Petition for Writ of Certiorari — Florida Rock Industries, Inc. v. United States, 107 S. Ct. 926 (1987) (No. 86-465)

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Text

No. SEP i 9 1986

ie ea ae oe ee es a

wale CLERK ‘

Supreme Court of the United States

October Term, 1986

FLORIDA ROCK INDUSTRIES, INC.,

Petitioner,

vs.

THE UNITED STATES,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

Joxnn A. DeVautt, ITI

Counsel of Record

C. Warren TRIP, JR.

Counsel

Brpe.tu, Dirrmar, DeVau.t

& Pouans P.A.

The Bedell Building

101 East Adams Street

Jacksonville, Florida 32202

(904) 353-0211

For Petitioner

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

or call collect (402) 342-2831

rain

EDITOR'S NOTE

THE FOLLOWING PAGES WERE POOR

HARD COPY AT THE TIME OF FILMING.

IF AND WHEN A BETTER COPY CAN BE

OBTAINED, A NEW FICHE WILL BE

ISSUED.

II.

III.

QUESTIONS PRESENTED

I. Whether the denial of a dredge and fill permit by the

U. 8. Army Corps of Engineers pursuant to Section

404 of the Clean Water Act, 33 U.S.C.§ 1344 (1982),

constitutes a taking under the fifth amendment

where the property can be put to no viable economic

use without such a permit.

Whether the federal government may avoid the pay-

ment of just compensation under the fifth amend-

ment by showing that property which has no viable

economic use by virtue of a federally imposed regu-

lation nevertheless retains a fair market value based

on possible sale to speculators who ‘‘bet’’ that the

very regulation on which the taking claim is prem-

ised will ‘‘some day be lifted.’’

Whether the Corps’ denial of a permit to fill a por-

tion of petitioners’ property presents a ripe claim

for a taking of the whole where: (1) the permit was

limited at the directive of the Corps and an applica-

tion for the entire property would not have been

processed; (2) the portion of the property for which

the permit was denied was the most likely to be

granted; and (3) the trial judge has found that, if

sought, a permit for the balance of the property

would not have been granted.

LIST OF PARTIES TO PROCEEDING BELOW

The caption of the case in this Court contains the

names of all parties to the appeal to the United States

Court of Appeals for the Federal Circuit.

QUESTIONS PRESENTED ......

ill

TABLE OF CONTENTS

LIST OF PARTIES TO PROCEEDING BELOW .....

OPINIONS BELOW

STATEMENT OF JURISDICTION

CONSTITUTIONAL AND STATUTORY PROVI-

SIONS INVOLVED

STATEMENT OF THE CASE

chica cldcptipretoctacvvedceenvesenyncctbioecsoesncaen

I. The Corps’ denial of a Section 404 permit for

Il.

ITT.

property not suitable for any viable economic

use without such a permit constitutes a taking

under the fifth amendment cc cscesccesnssemneee

The Court of Appeals’ holding that a regulation

which deprives an owner of all “economically

viable uses of the property” does not constitute

a taking under the fifth amendment where the

property retains a “fair market value” based on

possible sale to investors who “bet” that the very

regulation on which the taking claim is premised

“would some day be lifted,” departs from well-

established precedent of taking law and directly

conflicts with prior opinions of this Court ..........

The taking determination should be applicable to

the entirety of the property where it has been

established, as here, that further permit appli-

cations would be futile ..................

CONCLUSION ........ cciecidiiatioe Sica deunaldiichs

APPENDIX AST a App. 1

TABLE OF AUTHORITIES

Page

CasEs

Agins v. City of Tiburon, 447 U.S.255 (1980) 2. 14, 20

American Savings & Loan Association v. County

of Marin, 653 F.2d 364 (9th Cir.1981) 0. 20

Andrus v. Allard, 444 U.S.51 (1979) . 18

Buccaneer Point Estates, Inc. v. United States,

729 F.2d 297 (11th Cir.1984) ..... 21

Connolly v. Pension Benefit Guaranty Corp., —

Uinn, 16 BAS (HS) Ll .. 13

Dickman v. Commissioner of Internal Revenue,

‘6 t220 te) 18

Florida Rock v. United States, 791 F.2d 893 (Fed.

SL ) gapea eae REA eereeaetierne passim

Florida Rock v. United States, 8 Cl.Ct.160 (1985) ....passim

Green v. United States, 376 U.S. 149 (1964) 21

Hodel v. Virginia Surface Mining & Reclamation

Association, 452 Uy S.264 (1GBL) annencscececcnencsonsseersseesseensee 14

Kaiser Aetna v. United States, 444 U.S.164 (1979) ...... 12

Local Union No. 189, Amalgamated Meat Cutters

& Butcher Workmen v. Jewel Tea Co., 381 U.S.

GIG (2900) . ne 19

Loretto v. Teleprompter Manhattan CATV Corp.,

458 U.S.419 (1982) .. a 18

Martino v. Santa Clara Water Valley District,

703 F.2d 1141 (9th Cir.), cert. denied, 464 U.S.

847 (1983) ........ 20

Missouri Baptist Hospital v. United States, 555

F.2d 290 (Ct.C1.1977) 7

Olson v. United States, 292 U.S.246 (1934) cece 16

TABLE OF AUTHORITIES—Continued

Page

Penn Central Transportation Co. v. City of New

ORM, GO UE CUTE) aicencsteteece 12, 14, 18, 20

Pennsylvania Coal Co. v. Mahon, 260 U.S.393

| ERPS nae i vicakisdinica plane a bathdibiacmants 12

Sharp v. United States, 191 U.S.341 (1903) oo. 7

United States v. Eden Memorial Park Association,

Pe Fk 5 Rene Ne anurans eee neene 16

United States v. Riverside Bayview Homes, Inc.,

— U.S. —, 106 S.Ct.455 (1985) suse LO, 14, 19

United States v. Smith, 355 F.2d 807 (5th Cir.1966) ...... 7

Umted States v. 33.90 Acres of Land, More or

Less Situated in Bexar County, Texas, 709 F.2d

1012 (5th Cir.1983) 16

United States v. 320.0 Acres of Land, More or

Less in the County of Monroe, Florida, 605 F.2d

Te CE EE verinhiccceineiaee ccaeuuaeic oneness 16

CoNSTITUTION AND Laws

United States Constitution, Amendment V ..................... passim

Federal Water Pollution Control Act Amend-

ments of 1972, Pub.L.No.92-500, 33 U.S.C.

6 Ree I ee ei eins ote races 2, 3, 5

Section 404, 33 U.S.C.§ 1344(a)-(¢) (1982) .............. 2, 3, 10

Tucker Act, 28 U.S.C.§ 1491 (1982) nc eccsscsescsesssssnssssenee 4,5

Se TEA WIE ARIE saints 2

tare

No.

In The

Supreme Court of the United States

October Term, 1986

FLORIDA ROCK INDUSTRIES, INC.,

Petitioner,

vs.

THE UNITED STATES,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

ft.

OPINIONS BELOW

The opinion of the United States Court of Appeals for

the Federal Circuit is reported at 791 F.2d 893 (App.3).

The orders of the Court of Appeals denying rehearing and

denying the suggesstion for rehearing in bane are not not

reported (App.1-2). The opinion of the United States

Claims Court on liability is reported at 8 Cl.Ct.160 (App.

31); the order on valuation of the Claims Court, entered

following the trial on damages, is not reported (App.72).

STATEMENT OF JURISDICTION

The decision of the United States Court of Appeals

for the Federal Circuit was rendered May 14, 1986. The

petition for rehearing was denied on June 26, 1986 (App.1).

The jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1) (1982).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Fifth Amendment, United States Constitution:

‘‘nor shall private property be taken for public use,

without just compensation. ’’

Section 404 of the Federal Water Pollution Control]

Act Amendments of 1972 (as amended) :

**Permits for dredged or fill material.

‘‘(a) Discharge into navigable waters at specified

disposal sites.

‘“‘The Secretary may issue permits, after notice

and opportunity for public hearings for the discharge

of dredged or fill material into the navigable waters

at specified disposal sites. Not later than the fifteenth

day after the date an applicant submits all the in-

formation required to complete an application for a

permit under this subsection, the Secretary shall pub-

lish the notice required by this subsection.

‘*(b) Specification for disposal sites.

‘*Subject to Subsection (c) of this section, each

such disposal site shall be specified for each such

permit by the Secretary (1) through the application

of guidelines developed by the Administrator, in con-

junction with the Secretary, which guidelines shall

be based upon criteria comparable to the criteria ap-

plicable to the territorial seas, the contiguous zone, and

the ocean under section 1343(c) of this title, and (2)

in any case where such guidelines under clause (1)

alone would prohibit the specification of a site, through

the application additionally of the economic impact of

the site on navigation and anchorage.

‘‘(¢) Denial or restriction of use of defined areas as

disposal sites.

The Administrator is authorized to prohibit the

specification (including the withdrawal of specifica-

tion) of any defined area as a disposal site, and he is

authorized to deny or restrict the use of any defined

area for specification (including the withdrawal of

specification) as a disposal site, whenever he deter-

mines, after notice and opportunity for public hearings,

that the discharge of such materials into such area will

have an unacceptable adverse effect on municipal

water supplies, shellfish beds and fishery areas (in-

cluding spawning and breeding areas), wildlife, or rec-

reational areas. Before making such determination,

the Administrator shall consult with the Secretary.

The Administrator shall set forth in writing and make

public his findings and his reasons for making any de-

termination under this subsection.’’

33 U.S.C.4 1344(a)-(c) (1982).

STATEMENT OF THE CASE

The opinion of the United States Court of Appeals

for the Federal Cireuit from which this petition is taken

reverses a taking judgment entered after lengthy trials

on liability and damages by the United States Claims

Court, Alex Kozinski, Chief Judge. The trial judge had

held that the denial by the Army Corps of Engineers of a

dredge and fill permit to mine limerock on petitioner’s

property deprived petitioner of all viable economic use of

its property, thereby entitling it to just compensation un-

der the fifth amendment and the Tucker Act, 28 U.S.C.

§ 1491. The Court of Appeals for the Federal Circuit,

Nichols, Senior Circuit Judge, reversed, holding that the

trial court improperly failed to consider the fact that the

property retained a substantial ‘‘fair market value’’ based

on possible sale to speculators anticipating a future change

in the Corps’ regulations (App.24).

In March 1972, petitioner, Florida Rock Industries, Inc.

