Opinion
Chancery No. 18746
06-22-1999
Re: The Fairchild Corporation, et al. v. Metropolitan Washington Airports Authority
A. Hugo Blankenship, Jr., Esquire
Paul B. Terpak, Esquire
Benjamin D. Leigh, Esquire
4020 University Drive, Suite 312
Fairfax, Virginia 22030 William C. Mims, Esquire
101 N. King Street
Leesburg, Virginia 20178 E. William Chapman, Esquire
Grayson P. Hanes, Esquire
3110 Fairview Park Drive
Suite 1400
Falls Church, Virginia 22042 Edward S. Faggen, Esquire
44 Canal Center Plaza
Alexandria, Virginia 22314 Gentlemen:
This is an action for declaratory relief brought by the Fairchild Corporation and its wholly owned subsidiary, RHI Holdings, Inc. Fairchild and RHI Holdings seek a declaration of rights and injunctive relief. They suggest that the defendant, Metropolitan Washington Airports Authority ("MWAA" or the "Authority"), is without authority to acquire by eminent domain all or part of complainants' leasehold interest in certain property located at Washington Dulles International Airport.
In June of 1983, Fairchild entered into a contract with the United States to lease 223,489 square feet of land at Dulles Airport. Pursuant to its agreement with the United States, Fairchild began construction of an office building on the site. The forty-year term provided for in the lease commenced upon a determination by the United States that the building was ready for occupancy. The initial term of the lease is to expire on November 30, 2024. There is a dispute between the parties as to extensions of the lease.
In 1985, the Commonwealth and the District of Columbia enacted enabling legislation authorizing the creation of a regional airport authority for the metropolitan Washington area, the MWAA, which would lease Dulles and National (now Reagan National) Airports from the United States. 1985 Va. Acts, Ch. 598; 1985 D.C. Law 6-67. The Metropolitan Washington Airports Authority was created as
"a public body corporate and politic and independent of all other bodies, having the powers and jurisdiction hereinafter enumerated, and such other and additional powers as shall be conferred upon it by the legislative authorities of both the Commonwealth of Virginia and the District of Columbia." 1985 Va. Acts, Ch. 598, § 2.
The Virginia Act creating the authority provided that it would consist of eleven members to be appointed by the Governor of Virginia, the Governor of Maryland, the Mayor of the District of Columbia, and the President of the United States. It was expressly provided that
"the Authority…is hereby granted full power to exercise the right of eminent domain in the acquisition of any lands, easements, privileges or other property interests which are necessary for airport and landing field purposes, including the right to acquire by eminent domain aviation easements over lands or water outside the boundaries of its airports or landing fields where necessary in the interests of safety for aircraft to provide unobstructed air space for the landing and taking off of aircraft utilizing its airports and landing fields even though such aviation easement be inconsistent with the continued use of such land, or inconsistent with the maintenance, preservation and renewal of any structure or any tree or other vegetation standing or growing on the land at the time of such acquisition. Proceedings for the acquisition of such lands, easements and privileges by condemnation may be instituted and conducted in the name of the Authority in accordance with Title 25 of the Code of Virginia." 1985 Va. Acts, Ch. 598, § 9(C).
Subsequent to such action by the Virginia General Assembly, Congress passed the Metropolitan Washington Airports Act (Transfer Act). 49 U.S.C. §§ 49101, et seq. On two occasions the federal act permitting the lease of Dulles and National Airports has undergone judicial scrutiny resulting in various provisions of the Act being declared unconstitutional. Metropolitan Washington Airports Authority v. CAAN, 501 U.S. 252 (1991) (conditioning transfer to MWAA on creation of Congressional Review Board with veto power over decisions of Board of Directors declared unconstitutional); Hechinger v. Metropolitan Washington Airports Authority, 36 F.3d 97 (D.C. Cir. 1994) (Board of Review under amended Transfer Act again found unconstitutional as violative of separation of powers). Complainants argue that the instant case presents yet another opportunity for judicial nullification.
