Compensable property interests and takings: A case study of the Louisiana oyster industry

In its efforts to combat serious coastal erosion, the state of Louisiana has initiated some large freshwater diversion projects to reintroduce water from the Mississippi River into wetlands and shallow bays that received periodic floods prior to levees being erected in the early 20th century. The diversion projects, carried out by the state and federal governments, have had the unfortunate side effect of damaging some cultivated oyster beds on water bottoms leased from the state. Louisiana's oyster leasing laws have been interpreted by state and federal courts to grant a compensable property interest on which suits may be filed against the government for the taking of private property. In two such suits, the issue of assessing lease values has been hotly contested. The fair market value standard in federal takings law was ignored by state courts in favor of a much more generous assessment allowed by the state constitution. This paper provides a chronological history of the major issues involved in the litigation, with emphasis being given to determination of fair market value.