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Island Development Corp. v. Dist. of Columbia

October 4, 2007

ISLAND DEVELOPMENT CORPORATION, APPELLANT,
v.
DISTRICT OF COLUMBIA, APPELLEE.



Appeal from the Superior Court of the District of Columbia (CA7171-99) (Hon. William M. Jackson, Trial Judge).

The opinion of the court was delivered by: Fisher, Associate Judge

Argued October 12, 2006

Before FARRELL and FISHER, Associate Judges, and KING, Senior Judge.

The District of Columbia, National Children's Island, Inc. ("NCI"), and Island Development Corporation ("IDC") agreed to develop a recreational park on two islands in the Anacostia River. Several years later the deal fell apart, and the District of Columbia and IDC sued each other for breach of contract. Cross-motions were filed, and the Superior Court granted summary judgment to the District of Columbia, holding that a District Court ruling in an environmental lawsuit and a new federal law had frustrated the purpose of the contract and rendered performance impossible. We disagree, and we remand for further proceedings.

I. Factual Background

A. The 1993 Lease

In 1982, the District of Columbia and NCI signed a Cooperative Agreement which authorized NCI "to develop and operate a children's theme park" on Heritage Island and a portion of Kingman Island (the "Islands"), a forty-five acre site in the Anacostia River. Many years later, the District of Columbia entered into a Lease and Amended and Restated Cooperative Agreement with NCI and IDC to develop "a cultural, educational, and family-oriented recreation park" on the same site. This document, dated April 30, 1993, is the subject of this lawsuit and will be referred to as "the Lease" or "the 1993 Lease." According to the Lease, IDC is the "designated sublessee" of National Children's Island, Inc., responsible for the construction, development, and operation of the recreational park ("the Project").

By its terms, the Lease would not become effective unless two events occurred by September 1, 1993. First, the Council of the District of Columbia had to approve it. Second, because the Islands were owned by the United States of America, the National Park Service needed to transfer jurisdiction over them to the District of Columbia pursuant to 40 U.S.C. §§ 122, 123 (1988), presently codified at 40 U.S.C. § 8124 (2007).*fn1 These statutory provisions authorize the District of Columbia and the federal government to transfer to each other jurisdiction over property within the District of Columbia owned by one of them. Id. However, they allow transfer of jurisdiction "for purposes of administration and maintenance" only; the statutes do not provide for the transfer of title or the rights of development. Id.

B. The Transfer of Jurisdiction

The National Park Service signed the Transfer of Jurisdiction in February 1993. The Council approved the Lease on July 13, 1993, and accepted the Transfer of Jurisdiction from the National Park Service on August 9, 1993.

The Transfer of Jurisdiction was subject to twelve conditions to which the District of Columbia agreed. The first condition mandated that the Islands "only be used for the purposes of constructing and operating a cultural, educational and family-oriented recreational park." The remaining conditions limited construction on, and use of, the Islands; some of them related to any environmental hazards created or discovered during the course of completing the park. Section 9 provided that

[t]his transfer of jurisdiction will automatically revert to the United States Department of the Interior, National Park Service upon the passage of sixty (60) days from the date of written notice of reversion from said Department to the District of Columbia based on the occurrence of any of the following:

(i) failure to commence [development of the recreation park] within 3 years of this transfer of jurisdiction;

(ii) failure to commence operation of the Recreation Park . . . within 5 years of this transfer of jurisdiction;

(iii) after completion of construction and commencement of operation, the abandonment or non-use of the Recreation Park for a period of 2 years; or

(iv) after completion of construction, and commencement of operation, conversion of the Property to a use other than that specified in [this transfer of jurisdiction], or conversion to a parking use not in accord with the provisions of [this transfer of jurisdiction].

The 1993 Lease specifically referred to this portion of the Transfer of Jurisdiction: "This [Lease] shall automatically terminate upon (i) the occurrence of any event of reversion described in Section 9 of [the Transfer of Jurisdiction] and (ii) the actual reversion of jurisdiction over the [Islands] from the District to the National Park Service . . . ."

C. The Watershed Case

After the Transfer of Jurisdiction was completed, several environmental groups, including the Anacostia Watershed Society, sued the National Park Service and others, alleging that the transfer violated the National Environmental Policy Act ("NEPA").*fn2 See Anacostia Watershed Society v. Babbitt, 871 F. Supp. 475, 478 (D.D.C. 1994) ("Watershed I"). They sought a declaration that the transfer violated NEPA and an order rescinding the transfer. Id. at 478. On December 9, 1994, the United States District Court for the District of Columbia declared that the National Park Service had violated NEPA and ordered it to "immediately comply" by preparing an environmental impact statement or performing an environmental assessment of the effects of the Transfer of Jurisdiction. Id. at 488. The court retained jurisdiction over the matter "to facilitate prompt judicial review" if the National Park Service did not comply with the court's order and "if a change in the status quo with respect to the leased lands is threatened before the [National Park Service] ha[s] fully complied with the National Environmental Policy Act." Id.

The plaintiffs moved the court to "clarify or amend" its order "by setting aside as void ab initio the transfer of jurisdiction . . . ." Anacostia Watershed Society v. Babbitt, 875 F. Supp. 1, 1 (D.D.C. 1995) ("Watershed II"). However, the court "decline[d] to rescind the transfer . . . ." So far as the evidence revealed, the National Park Service could "preserve the status quo pending full compliance with NEPA . . . ." Id. at 2.

Other problems developed because the federal government retained ownership of the Islands. For example, no buildings or structures could be built on federally owned land within the District of Columbia "without express authority of Congress," D.C. Code § 10-128 (2001), so IDC could not obtain financing or begin construction.

D. The National Children's Island Act

Responding to the difficulties created by overlapping federal and District regulations, the parties worked together to petition for Congressional action. In April1995, Delegate Eleanor Holmes Norton introduced H.R. 1508, the National Children's Island Act of 1995 ("NCI Act"), "at the request of the District of Columbia." 141 CONG. REC. H11389 (1995) (statement of Del. Norton). The legislation would transfer ownership of the Islands from the federal government to the District of Columbia "[i]n order to facilitate the construction, development, and operation of National Children's Island . . . ." National Children's Island Act of 1995, Pub. L. No. 104-163, § 3 (a), 110 Stat. 1416, 1416 (1996). Both NCI and the District of Columbia sent representatives to the Congressional hearing to testify in support of the bill. See National Children's Island Act of 1995: Hearing on H.R. 1508 Before the Subcomm. on National Parks, Forests and Lands of the H. Comm. on Resources, 104th Cong. (1995) (statements of Carroll B. Harvey, Chairman of the Planning Committee for National Children's Island, Inc., and Michael A. Rogers, City Administrator for the District of Columbia). The bill was enacted as the National Children's Island Act of 1995, Public Law Number 104-163, on July 19, 1996.

The Act required the Secretary of the Interior, no later than six months after enactment, to transfer to the District by quitclaim deed "all right, title, and interest of the United States in and to the Islands." Id.,ยง 3 (a). The law also imposed some conditions on the transfer, including ...


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