This is a case of first impression. Counsel have furnished no authority where the right of the Authority to exercise the power of eminent domain has been challenged. Condemnation proceedings have been conducted in the past without question as to defendant's authority to exercise the power of eminent domain.
Complainants' arguments raise significant questions as to the Authority's ability to proceed with condemnation of the leasehold interest. First, complainants note that the Authority seeks to condemn an interest that arises out of a contract with the United States which was executed prior to the Authority's acquisition of its interest in the airport property. Although granted the power of eminent domain, the Authority is required, according to complainants, to honor leases that were extant at the time it acquired its interest in the airport property. Complainants suggest in their papers that the term of their lease may be extended beyond the term of the lease between the Authority and the United States. It is asserted that to permit the Authority to proceed would thus run afoul of the terms of the Transfer Act, the constitutional prohibition against impairment of contracts, and the Supremacy Clause of the United States Constitution. U.S. Const. art. VI.
Second, the Complainants draw the Court's attention to the limiting terms of the Transfer Act by highlighting the distinction between the provisions of the Transfer Act relating to the exercise of the power of eminent domain and the related provisions of the Washington Metropolitan Area Transit Authority Compact. Like those of the Airports Authority, the actions of the Transit Authority have a profound impact on interstate commerce. The Transit Authority is involved in the planning and regulation of mass transit for the metropolitan Washington area. In the case of the Transfer Act, the compact gives to the MWAA the power of eminent domain "conferred on it by Virginia." In the case of the WMATA, the compact grants the power of eminent domain to the Authority without qualification. This unfettered grant to the Transit Authority has been interpreted as a grant of the federal power of eminent domain. Thus, the Transit Authority may exercise a "quick take" power of eminent domain even when such power violates the constitutional provisions of one of the signatory states. Conversely, the Airports Authority may not.
This limiting language in the Transfer Act forms the centerpiece of complainants' challenge to the Authority's power to condemn their leasehold interest. They note that the compact should be reviewed using familiar contract principles. As the Court noted in Cuyler, supra,
"The requirement of congressional consent is at the heart of the Compact Clause. By vesting in Congress the power to grant or withhold consent, or to condition consent on the States' compliance with specified conditions, the Framers sought to ensure that Congress would maintain ultimate supervision power over cooperative state action that might otherwise interfere with the full and free exercise of federal authority." Id. at 439, 440 (authority omitted).
Complainants suggest that, in authorizing the Commonwealth to grant the power of eminent domain, Congress did not condition its consent upon the Commonwealth granting to the Authority the power of eminent domain. Nor did Congress mandate that the Commonwealth grant such power to the Authority. Thus, the grant of the power by the Commonwealth was a unilateral act subject to Virginia and not federal law. Under familiar contract principles, the delegation by the Commonwealth lacks mutuality. Accordingly, the grant of the power of eminent domain cannot be viewed as a provision of the compact. Instead, the delegation by the Commonwealth to the Authority must, according to complainants, be judged not by federal law but by the laws of the Commonwealth.
Complainants further assert that such delegation of the power of eminent domain by the General Assembly to the Authority violates the Constitution of Virginia in that it constitutes an impermissible delegation of a sovereign power. Complainants note that a Board of Directors, the majority of which may vote to exercise the power of eminent domain, controls the Authority. Given the Board's make up, such a majority could consist entirely of non-Virginian members. That is to say, condemnation of property in Virginia could take place without the inclusion and assent of representatives from the Commonwealth. Various scenarios were suggested by the complainants in which Virginia land use policies could be controlled by regional forces contrary to the will and without regulation by Virginia's duly elected representatives.
Congress has sanctioned the lease of the federally owned Dulles Airport and associated property for a period of 50 years to the MWAA provided the MWAA is authorized by joint action of the legislatures of Virginia and the District of Columbia to, inter alia, "exercise the powers of eminent domain in Virginia that are conferred on it by Virginia." 49 U.S.C. § 49106(b)(1)(D). The Secretary of Transportation and the Airports Authority are authorized to negotiate at any time an extension of the lease. 49 U.S.C. § 49104(d).
