# Appendix B — Kelly v. Tahoe Regional Planning Agency

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0524%3A04

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix B
- **Published:** January 1, 1994
- **Citation:** 510 U.S. 1041

## Text

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

-B 2-

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

-B S-

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

-B 11-

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,

-B 13-

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0524%3A04. Public record. Not legal advice.