His division of environmental

studies at the University of California-Davis is one of the

participating agencies in the Tahoe Research Group and the

interdisciplinary assessment team.

According to Dr. Goldman, Lake Tahoe is in many ways

unique among the large lakes of the world. It has a relatively

small watershed when considering its surface area and

volume, so much so, in fact that it would take 700 years to

replace the water if Tahoe were drained. Because of this

feature and because of its relative infertility, sediments and

other materials finding their way into Lake Tahoe stay there

for a very, very long time.

Dr. Goldman’s studies indicate that there has for several

years now been a 5 1/2% increase per year in algal growth at

Lake Tahoe. He feels that measurements and studies which

have a duration shorter than five years are inconclusive and

misleading because of tremendous inter-annual variations

caused by differing volumes of rainfall and _ other

climatological variations. Using a recognized procedure to

measure the transparency of Lake Tahoe, he concludes that

currently, Lake Tahoe is losing about 1/2 a meter a year of

its transparency primarily due to algal growth, with over 100

algae species appearing in the Lake, sometimes at different

times. As with Timothy Durbin, many of Dr. Goldman’s

opinions are digested later in the First Discussion Section.

For now, in the briefest summary, Dr. Goldman feels that

without base wide controls for erosion, and indeed, without

controlling development itself, many of the unique qualities

of Lake Tahoe will be lost forever.

On Cross-Examination, Dr. Goldman conceded that

airborne deposition of nutrients may exceed the nutrient

discharge from the combined effects of streams and ground

water, at least during certain years. Only recently have

scientists realized the role which is being played by organic

components of nitrogen and phosphorus.

-B 31-

He admitted that the studies which have been performed

at Lake Tahoe have not concentrated upon the role played by

the development of single family residences. Moreover,

Dr. Goldman and his colleagues were surprised when their

core studies of sediment from the bottom of the Lake did not

disclose a spike in the amount of diatoms showing increased

algal production at the time the basin was disturbed by

logging activities in the late Nineteenth Century.

Dr. Goldman also admitted that scientists as yet don’t

know the full extent of natural versus cultural loading of

nutrients into the Lake, but he emphasizes that very small

amounts can play a disproportionate role because they

interfere with the Lake’s historical equilibrium. Because of

this feature, he feels it is misleading to simply assign straight

percentages for the contribution of man-made disturbances

which in small increments may play a critical role in the

overloading of the ecosystem. More on this later.

*~_*es + * ©

The former United States Forest Service supervisor,

MR. WILLIAM A. MORGAN, became the executive director

of the Tahoe Regional Planning Agency in the Spring of

1985. Because of the pending litigation in the Federal

District Court in Sacramento, this was, he felt, one of the

most troubled periods during the history of the TRPA.

Mr. Morgan traced his understanding of the history of the

TRPA, starting with the so-called “1980 Plan” which was

prepared in 1964 and given the later dated in its title because

the authors had certain ideas about how they wished the Lake

to appear by the year 1980, as mentioned earlier in the

history section.

Mr. Morgan was, perhaps, the driving force in the consen-

sus building workshops which led to the agreement and the

Stipulated settlement of the Federal Court litigation. He felt

that the new goals and directions of the TRPA, including

what he called “the curing capacities” of the Lake Basin,

-B 32-

have been incorporated into the 1987 ordinances and the 208

Water Quality Plan.

Mr. Morgan feels that the IPES rating system, which to a

great degree also bears his personal stamp, not just directly

limits growth of residential development through planning,

but also indirectly manages other environmental thresholds,

which he feels to be a proper by-product of IPES.

He feels that the IPES system is superior to the Bailey

system because it recognizes the importance of field inves-

tigations to determine true land capabilities, and because it

far more specifically evaluates individual parcels than does

the old Bailey system.

He sees the so-called IPES “line” of demarcation, which

is the threshold score permitting or precluding construction,

moving down as the inventory of sensitive lands in the Basis

begins to shrink. He also feels it is appropriate that the most

Suitable lots for building are those which are first allowed

building permits; in other words, they are the less-sensitive

parcels.

In Mr. Morgan’s opinion, it is not necessary to have

licensed engineers and surveyor as members of the IPES

team as properly trained technicians, including a soil scien-

tist, a hydrologist, and a planner, are more than sufficient to

serve the TRPA and the public in implementing the IPES

rating system.

During cross-examination Mr. Morgan stated that there is

no credit given for offsite mitigation prior to an IPES evalua-

tion. Nor is there any provision he knows of for raising IPES

scores by onsite mitigation measures employed by the

landowner.

He further admitted that there is a possibility that the

IPES line may never move downward so as to free low

scoring lots for development. Finally, he conceded that IPES

doesn’t seek to measure post-construction impact.

-B 33-

Concerning the universal soil loss equation, Mr. Morgan

acknowledged that the TRPA version of the formula does not

utilize either the “C”, “cropping” or “coverage”, factor or the

so-called “P” factor which has to do with onsite mitigation

measures and practices.

*_es & & &

The defense then called another limnologist and noted

Lake Tahoe Research Consultant, DR. EARL R. BYRON,

who was awarded his doctorate at the University of Colorado

at Boulder. Dr. Byron has been doing a great deal of post-

graduate research work with Dr. Goldman, particularly with

respect to what he calls “the food web” at Lake Tahoe. Since

1983 he has been in charge of the interagency monitoring

program (LTIMP) at Lake Tahoe.

Dr. Byron feels that it is highly inappropriate in a com-

plex ecological system to use simple mass balance analyses

such as those employed by Mr. Durbin. He feels that the

whole system of transformation of nutrients involves the take

up, the decay, the sedimentation and the release of nitrogen,

in ways that do not lend themselves to a mass balance

understanding. Phosphorous, too, undergoes transforma-

tions, and though it is in shorter supply than nitrogen, it can

be even more devastating to the Lake because it can be

stored and is strongly associated with particles and with

sedimentation. And because it often appears in a particulate

form, he feels that Mr. Durbin’s utilization of soluble

reactive phosphorous as a measuring device, is again

inappropriate.

Dr. Byron stands by the scientific validity of his sediment

core studies which are mentioned, among other places, at

Exhibits SSSS-8 and -11, and he feels that the core studies

tend to show that development does play a significant role in

the eutrophication of the Lake. He feels, with the care that

was taken in capturing and analyzing the core samples, that

there is very little possibility of results being confused by

reason of near-surface “mixing” of the sediment materials.

-B 34-

He also feels it was inappropriate for Mr. Durbin to employ a

simple regression technique using the sediment core data

because, by projecting outside the date base, he failed to

demonstrate the wide statistical variance having extremely

disparate upper and lower confidence levels. Dr. Byron feels

that IPES is rationally related to its purpose of controlling

water clarity.

*_es e+ & ©

MR. FRANK W. DAYKIN, for many years the legislative

counsel for the State of Nevada, was called out of order by

the Plaintiff for the purpose of highlighting certain aspects of

the Compact itself, as well as its legislative history, cf. NRS

277.200. Mr. Daykin feels that in the early 1980’s, the

TRPA acted against the will of the Nevada State Legislature

in limiting the number of building permits that should have

been issued to Douglas County. He also feels that the TRPA

contravened Nevada law by interpreting the Compact so as to

interfere with the rights of certain land owners to proceed to

construction of single family residences while the final

Tahoe Plan was being hammered out.

es + * ©

DR. THOMAS A. CAHILL was called by the State of

California and the TRPA as an expert on atmospheric effects

at Lake Tahoe. Dr. Cahill comes from the Dept. of Physics

at the University of California at Davis and since 1970 has

done extensive work in using nuclear physics and in using

cyclotrons to analyze air pollution. He has authored some

140 articles on related subjects.

He, too, agrees that Mr. Durbin’s mass balance approach

is inappropriate because he feels that Mr. Durbin was unable

to measure some of the components which go to make up the

mass balance formula. That is to say, an approach which

relies On statistical interferences rather than data may be

misleading and scientifically invalid.

-B 35-

Even for those parameters where data was available, he

feels that Mr. Durbin utilized misleading data. For example,

the atmospheric deposition measurements for the Ward Creek

watershed are misleading because Ward Bench has one of the

highest rainfalls at Lake Tahoe.. Had Mr. Durbin been

sensitive to the contour studies of rainfall at the Lake, he

might have come up with some 36 tons of nitrogen loading as

opposed to some 56 tons.

Dr. Cahill launched into an extensive explanation of the

complex features of atmospheric deposition of nitrogen and

phosphorous at the Basin. Dozens of combinations exist,

because these nutrients can be deposited through a dominant

wet deposition process such as snow, rain and cloud water or

fog, or, in dry deposition through gases, fine particles and

course particles. Not only in the form of nutrient deposits

widely varying, but so too, are seasonal variations from the

Summer to the winter months as wel! as the amount ol

relative precipitation.

Dr. Cahill feels that Mr. Durbin has little scientific

support for the hypothesis that the problems at Tahoe are

strongly associated with urban development in_ the

Sacramento had Bay areas. Dr. Cahill’s studies show that

most of the storms that arrive at Tahoe come from the

Northwest to the Southwest over water and air sheds in the

North Pacific region which contain some of the cleanest air

in the world. In fact, he feels that it can be demonstrated

that there has actually been a decrease in NO2 concentrates

in the Sacramento and Bay areas between 1959 and 1989,

although these gains may be offset by the increased amount

of traffic in the Tahoe Basin during that same period and,

especially in the winter months, by ground up resuspended

dirt on roadways.

After a complex evaluation of the transformation of

nitrogen, the reactive nature of nitrates and the deposition ol

ammonium nitrate, together with the seasonal variations

mentioned earlier, and atmospheric inversions and

-B 36-

windflows, Dr. Cahill discounts the role of out-of-basin

sources for the airborne deposition of nitrogen. He feels that

course particle nitrogen from a massive biological sources,

play a much more significant role. He acknowledges that no

systematic studies have yet been done which show the

comparative contribution of organic course particle nitrogen

with other forms.

Dr. Cahill feels that scientists are getting much closer to

understanding the immensely complex process of nitrogen

and phosphorous deposition, transformation and recycling at

the Lake, but he feels that the TRPA is, nonetheless, on the

right track by controlling growth and development on high

hazard parcels of real property.

—_-

*_*s e+ * *

On February 27th the current Executive Director of the

Tahoe Regional Planning Agency, DAVID ZEIGLER, was

called by the TRPA for the purpose of describing monitoring

programs in the Basin, cause and effect relationships,

controls standards, programs and measures. During his

tenure, he has made sure that the TRPA is an active member

of the Lake Tahoe Interagency Monitoring Plan (LTIMP),

and corroborating the statements of Drs. Goldman, Byron

and Cahill, Mr. Zeigler pointed to the dramatic increase in

algal growth in the Lake and in its tributary streams. In fact

the streams themselves, as well as the Lake, have been in

frequent violation of water quality standards and guidelines

published by the Federal Government, and by California and

Nevada.

As did Dr. Cahill before him, Mr. Zeigler talked about the

Tahoe watersheds in their natural state as producing an

efficient system for stripping nutrients and holding them. He

also described the complex nitrogen cycle that takes nitrogen

gas from the atmosphere, converts it to nitrates which then

precipitate and are absorbed by both plants and animals,

eventually finding their way into debris. Exposure to bacte-

ria converts the nitrates to ammonium nitrate, organic

-B 37-

compounds and ammonia. Finally, they are converted back

into nitrate, with dangerous runoff potential occurring at the

front, middle and back ends of the system.

In Mr. Zeigler’s opinion a properly designed infiltration

system, such as the one located at Uppaway, can minimize,

but will not eliminate, the impact of nutrient-loading.

