# Petition for Writ of Certiorari — Florida Rock Industries, Inc. v. United States, 107 S. Ct. 926 (1987) (No. 86-465) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_2513%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1987 ## Text No. SEP i 9 1986 ie ea ae oe ee es a wale CLERK ‘ Supreme Court of the United States October Term, 1986 ft 4 FLORIDA ROCK INDUSTRIES, INC., Petitioner, vs. THE UNITED STATES, Respondent. fy Vv PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT re Vv 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 ~- VJ 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. aa 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. il 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 10 10 14 iv 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 4 ¢ No. In The Supreme Court of the United States October Term, 1986 Ly Vv FLORIDA ROCK INDUSTRIES, INC., Petitioner, vs. THE UNITED STATES, Respondent. .. Vv PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT ft. Vv 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). 2 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). ry Vw 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). Ly Vv 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). 8 (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 9 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 10 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). o 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). 4 NF is 11 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 12 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 13 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. 14 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- 15 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 16 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). 17 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 18 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 19 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- 20 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 21 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 Vv 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 Vv FLORIDA ROCK INDUSTRIES, INC., Petitioner, vs. THE UNITED STATES, Respondent. r, Vv Petition for Writ of Certiorari to the United States Court of Appeals for the Federal Circuit fa. Vv APPENDIX TO PETITION FOR WRIT OF CERTIORARI fay Vv 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. I 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 II 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. Ul 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. IV 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. V 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. vi 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, v. 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. See also p. 5 n.4 wmfra. (3) 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 income to cover even real estate taxes. Because of its location, the property is not suitable for residential construction or com- mercial activity. In any case, construction 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 appli- eation. See also p. 24 n.23 Infra 2 Additional findings of fact are set forth on the record of the May 7, and June 12, 1984, hearings and, where appropriate, in the body of this opinion. App. 36 Discussion Plaintiff claims a regulatory taking. Specifically, it argues that the United States has so seriously interfered with its right to use and enjoy its property as to render the property economically useless. The concept of a regulatory taking is not new in the law. More than half a century ago, the Supreme Court held that a state statute that effectively deprived the plain- tiff of the right to mine its land constituted a taking com- pensable under the fifth amendment. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 414-15 (1922). Over the years, the Supreme Court, the Court of Claims and the Court of Appeals for the Federal Circuit have consistently upheld the principle that excessive regulation may constitute a taking. Ruckelshaus v. Monsanto Co., — U.S. —, —, 104 S. Ct. 2862, 2874-75 (1984); Kirby Forest Industries v. United States, — U.S. —, —, 104 S. Ct. 2187, 2196 (1984) ; Hodel v. Virginia Surface Mining & Reclamation Associa- tion, 452 U.S. 264, 295-96 (1981) ; Agins v. City of Tiburon, 447 U.S. 255, 260 (1980); Kaiser Aetna v. Umited States, 444 U.S. 164, 174-75 (1979) ; Penn Central Transportation Co. v. New York City, 438 U.S. 104, 138 n.36 (1978) ; Gold- blatt v. Town of Hempstead, 369 U.S. 590, 594 (1962) ; Unit- ed States v. Central Eureka Mining Co., 357 U.S. 155, 168 (1958) ; Skaw v. United States, 740 F.2d 932, 939 (Fed. Cir. 1984) ; Yuba Goldfields, Inc. v. United States, 723 F.2d 884, 887-88 (Fed. Cir. 1983) ; Benenson v. United States, 212 Ct. Cl. 375, 392 (1977); Pete v. United States, 209 Ct. Cl. 270, App. 37 297 (1976); see also Whitney Benefits, Inc. v. United States, 752 F.2d 1554, 1557 (Fed. Cir. 1985) .3 The Supreme Court has enunciated the following test as to whether a regulatory taking has occurred: ‘‘A stat- ute regulating the uses that can be made of property effects a taking if it ‘denies an owner economically viable use of his land....’’’ Hodel, 452 U.S. at 295-96 (quoting Agins, 447 U.S. at 260). The court has found that denial of the permit by the Corps of Engineers made it impossible to profitably mine rock on plaintiff’s property. To paraphrase Mr. Justice Holmes, ‘‘{w]hat makes the right to mine [rock] valuable is that it can be exercised with profit. To make it com- mercially impracticable to mine certain [rock] has very nearly the same effect for constitutional purposes as ap- propriating or destroying it.’’ Pennsylvania Coal, 260 U.S. at 414.4 In addition, the court has found that there 3 In Chicago, Rock Island & Pacific Ry. v. United States, 284 U.S. 80 (1931), the Court noted that “[c]lonfiscation may result from a taking of the use of property without compensa- tion quite as well as from the taking of the title.” Id. at 96, quoted with approval in Kaiser Aetna, 444 U.S. at 174 n.8. * Restriction of the right to extract minerals in a particular manner may not work a taking if there are alternative methods to profitably mine the property. See Whitney Benefits, Inc. v. United States, 752 F.2d at 1562. (Markey, C.J., dissenting). Here, defendant has admitted that it is aware of no method for re- moving the limestone from plaintiff's property without obtain- ing a Corps permit to fill wetlands. Hearing Transcript of Aug. 25, 1983, at 15-16. Edward L. Baker, President of Florida Rock, testified that there is no economically viable method of mining limestone that can be accomplished without some filling of the property. Trial Transcript of Jan. 3, 1984, at 127. The court is persuaded by Mr. Baker’s testimony and finds that there is no profitable method of extracting limestone from plaintiff’s prop- erty that would not require a Corps permit. App. 38 are no other economically viable uses to which the property ean be put. Denial of the permit therefore has deprived plaintiff of all economically viable use of its land. Apply- ing 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 compen- sation. Defendant has launched a volley of arguments as to why plaintiff should nevertheless be denied any recovery. Many of these arguments are ingenious and forcefully pre- sented. If sustained, however, they would tie a claim for regulatory taking into a Gordian knot no plaintiff could ever hope to unravel. In considering defendant’s argu- ments, therefore, the court is mindful of the Supreme Court’s admonition that takings cases must not be resolved by mechanical application of formulae but through reason in light of common sense and experience. Katser Aetna v. United States, 444 U.S. at 175;5> see also Monsanto, — US. at —, 104 S. Ct. at 2874; Goldblatt, 369 U.S. at 594; Penn Central Transportation Co., 438 U.S. at 124; Whitney Benefits, Inc., 752 F.2d at 1558; Althaus v. United States, Nos. 443-82L & 352-83L, slip op. at 7 (Cl. Ct. Apr. 4, 1985). 5 The follow passage from Kaiser Aetna exemplifies the Court’s unwillingness to be lured toward an absurd result by an elegant argument: There is no denying that the strict logic of the more recent cases limiting the Government's liability to pay dam- ages for riparian access, if carried to its ultimate conclusion, might completely swallow up any private claim for “just compensation” under the Fifth Amendment... . But, as Mr. Justice Holmes observed in a very different context, the life of the law has not been logic, it has been experience. 444 US. at 177. App. 39 1. Plaintiff’s Residual Rights in the Property Defendant argues that plaintiff has not been deprived of its property because it retains valuable incidents of own- ership: the right to use the land in its current condition; to restrict or permit access to it by others; to sell, lease or give it away. in whole or in part. According to defendant, plaintiff has been deprived of merely one in the ‘‘ bundle of sticks’’ comprising its rights in the property, and such a partial deprivation does not constitute a taking. Defen- dant relies on such cases as Agins v. City of Tiburon, 447 U.S. 255 (1980) ; Andrus v. Allard, 444 U.S. 51 (1979) ; Del- tona Corp. v. United States, 228 Ct. Cl. 476 (1981); and Jentgen v. United States, 228 Ct. Cl. 527 (1981). Defendant’s argument proves far too much. A taking through regulation invariably leaves the property owner certain incidents of ownership that, on their face, appear to be significant. For example, in Pennsylvania Coal the property owner was denied the right to mine coal where _ doing so would cause the subsidence of any dwelling. The owner retained numerous other rights: to sell, lease or give away its interest in the property; to visit the mine; to exclude all intruders and trespassers. Similarly, in Benen- son, where plaintiffs were deprived of the right to replace the Willard Hotel with a modern office building, or to make any other significant exterior structural changes, the court noted that ‘‘ plaintiffs have complete freedom to alter the interior of the building for uses other than a hotel, and [defendant] has not prohibited the sale or other use of the property.’’ 