Petition for Writ of Certiorari — Mock v. Pennsylvania Department of Environmental Resources

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Supreme Court, U.S,

FIBRD

9513 QO FEB 2.8, 1996:

: Uric OF tht ClrAk

In The

Supreme Court of the United States

October Term, 1995

CONRAD MOCK and BARBARA MOCK,

Petitioners,

VS.

COMMONWEALTH OF PENNSYLVANIA DEPARTMENT

OF ENVIRONMENTAL RESOURCES,

Respondent.

Petition for a Writ of Certiorari to the Supreme

Court of Pennsylvania

PETITION FOR A WRIT OF CERTIORARI

KEVEN J. COAKLEY

Counsel of Record

ERNEST W. SCHOELLKOPFF

CONNELL, FOLEY & GEISER

Attorneys for Petitioners

85 Livingston Avenue

Roseland, New Jersey 07068

(201) 535-0500

8271

(800) 3 APPEAL » (800) 5 APPEAL « (800) BRIEF 21

Services, inc.

QUESTIONS PRESENTED

1. Is categorical treatment of regulatory action which

denies all economically beneficial or productive use of land

appropriate for “as applied” as well as facial takings challenges

under the FifthAmendment?

2. Where property owners produce uncontroverted

evidence that denial of a permit has rendered a property

valueless, does the government bear the burden of presenting

evidence of practicable and reasonably probable uses in order to

avert a taking?

3. Where denial of apermit has rendered property valueless,

does the Pennsylvaniacourts’ requirement that property owners

must affirmatively foreclose all pcssibility of alternative use,

however speculative, vitiate the Fifth Amendment guarantee

against takings without just compensation?

4. Are the landowners’ investment-backed expectations to

be considered in cases of categorical regulatory takings, and if so,

were those expectations of petitioners frustrated by their inability

to develop commercially zoned property because of wetlands

restrictions enacted long after the property was purchased?

TABLE OF CONTENTS

Page

Questions Pussenteds ... . .<iossectbchiendupeadss. i

Be re ee ee ii

ea eT COMMIORB 0 60's snnw ns puceenes area lil

Copiniens Bete « «xs +ii0sa0nteenaeeaee l

Statomentol SariedGicHGe. « .okcicckcdecacueesvesacs l

Constitutional Provisions Involved ................ 2

Statement of Mee Cass oo. kkk bbs eva eee es 3

Reasons for Granting the Writ ..................... 9

I. The Pennsylvania courts have declined to follow

- this Court’s standard for determining categorical

takings of property rendered valueless by the

denial of a wetlands fill permit, contrary to Lucas

v. South Carolina Coastal Council. ........... 9

II. Pennsylvania has sought to avoid this Court’s

categorical takings rule by imposing on the

property owner an uncertain and potentially

interminable burden of excluding ll

economically viable use in the permit application

Co ee es ee 12

Ill. In the constitutional determination of

economically viable use, the burden of production

ili

Contents

Page

must be shifted to the government once the

landowners have submitted unrebutted evidence

that their property is valueless. .......----++-- 14

IV. The Pennsylvania courts have skewed the takings

analysis to deny just compensation by confusing

the substantive determination of economically

viable use with the ripeness requirement. ...... 16

V. The state and federal courts require clarification

whether investment-backed expectations remain

as a factor to be considered or are subsumed in a

finding of acategorical taking. ......-------- 19

i sicae stb ateeswaesececsesees 20

TABLE OF CITATIONS

Cases Cited:

Agins v. Tiburon, 447 U.S. 255, 100S. Ct. 2138, 65 L. Ed.

2d 106 (1980) ...... ce cceescccccecescccccceeses 9

Connolly v. Pension Benefit Guaranty Corp., 475 U.S.

211, 106 S. Ct. 1018, 89 L. Ed. 2d 166 (1986) Fevaes 18

Dolanv. City of Tigard, __U.S.__, 114S.Ct. 2309, 129L.

EN a cup dasha cceisb ose 16

Florida Rock Indus. v. United States, 18 F.3d 1560 (Fed.

Cir. 1994), cert. denied, __U.S.__, 115S. Ct. 898, 130

L. Ed. 2d 783 (1995) ....---cccccecceccccesecees 18,19

Contents

Page

Formanek v. United States, 26 Cl. Ct.332 (1992) ...... 18

Herrington v. County of Sonoma, 857 F.2d 567 “ -* Cir.

1988), cert. denied, 489 U.S. 1090, 109S.Ct. 1557, 103

Ey Pk. eee rerrrr rere Goivebes 17

Loveladies Harbor, Inc. v. United States, 21 Cl. Ct. 153

(1990), aff’d, 28 F.3d 1171 (Fed. Cir. 1994) ........

oad HETERO Re a 10, 11,14, 15, 18,19

Lucas v. South Carolina Coastal Council, 508 U.S. 1003,

112S. Ct. 2886, 120 L. Ed. 2d 798 (1992) . 8,9, 10,11, 15,19

MacDonald, Sommer & Frates v. Yolo County, 477 U.S.

340, 106S. Ct. 2561, 91 L. Ed. 2d 285 (1986) .... 16,17,18

Olson v. United States, 292 U.S. 246, 54S. Ct. 704, 78 L.

Gs CREO ok os kek Ss oe ede ee be eei ein 15

Parkview Corp. v. Department of Army, 490 F. Supp. 1278

(EAP, WOR, FOOOE 6 Cancevenccevcdaaba bate eseee es 17

Penn Central Transp. Co. v. City of New York, 438 U.S.

104, 98S. Ct. 2646,57 L. Ed.2d631(1978) ....... 18

United States v. 341.45 Acres of Land, 633 F.2d 108 (8th

Cir. 1980), cert. denied sub nom. Bassett v. United

States, 451 U.S. 938, 101 S. Ct. 2017, 68 L. Ed. 2d 324

CQUEE bik boo vuoi ce hae eke oe eee 15

Contents

Page

Statute Cited:

p Ep Rol Lb)! ee ere errno k ee a l

United States Constitution Cited:

Pifth AMONGMERE . 0... ccc cece rc cccccvecevessenes i, 2,6, 16

FourteenthAmendment ............--++eeeeeeeees 2

Other Authority Cited:

C. McCormick, McCormick on Evidence § 338 (3d ed.

TOBE) occ cédevedsdpenvedeecee ede chiet eoaneens 14,15

AFPENDIX

Appendix A — Order of the Supreme Court of

Pennsylvania, November 22,1995 .......---++++: la

Appendix B — Order of the Commonwealth Court of

Pennsylvania, March 25,1993 .......---+s++0ee> 3a

Appendix C — Opinion of the Commonwealth Court of

Pennsylvania Filed March 25,1993 ......-.-+++- 4a

Appendix D— Dissenting Opinion of Judge Kelley in the

Commonwealth Court of Pennsylvania Filed March 25,

OE aie ob bak ac bee Eve Reece RENT has FEET aR 27a

Contents

Appendix E -— Commonwealth of Pennsylvania

Environmental Hearing Board Adjudication Issued

DENY 1, F988 oss s 6a eRe ed ek ees

Appendix F — Commonwealth of Pennsylvania

Environmental Hearing Board, Concurring Opinion of

Board Member Terrance J. Fitzpatrick Issued May 1,

SIGS svc cdovedaevek's-c4o0tke saeco

Appendix G — Letter of Joseph J. Ellam, Acting Director,

Bureau of Dams and Waterway Management,

Commonwealth of Pennsylvania Department of

Environmental Resources, Denying Permit

Application No. E 09-357 Dated Aprii 12,1990 ....

Page

30a

60a

63a

OPINIONS BELOW

The order of the Supreme Court of Pennsylvania, affirming

the order of the Commonwealth Court of Pennsylvania, is

reported at 667 A.2d 212 and is reprinted in the appendix hereto,

p. la, infra.

The order and opinion of the Commonwealth Court of

Pennsylvania are reported at 154 Pa. Cmwith. 380 and at 623

A.2d 940, and are reprinted in the appendix hereto, p. 3a and

p. 4a, infra, with the dissenting opinion of Judge Kelley at p. 27a.

The adjudication and order of the Commonwealth of

Pennsylvania Environmental Hearing Board have not been

reported. They are reprinted in the appendix hereto, p. 30a, infra,

with the concurring opinion of board member Terrence J.

Fitzpatrick at p. 60a.

The letter of the Bureau of Dams and Waterway

Management, Commonwealth of Pennsylvania Department of

Environmental Resources, denying petitioners’ encroachment

permit application is reprinted in the appendix hereto, p. 63a,

infra.

STATEMENT OF JURISDICTION

The petitioners, Conrad Mock and Barbara Mock,

respectfully pray that a writ of certiorari issue to review the

judgment of the Supreme Court of Pennsylvania, entered on

November 22, 1995, affirming the order entered with opinion by

the Commonwealth Court of Pennsylvania. Petitioners invoke

the certiorari jurisdiction conferred on this Court by 28 U.S.C.

§ 1257(a).

CONSTITUTIONAL PROVISIONS INVOLVED

The Fifth Amendment to the United States Constitution

provides:

No person shall be held to answer for a

capital, or otherwise infamous crime, unless

on a presentment or indictment of a Grand

Jury, except in cases arising in the land or

naval forces, orin the Militia, when in actual

service in time of War or public danger; nor

shall any person be subject for the same

offense to be twice put in jeopardy of life or

limb; nor shall be compelled in any criminal

case to be a witness against himself, nor be

deprived of life, liberty, or property, without

due process of law; nor shall private property

be taken for public use, without just

compensation.

Section 1 of the Fourteenth Amendment to the United States

Constitution provides:

All persons born or naturalized in the

United States, and subject to the jurisdiction

thereof, are citizens of the United States and

of the State wherein they reside. No State

shall make or enforce any law which shall

abridge the privileges or immunities of

citizens of the United States; nor shall any

State deprive any person of life, liberty, or |

property, without due process of law; nor

deny to any person within its jurisdiction the

equal protection of the laws.

STATEMENT OF THE CASE

Petitioners Conrad and Barbara Mock are part-owners of a

5.2- acre tract purchased in February of 1963 as a long-term

investment. The'property is on the east side of Easton Road (U.S.