(‘‘Florida Rock’’), a Jacksonville-based company engaged

in the mining, processing and sale of crushed stone and

aggregates for use in construction, agreed to purchase ap-

proximately 214 square miles (1,560 acres) of unimproved

wetlands located several miles west of metropolitan Miami

and east of the Everglades National Park in Dade County,

Florida. Rock mining was and is common in the area where

the property is located, and the property contains an ex-

tremely high quality limestone, with test borings indicating

estimates of at least 100,000 tons of rock per acre. Im-

portant to its intended use was the fact that the property

was located on U.S. 27, a major highway, and that the

property had right-of-way access to the Seaboard Coast-

line Railroad, one of the state’s two rail lines (App.32).

At the time Florida Rock purchased the property, it

had all of the necessary state and local permits, or waivers,

to mine limestone, and there were no applicable federal

statutes or regulations (App.33).

In October 1972, Congress adopted the Federal Water

Pollution Control Act Amendments of 1972, 33 U.S.C.

§ 1251, et seq., which gave the Army Corps of Engineers

jurisdiction to issue permits for discharge of materials

into the ‘‘waters of the United States.’’ In 1977, the

Corps issued regulations extending its permit jurisdiction

to wetlands such as those which exist on the subject prop-

erty.!

Because of the economic recession which severely lim-

ited construction in Florida, no mining activity took place

on the property in the mid-1970s. Unaware of the Corps’

jurisdiction or the need to obtain a federal permit, petition-

er began mining the property in July 1978. When its

activities were discovered, the Corps issued a cease and

desist order which prohibited petitioner from mining any

portion of its property absent a permit from the Corps,

and further required, as a condition for considering a per-

mit application, the restoration of the property to its pre-

1977 condition (App.34).

Because a directive from the Corps’ district engineer

restricted permit applications to a maximum period of

three years, petitioner, on October 1, 1979, submitted an in-

terim permit application to mine 98 acres of its property,

clearly stating its intention to mine the entire 1,560 acres.

On October 2, 1980, the Corps denied petitioner’s permit ap-

plication, and Florida Rock thereafter brought suit under

the Tucker Act, claiming that the denial of the permit een-

. This Court, in United States v. Riverside Bayview Homes,

Inc., — U.S.—, 106 S.Ct.455 (1985), recently upheld the exten-

tion of those regulations to wetlands.

stituted a taking of its entire property because there were

no economically viable uses to which the land could be put

absent a permit from the Corps (App.34).

During the course of a lengthy trial on liability,

Florida Rock offered evidence which established that the

property was too wet for agricultural use and too remote

for commercial, industrial or residential development; in

short, that it had no viable economic use except rock min-

ing, which, in wetlands areas, requires dredge and fill

activity (App.35). Moreover, it was shown that there was

no other active use to which the property could be put which

was less environmentally damaging that rock mining, and,

further, that petitioners’ permit denial was the result of

‘*a deliberate, but unannounced, policy of ‘zoning’ the

area west of the Dade-Broward Levee, north of the

Tamiami Trail and east and south of Krome Avenue

[where the property is located] as undisturbed wet-

lands where no significant development would be per-

mitted.’’ App.68-69 n.23.

Thus, the testimony established, and the trial judge found,

that the denial of the permit for rock mining demonstrated

that no fill permit would be granted for any portion of the

property (App.35).

In response, the government offered testimony as to

the fair market value of the property (later relied on by

the Court of Appeals) from a real estate appraiser who

acknowledged that under existing Corps regulations the

property had no current economic use, but estimated its

value at $3,500 per acre, based upon sales to long-term

speculators and investors who believe that the current

Corps regulations will change to permit future develop-

ment of the property. The government also attempted to

offer evidence of an alleged offer in June 1981, to pur-

chase a portion of the property for $4,000 per acre (like-

wise relied upon by the appeals court), but after objections

challenging the hearsay nature of the evidence and the fact

that an unaccepted offer to buy or sell is inadmissible to

establish market value’, withdrew the evidence concerning

the alleged offer.

Following this liability trial in January 1984, Chief

Judge Alex Kozinski orally announced his findings, later

reduced to a written opinion (App.31), a portion of which

may be summarized as follows:

(1) Florida Rock purchased the property for rock

mining and had reasonable economic expectations of such

use at the time that it bought the subject property ;

(2) The permit denial deprived Florida Rock of all

economically viable uses of the property ;

(3) The property at issue has only one economically

viable use, that is, for rock mining;

(4) At least as to the 98 acres which were the subject

matter of the application, the denial of the permit consti-

tutes a taking by the United States ; is

(5) Sales based on speculation that existing regula-

tions may change, where there is no evidence of the rea-

sonable probability of change, does not establish a viable

economic use so as to defeat a taking claim;

2 See Sharp v. United States, 191 U.S.341, 348-49 (1903);

United States v. Smith, 355 F.2d 807, 811 (5th Cir.1966); Missouri

Baptist Hospital v. United States, 555 F.2d 290, 298 (Ct.Cl.1977).

(6) When Florida Rock submitted the permit appli-

cation, it had every intention to mine the entire property

and it wanted to file an application for the entire 1,560

acres, but was prevented from doing so by the Corps;

(7) Had Florida Rock filed an application for the

entire 1,560 acres, it would have been rejected and denied

by the Corps; and

(8) Florida Rock had all the required permits from

Dade County to mine the entire acreage, and the State of

Florida waived jurisdiction over the property (App.35).

While the trial judge raled as a matter of law that

Florida Rock had failed to exhaust its administrative rem-

edies on the balance of its property and, therefore, that the

taking was limited to the 98 acres for which the permit

application was denied by the Corps, he acknowledged this

issue presented an extremely close question, and to avoid

the possibility of a retrial on damages, directed the parties

to present valuation evidence on two bases, one assuming

a taking of the entire 1,560 acres, the other based on a tak-

ing of the 98 acres for which the permit was denied.

Following a separate trial held on damages in April

1985, the trial court, using a comparable sales approach,

determined that the value of Florida Rock’s entire prop-

erty, as of the date of the taking, was $10,580,000 ($7,500

per acre for the property fronting on U.S. 27 and $4,000

per acre for the interior property), and accepting the gov-

ernment’s diminution in value analysis, determined the 98

acres to be worth $10,500 per acre, for a total of $1,029,000

(App.72).

Upon the government’s appeal, the Court of Appeals

for the Federal Circuit reversed the holding of the Claims

Court and held that a regulation which deprives an owner

of all ‘‘economically viable uses of his property’’ never-

theless does not constitute a taking under the fifth amend-

ment where the property retains a ‘‘fair market value’’

based on possible sales to investors who ‘‘bet’’ that the

very regulation upon which the taking claim is premised

might in the future be altered (App.22-23). Thus, the

Federal Circuit’s opinion, admittedly in the absence of

prior precedent (App.19-20), rejected the viable economic

use analysis applied by the Claims Court and adopted a

determination based upon ‘‘diminution in market value’’

which compares the owner’s basis or investment in the

property with its fair market value before and after the

alleged taking. The Court of Appeals stated:

‘‘Our trial court, as we read it, selected the immediate

use value because it thought it prescribed by the lan-

guage of the Supreme Court, read as saying that a

denial of an immediately viable use is a taking, re-

gardless of any fair market value analysis. No such

analysis appears to have been before the Supreme

Court when it gave such weight to such denial in the

cases cited. We doubt very much whether the Court

meant to say, or would have said, that a denial of any

immediately viable use must be a taking even though

it had no effect on the fair market value of the prop-

5 ee

‘*We do not perceive any legal reason why a well-

informed ‘willing buyer’ might not bet that the pro-

hibition of rock mining, to protect the overlying wet-

lands, would some day be lifted. The statute would

not have to change, only the perceptions of the Army

Kingineers. ... There is nothing so certain in life as

that all certainties become uncertain, and some are re-

placed by their opposites. One who invests in land

on this faith may be a speculator, but he is not on that

account a gull.’’ App.22-23.

The Court of Appeals denied a petition for rehearing

and a suggestion for rehearing in bane (App.1-2).

ARGUMENT

Point I

The Corps’ denial of a Section 404 permit for

property not suitable for any viable economic use

without such a permit constitutes a taking under

the fifth amendment.

In United States v. Riverside Bayview Homes, Inc.,

— U.S.—, 106 S.Ct.455, 460 (1985), this Court approved

the extension of the Corps’ authority under Section 404

to regulate wetlands similar to those involved here, based

in part on the availability of the ‘‘Tucker Act... to pro-

vide compensation for takings that may result from the

Corps’ exercise of jurisdiction over wetlands....’’ While

recognizing that the Court had ‘‘never precisely de-

fined those circumstances [where government regulations

amount to a ‘taking’ of the affected property]’’ (— U.S.

at —, 106 S.Ct. at 459), the Court noted that in instances

involving the Corps’ denial of a fill permit, the determina-

tion as to whether there has been a taking will turn on the

question of whether the denial of a permit ‘‘will prevent

economically viable uses of the property or frustrate rea-

sonable investment backed expectations’? (— U.S. at —,

106 S.Ct. at 460 n.6).

There can be no question that the evidence presented

at trial overwhelmingly supported the trial judge’s find-

ings that there is no other viable use for this property ex-

cept rock mining; that there is no other active use to which

the property could be put which would be less environ-

mentally damaging than rock mining; and, therefore, the

Corps, applying the same reasoning process, would deny

any application to dredge and fill the property, thus leav-

ing the property as a wetlands storage area or as a passive

recreational area without any viable economic return. As

found by Chief Judge Kozinski:

‘‘Rock mining is the only viable economic use to

which the property can be put. Some other uses (such

as hunting and fishing) would not yield sufficient in-

come to cover even real estate taxes. Because of its

location, the property is not suitable for residential

construction or commercial activity. In any case, con-

struction connected with such alternative uses would

require the issuance of a Corps permit. Such uses

would alter the character of the land and surrounding

environment much more drastically than limestone

mining; it is unthinkable that the Corps would issue

such a permit in light of its denial of plaintiff’s ap-

plication.’’ App.35.

He further stated:

‘‘The court has found that denial of the permit

by the Corps of Engineers made it impossible to prof-

itably mine rock on plaintiff’s property. To para-

phrase Mr. Justice Holmes, ‘[w]hat makes the right

to mine [rock] valuable is that it can be exercised with

profit. To make it commercially impracticable to

mine certain [rock] has very nearly the same effect

for constitutional purposes as appropriating or de-

stroying it.’ Pennsylvania Coal, 260 U.S. at 414 [foot-

note omitted]. In addition, the court has found that

there are no other economically viable uses to which

the property can be put. Denial of the permit there-

fore has deprived plaintiff of all economically viable

use of its land. Applying the standard enunciated by

the Supreme Court in Hodel and other cases leads to

the conclusion that there has been a regulatory taking

and that plaintiff is entitled to compensation.’’ App.