Mr. Zeigler described the evolution of the 1974 Bailey

Lane Classification Guide for Planning, its former coeffi-

cients and its lingering vitality in the IPES program. He

points out how the relative erosion hazard and runoff poten-

tial categories for IPES, in effect, both compliment and, in a

way, supplant, the Bailey system as it relates to the calcula-

tion for allowable land coverage. Whereas the Bailey system

drew lines with a broad brush, so to speak, and allowed land

coverage in categories 1 through 3 of between 1 and SZ%

only, the IPES program allows for a “curve” instead of a

“stairstep” approach. ‘Therefore, even those persons whose

land falls in a category 3 Bailey Land use allowable coverage

category may, depending upon their erosion hazard and

runoff potential score, cover their land with impervious

Surfaces to a degree somewhere between 5 and almost 20%,

unless, of course, the lot itself was inside a planned unit

subdivision, like Uppaway.

In the case of planned unit parcels, the calculation takes

into account factors for gross acreage. In Mr. Kelly’s case,

even if his IPES score was theoretically high enough, he

would still be limited to the 2500 square feet depicted on the

subdivision map.

In addition to his description of IPES_ procedures,

Mr. Zeigler talked about soil conservation and _ anti-

degradation policies which are consistent with the published

environmental thresholds of the TRPA anv with the Federal

Water Quality “208” Plan. In fact, he feels that the environ-

nrental threshold (and in another sense IPES itself) are ways

which allow numerical parameters to be assigned to what

would otherwise be difficult to enforce.

-B 38-

Mr. Zeigler also explained his understanding of Best

Management Practices such as drainage gontrol and revegeta-

tion. As desirable as Best Management Practices are, he

feels they are only as good as the care and maintenance

which are given to them following their installation. He

retains a long range concern for all such amenities, including

and especially those installed by Mr. Kelly in the Uppaway

subdivision. Management practices basin-wide, he states,

are nowhere near as effective to maintaining Tahoe’s

balance-state as are natural conditions.

*_ ses *& * ©

Another Consulting Hydrologist whose background and

training are heavily weighted in favor of statistical measure-

ments, is MR. DAVID DAWDY. Mr. Dawdy’s testimony

has a tendency to rebut the Guerrent thesis, in the following

particulars.

Mr. Dawdy feels that slope is a much more important

variable than does Mr. Guerrent. He thinks that

Mr. Guerrent’s report of sediment yields as high as 1 to 28

(expressed in parts per thousand), or 1,000 to 28,000

(expressed in partes per million), actually proves a very high,

not a low, sediment rating. Mr. Dawdy was also asked to

critique the Hill and Nolan report (Exhibit SSSS-5), which

was relied upon in part by Mr. Durbin. Mr. Dawdy feels that

the Hill and Nolan report impeaches itself because the

authors failed to take into account their own data from two

other streams on the east shore of the Lake. Had they done

so, Dawdy thinks they would have realized that some of their

morphological conclusions were faulty.

Finally, Mr. Dawdy joined the other defense experts who

criticized Mr. Durbin’s use of regression equations to make

predictions, without implementing rigorous confidence-level

standards at the same time.

ses + &

-B 39-

FLORENCE LIVINGSTON’S curricula vitae shows him

to be a pre-eminent city planner. With degrees from

Stanford, Yale Law School and MIT, Mr. Livingston has

been involved in major plans all over the country. Having

carefully examined the 1987 Tahoe Regional Plan, it is

Mr. Livingston’s opinion that the techniques which are

incorporated into the Plan are not only proper techniques for

environmental threshold carrying capacities, but they repre-

sent systematic, logical, unbiased and scientifically based

Standards. Mr. Livitigston has participated in the develop-

ment of plans in Menlo Park, Los Angeles, San Francisco

and Florida, where the conceptual framework is not at all

dissimilar to the format of the 1987 Tahoe Plan. Greater

treatment might properly be given to his opinions here, but

Mr. Livingston basically invade’s the province of the Court

in reaching his conclusions about the sturdiness of the legal

cornerposts for IPES.

-_*s * * *

MILT SHARP, Civil Engineer, was called by the defense

and taken out of order (once again for scheduling reasons) to

traverse Mr. Kelly’s claims about the size of the direct

expenses he sustained in developing Uppaway. According to

Mr. Sharp’s analysis, (see Exhibit J) Uppaway improve-

ments, including such matters as surveying, bond premiums

and the like, produce a total cost for phases I and II (the

Lakfront and Tennis Court lots) of $25,193.00. For Phase III

(the Hilltop) the figure is $24,888.00.

*_*s* + * ©

DR. ROBERT COATS, a Consulting Hydrologist with

expertise in the nutrient transports in alpine watersheds,

testified that Mr. Kelly cannot “improve on nature” with his

infiltration system and mitigation measures. He feels that

such a system does not cleanse certain forms of nitrogen that

may migrate through the subsurface in solution with ground

water. Further, the disturbance from construction inhibits

the “duff” zone on the floor of the forest. This organic layer,

-B 40-

which is a few inches thick at the soil surface, is perhaps the

most efficient zone for nitrogen uptake and certainly more

important than the uptake at the depth where the infiltration

system may deposit nutrients. Like Dr. Goldman, Dr. Coats

feels that Mr. Durbin errs in considering just the soluble

reactive fraction of total phosphorous loading (see Exhibit

Z-50). Like Dr. Byron, he feels that Mr. Durbin ignores

transformation processes of both nitrogen and phosphorous.

Like both of them, he knows that the dominant form of

nitrogen is organic nitrogen. And, like all the defense

experts, Dr. Coats feels that Mr. Durbin seriously underes-

timates the impact of land development and disturbance on

deposition of total phosphorous and organic nitrogen.

In Dr. Coats’ opinion, Mr. Durbin’s statistical regression

analysis is so seriously flawed that one should not give much

faith to the conclusions drawn. Stanford Standard Compe-

tence and Significance testing shows that there is a 50%

probability that Mr. Durbin’s regression analysis means

nothing at all. Obviously, the 95% confidence rating, which

scientists are used to, is not present in Mr. Durbin’s analysis

or in his nutrient budget; therefore, he feels, decisions cannot

be based on such inexactitude.

-_*s* *& * *

Wednesday, February 28th, saw the testimony of

KENNETH FOSTER, a consulting civil engineer licensed in

both Nevada and California. He was a member of the Board

of Directors of the Sierra Preservation Council, and he was a

key member of the technical advisory committee for the

Consensus Building Workshop.

He described the complex and tedious process of develop-

ing the technical base for the IPES procedure over a period

of more than two years. He described in detail each of the 9

IPES elements and the rationale behind the scoring proce-

dure, particularly the conversion and use of the universal soil

loss equation and the runoff potential which together account

for 650 of the 1150 available points.

-B 41-

For “conservative” reasons the Technical Advisory

Committee decided not to use the most recent soil service

category for the Cagwin soils that predominate in the Tahoe

Basin. They elected instead to use the older Rogers’ report,

which assigns a lower runoff potential category and a com-

mensurately lower IPES score to this component of the

evaluation. He acknowledged on cross-examination that this

scoring decision was made for policy as much as scientific

reasons.

*~_* &© * ©

Also testifying on the 28th was attorney KENNETH

ROLLSTON, who, along with Mr. Owens, was the attorney

for the TRPA during the time when amended plat maps for

Mr. Kelly’s subdivision were prepared. Following the

Federal Court approval of the subdivision, Mr. Rollston

discussed the import of certain correspondence he had sent or

received, particularly Exhibits A-4, I-S and I-13. The latter

two documents contain acknowledgements on behalf of the

TRPA that ordinances that might otherwise prohibit building

at Uppaway have had no application to the “deemed ap-

proved” status of the Uppaway subdivision by virtue of

Judge Thompson’s Federal Court Order. These exhibits and

their legal import are more carefully reviewed in the Third

Discussion section.

-_ se * ©

DR. ROBERT TWISS is a noted landscape architect and

an environmental planner. He is former Chief of the Califor-

nia -TRPA and was a member of the Technical Advisory

Committee during the creation of IPES.

From his direct involvement and from the research he has

done, Dr. Twiss feels that he is in a unique position to trace

the history and the environmental planning at Lake Tahoe

commencing with the grant from the Fleischmann Foundation

in 1957. These efforts eventualiy resulted in the final

advisory plan, dubbed the “1980 Plan”, which was published

-B 42-

in 1964 but was rejected by Washoe County and so ended the

period of what Dr. Twiss calls the “pre-planning” efforts.

The next “era” for the Tahoe Regional Pianning Agency

Started in 1967 and ran through 1972. During this period of

time, development was controlled by counties because a

region-wide plan was not in force. Recognizing the im-

minence of restrictions on the growth of subdivisions by the

implementation of a regional plan, developers took advan-

tage of this hiatus in regional planning and during 1970

created 4,134 lots. In 1972, 4223 more lots came into

existence. In total, during the time when the Tahoe Regional

Plan was in the process of preparation, 14,684 lots came into

being in the Tahoe Basin. Many of these lots represent the

12,000 vacant lots which are still in existence and affected

by “IPES”.

Dr. Twiss thinks that some of these subdivisions are

“antiquated” because they were approved prior to the adop-

tion of protective measures and because, he feels, they do not

adequately address environmental concerns.

In his role as a member of the Technical Advisory Com-

mittee, Dr. Twiss was one of the architects of IPES, so he

naturally approves the specificity with which IPES measures

individual building sites. He does not feel that IPES is a

growth control measure, but on cross-examination, he

admitted that if the line does not move downward in the near

future, then IPES will have the same effect as would a

growth control measure.

Dr. Twiss wishes to place the Uppaway subdivision in the

context of the enormity of the problems facing regional

planners at the Lake when it comes to understanding how

long it has taken to address the problems of the Uppaway

subdivision, being just one subdivision among many. The

planning agency had to cope with thousand of lots over the

Same period.

s-_*s* *+ &

|

|

|

-B 43-

The final two defense witnesses were Gordon Barrett, who

testified earlier, and Dr. Thomas Dunne.

GORDON BARRETT was briefly recalled to refute the

statement attributed to him by Mr. Lahman. Mr. Barrett

States that he never told anyone that Mr. Kelly would “never

build the Hilltop”. Mr. Barrett also reviewed Mr. Durbin’s

study of developed areas in the basin and offered the view

that because Mr. Durbin used some old maps, there are

significant developed areas both on the North Shore of Lake

Tahoe and on the South shore, particularly at the downtown

casino core and up along Kingsbury Grade, which

Mr. Durbin had simply failed to account for in his calcula-

tions. Therefore, Mr. Barrett feels that Mr. Durbin’s conclu-

sions were placed in further disrepute.

x~_* &£ * *

DR. THOMAS DUNNE from the _ University of

Washington, Dept. of Geological Sciences, was called by the

defense as an expert on pathways of rain and snowmelt

runoff from steep soil in forested areas which was the subject

of his doctoral thesis at John’s Hopkins Univ. in 1969.

Dr. Dunne describes four paths which runoff takes in

places such as Uppaway:

1. Overload flow, or so-called “Horton” flow, which

occurs when rainfall intensity exceeds the infiltration rate;

2. Water which percolates through grus into bedrock and

slowly migrates downhill (relatively deep ground water

runoff);

3. Shallow subsurface flow as ground water; and

4. Saturation exfiltration overland flow, where the near

surface water has become so saturated that it percolates back

to the surface for overload transport.

Like many defense experts before him, Dr. Dunne talked

about the fact that surface water can carry organic particles

as well as dissolved forms of nutrients. He offers the view

-B 44-

that any ground disturbances taking place near the protective

or “armored” layer near the surface replenish the supply of

erosive materials.