Route 611) just north of Doylestown, in Plumstead Township,

Bucks County, Pennsylvania. The Pine Run Creek runs roughly

parallel to the northern boundary of the property. The property

is located in an area designated as a C-2 Highway Commercial

District by the July 1989 Zoning Ordinance of Plumstead

Township. In the C-2 Highway Commercial District, a wide

variety of commercial uses, including an automobile repair

facility, are permitted.

The surrounding properties are highly developed with

commercial and industrial establishments, including atire store

located south of the property; a concrete plant to the east; a

medical facility north of the property; and automobile

dealerships and banks located to the west across Route 611. The

medical facility was constructed on totally filled wetlands after

petitioners had purchased their property. Petitioners’ property

is the only undeveloped land in the immediate vicinity.

Of the 5.2 acres which comprise the property,

approximately 3.94 acres are wetlands. There are only two

upland areas, which are located in the southeast (front) and

southwest (rear) corners. Together, these upland areas comprise

approximately 1 1/4 acres. In 1979, Petitioners applied to the

Pennsylvania Department of Environmental Resources

(“DER”) for a permit authorizing a retaining wall along the Pine

Run Creek and approval to fill behind it toa height above the 100-

year flood elevation. The project would have filled in all of the

wetlands on the property. DER issued a letter accepting the

calculations and methodologies but stating that permits would

not be issued until land development was imminent.

In 1985, petitioners entered into an agreement of sale with

Midas Realty Corporation to convey the property to Midas for

$175,000, but the sale was contingent upon Midas’ ability to

secure all necessary permits and approvals for constructing and

operating a Midas Muffler shop. On February 11, 1986, Midas

filed an application with DER for a Water Obstruction Permit

authorizing fill on a portion of the property to facilitate the

construction of the proposed Midas Muffler shop and its

attendant parking facilities. Submitted with the Midas

application was areport containing calculations which showed

that stormwater run-off and the 100-year floodplain elevations

of the Pine Run Creek would not be increased by the project. The

Midas project satisfied Plumstead Township’s standards for

stormwater management and floodplain use and the standards of

the Bucks County Conservation District for erosion and

sedimentation control. Because of opposition from DER and the

U.S. Army Corps of Engineers to the filling of wetlands,

however, Midas decided to discontinue its permit application,

and DER never took any action with respect to that application.

After the Midas sale fell through, petitioners decided to

pursue the development of the property themselves. They

proposed to construct an automobile repair facility, a permitted

use in the C-2 zoning district. They prepared a site plan utilizing

basically the same design as the earlier project proposed by

Midas.

On July 1!, 1988, petitioners filed a permit application with

DER and the Army Corps of Engineers, seeking authorization to

fill .87 acres of wetlands. The fill was required to provide

sufficient developable area adjacent to the upland frontage along

Route 611 for construction of an automobile repair facility. The

application proposed filling an area approximately 150 feet wide

by 240 feet long, lying between the two upland areas on the

property; construction of a 5,000-square-foot building and 37

Pion ee ee, ee igh iihaaie

parking spaces on the newly filled area; construction of a

stormwater detention basin on the rear upland area; extension of

a 36-inch reinforced concrete pipe; and installation of an outlet

structure near Easton Road. In addition, in order to compensate

for the wetland fill, petitioners proposed a .38-acre wetland

creation area in the rear upland section.

In their proposal, petitioners considered whether a facility

might be located in the rear upland corner; however, this

alternative was simply not feasible. As set forth in their

Comprehensive Environmental Analysis:

The alternative of pushing the facility to the

southeast corner of the tract where a larger

portion of non-wetland area exists was

considered and found less desirable to the

present alternative for the following reasons:

The area is currently steeply sloped and

would alsorequire substantial fill material in

the wetland area. The access road would also

have to be lengthened across the wetland

area. The detention facility would still be

required and would have to be constructed in

the wetland area. In short, approximately

equal amounts of disturbance to the wetland

area would exist while moving the facility

further back into the wildlife area(U.S. Army

Corps of Engineers consideration) and

further away from the patrons being served.

DER denied the permit application and the Mocks appealed

to the Environmental Hearing Board (“EHB”). Hearings were

held before Administrative Law Judge Robert D. Myers on July

9 and 10, 1991. The issues raised on the appeal were whether

DER’s denial of the permit application was proper, and, if it was,

whether the denial of the permit application effected a taking

under the Fifth Amendment to the United States Constitution and

article 1, section 10 of the Pennsylvania Constitution.

The EHB concluded that DER had properly denied the

permit application. On the taking issue, after considering all of

the testimony, the Board found: “The Site in its present condition

and without a permit to fill in a portion of the wetlands is

essentially valueless. With a permit similar to that applied for by

Appellants, the Site could have a value of $175,000 (the amount

offered by Midas) or more.”

The EHB accepted petitioners’ proofs that construction on

the rear upland area was not practical. In addition, the EHB

found that the DER had not even challenged petitioners’ proofs

that no other permitted uses would have a lesser impact on the

site’s wetlands. Notwithstanding these findings of fact, the

Board concluded that DER’s action in denying the requested

permit to fill .87 acres of wetlands did not effect a taking of all or

of a portion of the property.

At odds with the EHB’s conclusion is the unrebutted

testimony of Russell Benner, petitioners’ registered professional

engineer, unchallenged by DER, that there were no other uses

permitted by the zoning ordinance which would involve a lesser

impact on the wetlands portion of the property than the proposed

automobile repair facility. Rather, according to EHB, “common

sense” suggested that some other permitted use involving less

wetlands could be built on the site. The Board further speculated

that any reduction in the size of the project which would reduce

the amount of wetlands to be affected might induce DER to issue

a permit, and thus ignored the testimony of DER representatives

that any new permit application to fill wetlands on petitioners’

property would have been futile. Richard Shannon, who

reviewed the Mocks’ application for DER testified:

Q. And isn’t the location of the project off-

site one of the factors that you believe has to

be taken into account in terms of mitigation

as itis defined in the regulatory sense?

A. Yes.

Q. Under what circumstances, then, in a

non-water dependent project would you

permit the intrusion upon wetlands?

A. Where there are no practicable

alternatives to locating that project at that

Site.

Q. Doyou mean where it’s not practicable to

locate it off-site in some other location?

A. Yes.

Q. So, in the case of Mr. Mock, I take it that

you concluded that there is some off-site

location at which an automobile facility can

be located, for example, virtually any other

place in the Doylestown area, correct?

A. Yes.

Q. And consequently, under no

circumstances would you permit any filling

of wetlands because one could mitigate by

going somewhere else to c different site?

A. Essentially, yes. The Mocks never

provided me any documentation indicating

that this facility could not go at another site.

The EHB adjudication was issued prior to the decision in

Lucas v. South Carolina Coastal Council, 508 U.S. 1003, 112S.

Ct. 2886, 120 L. Ed. 2d 798 (1992).

Petitioners filed a petition for review with the

Commonwealth Court of Pennsylvania. In its majority opinion,

the court considered Lucas and declined to apply its

constitutional standard for determining whether the permit

denial was a regulatory taking, despite finding substantial

evidence to support the EHB’s conclusion that the property was

valueless in its present condition. The Commonwealth Court

further saw fit to repair to “traditional” takings analysis, and

opined that since the Mocks did not prove what their plans were

on the purchase in 1963, the permit denial did not interfere with

their investment backed expectations. Judge Kelley of the

Commonwealth Court dissented and filed a separate opinion

finding a taking under Lucas.

Petitioners then sought review by the Supreme Court of

Pennsylvania. The appeal was allowed and oral argument was

heard. On November 22, 1995 the Supreme Court of

Pennsylvania affirmed the order of the Commonwealth Court in

a per curiam order.

REASONS FOR GRANTING THE WRIT

THE PENNSYLVANIA COURTS HAVE DECLINED

TO FOLLOW THIS COURT’S STANDARD FOR

DETERMINING CATEGORICAL TAKINGS OF

PROPERTY RENDERED VALUELESS BY THE DENIAL

OF A WETLANDS FILL PERMIT, CONTRARY TO LUCAS

V. SOUTH CAROLINA COASTAL COUNCIL.

As the Court stated in Lucas v. South Carolina Coastal

Council: “When the owner of real property has been called upon

to sacrifice all economically beneficial uses in the name of the

common good, thatis, to leave his property economically idle, he

has suffered ataking.” 505 U.S. at ___,112S.Ct. at2895, 120L.

Ed. 2d 798. It is well established that regulatory action is

compensable without case-specific inquiry into the public

interest advanced in support of the restraint when regulation on

its face denies all economically beneficial or productive use of

land. See Agins v. Tiburon, 447 U.S. 255, 260, 100 S. Ci. 2138,

2141, 65 L. Ed. 2d 106 (1980). However, the Commonwealth

Court refused to apply this categorical analysis to petitioners’

“as applied” takings challenge to DER’s denial of a fill permit,

even though the court found substantial evidence to support the

EHB’s finding that the property was presently valueless. The

stated reason (pp. 16a-17a, infra):

The state statute in Lucas prohibited all

permanent development on the property in

question, but the department’s action with

respect to the Mocks only denied the specific

project under consideration. In this case,

neither the Act nor the department's

regulations prohibit the filling of wetlands,

nor did the department’s permit denial

prohibit all construction on the Mocks’ land.

Accordingly, the Pennsylvania courts below would not

recognize a categorical taking in the absence of a facial and total

statutory prohibition of economically viable use. This case

presents the Court with the opportunity toclarify that categorical

takings are not sorestricted and may occur in the present context

where a permit denial renders property valueless.

In Loveladies Harbor, Inc. v. United States, 28 F.3d 1171

(Fed. Cir. 1994), the Federal Circuit applied the categorical rule

espoused in Lucas to find that a total taking was effected by the

Army Corps of Engineers’ denial of a permit to fill 12.5 acres of

wetlands under section 404 of the Clean Water Act. The Federal

Circuit succinctly characterized the law of regulatory takings

after Lucas as follows:

(a) Aproperty owner whocan establish that

a regulatory taking of property has occurred

is entitled to a monetary recovery for the

value of the interest taken, measured by what

is just Compensation.

(b) With regard to the interest alleged to be

taken, there has been a regulatory taking if

(1) there was a_e denial of

economically viable use of the

property as a result of the regulatory

imposition;

(2) the property owner had distinct

investment-backed expectations; and

(3) it was an interest vested in the

Owner, as a matter of state property

law, and not within the power of the

State to regulate under common law

nuisance doctrine.