37-38. |

This Court has stated time and again [particularly

in Penn Central Transportation Co. v. City of New York,

438 U.S.104, 124 (1978) ], that the determination of whether

a particular regulatory scheme results in a taking is highly

fact-dependent and turns on an ad hoe analysis of each

case. In Pennsylvania Coal Co. v. Mahon, 260 U.S.393,

415-16 (1922), Mr. Justice Holmes cautioned that

‘(t]he general rule at least is that while property may

be regulated to a certain extent, if regulation goes

too far it will be recognized as a taking. ... This is a

question of degree—and therefore cannot be disposed

of by general propositions.”’

In Kaiser Aetna v. United States, 444 U.S.164, 175

(1979), this Court again acknowledged its inability to de-

velop a ‘‘ ‘set formula’ ’’ for determining when ‘‘ ‘justice

and fairness’ ’’ require that economic injuries caused by

public action be compensated by the Government [quoting

Penn Central], and stated that it therefore examined the

taking question

‘‘by engaging in essentially ad hoc, factual inquiries

that have identified several factors—such as the eco-

nomic impact of the regulation, its interference with

reasonable investment backed expectations, and the

character of the governmental action... .’’

Pabihcnieiees Seo mt

Most recently in Connolly v. Pension Benefit Guaranty

Corp., — U.S.—, 106 S.Ct.1018, 1026 (1986), citing prior

taking cases, this Court again stated:

‘*In all of these cases, we have eschewed the develop-

ment of any set formula for identifying a ‘taking’ for-

bidden by the Fifth Amendment, and have relied in-

stead on ad hoe, factual inquiries into the cireumstane-

es of each particular case.’’

While prior taking cases by and large have come to

this Court at the pleading stage, this case comes to the

Court upon a full record following two trials, one on lia-

bility and another on damages, with extensive factual find-

ings rendered orally and by written opinion by a trial

judge who carefully cited and followed this Court’s prior

decisions. By its opinion, the Court of Appeals has ig-

nored the trial judge’s function and substituted its own

factual] determinations in reaching a decision not on an

‘*ad hoe factual basis’’ but rather upon the policy decision

that property which retains a value for sale, whether or

not it can be utilized for any economically productive ac-

tivity, cannot be the subject of a regulatory taking.

Clearly, if the findings of fact, supported by substan-

tial competent evidence presented at these trials, do not

demonstrate that Florida Rock has been denied all econom-

ically viable use of its property as the result of the Corps’

permit denial, we respectfully suggest the taking clause

of the fifth amendment has no continuing viability except

in cases involving the direct physical invasion of property.

Point II

The Court of Appeals’ holding that a regulation

which deprives an owner of all “economically via-

ble uses of the property’”’ does not constitute a

taking under the fifth amendment where the prop-

erty retains a “fair market value’’ based on pos-

sible sale to investors who ‘‘bet’’ that the very

regulation on which the taking claim is premised

“would some day be lifted,” departs from well-

established precedent of taking law and directly

conflicts with prior opinions of this Court.

The opinions of this Court have consistently held that

the determination of whether a regulatory taking has oc-

curred turns on whether the regulation ‘‘denies an owner

economically viable use of his land.’’ Hodel v. Virginia

Surface Mining & Reclamation Ass’n, 452 U.S.264, 295-96

(1981), quoting Agins v. City of Tiburon, 447 U.S.255, 260

(1980). Accord Penn Central Transportation Co. v. City

of New York, 488 U.S.104, 131 (1978) (‘‘diminution in

property value, standing alone’’ does not establish a tak-

ing. ‘‘{T]he ‘taking’ issue in these contexts is resolved

by focusing on the uses the regulations permit’’). The

Court again stated that the determination of a regulatory

taking claim is based on whether the permit denial ‘‘ will

prevent economically viable uses of the property or frus-

trate reasonable investment backed expectations.’’ River-

side Bayview Homes, Inc., — U.S. at —, 106 S.Ct. at 460

n.6.

The Court of Appeals’ opinion misapprehends and

misapplies the controlling and consistent decisions of this

Court in fifth amendment taking cases. The opinion re-

jects the viable economic use analysis mandated by and

heretofore followed in this Court, and establishes an anal-

ysis based exclusively on the relationship of the owner’s

basis or investment in the property and a comparison of

its fair market value before and after the taking.

Under the Court of Appeals’ opinion, the fifth amend-

ment has no application where property retains a market

value, even though that ‘‘value’’ is admittedly based on

speculators betting on the prospect that the very regula-

tion which allegedly effects the taking will in the future

be altered.

‘*We do not perceive any legal reason why a

well-informed ‘willing buyer’ might not bet that the

prohibition of rock mining, to protect the overlying

wetlands, would some day be lifted. The statute would

not have to change, only the perceptions of the Army

engineers.’’ App.22-23.

Under such an approach, the fifth amendment analysis

shifts focus from the property owner and the government

to third parties from whom the property owner can pos-

sibly be made whole. The Court of Appeals cites no de-

cisions to support this proposition.

Judge Kozinski dealt with the proposition that a

residual value, based on the prospect of a change in the

regulation would defeat a taking claim, as follows:

‘‘Common sense suggests that regulatory action

will never entirely eliminate the market value of the

real property it affects. Land, by its nature, is time-

less; government policy, indeed any particular gov-

ernment entity, is inherently transitory. There are

invariably speculators willing to gamble that even the

most severe restrictions will eventually be lifted or

modified so as to render the property usable again.

If the existence of such a residual market for the

property could defeat a claim for a regulatory taking,

no regulatory taking could ever be proved and the

concept would be rendered meaningless. In fact, when

courts have determined that property has been ren-

dered unfit for economically viable activity, they have

found a fifth amendment taking even though the prop-

erty obviously continued to have market value [cita-

tions omitted].’’ App.42.

A market value analysis based on buyers willing to

‘*bet that the prohibition of rock mining... would some

day be lifted’’ (App.22-23) ignores clear precedent to the

contrary and effectively erases the taking clause from

the fifth amendment. Heretofore, it has been well estab-

lished that where a particular use is prohibited by gov-

ernment regulations or is contingent upon the securing of

a permit or license, such a use cannot be considered in

assessing market value unless it can be demonstrated that

there exists a reasonable probability that a variance or

permit will be granted or that the law will change to allow

that use. See United States v. 320.0 Acres of Land, More

or Less in the County of Monroe, Florida, 605 F.2d

762, 818-19 (5th Cir.1979) ; United States v. Eden Memori-

al Park Association, 350 F.2d 933, 936 (9th Cir.1965).

The proposed use must, in fact, be shown to be feasible

and probable in the near future. United States v. 33.90

Acres of Land, More or Less Situated in Bexar County,

Texas, 709 F.2d 1012, 1015 & n.3 (5th Cir.1983). The rule,

stated by this Court is as follows:

‘‘HMlements affecting value that depend upon events

or combinations of occurrences which, while within the

realm of possibility, are not fairly shown to be reason-

ably probable should be excluded from consideration

for that would be to allow mere speculation and con-

jecture to become a guide for the ascertainment of

value—a thing to be condemned in business transac-

tions as well as in judicial ascertainment of truth.’’

Olson v. United States, 292 U.S.246, 257 (1934).

Thus, the possibility that a confisecatory regulation

may change, absent the demonstration of a reasonable

probability of change (which was not here shown), does

not affect the determination of whether that regulation

results in a taking. Were it otherwise, no regulation

could ever effect a taking. As succinctly stated by Chief

Judge Kozinski for the Claims Court:

“Defendant has suggested that plaintiff’s holding

the land for ‘long term investment,’ in the hope that

it will eventually become available for productive

use, is itself a viable economic activity. Of course,

the same could have been said of the owners of the

mine in Pennsylvania Coal, of the Willard Hotel in

Benenson [Benenson v. United States, 548 F.2d 939

(Ct.C1.1977)] and of the unimproved land in Althaus

[Althaus v. United States, 7 Cl.Ct.688 (1985)]. If

passively holding land against the possibility that

restrictions on its use will be lifted were deemed a

productive economic use, property would never be

rendered useless by regulation and there could be no

such thing as a regulatory taking.” App.40 n.6.

The Court of Appeals’ opinion recognizes that when

Florida Rock acquired the property in 1972, it had the

local permits necessary for rock mining, that no federal

permit was required, and that it was not until after a

change of federal law that Florida Rock had not fore-

seen, that the Corps of Engineers acquired jurisdiction

in this area (App.5). Nevertheless, the Federal Circuit

gives no consideration to these facts in adopting a rule

which allows the government to avoid the fifth amend-

ment by establishing a fair market value based on third

parties who are “willing to bet” that regulations will

change in the future. Not only is such a rule contrary

to this Court’s teachings,’ but it assures there can never

be a regulatory taking. Clearly, if an existing owner

does not possess sufficient investment-hacked expectation

in his property to enforce a taking claim against a regula-

tory change which deprives that owner of any active use,

then certainly a subsequent buyer who purchases with

knowledge of the regulation [cf. Andrus v. Allard, 444

U.S.51, 64 n.21 (1979)] will not have sufficient investment-

backed expectations to successfully assert a taking claim.

Presumably, that purchaser is relegated to sell to an even

wilder speculator, at an even lower price, ete., ete. The

net result is the “‘Fifth Amendment’s guarantee . . .

[which is] designed to bar Government from forcing some

people alone to bear public burdens which is all fairness

and justice, should be borne by the public as a whole’”

(Penn Central, supra, 438 U.S. at 123), is effectively

abrogated.

Point ITI

The taking determination should be applicable to

the entirety of the property where it has been

established, as here, that further permit applica-

tions would be futile.

The only reason behind the requirement for condition-

ing a taking challenge upon denial of a permit is the rea-

sonable expectation that the permit may be granted. As

> See, e.g., Loretto v. Teleprompter Manhattan CATV Corp.,

458 U.S.419, 436 (1982) (ability to dispose of the property by

sale is a hollow right where the restraint is passed on to the pur-

chaser). Cf. Dickman v. Commissioner of Internal Revenue, 465

U.S.330, 336 (1984) (“Lo]f the aggregate rights associated with

any property interest, the right of use of property is perhaps of

the highest order”).

BREE. EN Oe EI HE a IN nk Sr

recently expressed by this Court, ‘‘after all, the very exist-

ence of a permit system implies that permission may be

granted, leaving the landowner free to use the property as

desired.’’ Riverside Bayview Homes, — U.S. at —, 106

S.Ct. at 459. Where, as here, the uncontroverted evidence

demonstrates, and the trial judge found, that there is no

prospect that a permit application for the entire property

would be granted, exhaustion becomes nothing more than

a time consuming, senseless, futile exercise.