From several perspectives he questions the validity of

Mr. Guerrant’s study and opinion. First, the M-3 and M-4

simulators, he feels, simply don’t simulate rainfall very well.

While the M-1 and M-2 are acceptable simulators, he feels

that the infiltration data which Mr. Guerrant developed

doesn’t prove Mr. Guerrant’s conclusions. He feels further

that Mr. Guerrant raked the upper two inches of the soil to

attempt to represent disturbed conditions, but this kind of

disturbance actually increases the infiltration capacity of the

soil. More typical construction efforts, such as soil compac-

tion, actually inhibit infiltration characteristics of Cagwin

type soils. He concludes that Cagwin soil is a soil of high

erodibility and thinks that Mr. Guerrant’s thesis wholly fails

to disprove this conclusion. He further feels that had the

Guerrant thesis been based upon a sufficient number of

replications, the conclusions might well have been very

different. In effect, he asks the Court to discount altogether

the soil studies done by Mr. Guerrant and his adviser, Clare

Mahannah.

Dr. Dunne also critically reviewed Mr. Durbin’s claim

that the bed and the banks of streams bring (or transport) the

great majority of sedimentation to the Lake (as opposed to

hill slope erosion of sediments). Because of what Dunne

calls a major computer error, Mr. Durbin processed much of

the LTIMP information using the wrong “triplets” (he

averaged the wrong numbers together). Had Mr. Durbin

instructed the computer correctly, he would have realized

that in some cases his own information disproves the

hypothesis. On other occasions, the computer program is too

highly variable to allow for Mr. Durbin’s kind of budget

analysis. Like Drs. Goldman and Byron, he feels that the

Durbin nutrient budget analysis ignores the contribution of

organic nutrients and mineral particles which are coated with

-B 45-

fine layers of nutrients. He offers the opinion that even

subsoil particles have attached phosphorous and iron which

can enter a stream through seepage.

Overall, he feels that the IPES system is a legitimate way

to examine the landscape and to anticipate the effect devel-

opment may have on sediment and nutrient transport, and

overall he feels that Mr. Durbin’s analysis is unscientific.

*-_es+ &¢ * &

PLAINTIFF’S REBUTTAL CASE:

The first witness on rebuttal was MR. DAVID

STRONGIN, who has lived in Incline Village since 1969 and

was a vocal critic of certain aspects of the TRPA regulations.

Approximately four years ago he talked to Dr. Goldman,

who indicated to him at the time that his studies were begin-

ning to show that runoff from single family residences was

not all that important to deteriorating water quality in Lake

Tahoe. The Court considers this impeachment, not substan-

tive, evidence.

-_* * *& *

NOBLE MURRAY was called to rebut the valuation

approaches used by defense appraiser Steven Johnson.

Though not an MAI appraiser, Mr. Murray feels that

Mr. Johnson inappropriately applied a discount because of

the difficulty of access to the Hilltop lots in Uppaway. He

also feels that it is too speculative to try to establish market

conditions for the alleged eventual movement of the IPES

line. Finally, he did his own comparable sales anz'ysis,

which included sales in the nearby Glenbrook subdivision

and which was considered and rejected by Mr. Johnson. By

including sales from such a nearby area, confidence-levels go

up, he feels, and so do values.

Overall, Mr. Murray feels that the aggregate value of the

Hilltop lots in Uppaway as of June of 1987 is some 2.025

-B 46-

million dollars, and as of January of 1982, 1.825 million

dollars.

ses & * €&

DR. WATKINS MILLER, a UNR Professor in Soil

Physics, Soil Chemistry and a teacher who lectures fre-

quently in hydrology, testified that he was Mr. Guerrant’s

thesis advisor, and that Mr. Guerrant did not ignore the

kinetic energy associated with rainfall. Instead, he simply

used a conversion-equivalency from another expert.

As a thesis advisor, he feels that Mr. Guerrant’s thesis is

based on solid scientific analysis, the results of which will

soon be published. Like Mr. Guerrant, Dr. Miller feels that

the Cagwin type soils present in Lake Tahoe Basin possess

low soi. erodibility and that slope becomes a factor in such

soils only in extremely unusual storm events, such as those

which would occur on an average of every 200 years.

*~_**& * *

PROF. MAHANNAH wa recalled to the stand to reinforce

his position that nutrients which are channeled into the

subsoil as the result of the action of the infiltration trenches

in Uppaway are, for the most part, if not entirely, taken up

by the overlying vegetation. Professor Mahannah testified

that those waters and nutrients which percolate or settle to a

depth of several feet are stored there momentarily, and the

nutrients are taken up by the vegetation, which is so abun-

dant that it could use up far more nutrients.

Prof. Mahannah agrees with Dr. Dunne’s statement that

the largest source of sediments comes from roadcuts, but he

does not feel that there is any evidence of waterborn

sedimentation through the gunnite stabilizing measures at

Uppaway. He feels that what Dr. Dunne was observing were

“tailings” from excavations by rodents in the vicinity.

Professor Mahannah is undissuaded by the defense experts

and feels more confident than ever that Uppaway is con-

tributing nothing to Tahoe’s pollution problems.

|

— —

-B 47-

*_*e* &© & *

Finally, Mr. Timothy Durbin was again called to the stand

by the Plaintiff to defend himself against the broadside

attacks leveled by the defense experts who questioned his

nutrient and sediment budgets. He defended, as well, the

conclusions he draws respecting the insignificant role played

by development on the loss of water clarity in Lake Tahoe.

Mr. Durbin testified that he is more firm than ever in his

ultimate conclusions, stating that if it is true that the data he

used to develop the budgets was too meager or too variable

to be relied upon, then the similarly unproven and untested

data which is relied on by TRPA, should also not be used to

support a land use ordinance system such as IPES.

Responding to Dr. Goldman and to Dr. Byron, Mr. Durbin

does not feel that organic particulates of phosphorous and

nitrogen are very important, because most of those two forms

of nutrients are not “biologically available”. They are,

instead, “refractory”, which is to say that they biodegrade or

decompose so very slowly that they become “labile” or

unavailable for algal uptake. Thus, they do not play a

significant role in the system.

Mr. Durbin defends his retrospective mathematical

extrapolations as well. He notes that available data in the

early 1960’s showing a dramatic surge in nutrient loading

helps guide the proper extension of the backward line and

reinforces the accuracy and legitimacy of his model.

He uses Dr. Byron’s Statistics involving streamloading of

six chosen streams to support a conclusion that data from

those six streams, when plugged into his nutrient budget,

demonstrate the relative role of development as to nitrogen

deposition to be a 7% contribution, which is not that far from

his 6% figure. He admits, however, that Dr. Byron attempted

no similar extrapolations from the same data.

Regarding Dr. Cahill’s analysis, Mr. Durbin feels that

both Dr. Cahill’s 36 ton per year estimate of atmospheric

-B 48-

deposition, as well as his own estimate of 51 tons, may be

low. Available data shows that the concentration of atmos- |

pheric deposition from all sources is higher at the mid-lake

buoy than at the Ward Lake stations. The Ward Lake

watershed receives a lot more precipitation than does mid-

lake. Mr. Durbin can’t explain the reason for this differen-

tial, but the data does seem to show higher loading than

might be gleaned from looking only at the Ward Lake data.

After listening to Dr. Coat’s criticisms, Mr. Durbin was

prompted to perform a Statistical test subjecting his claims to |

Standard deviation testing. Those calculations allow him to

say now that the nitrogen budget could be off by plus or

minus 1.2 tons per year, the phosphorous budget by 0.2 tons

per year and the sediment budget by plus or minus 4,000 tons

per year. Even with those deviations, however, his opinions

remain the same.

Testing for standard error on the contribution of develop-

ment, could have been off by as much as 1.7 tons per year for

nitrogen, .3 tons per year for phosphorous, and as much as

5,500 tons per year for sedimentation, but again his opinions

are unchanged.

Regarding Dr. Dunne’s criticisms, Mr. Durbin refers again

to the Hill and Nolan studies, where the major contributing

factor to sedimentation comes as the result of drainage

density and erosion occurring in the channel and on the

stream banks as opposed to other theories where that sedi-

ment is transported from the slopes of the watershed to the

Stream. Basically, he feels that his opinions are based on

empirical data, while Dr. Dunne’s opinions are more

theoretical.

On cross-examination he admitted that if he made a major

computer software programming error, his independent

analysis does not corroborate the Hill and Nolan analysis.

He further admitted that some of the information on this

topic came to him from verbal communication § with

Mr. Nolan; that is, the data supporting the hypothesis cannot

-B 49-

be found inside the Hill and Nolan paper itself. (Exhibit

SSSS-5).

Concluding, Mr. Durbin feels that TRPA should stand

back and take a new look at its IPES system because he feels

that he has proven, at least generally, that the TRPA has

erred in erecting the foundations of its land use regulation

system on a study of hillside erosion and nutrient transport.

These features, he feels, play such a small role in the overall

dynamics of the contamination of the waters at Lake Tahoe

that an entire system of land use regulation based on their

tenets, is ludicrous

es. te * ©

FROM THE VIDEOTAPE DEPOSITION

OF DR. MARGARET DAVIS:

While she is qualified to hold a number of titles,

DR. MARGARET DAVIS might be best described as a

paleoecologist. A Fulbright scholar, Dr. Davis has taken a

multi-disciplinary approach to her works, which allows her

to predict what the past might have looked like — and what

the future might look like — by examining pollen, grains,

diatoms, sediments and the like which have been deposited

on lake bottoms.

Comparing that evidence with known histories of develop-

ment and other environment and geological data, Dr. Davis is

able to form cross-disciplinary opinions about influences at

work inside particular lake environments.

She has not had too much direct experience with Lake

Tahoe (which she -calls a world class lake), but she has

examined a number of lake environments, both coniferous

and desiduous, that possess important similarities. She has

examined Tahoe data and compared that information against

the data produced from extensive studies done in several

other, mostly Eastern and Northeastern, lakes particularly

-B S0-

those known as Linsley Pond and Harvey’s Lake. These

lakes are similar to Tahoe because there was in each instance

extensive early logging activities around each body of water

followed, several decades later, by extensive house

construction.

Dr. Davis feels that it is important to note that logging in

“patches” (as opposed to clear cutting of major timber

stands) allows the lake to “recover” as revegetation com-

mences in the areas temporarily disturbed and prevents

long-term excessive nutrient loading and algae production.

She contrasts this phenomenon with permanent disturbances

represented by house building, where the nutrient loading is

more continous and unremitting and is concomitantly more

lake-threatening.

She is not at all surprised, then, that Dr. Goldman and

Dr. Byron were not able to detect significant damage to

Tahoe’s clarity during the late nineteenth century which may

be owing to logging operations. She is also not at all sur-

prised that they have discovered significant deterioration in

Tahoe since the early sixties.

She also can find evidence of “mixing” of sediment at the

bottom of Lake Tahoe. While sediments may “focus” or

gravitate toward the center of the lake, there is no evidence

of “focused” sedimentation from the logging period.

On cross examination, she admits that her conclusions

about Tahoe are bases mostly upon her training combined

with her analysis of existing studies and data. She has

neither conducted nor supervised studies in the Tahoe basin,

which has many dissimilarities (particularly in terms of its

size and depth) from the lakes which were used as compari-

son points such as Linsley Pond and Harvey’s Lake.

*-_s* e+ *& ©

This completes the Court’s digest of the testimony ad-

duced at trial. It’s time now to announce the first of several

legal conclusions which are based primarily on this evidence.