Id. at 1179. The Federal Circuit sustained the trial court’s

determination that there had been a denial of economically

viable use of the land by comparing the value of the 12.5 acre

parcel before and after the regulatory imposition, and the

conclusion that the 99% diminution of value from $2,658,000 to

$12,500 amounted to a total taking of the property owner’s

interests in the parcel. See id. at 1175, 1178. The Federal Circuit

thus affirmed the judgment that Loveladies Harbor had suffered

a regulatory taking of the 12.5-acre parcel.

In its adjudication of petitioners’ takings claim, the EHB

found that the property, without a permit to fillin a portion of the

wetlands, was essentially valueless, and noted that with sucha

permit, the site could have a value of $175,000 — the amount

offered by Midas — or greater. But contrary to the Federal

Circuit’s opinion in Loveladies Harbor, the Pennsylvania courts

made a radical retreat from Lucas and held that this was not

enough for a categorical taking.

Following Lucas, the EHB’s finding that the property was

rendered valueless categorically entitled petitioners to

compensation, unless the proscribed use interests were not part

of their title to begin with, 505 U.S. at__, 112 S. Ct. at2899, 120

L. Ed. 2d 798; that is, if DER could “identify background

principles of nuisance and property law that prohibit the uses”

intended “in the circumstances in which the property is presently

found.” Jd. at__, 112 S. Ct. at 2901-02, 120 L. Ed. 2d 798.

Indeed, the Pennsylvania courts did not consider this final point,

because they short-circuited the takings analysis by ignoring the

determination that the absence of a fill permit left the property

essentially valueless.

Il.

PENNSYLVANIA HAS SOUGHT TO AVOID THIS

COURT’S CATEGORICAL TAKINGS RULE BY

IMPOSING ON THE PROPERTY OWNER AN

UNCERTAIN AND POTENTIALLY INTERMINABLE

BURDEN OF EXCLUDING ALL ECONOMICALLY

VIABLE USE IN THE PERMIT APPLICATION PROCESS.

According to the majority opinion of the Commonwealth

Court, petitioners could not succeed on their taking claim unless

and until they exhausted any number of alternative proposals for

construction on the property, even though DER acknowledged

that no alternative plan would be acceptable to it, let alone

restore economic value to the property.

Initially, DER suggested that the Mocks could develop the

Site as a wetlands nursery, but of course could not show that this

would have any economic value. The DER also suggested that

the Mocks should develop only the uplands at the rear corner of

the parcel, most distant from the Easton Road frontage. Access

to the highway could be obtained via a road on adjoining

property, but that adjoining property owner refused permission.

Or, according to DER, petitioners could build a bridge over the

wetlands. Rejecting DER’s approach, the EHB expressly

accepted petitioners’ unrebutted showing that development of

the rear uplands area was not practical.

The Commonwealth Court further speculated that DER’s

denial of a permit for the proposed auto repair facility did not

foreclose some other development of the property which may not

require filling of wetlands in the same amount or location. The

Commonwealth Court expected the property owners to bear the

burden of establishing “the impossibility” of using the property

for any number of uses in the C-2 Highway Commercial District:

museums, libraries. hospitals, nursing homes, medical and other

office buildings, recreational and municipal facilities, service

and retail shops, and restaurants.

Notwithstanding the unfairness inherent in requiring the

property owner to prove the negative in a potentially

interminable series of permit applications before a taking might

arise, the exercise would prove nothing further in this case

because DER had made it clear that no intrusion on wetlands of

any kind would be permitted as long as the project — whatever

it was — could be located virtually any other place in the

Doylestown area. As it was, petitioners’ proposal for a 5,000

square foot building and 37 parking spaces was quite modest for

the 5.2 acre tract (with .38 acres to be dedicated as wetland

replacement). Any application for a smaller project design

would have been futile because the DER would require it to be

located at some other site in the area. Moreover, as found by the

EHB, DER left unchallenged petitioners’ proofs that no other

permitted use would have a lesser wetland impact.

Attempting to explain away the EHB’s factual conclusions,

the Commonwealth Court held (p. 17a, infra):

The import of the Board’s finding that the

land in its current state is valueless, is simply

that the Mocks’ undeveloped property at

present is without economic value. That

finding does not mean that the Mocks’

property must remain undeveloped and

devoid of value in the future because of the

department’s environmental regulations.

In the absence of acommon law nuisance, the true legal import

of the Board’s finding that the land is presently valueless is that

there has been a regulatory taking, and that petitioners are

entitled to a monetary recovery for the value of the land.

Il.

IN THE CONSTITUTIONAL DETERMINATION OF

ECONOMICALLY VIABLE USE, THE BURDEN OF

PRODUCTION MUST BE SHIFTED TO THE

GOVERNMENT ONCE THE LANDOWNERS HAVE

SUBMITTED UNREBUTTED EVIDENCE THAT THEIR

PROPERTY IS VALUELESS.

Loveladies Harbor rejected the government’s contention

that the property owners had to apply for a permit to fill a lesser

area before they could demonstrate that there are no remaining

economically viable uses. As in the present case, the property

owners established that further applications would have been

futile, and the owners were entitled to a presumption that there

were no economically viable uses, and that the burden is on the

government to prove otherwise. Loveladies Harbor, Inc. v.

United States, 21 Cl. Ct. 153, 157-58 (1990), aff'd, 28 F.3d 1171

(Fed. Cir. 1994). The EHB relied on its “common sense” that the

Mocks could have submitted some proposal with a lesser impact.

As recognized in Loveladies Harbor: “Common sense, however,

indicates the impossibility of requiring the plaintiff to prove a

negative.” Jd. at 157.

At the EHB hearing, petitioners presented sufficient

evidence to be entitled to judgment as a matter of law; the EHB

in fact decided that the land in its current state has been rendered

valueless. Thence, the burden of production should shift to the

government. /d. at 158;C. McCormick, McCormick on Evidence

§ 338 (3ded. 1984). DER offered no proof of any alternative uses

and instead relied on its misperception that the property owners

bore the entire burden of proof and persuasion.

In regulatory takings cases, once the plaintiff presents

sufficient and unrebutted evidence so as to be entitled to

judgment as a matter of law that they have been deprived of all

economically viable use of the property, the burden of presenting

sufficient evidence to the contrary must pass to the government.

Furthermore, the government must then demonstrate practicable

and reasonably probable uses, and the finder of fact must

discount any proposed uses that do not meet a “showing of

reasonable probability that the land is both physically adaptable

for such use and that there is a demand for such use in the

reasonably near future.” Loveladies Harbor, 21 Cl. Ct. at 158

(quoting United States v. 341.45 Acres of Land, 633 F.2d 108, 111

(8th Cir. 1980), cert. denied sub nom. Bassett v. United States,

451 U.S. 938, 101 S. Ct. 2017, 68 L. Ed. 2d 324 (1981)); see

Olson v. United States, 292 U.S. 246, 54S. Ct. 704, 78 L. Ed.

1236 (1934). If the government does not meet the Olson standard

of reasonable probability for adaptability and demand in the

market, the regulatory intrusion will have rendered the parce!

without economically viable use.

The opinion of the Claims Court in Loveladies Harbor

foreshadowed Justice Scalia’s observation in Lucas that the

takings analysis “presumes the unconstitutionality of state land-

use regulations only in the sense that any rule-with-exceptions

presumes the invalidity of alaw that violates it — for example,

the rule generally prohibiting content based restrictions on

speech.” 505 U.S. at__n.6, 112 S.Ct. at2893 n.6, 120L. Ed. 2d

798. The government cannot constitutionally escape a finding

that a taking has occurred for all practical purposes by leaving

the property owner with an interminable burden of pursuing

applications for smaller projects. In the wetlands context, once

the property owner proves that a denial of an otherwise lawful

project has rendered a property valueless, itis incumbent on the

government to show that there are reasonably probable

alternative uses to establish that the property retains economic

use, much as the Court has required the government to bear the

burden of showing rough proportionality between a permit

condition and the impact of the owner’s proposed development

in order to avoid takings liability. Dolan v. City of Tigard,

__U.S.__, 1148. Ct. 2309, 2319-20, 129 L. Ed. 2d 304 (1994).

Burden shifting is necessary if the Fifth Amendment guarantee

is to have meaning.

The effect of the opinions below is to deny a regulatory

takings claim unless and until the property owner forecloses all

alternative uses in any number of reapplications, even though the

uncontroverted evidence admits only of the conclusion that no

other project would be acceptable.

IV.

THE PENNSYLVANIA COURTS HAVE SKEWED THE

TAKINGS ANALYSIS TO DENY JUST COMPENSATION

BY CONFUSING THE SUBSTANTIVE DETERMINATION

OF ECONOMICALLY VIABLE USE WITH THE

RIPENESS REQUIREMENT.

Whether the property owner is required to submit

alternative applications containing less ambitious proposals in

a given case is a factor in determining not whether the property

owner has been deprived of all economically beneficial use, but

rather whether the taking claim is sufficiently ripe for litigation

in the first instance. See MacDonald, Sommer & Frates v. Yolo

County, 477 U.S. 340, 353 n.9, 106 S. Ct. 2561, 2569 n.9, 91 L.

Ed. 2d 285 (1986).

In reaching the merits, the Pennsylvania courts were

Satisfied that petitioners had made a sufficiently meaningful

application for the fill permit, and there was no question that the

takings claim was ripe for adjudication. However, they strained

to conclude that petitioners did not rule out any and all

productive use through further applications to reject the takings

claim on the merits. Whether the property owner has pursued

permissible uses to the point of ripeness must be extricated from

the substantive takings analysis. The effect of the rulings below

is tocondemn the property owner noton! y to piecemeal litigation

or otherwise unfair procedures in order to pinpoint just what use

may be made of the affected property, which is precisely what

Justice Stevens warned against in MacDonald, 477 U.S. at 350

& n.7, 106 S. Ct. at 2567 & n.7,91 L. Ed. 2d 285, but also to an

adverse final determination on the merits of the takings claim.