212 Ct. Cl. at 390. In Pete, barge owners were prohibited from conducting commercial operations on Bass- wood Lake, Minnesota. Plaintiffs nevertheless retained the right to exclude others from using or occupying the App. 40 barges; to sell or lease them; to modify, disassemble, or de- stroy them; and to move them to another location. In each of these cases, the court recognized that such rights as re- mained to the property owner, important though they may have seemed in theory, retained little or no economic value as a result of the government’s action. See also Amen v. City of Dearborn, 718 F.2d 789 (6th Cir. 1983), cert. denied, 104 S. Ct. 1596 (1984) (taking found even though landowners still had the right to live in their houses). In cases involving regulatory takings, the court must examine the substance, rather than the legal trappings, of what is left as a result of the government’s regulatory ac- tion. If that which is left to the property owner is ren- dered meaningless by that which is taken, compensation is due. Here, the court has found that denial of the Corps per- mit deprived plaintiff of the only economically viable use of its property—rock mining. Under such circumstances. 6 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 Benen- son and of the unimproved land in Althaus. 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. There may be situations where regulatory restrictions have no practical effect because the prohibited use is not economical- ly feasible. This is not such a case. Here, plaintiff had begun to mine the property and abandoned its activities only when (Continued on foliowing page) App. 41 plaintiff’s remaining ownership rights, such as the right to exclude others from the property, are meaningless; plain- tiff has no reason to exclude others if it cannot itself put the property to productive use. Under such circumstances, plaintiff’s residual rights are hollow and cannot defeat its claim for just compensation. 2. Residual Market Value Defendant next argues that plaintiff cannot claim a taking of its property because its land has not been ren- dered entirely worthless. Defendant presented evidence that there is a market for plaintiff’s land and relies upon cases holding that a mere diminution in the value of prop- erty is not a taking. Agins, 447 U.S. at 262-63; Andrus, 444 U.S. at 66; Penn Central Transportation Co., 438 U.S. at 131; Deltona Corp., 228 Ct. Cl. at 491-92; Jentgen, 228 Ct. Cl. at 532. In the cases cited by defendant the property affected by the government’s action continued to have significant value not merely because it could be sold for some positive price in the market, but in the more meaningful sense that it continued to be available for productive economic activ- ity. For example, the zoning ordinance in Agins drastically reduced the number of dwellings that could be built on plaintiff’s land. However, a significant amount of con- (Continued from previous page) served with a cease and desist order by the Corps of Engineers. Plaintiff then applied for a dredge and fill permit, disclosing every intention of conducting mining activities. Under these circumstances, relegating plaintiff to passively holding the land in the hope that the regulatory climate may someday change cannot be deemed the type of viable economic use that will defeat a claim for a taking under the fifth amendment. App. 42 struction was in fact permitted; this constituted a profit- able economic use. In Penn Central the Court noted that ‘(t]he restrictions imposed . .. not only permit[ted] rea- sonable beneficial use of the landmark site but also af- ford[ed] appellants opportunities further to enhance not only the Terminal site proper but also other properties.’’ 438 U.S. at 138 (footnote omitted). In contrast, plaintiff here is left without any economically viable use of its prop- erty and is afforded no ‘‘transfer rights’’ or other accom- modation of its interest. Common sense suggests that regulatory action will never entirely eliminate the market value of the real prop- erty it affects. Land, but its nature, is timeless; govern- ment policy, indeed any particular government 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 residua! market for the property could defeat a claim for a regula- tory 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 rendered unfit for economically viable activity, they have found a fifth amendment taking even though the property obviously continued to have market value. See, e.g., Katser Aetna v. United States, 444 U.S. 164 (1979); Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922); Benenson v. United States, 212 Ct. Cl. 375 (1977) ; Pete v. United States, 209 Ct. Cl. 270 (1976); Amen v. City of Dearborn, 718 F.2d 789 (6th Cir. 1983), cert. denied 104 S. Ct. 1596 (1984); Annicelli v. Town of South Kingstown, — R.I. —, 463 A.2d 133 (1983) ; Bartlett v. Zoning Commission, 161 Conn. 24, 282 A.2d 907 (1971); Dooley v. Zoning Commission, 151 Conn. *4, 197 App. 43 A.2d 770 (1964) ; State v. Johnson, 265 A.2d 711 (Me. 1970) ; Morris County Land Improvement Co. v. Township of Parstppany-Troy Hills, 40 N.J. 539, 193 A.2d 232 (1963). Here, the court finds that the market for plaintiffs land