-B 51-

IV. FIRST CONCLUSION:

Concerning the first of the three major issues which need

to be decided in this case, the Court concludes as follows:

IPES IS BASED ON SOLID SCIENTIFIC PRIN-

CIPLES; IT IS CLEVER, RATIONAL AND

EVENLY APPLIED; IT IS ALSO CONFUSING

TO THE AVERAGE PERSON AND IN THE

GRAND SCOPE OF THINGS, INSUFFICIENT BY

ITSELF OR IN CONJUNCTION WITH CURRENT

PRACTICES TO MAINTAIN TAHOE’S CLAR-

ITY. THE REGULATORY SYSTEM PREDI-

CATED UPON IPES IS VALID, HOWEVER, AND

WILL STAY VALID AS LONG AS THE DEFEN-

DANTS CONTINUE TO SHOW GOOD FAITH

ON OTHER FRONTS.

Vv. FIRST DISCUSSION:

On Saturday morning, February 10th, the Court walked

through the entire Uppaway subdivision during unseasonably

warm temperatures. The snow pack from a storm a week

earlier was rapidly melting.

One of the lakefront lots bears a home nearing the com-

pletion of construction. It was graced with an expensive

metal roof. Snow melt was cascading off the roof onto the

adjacent driveway. Two large wheelbarrows located in the

driveway were already filled with water and overflowing

waters dumped onto the street, where part was captured by

the Plaintiff’s much-discussed infiltration system. Because

one of the wheelbarrows was positioned over a small crest in

the driveway, some water was also spilling down towards the

Lake.

The infiltration system did not immediately capture all of

the water which was running on the asphalt roadway because

in some places fugitive soil had been compacted on the

drainage rock, which overlies the trenches. In these places,

the water migrated in rills downslope, but it was successfully

captured by the junction boxes or “manholes” which seemed

to be easily handling the flow. There was no evidence of

recent overflows or spillage from the lateral drainpipes

connected to these boxes. In other words, Mr. Kelly’s

infiltration system was working well, at least on that day.

Does that mean, then, that nutrient-ladened, algae-

forming, overflows will never find their way from Uppaway

parcels and slopes to the Lake?

Imagine, please, the year 2090. Indulge in a speculation

that private vehicular access to the Lake has been curtailed,

woodburning prohibited. Over the preceding 50 years no one

with the watchful eye of a William Kelly has (behind the

closed gate of Uppaway) prevented the Uppaway infiltration

system from becoming seriously clogged with sediment

having built up incrementally, year after year. A sudden

hundred year storm causes rainwater to melt a snowpack,

overburdening the infiltration system and causing sediment-

ladened runoff to head toward the Lake. Is the runoff

Significant to algae production? Probably not, if that is the

only runoff reaching the Lake. Is the runoff significant when

considered part of the runoff sheeting off impervious sur-

faces such as rooftops and roads in subdivisions surrounding

the entire Lake?

Put another way, is it irrational for the Tahoe Regional

Planning Agency to place controls on residential develop-

ment while it learns more about how Tahoe’s delicate

macrosystem operates and balances itself? Plain sense tells

the Court that the answer to this question has to be “no”. But

posing and answering such a simple question unfairly

deflects the thrust of what Mr. Kelly and his people are

saying.

Mr. Timothy Durbin, Professor Clare Mahannah and the

other Plaintiff experts would probably admit that some

nitrogen and phosphorus may someday (at least during an

extraordinary event) enter the Lake from the hillslopes of

-B 53-

Uppaway. They also know that Tahoe’s magical clarity is

being iost by reason of “cultural” or man-initiated activities.

Mr. Kelly’s experts are merely trying to show that

Uppaway’s contributions are de minimis, that they just don’t

make a difference. Through these experts, Mr. Kelly’s

attorney is trying to prove that Uppaway’s impact on the

Lake, as an engineered subdivision, is so inconsequential on

a global scale that further regulation of his client’s property,

and by extension, further regulation of other properly

engineered subdivisions, is both unfair and irrational.

Because there is a lesson in their testimony (albeit a

different one ihan the one they are teaching), neither this

Court, nor anyone interested in Lake Tahoe’s future should

turn a totally deaf ear to the opinions of these experts.

Mr. Kelly’s case requires a careful examination

The heat of Mr. Kelly’s case comes from the research and

the mathematical models and budgets created by former

USGS scientist and administrator, Timothy Durbin.

Mr. Durbin thinks he has developed a scientifically sound

hypothesis which will debunk the foundations of IPES.

Part of Mr. Durbn’s hypothesis is not impossibly complex.

That is to say, it can be comprehended by most lay persons.

He takes a known law in physics that applies to any sub-

Stance, whether the substance is nitrogen, phosphorus, or

even sediment loads. The law, which is called the “Law of

Conservation of Mass”, may be stated as follows: The

difference between input and output equals the change in

storage or inventory.

When he sought to apply this physical law to Tahoe,

Mr. Durbin then used some in-flow data from several sources

and stations which were monitored cooperatively in the

1980’s by the Lake Tahoe Inter-Agency Monitoring Program

(LTIMP). That inflow data was compared against other

available data on out-flows at the mouth of the Truckee

River.

-B 54-

A fairly simply mathematical calculation allowed him to

determine the storage change. As examples of the magnitude

of storage change, he offers the opinion that the storage

change for sediment is some 24,000 metric tons a year, and

for nitrogen, it is some 40 tons per year. A sample budget

(for nitrogen) looks like this:

NITROGEN BUDGET

(METRIC TONS PER YEAR)

INFLOWS PRESENT STEADY-STATE

Streams 9.8 5.9

Atmosphere 56.1 8.5

TOTAL 65.9 14.4

OUTFLOWS

Truckee River 5.3 3.0

Sedimentation 20.6 11.4

TOTAL 25.9 14.4

STORAGE CHANGE 40.0 0.0

His budgets rely upon a mathematical extrapolation to

reach what he calls a new “steady state”, a condition he

feels to be a proper logical conclusion drawn from the

model.

Using some aerial maps and some road maps,

Mr. Durbin calculated an area which he assigned to all

development in the Tahoe Basin (38 square miles, or

approximately 13% of the whole basin area). He fac-

tored that gross acreage figures against all possible

-B 55-

Stream flow sources of nitrogen, phosphorus and

sedimentation, assuming a so-called “worst case” in

which “all” offending material which could be at-

tributable to the developed areas found its way to the

Stream source. His analysis then became a little more

complicated, as he employed certain statistical regres-

sion formulae to develop baseline statistics for earlier

years, such as 1960 and before; finally, he created some

algebraic equations which allowed him to allocate the

offending nutrients between developed area sources and

all other contributing sources.

By so doing, Mr. Durbin compares the stream load

with the atmospheric load both now and _ pre-1960

(present vs. “steady-state”), and using a formula of his

own design:

[nitrogen = coefficient a+b (streamflow

area of watershed (area of watershed)

+ c (developed )

Area )

Area of Watershed) ]}

he solves for the relative contribution of development.

His conclusions about Tahoe’s growing problem with

algae are that out-of-basin sources of nutrients and

atmospheric depositions of nutrients on the Lake’s

surface, taken together, literally dwarf the role which is

played by streamborne nutrients which may be caused by

residential or commercial development.

Putting numbers to these conclusions, Mr. Durbin

feels that only 6 percent of dissolved nutrients can be

blamed on development, (with the term “development”

including both commercial and residential development).

As to sediment loading, which he claims does not

transport much nutrients, only 3,000 of the 24,000 tons

per year of sediment are attributable to development

under his theories and calculations.

-B 56-

The Court finds two general problems’ with

Mr. Durbin’s approach. First, the Court is not prepared

to say that the magnitude of nitrogen and phosphorus at

some 6% is a legally insignificant amount. Similarly,

3,000 tons of sediment is not in legal terms something

which is necessarily “de minimis”. This topic will be

addressed at much greater length in a moment.

The Court has as second major problem: it is not

persuaded that Mr. Durbin’s underlying hypothesis

merits great confidence. If anything, it is too bold, too

sweeping, and just too pat.

The Court was reminded of a point-counterpoint

Situation set forth in a recent book by the iconoclastic

author who first became popular in the 1960’s, Ken

Kesey.!

In an effort to justify the foundations of his personal,

existential philosophy, an aging professor and mentor of

Kesey’s alludes to the abortive attempts of a Nineteenth

Century physicist to disprove the Second Law of Ther-

modynamics, a principle which is not at all dissimilar to

the Law of Conservation of Mass utilized by Mr. Durbin

because it relies on the measurement of inflows and

outflows (in this case not of nitrogen and phosphorus,

but of energy):

“

... all... moving things of our world, all the

marvelous, spinning, humming, ticking, breath-

ing things should be doomed to run down and

die .... We may be drifting for the rocks, but

there is nothing we can do but stand at the

wheel, helpless, and wait for the boat to go...

down.” Page 330 and p. 332.

After ten years of struggling with the notion of the

utter futility of positive effort to bring new and re-

Suscitating energy to human endeavors, Kesey’s

! Kesey, Ken, Demon Box, Viking Press, 1986.

-B 57-

autobiographical character, a fellow named Deboree,

finally meets up with a young lady whose intellect

challenges, and perhaps, surpasses the old professor’s.

Her rejoinder:

““Entropy’, she whispered behind her hand,

like a resistance fighter passing a vital secret

under the very nose of the enemy, ‘is only a

problem in a closed system.’” (Emphasis

supplied) /d. at page 372.

This Court will agree that the laws of physics, such as

the Law of Conservation of Mass and the Second Law of

Thermodynamics, contain immutable principles.

Nonetheless, Mr. Durbin’s calculations as to in-flows

and outflows of nitrogen and phosphorus can only be

measured with any exactitude in a closed system.

The evidence at trial shows that the Lake Tahoe Basin

is not yet even in a position of being measured to the

degree that it has the chance to be called a closed system.

There are not just the 7 tributaries (which were measured

by the LTIMP agencies) feeding Lake Tahoe, but there

are some 107 tributaries or watersheds. According to all

of the witnesses who testified on the subject, they

dramatically vary in terms of their nutrient loading

features. Even if comprehensive measurements are

eventually achieved, the Tahoe basin is still too change-

able, too dynamic, to be looked at as a closed system.

Dissolved nitrogen does not occur in the same con-

centrations near the surface of the Lake, as it is much

more heavily concentrated as the bottom approaches.

This has great significance when looking at measure-

ments of nitrates and phosphorus at the shallow mouth of

the Truckee River, as Mr. Durbin did. Woodburning

stoves combined with temperature inversions trap

particles close to the Lake during many weeks of the

winter. Streams are subject to enormous fluctuations

and variabilities in terms of the nutrient loading.

-B 58-

Several hundred forms of algae and bacteria act in the

system and their proliferation pinch and swell.

At this point in the science of the examination of the

decline in the purity of the waters of Lake Tahoe,

Mr. Durbin’s Law of Conservation of Mass and the

budgets which he builds around that law are frightfully

oversimple. There are no calculations or accounts for

the transfers between organic and inorganic pools; there

are no exacting calculations or accountings for the

contribution of particulates of nitrogen and phosphorus

as distinct from those same elements in their dissolved

form; there is no scientific proof for his theory that

near-surface bottom sediments have been “mixed”; there

are no wind and atmospheric studies to show the precise

mechanics of airborne depositions of nitrogen; there are

no stream by stream comparisons of nitrogen uptake

from nearby vegetation. None of the baseline studies

which Mr. Durbin relies upon have redundancy

safeguards, nor have they been tested over long periods

of time. The precise “velocity” of depositions of

nutrients is virtually unknown at present; there are as yet

no systematic studies which compare the experience

between the so-called, “dry” years and the “wet” years.

The authors of the unpublished but highly debated

professional paper entitled “Suspended-Sediment Factors

Lake Tahoe Basin California and Nevada”, which is

Exhibit 5 to Exhibit SSSS concede at page 9:

“Longer and more continuous periods of record

from a diverse set of tributary basins are

needed to formulate predictive equations.”

