If so, feedlot s current operation might still be unreasonable (a nuisance); if not, then it isn t unreasonable

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1 Carpenter [p. 824] Jury/trial court: feedlot not a nuisance [its utility >>> gravity of harm to neighbors, e.g., Restatement 826(a)] Court of appeals: should have instructed jury based on Restatement 826(b) (e.g., could feedlot still operate profitably if it had to compensate the neighbors for the harm they would suffer?) If so, feedlot s current operation might still be unreasonable (a nuisance); if not, then it isn t unreasonable ID Supreme Court reverses and reinstates trial court judgment, holding that 826(b) is NOT part of Idaho s common law Rationale: this would eliminate the utility of conduct from the is the conduct a nuisance determination, and would place an unreasonable burden on agriculture, lumber, mining, and ranching/livestock industries [p. 826, top] Dissent would have incorporated 826(b); feedlot should have to account for all costs of production, including ones borne by third parties like the neighbors [p. 827] 1

2 Bistline s observation [we can t evaluate the true efficiency of conduct like a feedlot without taking account of these third-party effects] is correct And Coase suggests that if the feedlot is efficient (i.e., if its profits are >>> harms to neighbors), then the parties will bargain to permit the feedlot [note 3, p. 828] If this is so, why would the court be reluctant to incorporate 826(b)? Coase Theorem presumes: Claimants are reasonable, and Transaction costs are not an impediment to bargaining But: Transaction costs may be prohibitive (or may consume any gains from trade) where there are MANY neighbors Neighbors may not behave reasonably (i.e., they may not bargain predictably) if they have the property right to exclude the feedlot s operation [e.g., monopoly pricing; endowment effect] 2

3 Carpenter s rejection of 826(b) reflects doubt that Coasean bargaining will produce bargains that allow conduct that is efficient but has significant and substantial spillover effects Under Carpenter, nuisance determination is limited to 826(a) balancing analysis (benefit v. harm) And, if neighbors REALLY value freedom from pollution more highly, they can pay the feedlot to stop (or shrink its operations) Is this a meaningful answer? Other courts (including MO) have not followed the Carpenter approach (i.e., they do not validate uses as non-nuisances based on social utility alone) E.g., McGuire v. Kenoma, LLC, 375 S.W.3d 157 (Mo.Ct.App. 2012) (hog farm constituted nuisance) Doubts if Coasean bargaining will produce efficient results may justify protecting plaintiff w/damages award rather than an injunction [e.g., Boomer] This would protect plaintiff s expectation of noninterference by a liability rule rather than a strict property rule 3

4 Why does the dissenting Judge (Jasen) object to this remedy? Concern: in effect, this is allowing Atlantic Cement to take the property of the neighbors This is something that the government can do (as part of the social contract reflected in the Takings Clause of the Constitution), as long as just compensation is paid But we don t traditionally allow that remedy to private parties; does this remedy incentivize private parties to make these kinds of investments w/out bargaining? 4

5 MO legislature enacted Applies if alleged nuisance is from a property primarily used for crop or animal production Limits recoverable damages; affected owner can recover for reduction in FMV of land, and for medical costs, but not for noneconomic damages (such as annoyance or emotional distress) Statute upheld against due process challenge [Labrayere v. Bohr Farms, LLC, 458 S.W.3d 319 (Mo. 2015)] 5