Subsequent amendments to the Virginia statute have brought the enabling legislation into conformity with the requirements of the Transfer Act.
Fairchild and RHI Holdings seek in these proceedings a judicial determination that the Airports Authority lacks authority to acquire all or part of Fairchild's leasehold interest by eminent domain and disturb its quiet enjoyment of the leasehold. In addition, they seek injunctive relief to prohibit the Authority from proceeding to acquire any of the leasehold property by eminent domain. Complainants suggest that agents of the defendant have committed repeated trespasses to their property in preparation for the construction of a parking garage. They request that the Court enjoin such trespasses.
The basis for the relief Fairchild seeks is articulated in six numbered counts. In response, the Metropolitan Washington Airports Authority has demurred to each of the counts. Under familiar principles applicable to the consideration of a demurrer, this Court must consider Defendant's challenge only upon the facts as pled and the necessary inferences to be drawn from such facts.
Fairchild suggests in Count I that the delegation of the power of eminent domain to the Authority is violative of the Constitution of Virginia. Such complaint is susceptible to a determination as a matter of law on the extant record. It is ripe for adjudication on demurrer.
Complainants contend there are but four categories of entities to which the power of eminent domain may be delegated in the Commonwealth. These are localities, political subdivisions, Virginia public service companies and transportation district commissions, all of which are subject to the exclusive sovereignty of the Commonwealth of Virginia. The MWAA, however, because of the composition of its Board of Directors, is not, according to complainants, subject to the Commonwealth's exclusive sovereignty. As previously noted, it is possible that a majority of the MWAA's Board, consisting of no members appointed by the Governor of Virginia and confirmed by the General Assembly, could determine whether the power of eminent domain should be exercised within the Commonwealth. Such a delegation of the power of eminent domain would, in complainants' estimation, constitute an "improper surrender, alienation, abridgement or destruction of the sovereign power of the Commonwealth."
The MWAA has its origins in the actions of the Commonwealth and District of Columbia. However,
"[b]ecause the Compact creating the MWAA was congressionally sanctioned in accordance with the Compact Clause ('No state shall, without the consent of Congress,…enter into any agreement or compact with another state.' Art. I, § 10, cl. 3.), it is a federal law subject to federal construction, notwithstanding its genesis in the enabling acts of Virginia and the District of Columbia." Alcorn v. Wolfe, 827 F. Supp. 47, 51 (1993).The legislation of Congress, the District of Columbia and the Commonwealth of Virginia providing for the creation of the MWAA meets the two-pronged test used in determining the existence of a compact within the contemplation of Article 1, § 10, cl. 3 of the United States Constitution. ("No state shall, without the consent of Congress…enter into any agreement or compact with another state." Cuyler v. Adams, 449 U.S. 433 (1983).) Firstly, the Airports Authority has been specifically authorized by Congress to lease the airport facilities for fifty years, and secondly, the creation of the Authority is an appropriate subject for federal legislation given its significant impact on interstate commerce. Thus, the provisions of the Act enjoy supremacy over inconsistent state statutory and constitutional mandates and must be interpreted in light of federal law. Washington Metro. Area T.A. v. One Parcel of Land, 706 F.2d 1312 (1983).
Furthermore, the Court believes that the provisions of the Transfer Act and of the enabling legislation passed by the District of Columbia and the Commonwealth must be harmonized within the context of the legislative history giving rise to the creation of the Authority. Thus, the grant contained in the Virginia enabling act, which preceded the adoption the Transfer Act, contains the grant of the power to the Authority, which Congress later approved in accordance with its constitutional right of review. Once approved, the delegation became a matter of federal law not subject to state constitutional restrictions.