Mr. Durbin also admits that his numbers are not exact

and that they may be subject to variation. He further

admits that longer studies are needed in order to give

additional verity to his hypothesis.

It may well be true that different numbers and longer

studies will not change Mr. Durbin’s overall conclusion,

that atmospheric contributions are much more important

-B 59-

than streamflow contributions to nutrient loading in

Lake Tahoe, but that, in a sense, begs the legal question.

Different numbers and values may indeed change his

conclusion that steam loading is insignificant — to a

conclusion that it has some significance. That compara-

tively small differential is the very difference between

arbitrariness and the lack of arbitrariness when the

regulatory system and its postulates are taken under

judicial review.

Goldblatt v. Town of Hempstead, 369 U.S. 590, 82

S.Ct. 987 (1962) demonstrates just how far the Courts

will go to protect a legislative body’s police power. In

Goldblatt, the municipality sought to preclude further pit

excavation by a gravel contractor by enforcing an or-

dinance prohibiting digging near the ground water level.

In sustaining the reasonableness of the towns actions the

Court stated:

“Although one could imagine that preventing

further deepening of a pond already 25 feet

deep would have a de minimis effect on public

safety, we cannot say that such a conclusion is

compelled by facts of which we can take notice

... Id. at p. 595.

Many of the leading cases discussing standards of

judicial review talk in terms of this “reasonableness” —

but not “reasonableness” from the perspective of the

Court; instead, they examine the issue from the perspec-

tive of the legislature or governing body. This shift in

perspective was announced in the 1926 decision relied

upon by the TRPA; Euclid v. Ambler Realty Co., 272

U.S. 365, 388, 47 S.Ct. 114; which also coined the phase

“fairly debatable” as the test courts should apply when

they examine the rationale used by the rule-making

body.

This Court does not have to adopt this shallow stand-

ard to decide IPES’ validity, however, because the

scientific underpinnings of IPES are not just “fairly

-B 60-

debatable”; they are persuasive. IPES may not go far

enough in protecting Tahoe’s clarity from other algae-

forming influences, but as far as it does go, it is based on

reasonable scientific study, in fact, on the very best

science which is now available.

According to the experts called by the defense to

rebut Mr. Durbin’s theories, it is difficult to clearly

describe the fragility of the Tahoe ecosystem. Before

turning to a discussion of some of the substance of their

testimony, however, a couple of them described a

“tipping-of-the-scales” phenomenon which accentuates

their opinions. According to Dr. Goldman, for example,

“added” nutrient loading, or small accretions of nitrogen,

phosphorus and trace elements to the Lake, has, in some

cases, disproportionate and profound environmental

effects.

The concept might be likened to an aspect of getting

ready for a trip into the mountains. There is, along the

line, one additional can of pork and beans which the

pack mule just won’t tolerate. A little more becomes

way too much.

Dr. Goldman first takes issue with Mr. Durbin on the

subject of nutrient budgets; he does not feel that scien-

tists have yet reached the point at Lake Tahoe where

they are able to create and interpret a nutrient budget,

primarily because of the complexity of the system. For

example, a nutrient budget, like the one developed by

Timothy Durbin which (for nitrogen) rests primarily on

measurements of dissolved inorganic nitrogen, ignores

the significant contribution of organic nitrogen compo-

nents which may in fact be more important than inor-

ganic nitrogen by as much as a factor of ten. He states

that the conversion of organic nitrogen into inorganic

forms, and vice versa, is an immensely complex cycle

involving numerous relationships between the atmos-

phere, vegetation, streams, wind, seasons, precipitation,

-B 61-

phytoplankton, bacteria, water temperatures, inner-

annual mixing and photosynthesis. (See Exhibit U.)

Not only is the nutrient cycle itself enormously

complex, but it is a dynamic process as well. For ex-

ample, when Dr. Goldman first began to study the Lake,

nitrogen dominated the process of algal production; the

role played by phosphorus and trace elements did not

then appear as comparatively significant. More recently,

studies under his direction show not only that there is a

heretofore unstudied large pool of organic phosphorus,

but also that all forms of phosphorus have emerged to

play a much more important role in the accelerated

eutrophication of the Lake. What is more, phosphorus

has a synergistic effect with nitrogen in changing the

Clarity of Tahoe’s waters. Further, trace elements, such

as iron, zinc and molybdenum, are playing increasingly

important roles in the system.

Even though nitrogen is utilized by algae on an order

ten times as great as phosphorus, phosphorus is now

emerging as the “limiting” nutrient, becoming more

important to the relative proliferation of these

organisms.

These latter phenomena are important, he feels,

because phosphorus and trace elements are linked to

and/or transported by sedimentary erosion in ways more

pronounced than by nitrogen transport through erosion.

Dr. Byron joins his colleague in taking issue with a

number of Mr. Durbin’s theories. While he may not

dispute the notion that the Lake is capable of a “steady

State” or a nutritional balance in the food cycles of flora

and fauna in the Lake and basin, he rejects the notion

that a predictable evolution is taking place, particularly

with respect to nutrient storage and organic nutrients

associated with sedimentation.

Mass balances may exist, but they are only

momentary “snapshots” of a particular condition that is

seasonably subject to great variation. Since IPES

-B 62-

measures prospective contributions of both organic and

inorganic forms of nutrients, Dr. Byron states confi-

dently that IPES is compatible with most scientists’

understanding of the biological process taking place in

the Lake’s environment.

Even if the Court were to find Mr. Durbin’s nutrient

budget plausible from a theoretical standpoint, the

budget itself does nothing to support his conclusion that

winds are bringing pollutants to Lake Tahoe from the

urbanized coast. He seems to be asking the Court to

adopt a syllogistic leap — that if the streams LTIMP

measured aren’t bringing a significant percentage of

nutrients from the hillslopes, and since no other source

is apparent, then the “inescapable” conclusion is that the

pollutants are airborne, brought in by the prevailing

winds.

The conclusion does escape Dr. Thomas Cahill, who

knows more about those matters than anyone appearing

at trial, and Dr. Cahill’s answer is, again, that it is not a

scientifically valid method of inquiry to use a budget to

dissect an environment by isolating and examining just

one part of an ever-changing system. Along with hydro-

gen and oxygen, nitrogen and phosphorus are among the

ubiquitous building blocks for all life forms living in the

ecosystem. They cycle into and out of the atmosphere,

into and out of plants and animals, into and out of the

water itself. They are transported by a number of con-

veyances including winds, snow, rain, runoff, sediments,

algae, fish, bacteria, streams, roadways, roofs and

drainpipes. They can come from hillslopes like those in

Uppaway, and they can come from automobile exhausts.

They are stored, and they are released.

Man has moved into the Tahoe ecosystem and has

drastically altered it. Particularly since 1950, develop-

ment has changed the topography and the functioning of

more than a hundred watersheds that play key roles in

the nutrient cycle. Under these circumstances the law

-B 63-

permits reasonable regulation, even regulation that may

Substantially interfere with the free use of residential

property.

It may not be possible to fully reconcile all of the

language contained in several key opinions from the

U.S. Supreme Court. On some issues, the guidance from

the High Court is clear, unequivocal and uniform. For

example, all of the pertinent cases require the governing

body to prove that it is promoting a legitimate state

interest.

That may be the simplest task facing the Court in this

case. No one has suggested that the purpose of the

Tahoe Regional Planning Compact (or the purpose

behind the land use ordinances promulgated to imple-

ment the Compact, is anything but legitimate.

Subsections (3)(7) and (10) of Article I(a) of the

Amended Compact (P.L. 96-551, 94 Stat 3233) read as

follows:

(3) The region exhibits unique environmental

and ecological values which are irreplaceable

(7) There is a public interest in protecting,

preserving and enhancing these values for the

residents of the region and for visitors to the

region....

(10) In order to preserve the scenic beauty and

Outdoor recreational opportunities of the

region, there is a need to insure an equilibrium

between the region’s natural endowment and its

manmade environment.”

Clearly, the Compact seeks to advance and protect a

legitimate state interest. The dispute between the Plain-

tiff and the TRPA does not ripen until the foundations

-B 64-

for the implementing ordinances (IPES) are brought into

focus.

The landmark cases which predate First English

Evangelical Lutheran Church of Glendale v. County of

Los Angeles., 482 U.S. 304, 107 S.Ct. 2378 (1987), can

be grouped in such a way that they can be cited for two

distinct and competing standards for judicial review.

The first is the “rational relation” or “reasonableness”

test previously discussed, where the regulations are

upheld if the regulators could “fairly debate” the

rationale behind their rule-making, Goldblatt v.

Hempstead, supra, 369 U.S. 590. Arguably, most

zoning matters, particularly those which create land use

categories, fall under this heading, where the trial Court

gives enormous deference to the legislatures and

regulators. (See, e.g. the “manifest abuse of discretion”

test which Nevada has adopted in City of Henderson v.

Henderson Auto Wrecking, 77 Nev. 118, 359 P.2d 743,

745 (1961); and McKenzie v. Shelly, 77 Nev. 237, 362

P.2d 268 (1961)).

Starting about ten or twelve years ago, however, a

trend gradually began to develop in certain kinds of

property cases which is not at all dissimilar to the

history of the emergence of special protections for

fundamental civil rights in substantive due process

cases.

It can now be argued that the legislative entity has a

greater burden — to prove not just a “reasonable” nexus,

but a substantial one — when its zoning and land use

rules tell a landowner not just what kind of use is per-

mitted, but also when construction can commence and if

some major parts of the parcel can be placed to any use

at all.

What is more, some regulators are now vulnerable to

inverse condemnation or “takings” claims, which is the

subject of the next Discussion Section. For now, the

Court will briefly outline this emerging law of

-B 65-

“substantial relationships” without much mention of the

“takings” dimension.

There is no question that the government can promul-

gate land use regulations that impair or defeat recog-

nized real property interests, Penn Central Transporta-

tion Co. v. New York City, 438 U.S. 104 at 124, 98 S.Ct.

2646 (1978) [where the police power was exercised to

preserve Grand Central Terminal as a_ historical

landmark].

Two years later, in Agins v. Tiburon, 447 U.S. 255,

100 S.Ct. 2138 (1980), the High Court reviewed the

police power exercised by a Bay Area municipality to

preserve “open spaces” in a region of the northern San

Francisco Bay. According to the Complaint, the

ridgelands on a peninsula bordering the Bay contained

some of the highest value parcels in the region, and the

city had “completely destroyed” these values with its

greenbelting ordinance (447 U.S. at 258). Nonetheless,

the Court upheld the ordinance because it substantially

advanced legitimate governmental goals to limit conver-

sion of open space to urban use. (Agins also set the

Stage for First English, which is a “takings” case exam-

ined at length in the next section). Whether its actions

were advertent or inadvertent, the Agins Court may have

marked the beginning of the liberalization of the stand-

ard for judicial review in some real property regulation

cases.

Agins was followed by Nollan v. California Coastal

Commission, 483 U.S. 825, 107 S.Ct. 3141 (1987) where

there is the strong suggestion that land use regulations

are now subject to a new scrutiny when their implemen-

tation dramatically impairs the marketability of real

property. Now, even if a regulation is reasonable, it

must also have substantial public goals behind it and

Substantial causal connections with its ultimate objective

in front of it. If it does not meet these tests, the or-

dinance may be invalid (or confiscatory, or both).

-B 66-

It seems now that trial courts must do more than

examine a government’s action for simple “reasonable-

ness”. The Court must:

(1) compare the extent of the land-use restric-

tion with the importance of the governmental

objective; and

(2) if the restriction is itself substantial, enter a

finding that the ordinance as written will or

will not likely achieve its stated objective.