While acknowledging that Florida Rock had limited its

application to 98 acres solely to comply with the directive

of the Corps (which would have refused to process an ap-

plication for the entire property); that applying the same

standards the Corps would likewise deny permits for the

balance (indeed, the trial court found the denial was based

on an unannounced decision to ‘‘zone’’ the area in question

so as to maintain its continued existence as wetlands) ; the

trial judge nevertheless held, based on failure to exhaust

administrative remedies, that the taking determination did

not apply to the balance of the property.

Here, the evidence is unequivocal that the application

by the Corps of the same standards applied to the permit

area would require denial of a permit for the entire tract,

and the trial court has so found. Thus, such a future ap-

plication would clearly be futile. As this Court has ob-

served, “‘the doctrine of primary jurisdiction is not a doc-

trine of futility.’’ Local Union No. 189, Amalgamated Meat

Cutters & Butcher Workmen v. Jewel Tea Co., 381 U.S.

676, 686 (1965).

Holding the taking determination applicable to the

entire property accords with well-established law. Al-

though, as a general proposition, a claimant asserting an

‘fas applied’’ taking challenge to a land use regulation

must show that he had submitted plans for development

which were subsequently rejected, see Agins v. City of

Tiburon, 447 U.S.255, 260 (1980); American Savings &

Loan Ass’n v. County of Marin, 653 F.2d 364, 370 (9th Cir.

1981), the courts have recognized an exception to this

principle where an attempt to secure approval for use of

the property would be futile. See e.g., Martino v. Santa

Clara Water Valley District, 703 F.2d 1141, 1146 n.2 (9th

Cir.), cert. denied, 464 U.S.847 (1983). This ‘‘futility’’

exception applies regardless of whether the requirement of

submitting permit applications is analyzed in terms of a

ripeness isSue or an exhaustion of administrative remedies

matter.

To limit the judgment to the 98 acres for which a per-

mit was sought in accordance with the instructions of the

District Engineer is contrary to the rule (of which the gov-

ernment has been the beneficiary in countless cases), that

the property must be viewed as a whole, and violates funda-

mental fairness. In Penn Central, this Court emphasized

that:

‘« ‘Taking’ Jurisprudence does not divide a single par-

cel into discrete segments and attempt to determine

whether rights in a particular segment have been en-

tirely abrogated. In deciding whether a particular

governmental action has effected a taking, this Court

focuses rather both on the character of the action and

on the nature-and extent of the interference with rights

in the parcel as a whole. ...’’ 438 U.S. at 130.

Requiring Florida Rock to resubmit a permit applica-

tion for the balance of the 1,560 acres, where the initial

application was submitted at the insistence of the govern-

eke eee

Pee

Pade ws

ment and when the outcome of such a submission is pre-

ordained, would constitute a ‘‘manifest injustice.’’ See,

e.g., Green v. United States, 376 U.S.149, 160 (1964), and

Buccaneer Point Estates, Inc. v. United States, 729 F.2d

1297, 1299 (11th Cir.1984). Accordingly, the taking deter-

mination should be made applicable to the entirety of Flo-

rida Rock’s property.

ray

CONCLUSION

For the above-stated reasons, petitioner respectfully

requests the Court to issue a writ of certiorari to the Court

of Appeals for the Federal Circuit remanding the case for

an affirmance of the trial court’s determination as to the

taking, with instructions to enter judgment for Florida

Rock as to the entire 1,560 acres in the amount set out in

the Order on Valuation (App.72).

Respectfully submitted,

Joun A. DeVautt, IIT

Counsel of Record

C. Warren Trip, JR.

Counsel

Bepeti, Ditrmar, DEVavuLtT

& Pruuans P.A.

The Bedell Building

101 East Adams Street

Jacksonville, Florida 32202

(904) 353-0211

For Petitioner

In The

Supreme Court of the United States

October Term, 1986

oe ray

FLORIDA ROCK INDUSTRIES, INC.,

Petitioner,

vs.

THE UNITED STATES,

Respondent.

Petition for Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

fa.

APPENDIX TO PETITION FOR WRIT OF

CERTIORARI

fay

Joun A. DeVautt, III

Counsel of Record

C. Warren TRIPP, JR.

Counsel

Beveti, DirrMar, DEVauLt &

Pinuans P.A.

The Bedell Building

101 East Adams Street

Jacksonville, Florida 32202

(904) 353-0211

For Petitioner

TABLE OF CONTENTS

ORDER ON PETITION FOR REHEARING IN

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT eee App. 1

ORDER ON SUGGESTION FOR REHEARING

IN BANC IN UNITED STATES COURT OF

APPEALS FOR THE FEDERAL CIRCUIT .... App. 2

OPINION OF THE UNITED STATES COURT

OF APPEALS FOR THE FEDERAL CIRCUIT App. 3

OPINION OF THE UNITED STATES CLAIMS

COURT App. 31

ORDER OF THE UNITED STATES CLAIMS

COURT ON VALUATION ..... App. 72

App. 1

Unitep States Court oF APPEALS FOR THE FEDERAL CIRCUIT

Appeal Nos. 85-2588

85-2609

FLORIDA ROCK INDUSTRIES, INC.,

Appellee/Cross-Appellant,

Vv.

THE UNITED STATES,

Appellant/Cross-A ppellee.

Before DAVIS, Circuit Judge, COWEN and NICHOLS,

Senior Circuit Judges, and BALDWIN and BISSELL,

Circuit Judges.

ORDER

A petition for rehearing having been filed in this case,

UPON CONSIDERATION THEREOF, it is

ORDERED that the petition for rehearing be, and the

same hereby is, denied.

The suggestion for rehearing in banc is under consid-

eration.

FOR THE COURT

/s/ Francis X. Gindhart, Clerk

6/26/86

Date

ec: Mr. Fred R. Disheroon, DOJ

Mr. Sam Kazman

Mr. John A. DeVault, ITI

Ms. Nancy 8S. Marks

App. 2

Unitep States Court or APPEALS FOR THE FEDERAL CIRCUIT

Appeal Nos. 85-2588

85-2609

FLORIDA ROCK INDUSTRIES, INC.,

Appellee/Cross-Appellant,

v. |

THE UNITED STATES,

Appellant/Cross-Appellee.

ORDER

A suggestion for rehearing in bane having been filed

in this case,

UPON CONSIDERATION THEREOF, it is

ORDERED that the suggestion for rehearing in banc

is declined.

Judge Archer did not participate in the declination of

the in bane suggestion.

FOR THE COURT

/s/ Francis X. Gindhart, Clerk

7/8/86

Date

ec. Mr. Fred R. Disheroon, DOJ

Mr. Sam Kazman

Mr. John A. DeVault, ITI

Ms. Nancy 8S. Marks

App. 3

Unitep States Court oF APPEALS FOR THE FEDERAL CIRCUIT

Appeal Nos. 85-2588

85-2609

FLORIDA ROCK INDUSTRIES, INC.,

Appellee/Cross-Appellant,

Vv.

THE UNITED STATES,

Appellant/Cross-Appellee.

DECIDED: May 14, 1986

Before DAVIS, Circuit Judge, COWEN and NICHOLS,

Senior Circuit Judges, and BALDWIN and BISSELL,

Circuit Judges.

NICHOLS, Senior Circuit Judge.

This appeal from the Claims Court confronts us with

important and novel issues as to the application of the

fifth amendment and, consequently, the Tucker Act, 28

U.S.C. § 1491, to measures by the Secretary of the Army,

through the Army engineers under authority of the Clean

Water Act, 33 U.S.C. §1251(a)(1) and ff, to protect Flor-

ida wetlands against disturbance by the owner’s limestone

mining. At times, as by the holding below here, what were

intended as mere regulations are converted by force of law

into involuntary purchases called “takings.” We have the

benefit of amicus briefs supporting both sides. We con-

sider it is not legally impossible that the regulatory meas-

ures here involved could be a taking, and not impossible

App. 4

that no taking occurred. The trial judge failed to apply

the evidence in a manner correct in all respects to deter-

mine whether he had an actual instance of a taking before

him, The mere existence of authority te regulate did not

itself constitute the taking, and a regulation severely dam-

aging an owner’s expectations of realizing profit from his

holdings, may not because of that necessarily be a taking

either. We remand for determination of the taking ques-

tion according to right principles, as it would be improper

for us to constitute ourselves fact finders and weigh the

evidence ourselves.

The act that allegedly constituted the taking, denial of

a permit to discharge dredged or fill material into nav-

igable waters and other waters of the United States, ap-

plied to but 98 acres out of a 1,560-acre tract, but the cross-

appeal urges the whole 1,560 acres were taken because the

action respecting 98 acres established a precedent that

would govern the rest. This cross-appeal we deny. The

award for taking 98 acres was $1,029,000 plus interest from

a 1981 taking date. Anticipating that the cross-appeal

might succeed, the trial court determined that the award

for 1,560 acres would be $10,580,000 plus interest.

Statement of Facts

The plaintiff/appellee company, Florida Rock Indus-

tries, Inc. (Florida Rock), is a large-scale miner of lime-

stone, which it extracts for conversion into aggregates for

the construction industry. Such aggregates are basic ma-

terial for a variety of concrete products. There are large

deposits of limestone in South Florida, but they are rap-

idly becoming unavailable owing to the rapid growth of

the densely populated area. Florida Rock purchased the

App. 5

1,560 acre tract in question in 1972, paying $2,964.000.

The sole purpose was to obtain its limestone deposits for

extraction, and no other use, or sale, has ever been con-

sidered.

The tract is in the portion of Dade County, Florida,

that lies west of the city limits of Miami. Krome Avenue

borders its western side and the Tamiami Trail (Route

41) is one and one-half miles to the south. The built-up

western residential suburbs of Miami are growing rapidly

in its direction, and industrial activity is already visible

from the tract itself. The ground is wet, frequently

flooded by the state in its control of the water supply,

and is part of the Everglades according to the map, but

excluded by road, canal, and levee construction. The area

is criss-crossed with state-owned canals. The surface is,

according to the trial judge, of attractive appearance with

variegated vegetation, a habitat of redwing blackbirds,

swallows, snipe, American egrets and heron, as well as

fish. Defunct vegetation, matted and rotting, lies above

the limestone. They are wetlands that recharge the Bis-

cayne aquifer and filter and purify the ground water, if

left undisturbed.