A compact between the States, sanctioned by Congress, is "a consensual agreement, the meaning of which, because made by different States acting under the Constitution and with congressional approval, is a question of federal law." Petty v. Tennessee-Missouri Bridge Commission, 359 U.S. 275, 279 (1959). The terms of the compact "cannot be modified unilaterally by state legislation and take precedence over conflicting state law." Alcorn, supra, at 51, 52 (authorities omitted). As Justice Frankfurter, in commenting upon the Compact Clause, observed,
"The growing interdependence of regional interest, calling for regional adjustments, has brought extensive use of compacts. A compact is more than a supple device for dealing with interests confined within a region. That it is also a means of safeguarding the national interest is well illustrated in the Compact now under review." State v. Sims, supra, at 27.
Here, the General Assembly elected to delegate the power of eminent domain to an independent corporate body established to acquire, by lease, Dulles and National Airports. Fairchild's view of the limitations of the grant is too restrictive. In determining whether or not the General Assembly has acted contrary to the Constitution, the Court may not limit itself to a consideration of the four categories enumerated by the complainants.
Accordingly, it is the Court's opinion that, in conferring the power of eminent domain upon the Authority, the General Assembly violated no provision of the Constitution of Virginia. Its actions involved a "conventional grant of legislative power." State v. Sims, 341 U.S. 22, 30, 31 (1951). Not only does the grant provide for a delegation of the power, but also for the procedures to be followed should condemnation proceedings be instituted. See Delaware River Joint Toll Bridge Com'n, Etc. v. Colburn, 310 U.S. 419 (1940). There is no limitation such as the one complainants assert on the grant of the power of eminent domain.
The question then arises as to whether such a delegation of the power of eminent domain is proper, that is whether the delegation implicates a public use. As the Court observed in Phillips v. Fuster, 215 Va. 543 (1975),
"It has been universally held that the spirit of the Constitution of Virginia and the Federal Constitution prohibits the taking of private property for private use under any conditions.… The salient consideration is not whether a public benefit results, but whether a public use is predominant…: the public use implies a possession, occupation, and enjoyment of the land by the public at large, or by public agencies." Id. at 546, 547 (authorities omitted).In other words, the result obtained from the exercise of the power of eminent domain delegated by the General Assembly must be one not of incidental benefit, but one for the use of the citizens of the Commonwealth. "The right of the public to receive and enjoy the benefit of the use is the determining factor whether the use is public or private." Iron Company v. Pipeline Company, 206 Va. 711, 715 (1966). Whether or not a public use is served by condemnation of the subject leasehold is an issue subject to judicial review.
Here, the MWAA operates under a mandate from the United States, Commonwealth of Virginia and District of Columbia with specific enumerated powers. 1985 Va. Acts, Ch. 598, § 2. In the exercise of the power of eminent domain, the Authority is authorized to acquire "lands, easements, privileges, or other property interests which are necessary for airport and landing field purposes." Id. at § 9(C).
Dulles and National Airports are transportation centers in the Commonwealth. They serve vast numbers of patrons and play significant roles in the economy of the region. Their close proximity to the nation's capital makes them key players in the economic and political life of the country. Although not subject to regulatory control by the Commonwealth, the use of the property acquired by the Authority through its lease with the federal government is inherently public. See generally, 26 Am. Jur. 2d Eminent Domain § 24.
Clearly, then, this is not a situation where the General Assembly has improperly removed from the representatives the power to exercise legislative authority. Fairfax County v. Fleet Industrial Park, 242 Va. 426 (1991). Accordingly, the Court finds that while the Authority exercises its power of eminent domain pursuant to an Article I compact, even were this not so, the General Assembly's delegation of the exercise of the power of eminent domain to the MWAA is not violative of the Constitution of Virginia. Thus, the demurrer will be sustained as to Count I of the Bill of Complaint.
It should be added, however, that resolution of the specific issue of whether, under the facts of this case, a public use is implicated by the instant taking must await an evidentiary hearing. As the Court noted in Iron Company, supra,
"The critical inquiry is whether the taking…is necessary for its use in serving the public, that is, whether the taking is for a public use.The issue of the necessity of the instant taking is not one that can be determined on demurrer; hence, the Court makes no finding here with respect to the necessity of such taking. Clearly, though, the power of the Authority to condemn a leasehold interest in property for a public use is unassailable.