It is true that neither Agins nor Nollan are factually

Similar to the case at hand. As noted, the zoning or-

dinance in Agins affected property which had not yet

been subdivided into building parcels, as is the case with

Uppaway’s planned units. And in Nollan, the gov-

ernmental purpose urged for public benefit involved an

access-easement to a beach which had not previously

existed. [The Court held that the public purpose must

logically relate to the government’s assertion of jurisdic-

tion and remarked that building codes don’t have much

to do with easements]. So its hard to say whether the

“substantial nexus” or “substantial public interest” test

applies to all judicial review cases. Nonetheless, the

administrative interference by the TRPA in Mr. Kelly’s

case is considered so substantial that the Court elects to

apply the harsher test to the TRPA’s endeavors.

In our case, IPES’ restriction on “high-hazard” lands

like the Plaintiff’s, temporarily at least, is a complete

one. Mr. Kelly can perhaps build out one or two of his

lots in the next few years, but he has no assurance that

during his lifetime he will ever be allowed to build out

the remainder. One the other hand, the importance of

the Compact’s objective is also self-evident. Unless

something is done to protect Tahoe’s decline, her unique

beauty will be forever lost. The case presents a classic

clash between important interests on both sides.

-B 67-

On the second and controlling prong of the test, the

Court concludes from all the evidence that IPES is

rationally designed in such a way that it will substan-

tially protect the Lake from contamination caused by

activities on residential and commercial parcels. IPES is

not a panacea, and IPES will not do the job by itself, but

as far as it goes, IPES is built on solid scientific

foundations.

xe eK

While the Court has come down on the side of the

TRPA by holding that there is a rational basis for IPES.

(primarily because of the relatively greater precision and

scholarship shown by defense experts), part of the big

picture has not been illuminated by TRPA’s studies. No

matter what values one may assign to Mr. Durbin’s

theoretical nutrient budget, he accurately concludes that

the LTIMP data shows an unexplained presence of

sizeable quantities of nitrogen and phosphorus which

cannot be attributed to residential growth, or to develop-

ment generally, under anyone’s theory.

Dr. Goldman admits that when he and Dr. Byron

performed Lake bottom core Sample tests, they were

looking for evidence that logging and its consequent

erosion caused a spike in algae growth in Tahoe during

the late Nineteenth Century. If only for the reason that

the Lake was able in a sense to almost immediately

resuscitate itself, as Dr. Davis suggests, logging did not

Significantly increase the growth of these organisms.

Modern-day chronic conditions other than just the

building of homes, however, may bring Tahoe to a point

where it is beyond saving.

If Dr. Cahill is correct that air masses arrive at Lake

Tahoe from the relatively clean airsheds of the Pacific

Northwest and that a lot of the airborne pollution which

is carried to the Lake by winds has already settled or

been “scrubbed” out, then the proportionate contribution

of in-basin (but other-than residential) sources is a

-B 68-

puzzle awaiting a better solution, a solution which

should be given a priority effort by the planning agency.

It is more from policy than from science that the

TRPA chooses to call Tahoe’s Cagwin soil types highly

erosive. The better evidence shows that these soil

groups are only moderately erosive under most cir-

cumstances. What the evidence does tend to show is that

Cagwin soil becomes highly erosive when it becomes

compacted. What the evidence also tends to show is that

the soil group is highly conducive to a “rilling” phe-

nomenon and that runoff produces serpentine channels

through the soil as water runs from the impervious

surfaces through drain pipes and gutters and into the

soil. The evidence also tends to show that the problems

of erosion, sedimentation and runoff are dangerously

exacerbated during major storm events such as when

warm spring rain falls on a major snow pack.

It may be time for the TRPA to rethink some of its

standards such as the so-called “20 year event” drainage

control management practice. In fact, it may be time for

the TRPA to rethink and restudy a number of its current

‘parameters. The evidence suggests a deficiency in the

breadth of the management practices at Tahoe. Despite

the work done to date by major scholars, there is an

absence of a comprehensive coordinated scientific study

upon which to comfortably rest coordinated planning

measures.

There are some sources which may have as dramatic

an effect on the water quality of the Lake as the com-

bined effects of residential development. Consider, for

example, the following inquiries:

(1) Exactly what percentage of the deleterious

nutrient load may be coming from fertilized lawns,

especially from golf courses in the South Shore,

Edgewood, Glenbrook and Incline Village? There is

probably enough evidence available now to regulate laws

-B 69-

management practices as there is evidence to regulate

homebuilding.

(2) Consider also the Little Truckee River. If at one

time some 40% of Tahoe’s inflowing water wound and

filtered through the wetlands and meadows which were

partially covered by Tahoe Keys, how extraordinary an

event was that to the fragile tolerance levels of Lake

Tahoe? It has already been established in this case that

the TRPA is not what one would normally consider a

condemnatory authority, primarily because it simply

doesn’t have the money to condemn and purchase land

such as Tahoe Keys. Is the wetland loss Significant

enough to go to a governing authority who would have

funds to restore these nutrient-scrubbing wetlands? The

experts don’t yet have an answer to that question.

(3) If woodburning stoves and temperature inversions

blanket Lake Tahoe with clouds of particle-laden smoke,

then why isn’t woodburning prohibited during certain

climatic conditions? Isn’t that nutrient and sediment

source deemed significant enough for such regulation?

Experts don’t have that answer yet, either, but the

early evidence provides a sufficient basis for more

Stringent regulation than now occurs.

(4) If in-basin auto emissions might have a tendency

to tip the balance, why isn’t the TRPA taking a stand

before the state legislatures regarding mandatory public

transportation systems for visitors to the Basin and

Stringent automobile emission standards for its part-time

and full-time residents, or is the relative contribution of

automobile emissions too insignificant to consider these

drastic measures? The experts haven’t fully studied that

problem yet either.

(5) Dr. Thomas Dunne offered convincing testimony

that sheetwater on asphalt is capable of transporting

pebbles ranging from fine particles up to the size of a

tennis ball. Following snow and ice removal efforts by

California and Nevada’s transportation departments, that

-B 70-

kind of action must be occurring on public highways

throughout the winter months, made worse by trucks,

placing down sand and salts and made worse yet by

vehicle traffic crunching the residues.

How many nutrients adhere to these particles? How

many public thoroughfares are insufficiently curbed and

guttered? How many more infiltration trenches are

needed to mitigate road surface contributions?

From the perspective of the aerial photographs intro-

duced at trial, the roadways of the Tahoe basin look like

dark watercourses, and they must actually act something

like watercourses, too, during rainfalls and_ runoff

periods, because more “impervious coverage” is aSsoci-

ated with roadways than with all rooftops and driveways

in the basin combined. Logically then, at least as much

attention needs to be paid to what is happening on these

roads, as is now being paid to what is happening on

private property.

This Court has determined_that the IPES system,

which slows residential growth and which requires best

Management practices, is a legal system because it

makes plain sense and because it is evenly applied and

not discriminatory. This finding is not an absolute one

for all time, however. It is not very likely that the IPES

line will move too much in a direction permitting much

further residential construction until the contamination

of the Lake has abated. Without a coordinated effort

addressing far more than just residential development,

there seems to be little hope that major improvements in

water quality are going to come from regulating residen-

tial and commercial construction, when other nutrient

sources are not being addressed and regulated with equal

persistence.

It makes further sense, then, that if landowners are

eventually found to be bearing a disproportionate part of

the burden of regulation and if it turns out that lake algae

continues to flourish and multiply, there may yet be a

-B 71-

point when IPES becomes legally unfair to the land-

owner and legally vulnerable to new challenges from

people like William Cody Kelly.

x*x* ke Kk *

It will be obvious to the attorneys that for several

pages now the Court has been making observations that

are mostly dicta; they play no role in the issues before

the Court for present adjudication.

There is a final problem with IPES that falls into the

very same category, that is, a gratuitous comment that

plays no role in the decision. The comment is that IPES

is unnecessarily confusing to an average person.

That a system may be rational does not necessarily

mean that it is clear and easily understood by the Tahoe

landowner.

For example, part of the IPES scoring process meas-

ures Slope length and grade using the following formula:

1.5 ye

j=1 (Sj) ( j) (Sj) ( j-l)

1,022.47

And the formula for measuring erosion hazard reads: _

899.72 -\V 809,496.1-4(x*-1065.45x +202.612*

REH = 2

“(Formulas taken from Exhibit i-3, pp. 2 and 3 of the

Technical Appendices to the Plan.)

8 72-

Perhaps it is unfair to pick out and highlight these

highly technical details. Perhaps also there is no more

sensible way to approach the explanation than the

approach the TRPA employs. Nevertheless, even ex-

perts who read IPES in its entirety have trouble inter-

preting it.

There may be something of a moral obligation for

public servants to use their best efforts to demythologize

their jargon, to publish simple statements like the fol-

lowing testimony from Mr. Ziegler (paraphrased):

“There are 478 viable building parcels in

Douglas County. Under current trends, it will

be several years before lots with fairly low

scores will be considered’ for _ permit

approvals.”

Perhaps as this litigation finally winds up, TRPA

representatives will find a better atmosphere in which to

utter plain statements like Mr. Ziegler’s, statements

about the use of private property which owners can rely

on and plan for the future.

To conclude this Section, the Court finds:

1. That phosphorous and nitrogen and some impor-

tant trace elements in Lake Tahoe are in fact increasing

beyond their historical levels;

2. That increased levels of nutrients are in fact

CauSing increased algal growth;

3. That increased algal growth and sedimentation do

in fact cause loss of water clarity;

4. That sediment and nutrient transport from so-

called “hazardous” residential areas are in fact having a

meaningful and pronounced effect on the contribution of

phosphorous and nitrogen and trace elements to the

Lake.

On these grounds, the Court concludes:

-B 73-

1. That the IPES system examines runoff and erosion

hazard characteristics of individual lots and anticipates

the effect which development may have on sediment and

nutrient transport; and

2. Even though the IPES point system, for the most

part, discounts the mitigating effect which best manage-

ment practices may have upon nutrient and sediment

transport, it is, nonetheless, rationally based because it

evenly and scientifically rates runoff potential and

erosion hazard which might ultimately flow from the

parcels it measures.

x * * kK

VI. SECOND DISCUSSION;

THE TAKINGS’ ISSUES:

The second major task facing the Court is to decide

whether the TRPA has temporarily or permanently

deprived Mr. Kelly of the beneficial interest of his

property in such a way that it must compensate him for

the taking under the Fifth and Fourteenth Amendments

to the U.S. Constitution.

Before proceeding further into this discussion, the

Court wishes to make a threshold observation to prevent

confusion over semantics. In the previous Section, the

IPES ordinances were determined to be “valid” because

they rest on a rational premise and are reasonably de-

Signed to achieve the goals of the Compact. In other

words, the Court has already decided that an unconstitu-

tional taking has not occurred because the ordinances are

not Constitutionally suspect in a substantive due process

sense. The decision in First English Lutheran Church v.

Los Angeles County, supra, raises the specter of a

different “takings” issue altogether. An ordinance may

be “valid” and still confiscatory. (In fact, it is hard to

imagine a public purpose more “valid” or salutary than

the effort by Los Angeles in the First English case to

-B 74-

mitigate the chance of handicapped children drowning in

a flood, but the Court will defer for a few moments any

further discussion of the special facts of First English).

The issue now under scrutiny in our case is not

whether the TRPA’s ordinances are a valid exercise of

the police power belonging to the State Defendants, but

whether the implementation of a valid ordinance works a

condemnation of private property, and in this sense gives

the Plaintiff a remedy recognized by the U.S. Consti-

tution.