It is conceded that before the 1972 amendments to

the Clean Water Act, supra, Pub. L. No. 92-500, Florida

Rock had the local zoning classification requisite to allow

it to mine the limestone and needed no consent by the

Federal Government. The amendments followed the ac-

quisition and, according to the trial judge, Florida Rock

need not have foreseen them. Actually, because of a

slump in the construction industry, Florida Rock allowed

the land to remain untouched, though it paid the taxes on

App. 6

it, until 1978, and then commenced to mine. The Army

engineers learned of this and stopped it with a cease and

desist order. Florida Rock, on October 1, 1980, applied

to the Army engineers for a section 404 (33 U.S.C. § 1844)

permit to cover 98 acres only. This was estimated to

suffice for three-years production, and the Army engi-

neers refused to consider more. Florida Rock would have

preferred a permit for the whole 1,560 acres, all of which

it meant to mine eventually, but cut down the scope of the

application to obtain consideration which would otherwise

have been refused.

The Army engineers gave notice of the application

to interested federal agencies such as the EPA, the Na-

tional Park Service, and the Fish and Wildlife Service,

to the state, and to Dade County. All urged objections

focused primarily on the irremediable loss of wetland,

and in the case of some, to water pollution in the form

of temporary turbidity caused by the mode of mining

proposed, the only feasible method Florida Rock knows

of. This is to place a mechanism, called a ‘‘drag line,’’

on solid ground, remove the muck overlay, dump it tem-

porarily on the ground, remove the limestone thus made

accessible with aid of blasting as necessary, dump some

of the previously removed limestone or muck into the

hole to make a solid foundation to which the ‘‘drag line’’

can be moved, and commence another phase. As the hole

would be filled with water, dumping the fill into it would

produce temporary pollution by turbidity which, how-

ever, would not be a menace to the drinking water. Dade

County, if the permit were to be granted despite its recom-

mendation, would require controls to confine the turbidity

to 50 feet. It is clear from the administrative file that

App. 7

the temporary pollution was of primarily legal importance

as a source of federal jurisdiction, and the real concern

was the threatened loss of valuable wetlands, which ren-

dered a community service whose benefits extended far

beyond Florida Rock’s own property. The 98 acres, after

removal of all limestone, would consist mostly of a deep

lake or pond which, if environmentally harmless, was of

no value either.

Dade County pointed out that Florida Rock would

need various documents from it, including a Tree Re-

moval Permit, and should make certain agreements with

the county. The engineers, respecting their jurisdiction,

pointed out that their definition of ‘‘waters of the United

States’? in 33 C.F.R. § 323.2(a)(3) includes ‘‘wetlands

* * * the use, degradation or destruction of which could

affect interstate or foreign commerce including any such

waters.’’

Under date of October 2, 1980, after careful consid-

eration, the district engineer determined that the permit

would not be in the public interest, and denied it. His

findings are our source of the facts stated above, which

we take as given.

Proceedings Below

This lawsuit in the Claims Court followed. The ‘‘lia-

bility’’ and ‘‘damages’’ phases of the litigation were sev-

ered according to immemorial custom of that court and

its predecessor, the Court of Claims. The plaintiff intro-

duced evidence of its investment in the property, its in-

tentions respecting use of it for mining with its antici-

pated profit therefrom, and argued that, if the property

= App. 8

could not be mined, it had no viable economic use what-

ever. The circumstances of the permit application and

its denial were of course before the court. It appeared

that since the permit denial there had been numerous in-

quiries about possible sale of the property by Florida

Rock and one offer of $4,000 an acre. Florida Rock re-

jected everything, still wishing only to mine, and believ-

ing the property to be much more valuable than the offer,

on the hypothesis, presumably, of either the restraints

being lifted or the litigation resulting in the government’s

being held a taker. The value theory of Florida Rock

was that the property before permit denial had a use

value based on the owner’s anticipated profits, and after

the denial no ‘‘use value;’’ that fair market value subject:

to the restriction was a myth, potential buyers being made

up of gullible persons, often foreigners, who would pay

anything for acreage in South Florida, and more hard-

eyed types who would also buy anything if the price was

sufficiently trifling. Florida Rock offered, however, no

testimony by real estate appraisers. It introduced testi-

mony that the logic of denying the permit for 98 acres

would preclude a permit for any other part of the tract.

The government produced a qualified real estate ap-

praiser who testified that there was a fair market value

remaining; he assigned $5,466,000 to the 1,560 acres in

this case. The hypothetical willing buyers would not

necessarily be fraud victims: he tried to disregard them

though admitting they existed. The buyers would be aware

that rock mining was effectively prohibited and that other

development was likewise not then feasible. Their mo-

tivation would be a hope the regulation would change.

Other government evidence was consistent. The Dade

App. 9

County assessed value for tax purposes was $4,157,800,

but this was contested.

Since the oral argument, we have received from ap-

pellant’s counsel copies of a decision of the District Court

of Appeals of Florida, Third District, styled Florida Rock

Industries, Inc. v. Franklin B. Bystrom, Dade County

Property Appraiser, et al., case No. 85-1358. This ma-

terial is on Lexis and Westlaw. Filed February 25, 1986,

it reflects appellate and trial court affirmance of the ac-

tion of the Dade County appraisers in assessing the 1,560

acres, the subject of the appeal before us, as of January

1, 1982, at a fair market value of $4,089,950. We do not

consider it as evidence of any facts or as part of our

record. We cite it, infra, as interesting and relevant case

authority, though, of course, not a binding precedent in

this court. Upon our remand, if this opinion is offered,

the trial court will have to determine what use to make

of it.

In an oral decision rendered from the bench, May 7,

1984, the court (Chief Judge Kozinski) determined that

the permit denial promoted the public health and welfare;

“‘we have to take it as given that this was a proper exer-

cise of statutory and regulatory authority.’’ Counsel as-

sured him that there was no issue as to these matters in

the case. ‘‘The Corps’ denial of permit to rock mine the

property advances a legitimate public purpose.’’ The

court responded: ‘‘If you were challenging that, you would

be in District Court.’’ He held that ‘‘the denial of the

permit for the 98 acres was a taking because it left the

plaintiff no reasonable economic uses for the property.’’

He left open at that time whether the rest of the tract was

App. 10

taken. In general he accepted the testimony of the plain-

tiff’s economics expert that there was no other viable use.

He confirmed this with what he saw when he viewed the

property and noted defendant’s own appraisal expert’s

admission there was no residential demand in the wet-

lands area. He addressed the defendant’s evidence there

was a market among knowledgeable investors who ac-

cepted the fact they would not be able to use the property

for a while, saying that the law looks to the uses it can

be put to, and a possible sale to one accepting a period of

idleness, but hoping for a future change in conditions, is

too speculative. He remarked that the idea a sucker was

born every minute had been superseded by the idea one

would sell swamp land in Florida to someone at almost

any time.

As he had promised, but a year later, May 6, 1985, the

trial judge followed up with a written opinion, 8 Cl. Ct.

160 (1985). As it is published, we need not set it forth in

detail; it enlarges upon and elaborates the oral conclusions

for the most part. It finds that as of the time of permit

application, Florida Rock had all the necessary permits

from state and local officials. One feature is new. The

opinion, to refute defendant’s argument that the denial

stopped threatened harmful pollution which could be done

without compensating the would-be polluter, undertakes to

show that in fact the anticipation that the pollution would

occur was unfounded, and finds as a fact that the proposed

mine would not have polluted the water supply. He had

previously determined that the denial was ‘‘a proper exer-

cise of statutory and regulatory authority’’ which it could

hardly have been if the engineers had not reasonably an-

ticipated that some pollution would occur, enough to war-

App. 11

rant the exercise of federal jurisdiction at least. This part

of the opinion therefore reflects a drastic change of posi-

tion.

The trial as to damages was conducted before May 6,

1985. On May 7, 1985, the judge reassembled counsel to

hear him state his conclusions orally on the ‘‘damages’’

phase, on which he had now heard a large amount of new

evidence. He ultimately concluded that only 98 acres were

taken. He rejected the plaintiff’s evidence based on the

profit anticipated from sale of the limestone expected to

be extracted from the property and instead deduced a value

from actual sales of other property in the same neighbor-

hood, similar in containing limestone deposits, but different

in that extraction of the limestone was permitted. He con-

cluded the award for 98 acres should be $1,029,000, 7.e.,

$10,500 an acre including damage to the remainder of the

tract. If, on appeal, it should be held the whole 1,560

acres were taken, the award would be $10,580,000, he found.

Interest would run from the taking date, October 2, 1980,

at rates established in the court’s order. Defendant’s ob-

ligation to pay is conditioned upon tender by plaintiff of

a quit claim deed in proper form for the 98 acres.

Discussion

Appellant/Defendant supports its appeal with three

lines of argument, first, that the denial of the permit did

not constitute a taking under the fifth amendment, second,

that the court below engaged in an improper review of

public interest factors, and third, that in establishment

of the award the value of the property for rock mining

should not be considered, i.e., the property should be valued

App. 12

as already subject to the permit denial asserted to consti-

tute the taking. We address defendant’s second issue first

because, in our view, it raises a threshold question as to

the jurisdiction of the Claims Court which we should de-

fine before we go further.

To repeat, the Claims Court reviewed the evidence and

found as a fact that the proposed limestone mining would

not pollute. This would appear to be an issue as to the

jurisdiction of the Army engineers to regulate the activity

in question. Under the authority relied on by them, 33

U.S.C. 41344, permits can be required for discharge of

pollutants, including rock and sand, see definition, 33 U.S.C.

§ 1362(6), into federal waters. It is clear from both the

district engineer’s decision denying the permit, and the

government’s brief and oral argument before us, that this

is the sole basis in law for the Army engineers taking ac-

tion. Absent pollution, as defined in the statute, the pres-

ervation or destruction of the instant wetlands would be

a state or local issue only. The question of ‘‘public inter-

est,’’? as addressed in the district engineer’s decision, is far

broader and involves what he described as grave dangers

to the environment over a wide area and not at all depen-

dent on pollution. Should the plaintiff discover some means

of removing the limestone without putting any rock or sand

in government waters, the ‘‘public interest,’’ as stated by

the district engineer, would hardly be different at all if the

wetlands were still eliminated. It was not contended the

‘‘nollutants’’ would be more than temporary turbidity, and

the possible long-term harm by it would be minimal or non-

existent. One, therefore, must, in considering a document

App. 13

such as the district engineer’s decision in issue, distinguish

very sharply between ‘‘jurisdiction’”’ and ‘‘ public interest”’

considerations. Clearly the challenge by the court below

to the possibility of pollution has to do with the jurisdic-

tion of the Army engineers to grant or withhold the permit

in question, not to the broad range of ‘‘public interest”’

issues considered and applied by them when they deem

they have jurisdiction. The finding by the trial court that

there would be no pollution therefore attacks indirectly the

right of the engineers to apply their conception as to the

far weightier ‘‘ public interest’’ issue.