These constitutional limitations on the delegation of the power of eminent domain have been fixed by our former decisions: (1) the taking must be for a public use; private property cannot be taken for private use; (2) the use must be needful for the public; and (3) the rights of the public to use the facilities must be adequately protected." Id. at 715.
In Count II, complainants contend that Fairchild's contract with the United States is a vested, substantive contract right protected from impairment by subsequent legislation. U.S. Const. art. I, § 10; Va. Const. art. I, § 11. Fairchild and the United States entered into the lease of the subject property prior to the enactment by the General Assembly of the enabling legislation creating the Airports Authority. Thus, complainants assert that the exercise of the power of eminent domain pursuant to the enabling legislation, coming only after the execution of the lease, would constitute an unconstitutional impairment of their rights under the contract.
The Authority here seeks to exercise the power of eminent domain. Complainants rely on Heublein, Inc. v. Alcoholic Beverage Control Dept., 237 Va. 192 (1989), in support of their position. In Heublein the Court concluded that the relevant provisions of the Virginia Wine Franchise Act were violative of the Contract Clause of the Virginia Constitution in that the questioned legislation was "not a proper exercise of the police power but simply an effort to protect a small group of wholesalers from possible economic loss." Id. at 197. Thus, Heublein did not involve the exercise of the power of eminent domain. In contrast, it has long been recognized that the exercise of the power of eminent domain is an incident of state sovereignty which is "essential to advance the public interest." Accordingly, the exercise of the power does not implicate the Contract Clause of the Constitution of Virginia or the United States. West River Bridge Co. v. Dix, et al., 47 U.S. 507, 536 (1848).
Pursuant to its agreement with the United States, the Authority retains the interest of the United States in complainants' lease during the period of its fifty-year lease of the airport facilities from the federal government. The United States has waived any interest it may claim during that period, as has the Authority. Although the Complainants' lease may have been executed prior to the date of the creation of the Authority and the execution of the federal lease, this does not, as matter of federal law, limit the power of eminent domain. The implications of an extension of the complainants' lease beyond the expiration date of the Authority's lease with the United States involve factual matters that cannot be settled on demurrer and are critical to a determination of the contract and supremacy issues raised in Count II.
Adjudication of the allegations contained in Count II is thus not ripe for determination, and the demurrer should be overruled as to such count. However, to the extent that the period of the complainants' lease does not exceed that of the Authority's lease with the United States, the Court finds that the Authority is not prohibited from the exercise of the power of eminent domain by reason of its interference with the preexisting lease between the United States and Fairchild.
In Count III, the complainants assert that the Airports Authority has no authority to condemn federal lands. Absent condemnation, and with the continued performance by the parties during the balance of the period of the lease, the Authority would remain as complainants' landlord. As noted earlier, the complainants have observed that the language of the Transfer Act provides that the Authority may only "exercise the powers of eminent domain in Virginia that are conferred on it by Virginia." 49 U.S.C. § 49106(b). They have thus argued that the delegation of the power is limited to that which the General Assembly was capable of conferring on the Authority. The Court has rejected this argument, concluding that, while it was not the intent of the parties that a federal right of eminent domain be conferred on the Authority, the exercise of the power of eminent domain arises out of a compact and must therefore be interpreted in light of federal law. Complainants contend that under the Supremacy Clause the Airports Authority cannot condemn federal lands. U.S. Const. art. IV, § 3. The Court agrees. However, it is asserted that the interest sought to be condemned is only the leasehold interest of the complainants.
Whether the Authority in fact seeks to condemn an interest of the United States is a matter of fact that cannot be resolved on demurrer. Absent the consent of Congress, the Authority cannot condemn federal property. No such consent is contained within the compact. See Transwestern Pipeline Co. v. Kerr-McGee Corp., 492 F.2d 878 (1974).