The open-ended exhaustion of uses mandated by the

Pennsylvania courts also negates the futility exception

recognized in the ripeness cases: on grounds of futility, a party

might even bypass a permit process and go directly to couit

seeking judicial review of a law’s constitutionality under the

takings clause. For example, the permit application may not be

a “viable option,” Herrington v. County of Sor..ma, 857 F.2d

567,570 & n.2 (9th Cir. 1988), cert. denied, 489 U.S. 1090, 109

S.Ct. 1557, 103 L. Ed. 2d 860 (1989), or the granting authority

may have dug in its heels and made it transparently clear that the

permit, application or no, will not be forthcoming, e.g., Parkview

Corp. v. Department of Army, 490F. Supp. 1278, 1282 (E.D. Wis.

1980). Itis quite a strange turn to adjudicate a regulatory takings

claim on the premise that the requisite finality in the permit

application process has been achieved, only to reject the claim

because the property owners’ efforts in seeking every last

permissible use are inevitably found wanting.

The Court has acknowledged that there is no precise formula

for determining whether a landowner has been deprived of

economically viable use of his property. Instead, the reviewing

court must make “ad hoc, factual inquiries into the

circumstances of each particular case.” Connolly v. Pension

Benefit Guaranty Corp., 475 U.S. 211, 224, 106 S. Ct. 1018,

1026, 89 L. Ed. 2d 166 (1986). The decisions of the courts below

render it virtually impossible to prove a categorical regulatory

taking from the denial of economically viable use of property

and thereby unconstitutionally block the path to just

compensation. They take the property owners’ threshold

requirement of obtaining from the regulating agency a “final

definitive position regarding how it will apply the regulations at

issue to the particular land in question,” MacDonald, 477 U.S.

at 351, 106S. Ct. at2568,91 L. Ed. 2d 285, and use it as a pretext

to foreclose the petitioners’ takings claim on the merits. The

government's similar attempts in Loveladies Harbor, 21 Cl. Ct.

at 157-59, and Formanek v. United States, 26 Cl. Ct. 332 (1992)

were roundly rejected. The Federal Circuit requires that the

determination whether the government has taken all

economically beneficial use of land be guided by its market

value, if any, after the permit denial. Florida Rock Indus. v.

United States, 18 F.3d 1560, 1565-67 (Fed. Cir. 1994), cert.

denied, ___ U.S. __, 115 S. Ct. 898, 130 L. Ed. 2d 783 (1995).

Pennsylvania, on the other hand, insists that the property owner

exhaust all manner of impossibilities. The present case begs

loudly for clear guidance in resolving “the economic impact of

the regulation on the claimant.” Penn Central Transp. Co. v. City

of New York, 438 U.S. 104, 124, 98 S. Ct. 2646, 2659, 57 L. Ed.

2d 631 (1978).

THE STATE AND FEDERAL COURTS REQUIRE

CLARIFICATION WHETHER INVESTMENT-BACKED

EXPECTATIONS REMAIN AS A FACTOR TO BE

CONSIDERED OR ARE SUBSUMED IN A FINDING OF

A CATEGORICAL TAKING.

It is somewhat unclear after Lucas whether the claimant’s

investment-backed expectations must be considered in cases of

categorical takings. The Federal Circuit appeared to retain this

factor as part of the takings analysis in Loveladies Harbor, but

stated in Florida Rock that in such cases, Lucas teaches that the

economic impact factor alone is determinative and no balancing

of factors is required. Florida Rock, 18 F.3d at 1564.

Under the rubric of “traditional takings analysis” the

Commonweaith Court determined that the permit denial did not

interfere with investment-backed expectations because the

owners did not prove what their plans were in 1963 when they

purchased vacant land ona major highway. In doin gsothe court

below nullified the legitimate expectations of the owners and

utterly ignored that the restriction foreclosed development of

commercially zoned property long held for investment purposes.

If the Mocks’ investment-backed expectations remain a factor to

be considered in a categorical takings case, they are entirely

consistent with the conclusion that their property has been taken

by virtue of the wetlands regulation. The Commonwealth

Court’s rationale, which assumes that people purchase property

with no thought of being rewarded, nullifies well established

concepts of reasonable investment-backed expectations.

CONCLUSION

For these various reasons, this petition for certiorari should

be granted. If petitioners are correct in urging that the denial of

their permit application has effected a total, categorical taking,

the matter should be remanded to the Pennsylvania

Environmental Hearing Board for determination of just

compensation for the taking.

Respectfully submitted,

KEVIN J. COAKLEY

Counsel of Record

ERNEST W. SCHOELLKOPFF

CONNELL, FOLEY & GEISER

Attorneys for Petitioners

85 Livingston Avenue

Roseland, New Jersey 07068

(201) 535-0500

APPENDIX A — ORDER OF THE SUPREME COURT

OF PENNSYLVANIA, NOVEMBER 22, 1995

(J-171 of 1995)

IN THE SUPREME COURT OF PENNSYLVANIA

Eastern District

No. 110E.D. Appeal Dkt. 1994

Appeal from Order of Commonwealth Court entered March

25, 1993, at No. 1153 C.D. 1992, Affirming Decision of

Pennsylvania Environmental Hearing Board entered

May 1, 1992, at No. 90-166-MR

Argued: October 24, 1995

MR.AND MRS. CONRAD MOCK,

Appellants

COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT

OF ENVIRONMENTAL RESOURCES

ORDER

PER CURIAM: DECIDED: November 22, 1995

Order affirmed.

Mr. Justice Montemuro participates by designation as a

senior judge as provided by Pa.R.J.A. 701(f).

Judgment entered

Appendix A

s/ John W. Person

John W. Person, Esquire

Deputy Prothonotary

APPENDIX B — ORDER OF THE COMMONWEALTH

COURT OF PENNSYLVANIA, MARCH 25, 1993

INTHE COMMONWEALTH COURT OF PENNSYLVANIA

NO. 1153C.D. 1992

MR.AND MRS. CONRAD MOCK,

Petitioners

DEPARTMENT OF ENVIRONMENTAL RESOURCES .

Respondent

ORDER

NOW, March 25, 1993, the decision of the Pennsylvania

Environmental Hearing Board, dated May 1, 1992, at EHB

Docket No. 90-166-MR, is affirmed.

s/ David W. Craig

DAVID W. CRAIG, President Judge

CERTIFIED FROM THE RECORD

AND ORDER EXIT

MAR 25 1993

s/ CR Hostutter

Deputy Prothonotary — Chief Clerk

APPENDIX C — OPINION OF THE COMMONWEALTH

COURT OF PENNSYLVANIA FILED MARCH 25, 1993

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

NO. 1153 C.D. 1992

ARGUED: NOVEMBER 18, 1992

MR. AND MRS. CONRAD MOCK,

Petitioners

DEPARTMENT OF ENVIRONMENTAL RESOURCES,

Respondent

BEFORE: HONORABLE DAVID W. CRAIG, President

Judge

HONORABLE JOSEPH T. DOYLE, Judge

HONORABLE JAMES GARDNER COLINS,

Judge

HONORABLE BERNARD L. McGINLEY, Judge

HONORABLE DORIS A. SMITH, Judge

HONORABLE DAN PELLEGRINI, Judge

HONORABLE JAMES R. KELLEY, Judge

OPINION BY PRESIDENT JUDGE CRAIG

FILED: March 25, 1993

Appendix C

Conrad and Barbara Mock appeal from a decision of the

Pennsylvania Environmental Hearing Board, which upheld the

Department of Environmental Resources’ denial of the Mocks’

permit to fill wetlands on their property to construct an auto

repair shop, and also ruled that the department’s denial did not

effect an unconstitutional taking of the Mocks’ property.

The Mocks do not challenge the board’s determination that

the department correctly denied the permit application under the

applicable statutes and regulations. Therefore, the sole question

for our review is whether the department’s permit denial

accomplished a taking, under the U.S. and Pennsylvania

Constitutions, for which the Mocks must be compensated.

Because the circumstances of this case do not fall within the

newly articulated categorical rule in Lucas v. South Carolina

Coastal Council, __ U.S. ___, 112 S.Ct. 2886 (1992), nordo they

qualify as a taking under traditional takings analysis, we hold

that the board did not err in deciding that the Mocks did not suffer

a unconstitutional taking when the department denied their

permit application.

BACKGROUND

The relevant facts from the record are as follows. The Mocks

are part-owners of a 5.2 acre tract of land in Bucks County,

Pennsylvania, which they bought in 1963. The western edge of

the parcel fronts along a busy road in a “C-2 Highway

Commercial District” as designated by the local zoning

ordinance.’ Auto repair shops are a permitted use in the Highway

1. Zoning Ordinance of the Township of Plumstead, July 1989,

(Ordinance).

Appendix C

Commercial District, under section 1401a of the Ordinance. All

of the parcels surrounding the Mocks’ site have been developed,

but the Mocks have not subdivided or developed their land since

they bought it in 1963.

Of the 5.2 acres on the site, 3.94 acres are wetlands, as

defined by the department’s regulations at 25 Pa. Code §105.1.?

The Mocks do not dispute the definition or delineation of the

wetland areas on their property. The approximately 1 1/4 acres of

non-wetlands, known as upland areas, are located in the

southwest and southeast corners of the parcel, are rather steeply

sloped in places, and are separated by approximately 100 feet of

wetlands. A stream, Pine Run Creek, runs roughly along the

northern boundary of the property.

In 1988 the Mocks applied to the department for a permit’ to

fill .87 acres of wetlands on their property, to enable them to

build their proposed auto repair shop and its associated

driveways and parking spaces. The department regulates

activities which may affect wetlands under the provisions of the

Dam Safety and Encroachments Act, (Act), Actof November 26,

1978, P.L. 1375, as amended, 32 P.S. §§693-1 - 693.27, and

according to the regulations implementing the Act in 25 Pa. Code

§§105.1-105.451.

2. Wetlands are defined as “areas that are inundated or saturated by

surface or ground water at a frequency and duration sufficient to support, and

that under normal circumstances do support, a prevalence of vegetation

typically adapted for life in saturated soil conditions, including swamps,

marshes, bogs and similar areas.” 25 Pa. Code $105.1.

3. The Mocks submitted a Joint Permit Application to the department,

one copy of which was forwarded to the U.S. Army Corps of Engineers for their

evaluation of the project. However, only the department's permit denial is at

issue here.

Appendix C

The department conducted a preliminary review of the

Mocks’ application and concluded that the project, as proposed,

presented potentially significant adverse environmental impacts

under the criteria listed in 25 Pa. Code §105. 14(b). Ina letter to

the Mocks dated September 23, 1988, the department specified

that the proposed project had an impact on the wetland ecology,

and that the auto repair shop did not need to be built close to

water, tworelevant concerns under 25 Pa. Code §§105.14(b)(4)

and (b)(7).