Defendant further says, and we think it is indisputable,

that the proper way to challenge the decision to grant or

withhold the permit would be under the Administrative

Procedures Act (APA), 5 U.S.C. § 702 and ff. If there

was no pollution, even giving due weight to the contrary

determination, as held in Di Vosta Rentals, Inc. v. Lee, 488

F.2d 674 (5th Cir. 1973), cert. denied, 416 U.S. 984 (1974),

then the Army engineers had no statutory authority to act.

The Tucker Act suit in the Claims Court is not, however,

available to recover damages for unauthorized acts of gov-

ernment officials. Armijo v. United States, 663 F.2d 90

(Ct. Cl. 1981); NBH Land Company v. United States, 576

F.2d 317 (Ct. Cl. 1978). What is meant by authority in

these premises is aptly illustrated by Portsmouth Harbor

Land & Hotel Co. v. United States, 260 U.S. 327 (1922)

where Army ordinance officers fired heavy coast defense

guns over the plaintiff’s hotel land. Justice Brandeis, dis-

senting, denied that the officers had authority to acquire an

interest in hotel land, but Holmes, for the majority, held

that whether they had authority to fire the guns was the

decisive authority question. As to how authority is deter-

App. 14

mined, see also Armio v. United States, supra, and Drakes

Bay Land Co. v. United States, 424 F.2d 574 (Ct. Cl. 1970).

In the instant case, therefore, the district engineer did not

need authority to acquire the 98 acres he is held below to

have acquired on behalf of the United States, but he did

need, or rather plaintiff needed him to have, authority to

regulate the proposed mining as a de jure pollution, how-

ever minimal, of federal waters. In Armijo v. United

States, 663 F.2d at 93, the Court of Claims said of regula-

tory taking cases justiciable under the Tucker Act ‘‘[i]n

such cases the characteristic feature is the defendant’s use

of rightful property, contract, or regulatory rights to con-

trol and prevent exercise of ownership rights the defen-

dant is unwilling to purchase and pay for.’’ [Emphasis

supplied.] In stating. therefore, ‘‘we have to take it for

granted that this was a proper exercise of statutory and

regulatory authority’’ the court recognized the limits of his

role in a taking case, and in assuring him that ‘‘the Corps’

denial of permit to rock mine the property advances a

legitimate public purpose’’ counsel stipulated that such

an issue was not before the court for adjudication. Logi-

eally, a decision that there was no threatened pollution

does not support an award of $1,029,000. It would support

either a dismissal of the complaint or a transfer of the case

to a court having APA jurisdiction.

In Deltona Corp. v. United States, 657 F.2d 1184 (Ct.

Cl. 1981), cert. denied, 455 U.S. 1017 (1982), the Court of

Claims considered permit denial issues under the Clean

Water Act, of the same general kind as here. The claim-

ant, before its Court of Claims suit, had actually litigated

its issues as to the validity of permit denial in an APA

App. 15

suit, and a United States District Court had upheld the

denial in all respects. In that context, the court held that

the propriety of the permit withholding was ‘‘given’’ in

the Tucker Act suit. We now hold that the election of a

Tucker Act suit, without a previous test of validity issues

under the APA, accomplishes the same result because of

the necessity of conceding the engineers’ authority to act.

In defending, the government may deny the authority and

in that way authority could become an issue in a Tucker

Act taking case.

Apart from the foregoing, the unexplained switch in

the trial court’s position appears improper under the Law

of the Case doctrine. Yachts America, Inc. v. United

States, 779 F.2d 656, 659-60 (Fed. Cir. 1985); Northern

Helex Company v. United States, 634 F.2d 557, 561-62

(Ct. Cl. 1980); United States v. Turtle Mountain Band of

Chippewa Indians, 612 F.2d 517, 519-22 (Ct. Cl. 1979).

He was identified, during his chief judgeship, with the

practice of delivering orally from the bench opinions and

fact findings in complex cases, saving time and conser-

ving judge power. Often, as here, he undertook to answer

questions so that his position would be thoroughly under-

stood by counsel, and future proceedings in the case would

be governed accordingly. The discussion here referred to

occurred during such a question and answer period. The

proceedings were recorded with care in the trial tran-

script. Between them and the retraction in the May 6,

1985, decision, the trial on damages occurred. We would

not think of applying law of the case to mere colloquies

between court and counsel, but this was more and differ-

ent. We think that when an oral presentation by a judge

App. 16

is given the prominence it enjoyed here, it, or the tran-

script of it, should have the same dignity as written find-

ings and conclusions would have if they existed.

A good deal is said in this case about the apparent

indifference of the Army engineers and their advising

agencies in the United States Government to the loss of a

valuable asset on the part of Florida Rock, one in which

substantial capital was invested. Whether or not able

counsel ultimately extricate the government from becom-

ing an involuntary purchaser, it would seem officials who

have studied all other aspects of their exercise of regula-

tory authority with the care the administrative record

reveals, would give some thought to that. They appear

to have believed it was enough to tell Florida Rock it

could get its limestone elsewhere, disregarding the fact

that in this tract it had invested its capital. Yet apparent

official unwisdom does not make a constitutional viola-

tion. If one otherwise would have occurred here in the

form of a taking without just compensation, it is cured

by the Tucker Act and a more cautious construction of the

Clean Water Act is not legally required. Cf. United States

v. Riverside Bayview-Homes, Inc., — U.S. —, 106 S. Ct.

455 (Dec. 4, 1985).

Accordingly, the inquiry whether and finding that the

proposed activity would not pollute, was erroneous. It

requires vacating and remanding because we cannot tell

to what extent it influenced the holding that the denial of

the permit constituted a taking.

App. 17

We can, therefore, turn to the ultimate issue in this

case, which is whether duly authorized and lawful acts of

the Army engineers, denying a permit under 33 U.S.C.

§ 1344, constitute a taking and subject the United States

to money liability in the Claims Court under the Tucker

Act.

Defendant no longer argues, as it did below, if the

regulation is lawful it cannot constitute a taking; in that

event, it was once said it was not an exercise of the power

of eminent domain but of the police power or some other

different source of authority. This argument got its start

in Mugler v. Kansas, 123 U.S. 623 (1887), much discussed

below, in which the Kansas legislature, having determined

that beer was an obnoxious and toxic beverage, prohib-

ited its manufacture in the appellant’s brewery, rendering

the brewery, of course, of no value. While the court below

deemed Mugler’s precedential authority much abated, we

may concede as a hypothetical, if Florida Rock produced

on its tract a fluid aS“septic as Kansas then considered

beer to be, and proposed to drain it into the Miami drink-

ing water, this could be stopped without compensation.

But the scope of permissible regulation has much in-

creased since 1887 and it is no longer asserted that a reg-

ulation, by its very nature as a regulation, cannot be an

exercise of eminent domain. The holding or plain impli-

cation of United States v. Riverside Bayview-Homes, Inc.,

supra, is that a regulation under the Clean Water Act

can be a taking if its effect on a landowner’s ability to

put his property to productive use is sufficiently severe.

See statement of Justice White, 106 S. Ct. at 459 n.4. The

App. 18

Clean Water Act in its present form, of course, goes far

beyond the concerns of navigation, and such concerns are

not implicated in this case, but in any event, the effect of

Kaiser Aetna v. United States, 444 U.S. 164 (1979) is

that the old ‘‘navigation servitude,’’ often used to excuse

what looked suspiciously like takings, is no longer avail-

able for that duty in regulatory taking cases. Defendant,

however, invoked the navigation servitude to excuse a

regulation under the Clean Water Act that completely

denied to the owner of a small island, any economic use

of it, but the Court of Claims in Laney v. United States,

661 F.2d 145 (Ct. Cl. 1981) held that this could be a tak-

ing, and a summary judgment holding it could not be was

denied. This court has held that a taking can occur by a

valid regulation with no phyiscal invasion. Skaw v.

United States, 740 F.2d 932 (Fed. Cir. 1984). Under

these authorities, the question has got to be faced whether

the impact of the regulation here involved was sufficiently

severe under the facts, as undisputed or as found, and

the unchallengeable legality in this proceeding of the reg-

ulatory act here involved, does not answer the question

or even lead towards the answer. In Laney, too, the legal-

ity of the regulation under the Clean Water Act was con-

ceded.

The Supreme Court has recently restated its standards

for determining when a regulation constitutes a taking. It

says:

[W]e have eschewed the development of any set form-

ula for identifying a “taking” * * * and have relied in-

stead on ad hoc, factual inquiries into the cireum-

stances of each particular case. * * * To aid in this

App. 19

determination, however, we have identified three fac-

tors which~have “particular significance:” (1) “the

economic impact of the regulation on the claimant”;

(2) “the extent to which the regulation has interfered

with distinct investment-backed expectations”; and

(3) “the character of the government action.”

Connolly v. Pension Benefit Guaranty Corp., 54 U.S.L.W.

4208, 3212 (U.S. Feb. 26, 1986)

The fifth amendment, as backed by the safety net of the

Tucker Act, does not find a taking in a mere denial of the

‘*highest and best use,’’ 2.e., most profitable use, that would

be available in the absence of regulation. It was so held in

considering a Cle.n Water Act regulation in Deltona Corp.

v. United States, 657 F.2d 1184 (Ct. Cl. 1981), cert. denied,

455 U.S. 1017 (1982); Jentgen v. United States, 657 F.2d

1210 (Ct. Cl. 1981), cert. denied, 455 U.S. 1017 (1982). The

regulation may allowably have some adverse effect on the

market value, as of course is almost inevitable if the most

profitable use is prohibited. Andrus v. Allard, 444 U.S. 51,

66 (1979); Penn Central Transportation Co. v. New York

City, 438 U.S. 104, 131 (1978). In cases of relatively recent

date, e.g., Penn Central, supra, the decision of Hadacheck v.

Sebastian, 239 U.S. 394 (1915) is often referred to as an in-

stance of truly spectacular reduction in value, from $800,000

to $60,000, caused by the regulation, which was held valid.

However, this was just an allegation, not a finding, and the

case appears to belong to the period when it was held a

valid ‘‘police power’’ regulation could not also be an exer-

cise of eminent domain. The case generally considered to

have broken with this analysis came later: Pennsylvania

Coal Co. v. Mahon, 260 U.S. 393 (1922). In that case, Jus-

tice Brandeis’ dissent cites Mugler v. Kansas and Hada-

check v. Sebastian and points out quite clearly how the

App. 20

Court is breaking with its precedents. There is no fixed

formula to determine how much diminution in market value

is allowable without the fifth amendment coming into play.