The Transfer Act provides that
"[t]he Metropolitan Washington Airports and Airports Authority are not subject to the requirements of any law solely by reason of the retention of the United States Government of the fee simple title to the Airports." 49 U.S.C. § 49111(b).While this would limit the applicability of various statutes during the period of the lease by the Authority from the United States, it does not constitute an abandonment of the interest of the federal government. Further, if the interest of the United States in the instant lease were to be affected by the condemnation to the extent that it became a "condemnation action against the United States," such action would be barred. Transwestern Pipeline Co., supra, at 883.
The Airports Authority, however, is the successor in interest to the lease between the United States and Fairchild. Furthermore, Fairchild's instant lease will expire prior to the lease between the Authority and the federal government. Thus, if the inquiry were to end here, the Authority could condemn complainants' leasehold as a proper exercise of the power granted to it by Congress. Such a condemnation would not, in the opinion of the Court, be barred by the general proposition that, absent congressional assent, property of the federal government is not subject to condemnation. See City of Sacramento v. Secretary of HUD, 363 F.Supp. 736 (E.D. Cal. 1972); United States ex rel. Tennessee Valley Authority v. Welch, 327 U.S. 546 (1946).
However, this matter cannot be concluded on demurrer. In addition to the issue of the impact of the taking on the interest of the United States, complainants have suggested that their lease may be extended beyond the period of the Authority's lease with the federal government. These issues, like those presented in Count II, involve issues of fact that cannot be resolved on the instant demurrer. Accordingly, the demurrer is overruled as to Count III.
Complainants next challenge MWAA's exercise of the power of eminent domain based upon the express terms of the Virginia, D.C. and United States enabling legislation. The applicable provisions of the legislation are to be found in § 22(C) of the Virginia Act ("The Authority shall be responsible for all executory contracts entered into by the United States with respect to the former Metropolitan Washington Airports Authority before the date of acquisition of those airports.") and in § 49104(6)(A) of the federal enabling legislation ("The Airports Authority shall assume all rights, liabilities and obligations…including leases."). These provisions are to be read in connection with the provisions of the Virginia Act indicating that the statute should be construed liberally. 1985 Va. Acts, Ch. 598 § 24.
The Court is of the opinion that the limitations contained in the Transfer Act and Virginia enabling legislation were meant only to ensure that the leases of airport property in existence at the time of the transfer were honored. They are not an expression of an intent to restrict the ability of the Authority to conduct eminent domain proceedings. In fact, the intent of the parties to the compact was to expressly provide, in contrast to the common law rule, for a liberal construction of the provisions relating to the exercise of the power of eminent domain.
Although statutes conferring the power of eminent domain are generally subject to the rule of strict construction, this maxim is inapplicable where, as in the instant case, the legislature has expressed a contrary intent. Here, public policy demands that, when necessary to provide efficient services to the public, the Authority be permitted to exercise the right of eminent domain over leasehold interests existing prior to the transfer by the United States of such interests to the MWAA. The creation of the Authority was, therefore, not intended to lock in time extant leasehold interests, the future acquirement of which might become necessary as the demands on the airport increased.
Accordingly, as Count IV is ripe for adjudication on the instant pleadings, the demurrer thereto will be sustained.
Counts V (alleging arbitrary and capricious conduct by the defendant and a lack of necessity) and Count VI (alleging trespass by the Authority's agents on the leasehold of the complainants) raise factual issues that cannot be resolved on demurrer. Although Count V would ordinarily be raised in the condemnation proceeding, such a practice does not constitute a bar to proceeding in the instant chancery cause. Accordingly, the demurrer to Counts V and VI are overruled.
As this case is before the Court on demurrer, the decision of the Court must rest on the scant record before it. However, in determining this matter, the Court has been mindful of the burden which complainants must carry in demonstrating the unconstitutionality of the Authority's exercise of the power of eminent domain. Walton v. Commonwealth, 255 Va. 422 (1998).
Mr. Chapman may draw a decree consistent with this opinion to which counsel may note their exception.
Very truly yours,
Thomas D. Horne
Judge