In that letter, the department also requested that the Mocks

submit additional information about alternatives to the project

which could reduce the adverse environmental impacts,

additional information about the need for the project and its

resulting public benefits, and its effect on the natural condition

of the wetlands involved. The department identified these issues

as necessary considerations pursuant to 25 Pa. Code §§ 105.15

and 105.16. As part of the preliminary review, the department

also considered the recommendations of other agencies involved

in granting a permit to fill wetlands, in particular, the

Pennsylvania Fish Commission, the Environmental Protection

Agency, and the U.S. Fish and Wildlife Service. The record

reveals that all of these agencies recommended denial of the

Mocks’ project as proposed.

The Mocks, through their engineering consultant Russell

Benner, responded to the department’s preliminary review ina

letter dated September 30, 1988, in which he suggested moving

the location of the building, offered to maintain a buffer between

the project and the wetlands through a conservation easement

and by planting trees, and noted that the Mocks’ plan provided

for a wetland replacement area of .38 acres to compensate for the

proposed filling of .87 acres. Mr. Benner also noted that he

Appendix C

considered the application complete at that time, and that all

matters had been adequately discussed. His letter to the

department stated, “[wlJe will not accept the permit application

being deemed incomplete in lieu of taking action on the permit

request, therefore we hope that future correspondence from your

office will address a conditional approval of, or a denial of the

permit application.”

In October 1988 the department contacted Mr. Benner to

suggest that the Mocks consider limiting their construction to the

uplands portion of their property. Mr. Benner responded that this

proposal would require the Mocks to secure a variance from the

township’s setback requirements,‘ and that he would pursue that

alternative. The Mocks did not submit any alternative proposals

to the department.

Thereafter, the department completed its review of the

Mocks’ application. In a letter dated April 12, 1990, the

department notified the Mocks that their application was denied.

The reasons for the denial were similar to the ones the

department gave in its preliminary review, namely, that the

project adversely affected wetlands and wetland ecology, that

the Mocks did not demonstrate that alternatives with less impact

on wetlands did not exist to attain the goals of the project, and

that the public benefits of the project did not idee sateen the

environmental harms.

The Mocks appealed the denial to the Environmental

Hearing Board, arguing that the department erred in denying

their permit, and that the department’s action constituted a taking

4. Section 1402b of the Ordinance specifies the minimum setback

requirements for permitted uses in the C-2 District.

Appendix C

of their property. Before the board ruled, the department and the

Mocks met to discuss possibilities for settlement. In the course

of that meeting the department again suggested that the Mocks

consider using only the upland portions of the property for their

shop, but the Mocks rejected that idea as economically

infeasible. The department also suggested using the property for

a wetlands nursery, but the Mocks rejected that idea as well.

After two days of hearings, in which it took additional

evidence, the board upheld the department’s denial ina decision

issued on May 1, 1992. After concluding that it had jurisdiction

over the Mocks’ appeal, the board ruled that the department

correctly denied the project permit and that the denial did not

constitute a taking. From the board’s ruling that the department's

action did not effect an unconstitutional taking, the Mocks

appeal to this court.

THE ENVIRONMENTAL HEARING BOARD’ S DECISION

The board’s decision consisted of extensive findings of fact,

discussion, and conclusions of law. Some of the facts were

stipulated by the parties, describing the parcel, the project, and

an earlier unsuccessful attempt by the Midas Realty Corporation

to secure permission to fill wetlands on the Mocks’ property to

build a muffler repair shop.*

5. In 1985 the Mocks entered into an Agreement of Sale with Midas

Realty Corporation for $175,000, which was contingent upon Midas’ ability to

secure all the permits necessary to build a muffler repair shop on the property.

When Midas encountered opposition to the project from the department and the

Army Corps of Engineers in 1986, it abandoned the project. The design of the

Mocks’ project was “basically the same as the design of the Midas project.”

Finding of Fact No. 25.

10a

Appendix C

Based on the amount quoted in the Midas deal, Finding of

Fact No. 54, which is important to deciding the takings question,

states, “(t]he Site in its present condition and without a permit to

fill in a portion of the wetlands is essentially valueless. With a

permit similar to that applied for by Appellants [the Mocks], the

Site could have a value of $175,000 (the amount offered by

Midas) or more... .”

The board’s discussion outlined the review procedures that

the department followed in evaluating the Mocks’ project.® As

already stated, of the ten factors to be considered in evaluating

projects which interfere with wetlands, the department found

two to be relevant — the impact of the proposed project on the

ecology of the wetlands, and the extent to which the project was

water-dependent. 25 Pa. Code §§105.15(b)(4) and (b)(7).

Because the department found that the project had the potential

for significant environmental harm, the department then

proceeded to consult with the Mocks to examine ways to reduce

or eliminate the harm, pursuant to 25 Pa. Code §105.16(a),

including ways to mitigate the harm.

The department defines mitigation in 25 Pa. Code §105.1 as

follows:

An action undertaken to accomplish one or

more of the following purposes:

(i) Minimize impacts by limiting the degree

6. The board noted, and we note also, that Chapter 105 of 25 Pa. Code was

substantially revised effective October 12, 1991. The references in the boerd’s 3

decision, and in ours, are to the version of the regulations in effect on April 12,

1990, when the department denied the Mocks’ permit.

ee Te

lla

Appendix C

or magnitude of the action and _ its

implementation.

(ii) Rectify the impact by repairing,

rehabilitating or restoring the impacted

environment,

(iii) Reduce or eliminate the impact over

time by preservation and maintenance

operations during the life of the action.

(iv) Ifthe results listed in subparagraphs (i)

- (iii) of this definition cannot be achieved,

compensate for the impact by replacing or

providing substitute resources or

environments.

In this case the department considered the Mocks’ efforts to

mitigate the environmental harm and concluded that, although

they attempted to reduce the negative impact over time by

proposing deed restrictions and a tree buffer under factor (iii),

the Mocks did not adequately avoid or minimize the negative

impact by considering reducing the size of the project or

changing its proposed use, under factor (i). The department did

not find factor (ii) applicable to the Mocks’ proposal. —

Further, the department continued its analysis of the Mocks’

proposal to include replacement wetlands as a part of their

project, according to factor (iv). The department concluded, and

the board agreed, that the Mocks’ creation of .38 acres of

replacement wetlands did not compensate for the environmental

harm caused by the loss of .87 acres of wetlands, as proposed.

12a

Appendix C

The department then proceeded to the third step in its

evaluation, as required by 25 Pa. Code §105.16, to weigh the

public benefits against the environmental harm of the project. Of

the possible benefits listed in that section of the regulations, the

Mocks identified five positive effects of their project: reduction

of illegal trash dumping from the roadway; elimination of

erosion and sediment pollution; reduction of air pollution

resulting from auto repairs; the creation of 20-30 jobs; and

fulfilling a need for general auto repairs in the area.

The department ruled, and the board agreed, that the Mocks

did not prove that the benefits outweighed the harms. The

reduction of trash and erosion could be accomplished with minor

measures if they were proven to be problematic. The other three

benefits — reducing air pollution, creating jobs, and satisfying

demand — were all associated with the shop itself, but were not

shown to be tied in any way to the shop’s location on the Mocks’

land, near or on wetlands. The Mocks do not question the

department’s balancing of harms and benefits here on appeal.

After determining that it had jurisdiction,’ the board

concluded that the Mocks did not suffer an unconstitutional

taking because the Mocks did not prove that their land was

valueless after the department’s permit denial. Relying on

Andrus v. Allard, 444 U.S. 51 (1979), and Penn Central

Transportation Co. v. New York City, 438 U.S. 104 (1978),

among others, the board ruled that although the department’s

action may prevent the Mocks from the most profitable use of

their property, reduction in value is not enough to find a taking.

7. The department had argued that the board lacked jurisdiction to

consider the takings question, but revised its position on appeal to this court,

stating that the board correctly determined that it had jurisdiction.

13a

Appendix C

Based on the fact that the Mocks did not consider any alternative

projects or submit revised applications to the department, the

board stated, “[s]ince Appellants [the Mocks] did not seek

approval for a smaller facility, we cannot conclude that they will

be denied any use of the wetlands.” Further, the board stated that,

“[c]ommon sense tells us that some of the other permitted uses do

not require a 5,000 square foot building and may not require as

many parking spaces.”

The board was persuaded that the Mocks’ investment-

backed expectations were not destroyed, because they never

introduced evidence of what their expectations were when they

purchased the property in 1963 or afterwards, and because

riparian land has been “the subject of regulation for centuries,”

citing White v. Pennsylvania Railroad Co., 354 Pa. 397,47 A.2d

200 (1946). The board perceived no evidence to suggest that, just

because the department denied the fill permit for this particular

project, it would prohibit all projects which required any filling

of wetlands; thus, in the board’s view, the Mocks’ investment-

backed expectations were not destroyed.

Within the legal framework of traditional takings analysis,

the board concluded that the department’s action was not an

unconstitutional taking of the Mocks’ property. After the board

rendered its decision, the U.S. Supreme Court decided the Lucas

case, on which the Mocks rely heavily to support their argument

that because the department’s action left their property

valueless, the board erred in not finding a taking.

Our scope of review in Environmental Hearing Board

decisions is to determine whether the record contains substantial

evidence to support the board's findings of fact, and whether the

board committed errors of law or constitutional violations.

l4a

Appendix C

Willowbrook Mining Co. v. Department of Environmental

Resources, 92 Pa. Commonwealth Ct. 163, 499 A.2d 2 (1985).

THE LUCAS DECISION

In Lucas, decided on June 29, 1992, the U.S. Supreme Court

considered the appeal of an owner of beachfront property in

South Carolina, who was prohibited from developing any

permanent habitable structures on his land by the 1988 South

Carolina Beachfront Management Act, enacted after Mr. Lucas

had purchased the property. S.C. Code §§48-39-250 -290 (Supp.