We are not cited to, nor have we found, cases comparing

the owner’s investment or basis with the market value sub-

ject to the regulation and applying any rule or formula with

respect thereto, but we deem that a relevant consideration

for exercise of a value judgment. |

The court below relied on statements that a regulation

was a taking if it ‘‘denies an owner economically viable use

of his land”’ citing Hodel v. Virgima Surface Mining & Re-

clamation Association, Inc., 452 U.S. 264, 296 (1981) ;*

Agins v. City of Tiburon, 447 U.S. 255 (1980). It found as a

fact that such denial occurred. This finding seems not

clearly erroneous only if immediate use is meant. Defen-

dant’s suggestion of other immediate uses we deem ob-

viously mere window dressing in light of its own expert wit-

ness’ concession that a ‘‘willing buyer’’ subject to the regu-

lation would have to be, and would be, one who expected to

put the property to no immediate use. The position of the

court was that if there was, under the regulation, no allow-

able and practicable immediate use, this established a taking

regardless of the impact of the regulation on fair market

value, even if it had no impact. Defendant said and says

that a fair market value was real and its indications should

govern.

This issue could not become a genuine controversy in

most other regulatory contexts. In the special locale of the

*The Court cited Hodel for a proposition other than the

portion of Hodel relying on National League of Cities v. Usery,

426 U.S. 833 (1976), overruled in Garcia v. San Antonio Metro-

politan Transit Authority, — U.S. —, 105 S. Ct. 1005 (1985).

App. 21

property involved, and special facts of this case, it does.

Plaintiff offered no real estate appraisal expert to support

its taking claim, but its econdmic expert, Dr. Nicholas, testi-

fied that “fair market value’’ subject to the regulation was

a myth: the only buyers who would pay any substantial sum

for the property were foreigners, unaware of the physical

nature of the property and of the legal restrictions on its

use, victims of fraud or self-deception. Defendant’s expert,

Mr. Cantwell, a qualified real estate dealer, testified that

there was a fair market value subject to the regulation, as

above set forth, the ‘‘willing buyers’’ of the conventional

value formula being investors willing to forego immediate

income in hope of long-term gain.

The locale makes the government theory more plausible

than it might otherwise be. South Florida heas long en-

joyed renown as not only a place where the gullible are

fleeced, but also one where far-seeing investors realize for-

tunes. With the proximity of the huge and growing metro-

polis of Miami, expanding too in that specific direction,

there can be no telling what future Miamians will want to

use the instant tract for, still less what they will be willing

and able to pay. Mineral land in the mountains or deserts

may well be foreseen to have no possible future use except

for production of minerals. This land is different and the

trial judge recognized as much when he got to the ‘‘dam-

age’’ phase for he found that the property would have sub-

stantial residual value, in view of its location, with all the

minerals removed; thus a ‘‘willing buyer’’ would pay more

than the mere value of the land as mineral land.

Of course, we take it for granted, as Mr. Cantwell did,

that the ‘‘willing buyer’’ of the market value formula has

got to be one who is correctly informed about the physical

App. 22

character of the land, as well as legal restrictions on its use.

He tried to disregard what those who came to be fleeced

might pay.

Thus, we have set up for adjudication a contest for em-

ployment as a test between immediate use value or non-

value and fair market value. In Goldblatt v. Town of Hemp-

stead, 369 U.S. 590 (1962), it is held that without evidence

of a diminution in fair market value, a prohibition of mining

on a tract cannot be held a taking. In Florida Rock Indus-

tries, Inc. v. Bystrom, supra, the Florida court holds that

the lack of any immediate use of or for land does not ex-

clude determination of its fair market value by analysis

based on comparable sales of similarly restricted land. Slip

op. at 8. Our trial court, as we read it, selected the immed-

iate use value because it thought it prescribed by the lan-

guage of the Supreme Court, read as saying that a denial

of an immediately viable use is a taking, regardless of any

fair market value analysis. No such analysis appears to

have been before the Supreme Court when it gave such

weight to such denial in the cases cited. We doubt very

much whether the Court ever meant to say, or would have

said, that a denial of any immediately viable use must be a

taking even though it had no effect on the fair market value

of the property. The further reason for the Claims Court’s

election was that it believed Dr. Nicholas that the only

‘‘willing buyers’’ were victims of deception, and disbe-

lieved Mr. Cantwell that there were serious and well-in-

formed “willing buyers.’’

We do not perceive any legal reason why a well-in-

formed ‘‘willing buyer’’ might not bet that the prohibition

App. 23

of rock mining, to protect the overlying wetlands, would

some day be lifted. The statute would not have to change,

only the perceptions of the Army engineers. One who re-

members when wet lands were called swamps, when their

draining or filling was deemed progress, and when their

main environmental impact was in the production of nox-

ious disease-bearing mosquitos, and who has observed their

present status, will not be astonished if some day a mosquito

bred in a swamp bites someone and infects him with ma-

laria, and the old beliefs revive. Not only do we take as

given, but we are impressed by, the wealth of scientific in-

formation that went into the district engineer’s decision.

He had light not available to our forebears. By the same

token, our descendants may know things we do not even

suspect. There is nothing so certain in life as that all cer-

tainties become uncertain, and some are replaced by their

opposites. One who invests in land on this faith may be a

speculator, but he is not on that account a gull.

Normally an appellate court accepts a trial court’s

election of whom to believe among conflicting testimony.

Due to the different occupations of Dr. Nicholas and Mr.

Cantwell, however, and their consequently different oppor-

tunities to perceive how the market operates, and who the

‘‘willing buyers’’ are, we think that the court’s acceptance

of Dr. Nicholas’ testimony is clear error. We are left with

a profound conviction that a mistake has been made. Since

the tract was not listed for sale, the $4,000 per acre offer,

the frequent inquiries, and the assessed value, must have

reflected interest of knowledgeable people, not foreigners

or gulls. There may be a question what knowledgeable buy-

ers would have paid, but that they would have paid some

substantial figure seems certain.

App. 24

The trial court also invoked the rule that damages

must not be speculative, by analogy as he was not ascertain-

ing damages at that point. This rule, however, means that

the court must not, itself, speculate, z.e., guess, about poten-

tial end uses or markets when the speculation is so remote

or improbable that one would not invest his money in it. It

does not exclude consideration of a relevant market made

up of investors who are real but are speculating in whole

or major part. Florida Rock Industries, Inc. v. Bystrom,

supra. Slip op. at 7. Anyone who buys mineral property is

speculating to a large extent, and so is even to some extent

one who buys ‘‘blue chip’’ securities. See Orgel Valuation

Under Eminent Domain § 31 (2d ed. 1953).

Whether based on a belief that a use value analysis was

required, or on a belief that the only serious bidders for the

property subject to the restriction were fraud victims, or

on a belief the other serious informed bidders were specu-

lators, the exclusion from consideration of defendant’s test-

imony as to the potential market was clear error or error,

and highly prejudicial to appellant. We are of the opinion

that Mr. Cantwell’s testimony, if considered and believed,

established the existence of a market in which Florida Rock

could have disposed of the property and mitigated the se-

verity of the regulatory action here involved, and the court

should have considered such a possibility. Indeed, if there

is found to exist a solid and adequate fair market value (for

the 98 acres) which Florida Rock could have obtained from

others for that property, that would be a sufficient remain-

ing use of the property to forestall a determination that a

taking had occurred or that any just compensation had to

be paid by the government.

The court’s methodology is objectionable for the fur-

ther reason that, by dispensing with the fair market value

App. 25

test in determining the occurrence of a taking, it makes the

case improperly one to recover for frustration of business

expectations. A taking is founded on the fact that Florida

Rock is prevented from doing a profitable business in the

extraction and sale of its limestone. Yet frustration in per-

formance of even an existing contract is not a taking of

contract rights, Omnia Commercial Co. v. United States,

261 U.S. 502 (1923) still less a hope of future profitable con-

tracts. This case is cited and followed in Connolly v. Pen-

ston Benefit Guaranty Corp., supra, our latest Supreme

Court pronouncement. Cf. Kimball Laundry Co. v. United

States, 338 U.S. 1 (1949) in which, in the case of a tempor-

ary taking some injury to business is allowed to be awarded,

with a careful explanation that this would not be so of a

permanent taking. If, therefore, the award here was for a

temporary interruption of production, the rule might be

different.

According to Agins v. City of Tiburon, 447 U.S. at 261,

the question of identifying a regulatory taking involves a

‘‘weighing of private and public interests.’’ What is called

the ‘‘seminal decision’’ in Village of Euclid v. Ambler

Realty Co., 272 U.S. 365 (1926) is cited as illustrative.

There the challenged zoning laws were held to bear ‘‘a sub-

stantial relationship to the public welfare, and their enact-

ment inflicted no irreparable injury upon the landowner.’’

447 US. at 261.

Conducting a similar weighing here, the preservation

of wetlands bears a substantial relationship to the public

welfare as perceived by the best lights of our time. The

pollution of the water, though the necessary hook for juris-

App. 26

diction of the Army engineers, is not claimed in the district

engineer’s decision to be by itself very serious. The de-

crease in water quality due to turbidity will be ‘‘short

term.’’ ‘Water pollution does not appear to be a problem’’

at (water supply) wells adjacent to similar pits. No differ-

ence in water quality appears. Thus, when appellant char-

acterizes the regulatory action as one to prevent pollution,

it is really elevating form over substance. The concern of

the district engineer is almost exclusively the continued ex-

istence of the wetland, not the temporary and moderate pol-

lution incident to the occurrence of actual mining. It would

be forensic semantics to characterize his decision as one

against pollution, and the action has to be analyzed more

carefully to weigh the private and public interests.

The Clean Water Act covers many types of pollution.

We may assume, arguendo, that one who wanted to put toxic

wastes in drinking water would encounter a balancing of

publie and private interests most unfavorable to his posi-

tion and not likely to result in a compensation award. De-

nial of the permit frustrates him in doing harm. On the

other hand, a moderate and pro forma polluter such as

Florida Rock does no harm. Denial of the permit requires

it to maintain at its own expense a facility, the wetlands,

which by presently received wisdom operates for the public

good, and benefits a large population who make no contri-

bution to the expense of maintaing such facility. This ap-

pears to be a situation where the balancing of public and

private interests reveals a private interest much more de-

serving of compensation for any loss actually incurred. The

private interest, unless relieved by a Tucker Act award, su-

stains what may well be a permanent obligation to maintain

property for public benefit, to carry the taxes and other

a. re

App. 27.

expenses, and not to receive business income from the prop-

erty in return.