is based on speculation, much of it fueled by unserupu- lous promoters. Southern Florida real estate attracts much investment capital, particularly from abroad. Land is sold to unwary, distant buyers on the premise that it is, or can be rendered, suitable for development. The State of Florida has recognized this as a serious problem and has taken measures to curb the practice, apparently without complete success. The existence of a market for plaintiff’s property, despite what the court has found to be its useless- ness for all productive activity, is based upon speculators’ expectations that they will be able to pass the property on to hapless investors who do not understand the nature and scope of the restrictions on its use, or can be persuaded that the restrictions are transitory or can be cireum- vented.’ It is well established that speculative value may not be taken into account for purposes of determining compensa- tion in condemnation proceedings. United States v. 117,- 763.00 Acres of Land, 410 F. Supp. 628, 631-32 (S.D. Cal.), aff’d sub nom. United States v. Shewfelt Investment Co., 7 Potential buyers would require much sophistication to understand the full scope of the restrictions on the use of plain- tiff’s land. The FWPCA does not directly prohibit construction in wetlands, but merely requires a permit therefor. Buyers might well believe that a permit is readily obtainable. In reality, if a permit was denied plaintiff for rock mining, there is little pos- sibility that a permit would be issued for other construction activities (such as apartment houses) which alter the character of the land and surrounding environment much more drastically. App. 44 570 F.2d 290 (9th Cir. 1977) ; accord Olson v. United States, 292 U.S. 246, 257 (1934); United States v. 158.24 Acres of Land, 696 F.2d 559, 562 (8th Cir. 1982); United States v. 620.00 Acres of Land, 101 F. Supp. 686, 690 (W.D. Ark. 1952). In 117,763.00 Acres of Land, the government sought to condemn a leasehold of desert property for use as an artillery range. The property owners argued that the fair market value ought to be determined by reference to prices paid by speculators for nearby property. At the urging of the United States, the court rejected this argument noting that the prices paid by speculators did not rest upon the ‘‘appraisal of the land in terms of its uses and a forecast of what the needs of a growing and shifting population for those uses will be,’’ but upon the fact that ‘‘each speculator buys with the thought that he can sell to another speculator at a higher price... the whole thing [being] a game of wits with someone at the end of the trading chain losing.’’ 410 EF. Supp. at 632. It seems eminently sensible, as well as entirely fair, to apply the same rule in inverse condemnation cases. This court has done so recently in Althaus v. United States, Nos. 443-82L & 352-83L (Cl. Ct. April 4, 1985). The author of this opinion cannot improve on Judge Mayer’s terse dis- missal of defendant’s identical argument in Althaus: ‘‘!T |he court rejects the idea that the fifth amendment can be avoided by forcing citizens to sell their property to spec- ulators at a fraction of its value.’’ Slip op. at 9. 3. Rock Mining as an Element of Value Perhaps defendant’s most ingenious argument is that the court must ignore limestone mining—indeed any activ- ity requiring a federal permit—in determining whether App. 45 plaintiff has been dprived of all viable economic use of its property. Under defendant’s theory, any use that is sub- ject to governmental approval is dependent upon the con- sent of the government for its value and so defendant may not be charged with loss arising from the prohibition. De- fendant relies upon a series of direct condemnation cases holding that the United States need not compensate a prop- erty owner for value derived from uses that the government was entitled to prevent through a power other than eminent domain. United States v. Fuller, 409 U.S. 488 (1973); United States v. Rands, 389 U.S. 121 (1967) ; United States v. Twin City Power Co., 350 U.S. 222 (1956) ; United States v. Cors, 337 U.S. 325 (1949). Defendant’s argument badly distorts the nature and function of government in a free society where the right to own and enjoy property is a fundamental aspect of personal liberty, not a privilege dependent upon the whim of the sovereign. See Lynch v. Household Finance Corp., 405 U.S. 538, 552 (1972) ;* see also Fuentes v. Shevin, 407 U.S. 67, 81 (1972); Shelley v. Kraemer, 334 U.S. 1, 10 (1948). Under defendant’s theory, the government would never be re- quired to pay compensation for denial of a permit or, in- deed, for any regulatory activity that severely limits or en- tirely destroys the economic uses to which property may be put. Since practically all economic activity has now been held to be the proper subject of regulation by the federal government, defendant’s argument would effectively free the United States of all constitutional constraints in the 8 In Lynch the Court noted that “the dichotomy between personal liberties and property rights is a false one... . Neither could have meaning without the other. That rights in property are basic civil rights has long been recognized.” 