1990). The Beachfront Management Act directed the South

Carolina Coastal Council to establish a baseline beyond which

construction of habitable improvements was prohibited, for the

purpose of preserving the state’s beaches. No exceptions were

provided in the Beachfront Management Act.*

After first deciding that the claim was ripe, Justice Scalia

outlined the two categories of regulatory actions which would be

compensable without the “case-specific inquiry into the public

interest advanced in support of the restraint” that would

normally be required in a traditional takings analysis. Lucas,

__ U.S. at __, 112 S.Ct. at 2893. The first type involves

regulations which compel a property owner to allow a physical

invasion of his property. Jd. at__, 112 S.Ct. at2893. “The second

situation in which we have found categorical treatment

appropriate is where regulation denies all economically

beneficial or productive use of land.” Jd. at__, 112 S.Ct. at2893.

8. S.C. Code §§48-39-280(A) and 290(A) (Supp. 1988). In the course of

Mr. Lucas’ appeal, the South Carolina legislature amended the Beachfront

Management Act to allow the Council to issue special construction permits in

certain circumstances. S.C. Code §48-39-290(P)(1) (Supp. 1991).

iSa

Appendix C

Justice Scalia distinguished between government

regulation that diminishes property values and the

“extraordinary circumstance when no productive or

economically beneficial use of landis permitted... .”Jd.at__,

112 S.Ct. at 2894 (emphasis in original). He stated:

And the functional basis for permitting the

government, by regulation, to affect property

values without compensation — that

“Government hardly could go on if to some

extent values incident to property could not

be diminished without paying for every such

change in the general law,’ . . . — does not

apply to the relatively rare situations where

the government has deprived a landowner of

all economically beneficial uses.

Id. at __, 112 S.Ct. at 2984 (emphasis in original and citations

omitted) (quoting Pennsylvania Coal v. Mahon, 260 U.S. 393,

413 (1922)).

Justice Scalia would require compensation in situations

where “the owner of real property has been called upon to

sacrifice all economically beneficial uses in the name of the

common good, that is, to leave his property economically idle

.. «9 Id. at__, 112S.Ct. at2895 (emphasis in original), typically,

as in Mr. Lucas’ case, requiring land to be left in its natural state.

The Court accepted the trial court’s finding that Mr. Lucas’ land

was rendered valueless by the South Carolina law, fitting this

case into the second category of takings cases described by

Justice Scalia.

The Court in Lucas then defined circumstances where the

government could avoid compensating a land owner in a

l6a

Appendix C

categorical taking, even where the land was deprived of all value,

if the regulation in question does no more than could be

accomplished under the state's nuisance laws. “Any limitation

SO severe cannot be newly legislated or decreed (without

compensation), but must inhere ... in the restrictions that

background principles of the State’s law of property and

nuisance already place upon land ownership.” Jd. at__, 112 S.Ct.

at 2900. Because the question of whether Mr. Lucas could have

been prohibited from developing his land under existing

nuisance law was not addressed below, the Supreme Court

remanded the case to the South Carolina Supreme Court for

consideration of that issue.

The Mocks argue that Lucas applies to their situation, and

that the board’s own findings support the conclusion that the

department’s action constituted a taking. First, they note that the

board found that their property, in its present condition and

without a permit, is essentially valueless. Finding of Fact No. 54.

Second, they argue that each of the alternatives suggested by the

department, namely, using the site as a wetlands nursery, and

confining development to the upland areas, were economically

infeasible, and the board recognized them as unreasonable

options. Third, the Mocks argue that the department never

substantiated that it would grant a permitto fill any portion of the

wetlands. We will address their arguments in turn.

Although we find substantial evidence to support the

board’s finding that the Mocks’ property is valueless in its

present condition, that finding does not put the Mocks in the

same situation as the land owner in Lucas. The state statute in

Lucas prohibited all permanent development on the property in

question, but the department's action with respect to the Mocks

only denied the specific project under consideration. In this case,

17a

Appendix C

neither the Act nor the department’s regulations prohibit the

filling of wetlands, nor did the department’s permit denial

prohibit all construction on the Mocks’ land.

The import of the board’s finding, that the land in its current

state is valueless, is simply to state that the Mocks’ undeveloped

property at present is without economic value. That finding does

not mean that the Mocks’ property must remain undeveloped and

devoid of value in the future because of the department's

environmental regulations.

In its discussion, the board accepted as reasonable the

Mocks’ rejection of the department’s suggestion to build their

shop in the southeast uplands corner of the lot, because it was

objectionable from a business standpoint. According to the

Mocks, if the shop was located in that corner of the lot, it would

have low visibility from the highway, would be close to noise and

dust from a neighboring cement plant, and would require

construction of a bridge or access road to reach it, which would

also require filling of wetlands.’

We agree with the board’s determination that the proposed

alternative location for the garage may be unreasonable from a

business standpoint, but, again, the department’s denial of this

project does not foreclose other uses of the property. As the board

points out, there are a variety of uses permitted in this C-2

Highway Commercial District, which may not require filling of

wetlands in the same amount or location as the plan submitted by

the Mocks. Section 1401a of the Ordinance permits a variety of

uses in the C-2 district, including museums, libraries, hospitals,

9. The wetland nursery option was never fully explored by the department

or the board, because it “did not make sense” to the Mocks. Finding of Fact

No. 49.

18a

Appendix C

nursing homes, medical and other office buildings, recreational

and municipal facilities, service and retail shops, and

restaurants. The Mocks have not established the impossibility of

using the property for service or retail shops, for example.

The Mocks next argue that the department never guaranteed

that it would approve a permit to fill wetlands for an access road

to reach the garage if it was moved to the uplands corner, or for

any other purpose, but the record does not sufport this

contention. Because the Mocks never submitted aternative

proposals to the department, the department could only respond

to questions about hypothetical situations. However, when

questioned about the possibility of granting a pernit to fill

wetlands for an access road to reach the southeas: uplands

corner, Richard Shannon, a water pollution biologist for the

department, testified, “I feel that adriveway construction on this

property would be feasible because the impact would be

minimal.”

The board correctly states that the department’s “action was

to deny permission for Appellants [the Mocks] to proceed with

a specific project design. It does not go beyond that point.”

Although the board did not consider Lucas in its evaluation, the

facts and conclusions the board did make in upholding the

department’s action support our interpretation that the Mocks’

case is distinguishable from Lucas. Because we find Lucas to be

inapplicable to this case, we need not consider whether the

Mocks’ project would have already been prohibited under

existing nuisance or property law.

TRADITIONAL TAKINGS ANALYSIS

Although we have determined that the Mocks’ case is not the

19a

Appendix C

extraordinary one when no economically beneficial use of land

is permitted, Lucas,__ U.S. at__, 112 S.Ct. at 2894, we muststill

evaluate their situation under the principles of takings analysis

established by previous court decisions. Both the Fifth

Amendmentto the U.S. Constitution, and Article I, section 10 of

the Pennsylvania Constitution provide that private property

shall not be taken for public use without just compensation.

The Act and the department’s regulations are exercises of

the state’s police power, to enact and enforce laws for the

promotion of the public welfare. Willowbrook Mining Co., 92 Pa.

Commonwealth Ct. at 169,499 A.2dat 5. In Lawton v. Steele, 152

U.S. 133 (1894), the U.S. Supreme Court provided a three-part

test for the validity of a state’s actions under its police power: (1)

The public interest must require such interference; (2) The

means chosen must be reasonably necessary for the

accomplishment of the purpose; and (3) The means chosen must

not be unduly oppressive on individuals. Jd. at 137.

As the board noted in its decision, the Mocks concede that

the department’s action satisfies the first two prongs of Lawton.

The Mocks never argued that the purpose of the Act was invalid,

or that the Act and its implementing regulations were not tailored

to meet a legitimate state purpose." The Mocks argue that the

10. U.S. Const. amend. V, and Pa. Const. art. I, §10. Because the courts of

our commonwealth have interpreted the takings clause using the same

framework as the federal courts, we need not pursue two separate levels of

analysis here.

11. Section 693.2 of the Act, 32 P.S. §693.2, states the purposes of the

Act, which are to regulate and plan dams and other water encroachments in order

to protect the health, safety, and welfare of people and property, to protect the

state’s watural resources, and to protect navigation.

20a

Appendix C

permit denial places an undue burden on them as individual

property owners, according to the third prong of Lawton. Our

court recognized that “an unconstitutional taking of private

property would be unduly oppressive.” Willowbrook Mining

Co., 92 Pa. Commonwealth Ct. at 170,499A.2d at 5.

Before the Supreme Court’s decision in Pennsylvania Coal

Co. v. Mahon, 260 U.S. 393 (1922), the concept of a taking was

generally limited to a direct physical appropriation of private

property or the functional equivalent of such an ouster. Lucas,

U.S. at __, 112 S.Ct. at 2892. In Mahon, Justice Holmes

recognized the potential for a taking to occur through the

operation of government regulation. He stated, “[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.” Mahon, 260 U.S. at 415.

Since that time, the United States Supreme Court has not

decided the point at which a regulation goes too far according to

any set formula, but has been guided by the facts and

circumstances in each case. Penn Central Transportation Co.,

438 U.S. at 124. In general, compensation for a government

taking will be required when “the purpose of the regulation or the

extent to which it deprives the owner of the economic use of the

property suggest that the regulation has unfairly singled out the

property owner to bear a burden that should be borne by the

public as a whole.” Yee v. City of Escondido, 112 S.Ct. 1522, 1526

(1992).

In its case-by-case, factual inquiries, the Supreme Court has

identified several important factors in determining whether a

regulatory taking has occurred: the type of governmental

interference; the diminution of property values; and the extent to

which the regulation interferes with reasonable, distinct,

2la

Appendix C

investment-backed expectations. Penn Central Transportation

Co., 438 U.S. at 124. We will analyze each of these factors as it

relates to the Mocks’ circumstances.

First, the courts have been more likely to find a taking if a

regulation compels a property owner to allow a physical invasion

of his property, rather than interference with its use. Jd. at 124.

Even a minimal permanent intrusion on private property has

been considered a taking, as in Loretto v. Teleprompter

Manhattan CATV Corp., 458 U.S. 419 (1982), where the Court

found a regulatory taking when property owners were required

to allow cable television equipment to be attached to their

buildings. Because the regulation in the Mocks’ case does not

involve a physical interference with property, this factor does not

persuade us to conclude that a taking has occurred.