Defendant says there was no taking because the 98

acres held taken are only a small part of a single tract of

1,560 acres, the rest not taken, and no restriction arising

from the denial of the permit applies to them. Such a con-

tention had dignity and was of decisive importance in the

cases of Deltona, supra, and Jentgen, supra, but there the

Army engineers considered the entire tracts and determined

that portions thereof could be developed as proposed. Here

the Army engineers considered only the 98 acres. As to the

rest, it is and, for the immediate future, remains illegal to

mine without a permit in the only fashion Florida Rock con-

siders feasible. Florida Rock could apply seriatim for per-

mits to allow mining on the rest, and inevitably, from the

evidence and the findings, have them denied. We do not

think that the mere possibility a permit might be granted,

like the possibility one might put a pot of water on a hot

stove and have it freeze, is a reality requiring us to deem

that viewing the 1,560 acres as a whole, Florida Rock might

in theory mine a lot of limestone, or perhaps market a hous-

ing development as appellant also would have us speculate.

The near certainty that the pot of water will boil is

what justifies Florida Rock’s cross-appeal in which it says,

if it can’t, as a practical or legal matter, mine on the rest of

the property, the rest is taken, and the judgment should be

modified to provide an award in the sum stated in the trial

court’s alternative finding. There are, however, answers to

this. In the first place, if the Army engineers adverted to

the possibility of making the government an involuntary

App. 28

purchaser at all, they must have supposed the exposure

would be much reduced by confining their determination to

a test case of 98 acres. Such an interest in controlling the

extent of exposure is entitled to some judicial respect. In

the second place, since the 98 acres sufficed for Florida

Rock’s needs for three years, there is no likelihood that

Florida Rock would, if allowed, mine over 98.acres in three

years. Therefore, the frustration of any viable economic

use, constituting the alleged taking, does not as to the excess

commence until over three years have passed. If the taking

legally occurs at the start of the three years, interest starts

to run, which seems unfair when Florida Rock never ex-

pected to derive income from it. Thirdly, the real injury be-

comes more speculative as the time of intended development

becomes more distant. Fourth, Florida Rock might have

precipitated takings by filing a series of applications for 98-

acre segments of the whole, but if the Army engineers re-

fused to consider them, the refusal would be reviewable

under the APA and not under the Tucker Act. We think it

is very questionable whether a refusal to consider applica-

tions relating to remote periods would be deemed an abuse

of discretion and, on the other hand, to hold the mere en-

actment of the statute a taking would be contrary to Hodel,

Agins, and indeed, just about all the recent Supreme court

authorities.

If the instant case, after the remand, still results in a

substantial award against the government, the Army engi-

neers probably would want to consider whether the con-

tinued protection of the 1,560 acres of wetlands was worth

the damage to the public fise. This right should be pre-

served to them.

App. 29

Vil

Appellant also attacks the decision below on the cur-

ious ground that the comparable sales, used as the trial

court’s base to compute the fair market value of the land

it held taken, were sales of rockland near the Florida Rock

site, but free of government restrictions on mining. The

law, says appellant, requires land taken to be valued sub-

ject to all existing legal restrictions on its use. Thus, if the

regulation constituting the taking reduced the value of land

subject to it to zero, the very severity of the economic in-

jury would relieve the taker of all but nominal fifth amend-

ment liability. We suppose appellant added this contention

to provide a little humor for an otherwise serious and schol-

arly brief, and say no more about it.

CONCLUSION

We hold that the trial court committed an error of law

in investigating and determining, notwithstanding the dis-

trict engineer’s finding that there was at least some de

jure pollution to be anticipated from Florida Rock’s proj-

ect, in reality there was none. The apparent purpose was

to sustain the assessment of taking liability for injury in-

flicted by regulation, but the alleged taker had a right, in

the Claims Court, to have the claim assessed on the basis

that its regulatory action was valid and correct in all re-

spects. The trial court also erred in assessing the severity

of economic impact exclusively on the basis of a use value

formula, refusing to consider any fair market value re-

maining in the land and realizable by the landowner. We

think, however, the record reveals a substantial possibility

that a taking should be held to have occurred under correct

legal standards, so a remand is necessary. On remand, the

App. 30

court should consider, along with other relevant matters,

the relationship of the owner’s basis or investment, and the

fair market value before the alleged taking, to the fair mar-

ket value after the alleged taking. In determining the

severity of economic impact, the owner’s opportunity to

recoup its investment or better, subject to the regulation,

cannot be ignored.

We affirm, however, the trial court’s refusal to deter-

mine that land was taken in excess of the 98 acres as to

which the permit was sought.

AFFIRMED IN PART, VACATED IN PART, AND

REMANDED FOR FURTHER PROCEEDINGS

CONSISTENT WITH THIS OPINION

App. 31

IN THE UNITED STATES CLAIMS COURT

No. 266-82L

FLORIDA ROCK INDUSTRIES, INC.,

Plaintiff,

THE UNITED STATES,

Defendant.

Fifth amendment taking; inverse condemnation; viable

econmic use; residual market value; Federal Water

Pollution Control Act Amendments of 1972; Clean

Water Act; dredge and fill permit; navigational servi-

tude.

(Filed May 6, 1985)

John A. DeVault, ITI, with whom were C. Warren

Tripp, Jr. and Bedell, Dittmar, DeVault, Pillans & Gentry,

Jacksonville, Florida, for plaintiff.

Fred R. Disheroon, with whom were George B. Hen-

derson and Assistant Attorney General F. Henry Habicht,

II, Washington, D.C., for defendant.

OPINION

KOZINSKI, Chief Judge.

This case presents the question of whether denial of a

dredge and fill permit by the U.S. Army Corps of Engi-

neers pursuant to section 404 of the Clean Water Act, 33

(1.8.C. § 1344 (1982), constitutes a taking of plaintiff’s

property, where the property can be put to no viable eco-

nomic use without such a permit.

BACKGROUND

On September 21, 1972, plaintiff bought about two and

a half square miles (1560 acres) of unimproved wetlands in

App. 32

Dade County, Florida, several miles inland from the city of

Miami. Plaintiff’s property is situated above a limestone

formation that is approximately 50 feet deep. The lime-

stone is suitable for mining and tests indicate that the

property would yield some 100,000 tons of usable rock per

acre,!

Plaintiff is in the business of manufacturing and sell-

ing crushed stone and aggregate for use in construction.

It bought the property for the specific purpose of mining

the limestone from which these materials are produced.

Plaintiff considered the property particularly well suited

to its purposes because of the proximity to Miami and the

fact that a spur of the Seaboard Coast Line Railroad ser-

vicing a nearby quarry could be extended to provide a con-

venient and economical means of transporting the lime-

stone to other parts of the state.

Rock mining is common in the part of Dade County

where plaintiff’s property is located. Thé normal method

of extracting limestone is by use of a dragline, a large

mechanical device that looks somewhat like a crane. The

dragline is placed near one corner of the property on a pad

(an area covered with crushed rock or other filler to raise

it above water level). The peat layer covering the limestone

is then removed from the area adjacent to the pad, expos-

ing the rock. The rock is loosened through blasting and

then scooped out by the dragline. After some processing,

the rock is placed on trucks or box ears for shipping. When

the dragline finishes removing all of the rock within its

1 The court makes no finding as to the amount of limestone

on the property or its value. These issues may be resolved

through further proceedings in the damages portion of this case.

App. 33

reach, it is moved to a new location. Blasting and excava-

tion begins anew until the cycle is completed and the drag-

line must be moved again.

Excavation continues in cycles in a single direction

leaving behind a trench some 50 feet deep and filled with

water. When the dragline reaches the end of the excava-

tion area, it reverses course and digging continues imme-

diately adjacent to the trench just completed. With each

sweep of the dragline, the trench becomes wider; it even-

tually develops into a deep body of standing water. This

body of water is incapable of sustaining the rich variety of

plant and animal life found in the displaced wetlands.

When plaintiff bought the property, it had all of the

necessary state and local permits or waivers to operate a

limestone quarry; there were no applicable federal statutes

or regulations. Approximately one month later, Congress

passed the Federal Water Pollution Control Act Amend-

ments of 1972, 33 U.S.C. $1251 et seq. (FWPCA). This

legislation gave the Army Corps of Engineers jurisdiction

to issue permits for discharging certain materials into the

‘‘waters of the United States.’’ In 1977 the Corps issued

regulations taking the position that this phrase extends the

Corps’ jurisdiction to wetlands.

The removal of limestone does not, per se, implicate

the FWPCA or require a permit from the Corps. Nor is

the destruction of the wildlife habitat associated with

limestone removal, in and of itself, a basis for exercise of

Corps jurisdiction over plaintiff’s activities. The Corps’

sole basis for jurisdiction is the fact that, as part of the

mining process, plaintiff must temporarily deposit the ex-

eavated material onto wetlands immediately adjacent to

App. 34

the excavation. This occurs in two ways. First, some of

the excavated material is used to construct the pad or plat-

form on which the dragline sits. Second, after material is

removed from the excavation pit, it is normally deposited

on the ground for drying and processing before it can be

shipped.

Because of a serious downturn in the southern Florida

building industry in the mid-1970s, plaintiff did not begin

mining until July of 1978. At that time, plaintiff was un-

aware of the Corps’ jurisdiction or the need to obtain a

federal permit. The Corps discovered plaintiff’s activities

and issued a cease and desist order on September 7, 1978.

Plaintiff complied and began preparing a permit applica-

tion. As a condition for considering the application, the

Corps required that plaintiff restore the property to its

pre-excavation condition.

On October 1, 1979, plaintiff submitted to the Corps an

application for a permit covering a 98 acre portion of the

property. Plaintiff. in fact, intended to excavate all of its

property. However, the Corps had advised prospective

applicants that it would not consider applications that cov-

ered more than about three years of excavation. Plaintiff

estimated that excavation of the property covered by its

application would take about that long, while it might well

take many decades to excavate the entire tract.

On October 2, 1980, the Corps denied plaintiff’s permit

application. Plaintiff did not seek judicial review of that

decision. Instead, it brought suit in our predecessor court

claiming that denial of the permit constituted a taking of its

property because there are no economically viable uses

(other than rock mining) to which the land may be put.

App. 35

Key Findings of Fact

Trial on the question of liability was held in Florida

from January 3 through January 11, 1984. After briefing

and argument, the court made a number of oral findings of

fact, the following of which are crucial to analysis of the

issues presented:

(1) At the time the Corps issued its cease and desist

order, plaintiff had all the necessary state permits or waiv-

ers, as well as the economic resources, to mine limestone on

its property. Limestone mining would have afforded plain-

tiff substantial economic gain.

(2) Under the current state of technology, it is im-

possible to profitably mine limestone on plaintiff’s prop-

erty without a Corps of Engineers dredge and fill permit.