405 U.S. at 552. App. 46 area of economic regulation. This the court will not do. As Professor Epstein recently noted: ‘‘Our guiding principle should derive from our Lockean tradition—a tradition that speaks about justice and natural rights .... When govern- ment wishes to encroach on those rights in order to dis- charge its collective functions, it must give all the individ- uals on whom it imposes its obligations a fair equivalent in exchange.’’ Epstein, Judicial Review: Reckoning on Two Kinds of Error, 4 Cato J. 711, 716 (1985). The cases defendant cites do not, in fact, support its conclusion. In Fuller, the property owner sought compensa- tion for value derived from permits entitling him to graze his cattle on federal lands adjacent to the condemned land. The Court held that this element of value was not compen- sable because the Secretary of the Interior was authorized to withdraw the permits at will, thereby destroying the value created by their existence. 409 U.S. at 493. In Rands and Twin City Power Co., the Court denied compensation for losses resulting from an exercise of the ‘‘navigational servitude’’ of the United States. Rands, 389 U.S. at 126; Twin City Power Co., 350 U.S. at 228. In each of these cases, the action of the United States was taken in its pro- prietary, rather than its sovereign, capacity. The rights in question belonged to the United States and were only en- joved by the property owners subject to revocation.’ In our case, the right to mine the property belongs entirely to ® Cors has no relation to this case. It stands for the prop- osition that the government need not compensate the owner for value created by the very use to which the government plans to put the condemned property. 337 U.S. at 333. Here, the value destroyed by denial of the permit was not created by the gov- ernment; it is due entirely to market forces extraneous to the Corps’ permitting process. App. 47 plaintiff. The United States has no proprietary interest in plaintiff’s land and therefore no right to prohibit rock min- ing except through exercise of its regulatory power. This is plainly not the situation contemplated in Fuller, Rands and Twin City Power Co., and the United States therefore can- not escape its responsibility to pay compensation under the fifth amendment." 4. Taking and the Police Power Defendant also raises arguments to the effect that the Corps’ denial of a permit cannot constitute a taking because it merely prohibits an activity ‘‘found by Congress to be detrimental to the publie welfare ;’’ because plaintiff’s pro- posed rock mining operation would cause pollution; and because defendant is trying to protect ‘‘vaiuable habitat and food chain resources|,} ... values that society has his- 10 Defendant might have been misled by language in cases such as Fuller to the effect that ‘the Government as condemnor may not be required to compensate a condemnee for elements of value that the Government . . . might have destroyed under the exercise of governmental authority other than the power of eminent domain.” 409 U.S. at 492 (emphasis added). This lan- guage does not, in fact, support defendant's position. Destruc- tion of some property rights may occur incident to a valid ex- ercise of regulatory authority, but.where the destruction is ex- cessive—as in this case—it is deemed to have been an exercise of the power of eminent domain as well. See San Diego Gas & Electric Co. v. City of San Diego, 450 U.S. 621, 653 (1981) (Bren- nan, J., dissenting) & authorities cited therein; Sun Oil Co. v. United States, 215 Ct. Cl. 716, 769 (1978) (“if [government] regulation is unreasonable or arbitrary relative to private prop- erty rights, the law of eminent domain applies”) (citing Gold- blatt, 369 U.S. at 594, and Pennsvivania Coal, 260 U.S. at 413-14); Althaus v. United States, Nos. 443-82L & 352-83L, slip op. at 6 (Cl. Ct. Apr. 4, 1985) (government actions resulted in de facto exercise of power of eminent domain). Even by its own terms, ' png the statement quoted from Fuller has no application to this case. App. 48 torically enjoyed and may properly protect.’’ These argu- ments are considered in turn. a. Activity Detrimental to the Public Welfare Defendant’s broadest argument is that compensation need never be paid where an activity is prohibited that has been ‘‘found by Congress to be detrimental to the public welfare.’’ The court rejects this argument out of hand. Ex- ercise of the police power, by definition, promotes the public good. It follows that any use prohibited under the police power is contrary to the public welfare. In essence, then, defendant is arguing that an exercise of the police power can never result in a taking, regardless of how innocuous the private activity or how severely the governmental action diminishes the use and enjoyment of private property. The compensation clause of the fifth amendment would be read out of existence if government could define away private property rights by pronouncing their exercise as contrary to the p [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_2513%3A1. Public record. Not legal advice.