It might be best to begin the “takings” discussion with

three issues which the Court has considered but has

promptly rejected as having little application in this

case. They are a so-called “facial” challenge, the claim

that a permanent taking has occurred, and Mr. Kelly’s

claim of a temporary taking from 1982 until the new

ordinances went into effect.

Agins, supra, is a pretty good example of a what a

“facial” challenge is all about. In Agins, the appellants

purchased five acres on a hill in Tiburon, CA. Because

of the fabulous views from the property, they considered

their acquisition to be a wise investment, at least until

the city adopted two ordinances that zoned the property

for use for single family dwellings only. They never

sought approval for development of their land; they

simply brought suit claiming that the ordinances were on

their face unconstitutional. Ruling that the ordinances

did not forcibly deprive the Agins of the best use to

which their land could be put, the Supreme Court af-

firmed the California Supreme Court ruling upholding

the ordinances.

Mr. Kelly has also mounted a half-hearted facial

challenge. Like the Agins, however, Mr. Kelly must go

behind the TRPA ordinances because they do not on

their face deprive him of all use of his property; in fact,

he has already placed part of his property to extensive

use. (Note: deferred for later discussion is the

-B 75-

investment-backed expectation aspect of Agins and other

cases).

The second relatively minor issue, at least from the

Court’s standpoint, is the claim that the Uppaway hilltop

has been permane.ily taken. The argument is based on

the fact that neither Mr. Ziegler nor anyone else can tell

Mr. Kelly when he will be able to apply for building

permits for the lots numbered 37, 34 (formerly #47), 33

(formerly #50); or 38 (formerly #51) which have all,

despite an administrative appeal, failed to reach the 725

point “cut off” threshold value for building permit

applications (see Exhibit 7-23c and YYY).

The burden is on Mr. Kelly to prove by a

preponderance of the evidence that both a taking has

occurred and that it is permanent. Without yet deciding

the former issue, the Court finds that Mr. Kelly has

failed to prove permanence. Mr. Ziegler and others

testified that in the next several years the 725-point

cut-off line is likely to move downward. The line needs

to be lowered by only 33 or less points to make all four

remaining lots eligible.

The third issue which the Court deflects away from

primary consideration is the claim of a “taking” starting

in 1982. Part of this claim has already been disposed of

in the Order Partially Granting Summary Judgment.

Between 1984 and 1987, the TRPA was under a federal

court order to stop processing applications, and the

Court has ruled this period to be non-actionable. In

1982 “case-by-case” reviews were the governing proce-

dures, and in 1983, the TRPA placed itself under a

moratorium.

Had the Plaintiff’s subdivision been singled out for

regulation, then his pre-1987 “takings” argument would

carry a lot greater force. During this early period,

however, the TRPA was trying to cope not with six lots,

but with something on the order of 14,000 lots according

to Dr. Twiss and Mr. Morgan. The TRPA’s conduct

-B 76-

during this period might be described as more “delibera-

tive” than “appropriative”. Mr. Kelly’s frustrations,

particularly in the summer of 1983, are both reasonable

and understandable (and will be further addressed in the

Third Section), but they are ruled, once again, to be

non-actionable, at least in a “takings” context.

Moratoria are exempt from claims of deprivation of

property under the Fifth and Fourteenth Amendments as

long as three ingredients are present. First, there must

be some evidence of proper planning and good faith on

the part of the government, see, e.g., O.C. Const. Co.,

Inc. v. Gallo, 649 F.Supp. 1331 (D.R.I. 1986); affirmed

by O.C. Construction Co., Inc. v. Gallo, 836 F.2d 1340

(1st Cir., 1987) (where the court found a town council’s

efforts wanting in this respect). Second, there has to be

a Significant public purpose served by the moratorium,

see e.g., Schafer v. City of New Orleans, 743 F.2d 1086

(1984) (where an ordinance prohibiting permits for

neighborhood fast food restaurants during the pendency

of a 10 1/2 month study was upheld). Finally, the

moratorium must be reasonable in its duration, consider-

ing the complexity of the problem, see e.g., Smoke Rise

Inc. v. Washington Suburban Sanitory Commission, 400

F.Supp. 1369 (1975) (where a five year ban in sewer

hookups ina complex multi-jurisdictional drainage basin

was deemed reasonable).

The self-imposed moratorium of the TRPA in 1983

meets all three of these criteria. The TRPA was acting

in good faith, particularly when it is considered that they

were under the threat of litigation by the State of

California. The public purpose was, as earlier dis-

covered, significant. The duration of the moratorium

was reasonable in light of the complexity of the prob-

lems facing the TRPA.

x~*x *&* *&

With all preliminary matters out of the way, the Court

can now focus on what it feels to be some truly intricate

-B 77-

and difficult Constitutional claims. In so many words,

the U.S. Supreme Court has admitted to being unable to

formulate set guidelines of general application which

lower courts can use in a more or less mechanical fash-

ion to determine when a regulatory “taking” of private

property has occurred, because there are so many “ad

hoc” factual inquiries unique to each case that need to be

addressed, see e.g. Keystone Bituminous Coal Ass’n. y.

De Benedictus, 480 U.S. 470, at 495, 107 S.Ct. 1232

(1986).

The Supreme Court’s perplexion may be understand-

able. Although relatively few cases have come down

since Agins, supra, the complexion of cases which have

been reviewed by the Supreme Court differ dramatically

from one another. Further, the pre-Agins line of “tak-

ings” cases is equally disharmonious, again because of

factual dissimilarities.

One author has gone so far as to liken the elusive

inquiry to a “hunt for the quark”, C. Haas, Land-Use

Planning 766 (3d ed. 1976), quoted in S. Loger-

Friedman, “Constitutiona! Rights as Property?: The

Supreme Court’s Solution to the ‘Takings Issue’ ”, 15

Columbia Journal of Environmental Law 31.

Despite the absence of a coherent pattern in the

tapestry of “takings” cases, upon closer analysis some

coherent, if subtle, principles do begin to emerge. For

example, there is a group of cases which might be

referred to as “per se” compensability cases, to borrow a

term from a New York case briefed by both sides,

Seawall Associates v. City of New York, 542 N.E.2d

1059 (1989). The common thread woven into the fabric

of these cases is that some kind of physical occupation

or trespass has occurred.

Nollan, supra, and the case quoted many times by the

Plaintiff, Kaiser Aetna v. United States, 444 U.S. 164,

100 S.Ct. 383 (1979) contain examples of this thread. In

Nollan, (as noted in the last section), the public was

-B 78-

given a permanent right to travel, without cost, back and

forth across the plaintiff’s beachfront property. In

Kaiser Aetna, the public was granted the right to enjoy a

private Hawaiian lagoon in exchange for a ruling which

allowed the developer to dredge the lagoon and improve

the navigability of its shallow waters. In both cases, the

duty to the public imposed on the landowner as a condi-

tion to the issuance of permits had little if anything to do

with the benefits awarded to the public by the rulings.

Building codes and navigation rules are designed to

promote the safe use of property; they don’t say any-

thing about who (outside the landowners and his guests)

should benefit from the safety achieved by implementing

the regulations. Put another way, if the public is invited

to use private property, its government must pay for the

use.

Naturally, the TRPA seizes on this point and ifivites

the Court to decide from the evidence that there is

nothing at all about IPES which is physically invasive.

Mr. Kelly can keep his front gate locked, as far as the

TRPA is concerned, and keep the public away from his

property at his fancy. Unfortunately, the issue may not

be as simple as determining whether or not IPES invites

members of the public to come on or over private prop-

erty for their own purposes.

Nollan, Kaiser Aetna and Seawall are all cases where

the regulation is inherently invasive. The public’s flag,

sO to speak, has been planted squarely on the property

itself. However, there may be other forms of com-

pensable regulatory “takings” which are not so obvious

and not so physically invasive. The issue may involve

more than dominion over lands; it reaches more subtle

form of public appropriation.

The Plaintiff is asking the Court to examine these

subtleties, to take a careful look at the genuiness of the

TRPA’s announced motives. If the TRPA is trying to

disguise a hidden purpose — for example, to offer the

-B 79-

public unimpeded views of the Lake from the eastern

Shore (or for that matter views of the ridge from the

Lake which are not interrupted by houses jutting out

from the landscape) — then the TRPA is appropriating

the Plaintiff’s land in ways which Nollan and Kaiser-

Aetna prohibit, even though members of the public may

never set foot in Uppaway.

The TRPA has admitted in so many words to having a

couple of agendas that can’t be found in any official!

TRPA publications. When Dr. Robert Twiss reviewed

the history of the development of IPES, he pointed

proudly to the fact that no new subdivision lots have

been approved in the basin since 1982 (see Exhibit

Z-58), though he later offered the opinion that IPES is

not a growth control measure.

Former TRPA director William Morgan is perhaps

more forthright or insightful when he admits that IPES

not only affects residential growth and land capabilities,

but it also indirectly controls other facets of travel and

development in the basin. Current Agency director

David Ziegler states that IPES gives planners and the

Forest Service the time to attempt to “retire” by orderly

purchase a number of very high hazard lands before

further building is allowed on moderately erosive

parcels.

Obviously, the issues of carrying capacities have been

very much on the minds of the staff and management of

the TRPA since the outset. It is equally obvious that

carrying Capacities and staged growth were on the minds

of the participants in the Consensus Building

Workshops.

Perhaps no clearer example of this proposition exists

than in the transmutation and incorporation of the Bailey

Land use coverage formulas into the IPES measure-

ments. When Mr. Foster looked to the technical details

of changing the Bailey system, he admits that the first

“curve” for allowable land coverage under the tentative

-B 80-

new Relative Erosion Hazard formulas embraced too

many parcels, that too much building might commence

too quickly unless greater differentiation were achieved.

That’s what gave rise to the complicated mathematical

formula quoted earlier on page 88. For his part,

Mr. Ziegler admits that the allowable land coverage

formulas were mathematically “tweaked” (not his word)

to give the percentage land use coverage a more even

curve between the five and twenty five percent cate-

gories. Clearly, these were growth contro! policies

being infused into IPES by administrative, not scientific

decisions, just as growth control policies were infused

into ordinances 81-1 and 81-5. Just as clearly, the

TRPA does not want to see the Tahoe Basin subject to a

rapid build-out and the Agency is intentionally control-

ling absorption rates with its IPES cut-off line.

Nonetheless, whatever the personal views of its

authors and architects, whatever policies have helped

guide its creation, IPES is there to be examined by

objective standards.

IPES’ official purpose is not to preserve a Tahoe

wilderness (which has probably been already lost for

over a century) or even a diluted form which author

Gretel Ehrlich calls a “wildness” in her book, The Solace

of Open Spaces* Ostensibly, IPES has nothing to do

with open spaces or greenbelting. IPES stated purpose

is to foster the continuing clarity of Tahoe’s water. It

either helps to accomplish that goal or it doesn’t, and

this Court has ruled in the First Section of this decision

that IPES is rationally designed to help achieve that

particular goal, which is one goal among many ex-

pressed in the Compact. Whatever confiscatory impact

IPES may have, it does not come from a covert ap-

propriation of land for public benefit; the appropriation

is either overt or it is nothing at all.

‘ published by Viking Penguin, Inc., New York, New York, 1985.

-B 81-

This, after all these many pages of discussion, leads

finally to what the Court feels to be the Single most

powerful Constitutional challenge which Mr. Kelly’s

lawyers have effectively mounted. The Stage is finally

set to place First English Lutheran Chuch in the Spot-

light. The issue may be stated this way: Have four or

more of the lots on the Uppaway hilltop been tem porar-

ily “taken” since 1987 so as to give Mr. Kelly a right to

money damages, the remedy now available to an inverse

condemnee?