When a regulation interferes with the use of property, its

effect on property values is an important consideration in our

analysis. Because government would cease to function if the

state was compelled to compensate property owners every time

a regulation diminished property value, the courts have

uniformly held that diminution in property value, standing

alone, cannot establish a taking; the takings issue must be

resolved by focusing on the uses that the regulations permit.

Penn Central Transportation Co., 438 U.S. at 131.

Further, a regulation does not effect a taking just because it

deprives a property owner of the most valuable use of his

property. Andrus, 444 U.S. 51.’ Where an owner possesses a

12. See also Euclid v. Ambler Realty Co., 272 U.S- 365 (1926), and

Hadacheck v. Sebastian, 239 U.S. 394 (1915).

13. See also Goldblatt v. Hempstead, 369 U.S. 590 (1962).

22a

Appendix C

“full ‘bundle’ of property rights, the destruction of one ‘strand’

of the bundle is not a taking” because the effect of the regulation

must be viewed in its entirety. Andrus, 444 U.S. at 66. In applying

these principles, the Supreme Court has sustained regulations

that have resulted in large reductions in property value where the

land retains significant value. Pace Resources. Inc. v.

Shrewsbury Township, 808 F.2d 1023, 1031 (3d Cir. 1987)

(citing e.g., Euclid and Hadacheck).

The Mocks did not present any evidence of the diminution

in their property value, except to quote the amount involved in

their earlier sales agreement with Midas to build a muffler shop,

which fell through, and to submit a narrative appraisal report

which supported that estimate. Because the Mocks focused on

only two options for their land, building an auto repair shop

according to their specific site plan or leaving the land

undeveloped, they did not offer any testimony or evidence about

the economic value of their land which could be realized through

other development options.

Therefore, although we accept the board’s finding that the

land in its present state is essentially valueless, the Mocks failed

to prove that their land lost all of its residual value when the

department denied their fill permit. The Act does not compel the

Mocks to leave their land in its present undeveloped state, and we

must focus on the remaining uses which the regulations permit.

Because there is no evidence in the record that the land cannot be

put to economically viable use, this factor also weighs against

finding a taking.

The third factor in our analysis involves the effect of the

department’s action on the Mocks’ reasonable, distinct,

—

23a

Appendix C

investment-backed expectations for their property. As stated in

Pace Resources. Inc., “[t}he concept of reasonable, distinct,

investment-backed expectations may . . .involve a recognition

of the fact that a property can have value, arising from partially

executed plans for development, that is unique to its owner and

not reflected in its current market value.” 808 F.2d at 1032-33.

However, the expectations are reasonable only if they take into

account the power of the state to regulate property for the public

interest, and, for a taking to occur, the regulation must have

almost the same effect as the destruction of the owner’s property

rights. Jd. at 1033.

We find substantial support for the board’s finding that the

Mocks never presented any evidence of what their plans were for

their property when they bought it in 1963. The department’s

permit denial did not interfere with any present or past use of the

property, so we must focus on what the Mocks could reasonably

expect to do with their property in the future. See Penn Central

Transportation Co., 438 U.S. at 136.

As to the Mocks’ future plans, we further agree with the

board that the Mocks could not reasonably expect to develop

their land free from government regulation because it is riparian

land, which has been subject to regulation for centuries. White v.

Pennsylvania Railway Co.. Not only isa large part of their parce]

wetlands, which the Mocks do not contest, but it is also within the

100-year floodplain, as designated by the local zoning

ordinance.

The department’s action prevents the Mocks from

proceeding with the development of their auto repair shop as

planned, but it does not destroy the Mocks’ rights to develop their

property according to some alternative plan, even if that plan

24a

Appendix C

involves some filling of wetlands. Thus, the Mocks’ reasonable

investment-backed expectations were not frustrated to the point

of effecting a taking of their property.

The Mocks rely on two decisions of the U.S. Claims Court to

support their takings argument, Loveladies Harbor, Inc. v. The

United States, 21 Cl. Ct. 153 (1990), and Formanek v. The United

States, 26 Cl. Ct. 332 (1992), but we are not bound or persuaded

by these decisions. In each of these cases the landowners

appealed from the Army Corps of Engineers’ denial of a permit

to fill wetlands, and in each instance the U.S. Claims Court found

that a taking had occurred.

In Loveladies Harbor, Inc. the court determined that a taking

occurred because of the significant diminution in property value,

based on a comparison of the estimated fair market value of the

land if it was fully developed for its most profitable use, to the

value of the land sitting idle, which was almost zero. The court

was not persuaded that the alternative uses suggested by the

government had a “reasonable probability” of being

successfully developed. Loveladies Harbor, Inc., 21 Cl. Ct. at

159. Furthermore, the court found that the federal and state

regulations in question lacked a substantial, legitimate state

purpose. /d. at 160.

In Formanek the court followed the same reasoning as it did

in Loveladies, to find that the permit denial effected a taking

when the property value of the undeveloped land was

substantially lower than its projected worth when fully

developed. Formanek, 26 C1. Ct. at 339-40. The court also found

that the land owners’ investment-backed expectations in their

property had been frustrated by the denial. Jd. at 340.

25a

Appendix C

These cases are distinguishable from the Mocks’ situation

on several grounds. The method of comparing the fair market

value of the most profitable use of the property to its market

value as acompletely undeveloped tract, used in Loveladies and

Formanek, has not been adopted by the United States Supreme

Court, and we decline to adopt it here. Because the past decisions

of the Supreme Court clearly support the principle that a

regulation does not effect a taking when it prevents a property

owner from using his land in such a way as to generate the most

profit, e.g., Andrus, we are convinced that the method used by the

Claims Court to calculate diminution in property value is in

error.

Furthermore, the Mocks did not argue that the Act here

lacked a legitimate public purpose, nor did they prove that their

reasonable, investment-backed expectations were destroyed by

the department’s action, factors which were apparently present

in the Claims Court’s analysis in Loveladies and Formanek,

respectively. Therefore, although the cases cited by the Mocks

involved regulation of wetlands which did go so far as to

accomplish a taking, they do not change the outcome of the case

before us.

CONCLUSION

Because the department’s denial of the Mocks’ permit did

not render the land valueless, this case does not fit the categorical

rule articulated in Lucas v. South Carolina Coastal Council. Nor

does this case satisfy any of the factors present in a traditional

takings analysis, such that the state is forcing the Mocks alone to

bear burdens which, in all justice and fairness, should be borne

by the public as a whole. Penn Central Transportation Co., 438

26a

Appendix C

U.S. at 123. The department’s actions here did not effect a taking

of the Mocks’ property for which compensation is required.

Accordingly, we affirm the board’s decision.

s/ David W. Craig

DAVID W. CRAIG, President Judge

27a

APPENDIX D — DISSENTING OPINION OF JUDGE

KELLEY IN THE COMMONWEALTH COURT OF

PENNSYLVANIA FILED MARCH 25, 1993

IN THE COMMONWEALTH COURT

OF PENNSYLVANIA

NO. 1153 C.D. 1992

ARGUED: November 18, 1992

MR. AND MRS. CONRAD MOCK,

Petitioners

DEPARTMENT OF ENVIRONMENTAL RESOURCES,

Respondent

BEFORE: HONORABLE DAVID W. CRAIG, President

Judge

HONORABLE JOSEPH T. DOYLE, Judge

HONORABLE JAMES GARDNER COLINS,

Judge

HONORABLE BERNARD L. McGINLEY, Judge

HONORABLE DORIS A. SMITH, Judge

HONORABLE DAN PELLEGRINI, Judge

HONORABLE JAMES R. KELLEY, Judge

DISSENTING OPINION

BY JUDGE KELLEY FILED: March 25, 1993

28a

Appendix D

I respectfully dissent. I believe that the record and exhibits

indicate clearly that the Mock property was rendered

economically valueless by the denial of the permit by the

Department of Environmental Resources.

The site of the property is ina commercial district fronting

on a main traffic artery in Bucks County. The exhibits and

testimony indicate that there was no feasible way that the

property could be developed without encroaching on the

wetlands. The Department of Environmental Resources

determined preservation of the wetlands as justification for the

denial of the permit for construction of commercial utilization of

the property.

I believe therefore, that the facts of the instant case do fall

within the parameters as determined by Lucas v. South Carolina

Coastal Council, 112 S.Ct. 2886 (1992).

I additionally find it most troubling that the Department of

Environmental Resources relies upon an evaluation by the Fish

Commission for its determinations. The Fish Commission

language “would seem likely” as being sufficient justification to

justify a negative determination is incomprehensible to me. (See

Department of Environmental Resources Exhibit No. 27.) Such

equivocal language would not support any rightful claims in law

in order to sufficiently justify impeding the substantive rights of

property.

I would, therefore, find sufficiency in the record that there

was a taking by this determination and would accordingly so

reverse.

29a

Appendix D

s/ James R. Kelley

JAMES R. KELLEY, Judge

CERTIFIED FROM THE RECORD

AND ORDER EXIT

MAR 25 1993

s/ CR Hostutter

Deputy Prothonotary — Chief Clerk

30a

APPENDIX E — COMMONWEALTH OF PENNSYLVANIA

ENVIRONMENTAL HEARING BOARD ADJUDICATION

ISSUED MAY 1, 1992

COMMONWEALTH OF PENNSYLVANIA

ENVIRONMENTAL HEARING BOARD

101 SOUTH SECOND STREET

SUITES THREE FIVE

HARRISBURG, PA 17101-0105

717 787 3483

TELECOPIER 717 783 4738

M. DIANE SMITH

SECRETARY TO THE BOARD

EHB Docket No. 90-166-MR

(consolidated)

Issued: May 1, 1992

MR. AND MRS. CONRAD MOCK

COMMONWEALTH OF PENNSYLVANIA DEPARTMENT

OF ENVIRONMENTAL RESOURCES

ADJUDICATION

By Robert D. Myers, Member

Syllabus

3la

Appendix E

The Board sustains DER’s action in denying Appellants’

application for a permit authorizing them to place fill on 0.87

acres of wetlands in order to construct an auto maintenance

facility. In reaching this result, the Board concludes that

Appellants did not fully consider options to reduce or eliminate

the impact of their proposed project on the wetlands, that

Appellants’ proposal to replace the wetlands with 0.38 acres of

man-made wetlands did not adequately compensate for the loss,

and that the public benefits cited by Appellants did not outweigh

the environmental harm. The Board also considers and rejects

Appellants’ claim that DER’s action amounts to an

unconstitutional taking of their property, ruling that investment-

backed expectations in riparian land must take into account the

long history of governmental regulation and the likelihood of

future regulation.