First English is both peculiar to its own facts and

wide-reaching in its effect. In 1957, an evangelical

church in Glendale, California purchased a 21 acre

parcel in the bottom of a canyon in a National Forest

which is part of a major watershed.

Twenty years later, 4000 forested acres in the

watershed were destroyed by fire, and seven months

after that, a major storm event sent a wall of water and

mud down the canyon which caused extensive damage

and cost ten people their lives. Fortunately, no lives

were lost on the Church’s parcel known popularly as

“Lutherglen”, but all of the buildings and curtilage were

destroyed.

A county ordinance adopted after the flood prohibited

the Church from reconstructing or improving their

retreat, and the Church brought suit. At the close of its

case, the trial court non-suited the plaintiff respecting its

inverse condemnation claim and this ruling was upheld

by the Court of Appeals.

The U.S. Supreme Court, however, reversed the Court

of Appeals in an opinion authored by Chief Justice

Rehnquist. Assuming without finding that the County

ordinance had denied the Church all use of its property

for several years, the High Court announced Clearly for

-B 82-

the first time that the remedy for temporary regulatory

takings is monetary compensation under the Constitu-

tion. The case was remanded back to California for

further findings on issues of liability and, if liability

were proven, for a calculation of damages.

In an effort to limit its applicability to the case at

hand, the TRPA rightly emphasizes that the U.S.

Supreme Court’s decision in First English created only a

remedy and went no further. This point was also

Stressed when the case went back to the California

Appeals Court, 258 Cal.Rptr. 893, (Cal.App.2 Dist.

1989) where Justice Johnson stated at p. 897:

“The United States Supreme Court in First

English made it abundantly clear the Court was

deciding the remedies issue — and only that

issue.”

He later quoted the following language from the

Supreme Court opinion of Chief Justice, Rehnquist:

“We accordingly have no occasion to decide

whether the ordinance at issue actually denied

appellant all use of its property or whether the

county might avoid the conclusion that a

compensable taking had occurred by estab-

lishing that the denial of all use was insulated

as a part of the State’s authority to enact safety

regulations. (Citations omitted.) These ques-

tions, of course, remain open for decision on

the remand we direct today...”

The California Court then went on to decide that the

Church was not denied all use of the property (which

had been used previously as a campground) and that the

public interest in preventing death and injury from

floodwaters overwhelms the private right to construct

dwellings. The California Court also noted that the

ordinance is an interim measure pending the completion

of a comprehensive flood management plan. As it had

done on the first appeal, the California Appeals Court

-B 83-

Sustained the trial court’s dismissal of the plaintiff’s

inverse condemnation claims. As distinguishable as

First English might be from Kelly v. TRPA, the case is

not entirely without application. And while the U.S.

Supreme Court did not reach liability issues, the Subject

is discussed at length by the California court on remand.

Concededly, a state appellate court’s comments obvi-

ously don’t have the same force and effect as an opinion

of the U.S. Supreme Court, but Justice Johnson offers

some telling observations:

“If there is a hierarchy of interests the police

power serves — and both logic and prior cases

Suggest there is — then the preservation of life

must rank at the top. Zoning restrictions

seldom serve public interests so far up on the

Scale. More often these laws guard against

things like “premature urbanization”, or

“preserve open spaces”, or contribute to orderly

development and the mitigation of environmen-

tal impacts. When land use regulations seek to

advance what are deemed lesser interests such

as aesthetic values of the community they

frequently are outweighed by constitutional

property rights. Nonetheless, it should be

noted even these lesser public interests have

been deemed sufficient to justify zoning which

diminishes — without compensation — the

value of individual properties. /d. at 904.

If, as Justice Johnson states, there is a “hierarchy” of

police power interests, IPES’ objective to preserve water

quality would probably have to fall into the “lesser”

category of aesthetic interests, which, under Justice

Johnson’s theory, makes the land use regulation more

Suspect when weighed against a property right. What is

more, Mr. Kelly has had no prior use of the property (at

least there is no evidence of camping or other beneficial

use of the hilltop during his ownership). The TRPA is

-B 84-

telling Mr. Kelly, temporarily at least, that he simply

cannot further build on at least four of his lots.

It is difficult, then, if not absurd, to avoid calling the

effect of the TRPA’s code of ordinances on the Uppaway

hilltop anything other than a temporary appropriation or

taking for a public purpose.

There is, however, one fundamental, perhaps pivotal,

difference between Mr. Kelly’s case and the plight of the

First English Lutheran Church. Except for the argument

that it is avoiding substantial risks of liability to its

guests and invitees, the Church is deriving absolutely no

benefit from the Los Angeles ordinance which temporar-

ily precludes construction of new improvements. In

contrast, every single one of Mr. Kelly’s lots will even-

tually diminish in value if Lake Tahoe is despoiled.

IPES is a burden, surely, but it also conveys significant

personal benefits to each landowner it serves. The

Tahoe ordinances do not just benefit the public, they

specially benefit private property.

This single feature makes the Kelly case vastly

different from First English because when an observer

places the two competing interests on a mental set of

scales, ana wher the package of public benefits is

weighed against the burdens imposed on an owner of

property, af ai‘owance has to be made for the fact that

the benefit package includes benefits to the property

owner himself. Not only are the burdens partially offset

in this scenario, but the scales begin to tip in favor of

holding the regulation’s effects on land use to be non

compensable to the property owner because he (or she)

too is deriving a partial reward from the regulation. Put

another way, the only sensible and defensible way this

Court can find to reconcile the competing interests and

the conflicting legal precedents is to conduct a weighing

of interests approach.

Mr. Kelly would be as unsuccessful as the appellants

were in Penn Central, supra, if he were to argue that he

-B 8S-

is “solely burdened and unbenefitied” 48 U.S. at p. 134.

Just as the judgment of the New York Council bene-

fitted all New York citizens and structures, /d.. the

Compact benefits all Tahoe residents and lots, “both

economically and by improving the quality of life”, Jd.

After examining the restrictions on private building

and weighing them against the benefits received. the

Court reaches the following conclusion:

AS LONG AS THE BENEFIT RECEIVED BY

THE PROPERTY FROM THE ORDINANCE

IS DIRECT AND SUBSTANTIAL AND THE

BURDEN IMPOSED IS PROPORTIONAL.

THE TRPA CAN FORCE LANDOWNERS

LIKE MR. KELLY TO POSTPONE THEIR

BUILDING PLANS FOR A REASONABLE

PERIOD OF TIME.

The terms “direct”, “substantial”, “proportional” and

reasonable period” are underscored because they have

Special implications. “Direct” and “substantial” simply

mean that, taken together, the Regional Plan, the Code of

Ordinances, and the Rules of Procedure of the Tahoe

Regional Planning Agency are rationally designed, and

they are working to achieve the goals of the Compact.

The Court has already ruled on the issue of rational

design and the early evidence is that the ordinances are

heiping to achieve their stated purpose of maintaining

the unique beauty which is Tahoe’s special lure to lot

owners and tourists alike.

“Proportional” simply means that the burdens are

equably distributed. In the context of IPES, for ex-

ample, the high hazard lots bear a greater burden than

the low hazard lots from a number of standpoints,

including land coverage and management practices such

as slope stabilization, and so they should. IPES as it

now stands is proportional. The term “reasonable period

of time” requires a bit more of a context.

-B 86-

Mr. Durbin’s analysis of existing data is cogent

enough to give the Court grave misgivings over whether

the 1987 plan will succeed unless the TRPA links IPES

to a chain of other stringent management practices which

will further reduce the amount of nitrogen and oxygen

entering the Lake. The Court obviously can’t say what

those measures are or how stringent they need to be-

come, but Dr. Goldman and Dr. Byron have some ideas:

“A better understanding is needed of _ the

various ways that nutrient pollutants reach the

lake. Further information is required to assess

how quickly and to what extent fertilizers

applied to the basin’s lawns and golf courses

travel to the lake...

Applied research can provide a more sound

basis for urgently needed regulation of fer-

tilizer use...

A small-scale, but essential, research project

could identify the actual magnitude of the

sewer line leakage problem. The extent and

Significance of shoreline erosion § requires

further investigation...

There is a need to characterize the relative

amount of nutrient inputs from direct atmos-

pheric loading .... (from page 12 of Exhibit

SSSS-8).

Every year, Dr. Goldman drops his secchi disc off the

back of Mr. Le Conte’s boat. Every year, he concludes

from his visual observation that the Lake has lost further

ground, so to speak. Every year that goes by will record

a self-proving or self-disproving chronicle of the ef-

ficacy of the Regional Plan for the Lake Tahoe Basin.

The burden/benefit approach the Court has selected

may be nothing more than a euphemism for the recogni-

tion of a legally permissible building moratorium on

certain high hazard lots. Because the Court has given

-B 87-

Mr. Kelly some relief in the Third Conclusion, the Court

doesn’t really have to reach or decide anything more in

this Section than that Mr. Kelly has failed to prove his

inverse condemnation claim. Whether and when IPES

may become confiscatory (unreasonable) will be a moot

issue for Mr. Kelly if the Third Conclusion stands up on

appeal.

Indulging in a moment of speculation, however. how

much time needs to elapse before IPES becomes Con-

Stitutionally suspect? Of course, a problem will never

arise if water clarity starts to improve, and as a conse-

quence, the IPES line is moved down. However. that is

unlikely. It is more likely, from the evidence. that the

TRPA is going to have to get its “hands around” other

contamination problems, so to speak, and start regulating

them before the water quality will improve and owners

of high hazard lands will have the chance to apply for

building permits.

Five years was considered a reasonable period of time

in Smoke Rise, supra. Fourteen years was considered to

be clearly excessive in Urbanization Versailles. Inc. v.

Rivera Rios, 701 F.2d 993 (1983). Of course, those

cases stand on their own factual situations. which vary

considerably from the case at hand. Nonetheless. is it

reasonable to ask a person to wait more than ten years to

put his or her lands to a proper use?

x~_ xx * &

The Court’s rejection of the First English claim also

moots a final “takings” issue which received extensive

attention at trial and again in the briefs.

Two cases whose captions start with “Penn” are the

Standout U.S. Supreme Court cases articulating the

concept of so-called “investment backed” decisions to

acquire real property, and they guide the legal analysis

measuring when a diminution in property value is

justifiable because of an exercise of police power.

-B 88-

Penn Central Transportation Company v. City of New

York, supra, it will be recalled, concerned the decision

of a corporation to “swallow” the historic Grand Central

Terminal with an overlapping office building rising high

above a cantilevered platform over the terminal’s roof.

Writing for the majority, Justice Brennan concluded that

the historic designation did not prohibit the Plaintiff

from profitably using the building as it had been used for

sixty-five years, which “... must be regarded as Penn

Central’s primary expectation concerning the use of the

parcel”, 438 U.S. at page 136.

Penn Central borrows heavily from the other “Penn”

case, Pennsylvania Coal Co. v. Mahan, 260 U.S. 393, 43

S.Ct. 158 (1922) where it became commercially imprac-

ticable to exploit some subsurface coal mining oppor-

tunities when a Pennsylvania statute prohibited mining

activities which might cause houses to subside. Since

the coal company had deeded away the surface rights

that supported the houses, it could have “expected” the

regulation result as part of the downside risk of its

contracted bargain; see also, another more recent coal

mining case, Keystone Bituminous Coal Ass’n., v. De

Benedictus, 480 U.S. 470, 107 S.Ct. 1232 (1987).

At trial in this case, witnesses disagreed vehemently

over what Mr. Kelly’s investment expectations were:

whether he sought only to recapture his investment and

provide himself and his family with a home; whether he

in fact has do

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