Procedural History

Mr. and Mrs. Conrad Mock (Appellants) filed a Notice of

Appeal on April 26, 1990 from an April 12, 1990 letter of the

Department of Environmental Resources (DER) denying

Appellants’ Encroachment Permit Application No. E09-357 to

place and maintain fill on a tract of land in Plumstead Township,

Bucks County. Appellants filed a second Notice of Appeal on

December 6, 1990 from DER’s denial of their request for Section

401 Water Quality Certification. This appeal was docketed at 90-

530-MR and, at the suggestion of the parties, was consolidated

into the first appeal (90-166-MR) on January 3, 1991.On March

26, 1991 the Board approved a Partial Stipulation of Settlement

that removed the Section 401 Water Quality Certification issue

from the consolidated appeals.

A hearing was held in Harrisburg on July 9 and 10, 1991,

32a

Appendix E

before Administrative Law Judge Robert D. Myers, a Member of

the Board, at which all parties were represented by legal counsel

and presented evidence in support of their positions. Appellants

filed their post-hearing brief on August 28, 1991; DER filed its

post-hearing brief on September 27, 1991. Appellants filed a

reply brief on October 17, 1991.

The record consists of the pleadings, a partial stipulation of

facts, a transcript of 386 pages and 46 exhibits. After a full and

complete review of the record, we make the following:

FINDINGS OF FACT

1. Appellants are individuals with a mailing address of 102

West Street Road, Feasterville, PA 19047-7817 (Notice of

Appeal).

2. DER is an administrative department of the

Commonwealth of Pennsylvania and is responsible for

administering the provisions of the Dam Safety and

Encroachments Act (DSEA), Act of November 26, 1978, P.L.

1375, as amended, 32 P.S. §693.1 et seq., the Clean Streams Law

(CSL), Act of June 22, 1937, P.L. 1987, as amended, 35 P.S.

§691.1 et seqg., and the regulations adopted pursuant to said

Statutes.

3. Appellants are part owners of a 5.2-acre tract of land

(Site) in Plumstead Township, Bucks County, purchased in

February 1963 by Appellants and others for $9,000 (Stip.'; N.T.

29-31).

1. The Partial Stipulation of Facts presented at the outset of the hearing

(N.T. 3).

33a

Appendix E

4. The Site is located along the east side of Easton Road,

U.S. Route 611,L.R. 156, just north of Doylestown, Pa. in an area

zoned C-2, Highway Commercial (Stip.; Appellants’ Exhibit

No. 11(a)).

5. Road frontage along the western (Easton Road)

boundary is 267.03 feet. The rear (eastern) boundary is 587.05

feet. While the southern boundary (532 feet) is nearly at right

angles with these two, the northern boundary (589.08 feet) veers

to the northeast to create a tract much wider in the rear than in the

front (Appellants’ Exhibit No. 11(a)).

6. Pine Run Creek, flowing in a northeast-southwest

direction, meanders through the site along the northern boundary

and passes under a bridge located on Easton Road about 50 feet

south of the northern boundary. (Appellants’ Exhibit No. 11(a)).

7. Much of the Site south and southeast of Pine Run Creek

is relatively flat but rises in elevation toward the southeast corner

(18 feet above the creek bank) and southwest corner (8 feet above

the creek bank). The entire Site is wooded. (Appellants’ Exhibit

No. 11(a)).

8. All of the Site is within the 100-year floodplan of Pine

Run Creek except for the higher-elevation areas in the southeast

and southwest corners. These upland areas amount to about 1 -1/

4 acres. The larger area is in the southeast corner and is separated

from the smaller area in the southwest corner by about 100 feet.

(Stip.; Appellants’ Exhibit No. 11(a)).

9. Slopes in the southeast upland area are 10%-20% (N.T.

55).

34a

Appendix E

10. The relatively flat areas of the Site (3.94 acres)

constitute wetlands (Stip; N.T. 150).

11. The land in the vicinity of the Site is highly developed

with commercial and industrial establishments. These include a

tire store south of the Site, a cement factory east of the Site, a

medical facility north of the Site and an oil company, auto

dealership and banks west of the Site (across Easton Road). The

Site is the only undeveloped land in the immediate vicinity (N.T.

13,58, 152).

12. The Site has not been occupied, subdivided or

developed since Appellants purchased it. Appellants have

expended some funds for the payment of taxes and for

reservation of sewage connections, and have recovered some of

their expenditures by selling part-interests in the Site. Because

the Site is undeveloped, the portion bordering Easton Road

receives a certain amount of trash tossed into it from the

highway. That portion of the Site also experiences some erosion

and sediment pollution from a stormwater pipe discharging into

it (Stip.; N.T. 14, 28-31, 85-86, 87-88, 227-228; Appellants’

Exhibits Nos. 3 and 4).

13. When the minimum yard requirements (front, side and

rear), set forth in the Plumstead Township Zoning Ordinance in

effect in 1988, are considered,' the areas available for

development purposes are reduced to 1/100 of an acre in the

southwest upland and 1/10 of an acre in the southeast upland.

This latter area would be increased by 2/10-3/10 of an acre under

the revised yard requirements in the 1989 Zoning Ordinance

(Stip.; N.T. 54-55, 100-103, 118; Appellants’ Exhibits Nos. 11(a)

and 12).

35a

Appendix E

14. In 1979 Appellants filed an application with DER

seeking a permit authorizing the placement of a retaining wall

along Pine Run Creek and the placement of fill behind it to a

height above the 100-year flood elevation. This project would

have filled in all of the wetlands on the Site. DER issued a letter

accepting the calculations and methodology but stating that

permits would not be issued until land development was

imminent. No work was done on the project and no permits were

ever issued (N.T. 49-52, 97-99).

15. ON December 5, 1985 Appellants entered into an

Agreement of Sale with Midas Realty Corporation (Midas),

agreeing toconvey the Site to Midas for $175,000 but contingent

on Midas’ securing all necessary permits and approvals for

constructing and operating a Midas Muffler Shop on the Site

(N.T. 16-17, 52; Appellants’ Exhibit No. 2).

16. On February 11, 1986 Midas filed with DER an

application for a Water Obstruction Permit authorizing the

placement of fill on a portion of the Site for the construction of a

Midas Muffler Shop and parking areas (N.T. 52-53, 61-63;

Appellants’ Exhibits Nos. 11(a) & 13).

i7. The Midas project included, inter alia, a strormwater

detention basin and the extension of a 36-inch reinforced

concrete pipe designed to carry off-site runoff to an outlet

structure to be constructed in the south bank of Pine Run Creek

near the Easton Road bridge (N.T. 63; Appellants’ Exhibit No.

11(a)).

18. Submitted as part of the Midas application was areport

containing calculations showing that stormwater runoff and

100-year floodplain elevations would not be increased by the

proposed project (N.T. 64, 68-71; Appellants Exhibit No. 17).

36a

Appendix E

19. The design of the Midas project satisfied Plumstead

Township’s standards for stormwater management and

floodplain use and Bucks County Conservation District’s

standards for erosion and sedimentation control (N.T. 71-73;

Appellants’ Exhibits Nos. 15 & 16).

20. Since the placement of the outlet structure was outside

of the floodway, it qualified for a General Permit from DER.

Authorization for this aspect of the project was issued by DER on

April 29, 1986 (N.T. 63-64; Appellants’ Exhibit No. 14).

21. After encountering opposition from officials of DER

and the U.S. Army Corps of Engineers (C.O.E.) to the filling in

of wetlands, Midas decided to discontinue its permit application

and no DER action was ever taken with respect toit (N.T. 77-79).

22. Appellants returned Midas’ downpayment and the

Agreement of Sale became a nullity (N.T. 17-18).

23. After the Midas saie fell through, Appellants decided to

develop the Site themselves by constructing an auto repair

facility, a permitted use in the C-2, Highway Commercial

District of Plumstead Township (Stip.; N.T. 18).

24. Appellants filed with DER and the C.O.E. a Joint

Permit Application seeking authorization for the project. The

Application was resubmitted to DER in its entirety (with

additional information) on July 11, 1988 (N.T. 82-83;

Appellants’ Exhibit No. 20).

25. The design of Appellants’ project was basically the

same as the design of the Midas project. It proposed (a) the filling

of 0.87 acres of wetlands, an arearoughly 150 feet wide by 240

37a

Appendix E

feet long lying between the two upland areas; (b) the

construction of a 5,000? square foot building and 37 parking

spaces’ on the filled-in area; (c) the construction of a detention

basin east of the parking area; and (d) the extension of the 36-

inch reinforced concrete pipe and the installation of the outlet

structure near Easton Road (Stip.; N.T. 19, 73-75; Appellants’

Exhibit Nos. 11(b)).

26. Appellants’ project also proposed a 0.38-acre wetlands

replacement area to be created by Appellants in the southeast

upland area. Pursuant to this proposal existing wetlands soil

would be excavated (from wetland areas to be filled in) and

stockpiled. The upland area would be excavated to the elevation

of the adjacent wetlands area and the wetlands soil would be

placed on it. Wetlands plantings — sedge, sensitive fern,

common skunk cabbage, spice bush, silver maple and red ash —

would be placed in the replacement area (Stip.; N.T. 75-77;

Appellants’ Exhibit No. 11 (b)).

27. Inaddition, Appellants, proposed to place a double row

of conifers to separate the wetlands area from the remainder of

the Site and to deed-restrict the wetlands area to prevent any

future development (Appellants’ Exhibit No. 20).

28. Appellants’ Application contained copies of approval

2. The testimony of Russell G. Benner, Jr. indicated the size to be about 40

feet by 100 feet (N.T. 74). This would amount to 4,000 square feet. However, the

Application states 5,000 square feet and our measurements of the building as

depicted on Appellants’ Exhibit No. 11(b) satisfies us that 5,000 square feet is

the more accurate figure.

3. Under the current zoning ordinance 51 parking spaces would be

required (Stip.).

38a

Appendix E

letters obtained in connection with the Midas application in

1986. See Findings of Fact Nos. 19 & 20 (Stip.; N.T. 83-84;

Appellants’ Exhibit No. 20).

29. Included in Appellants’ Application was a

Comprehensive Environmental Analysis. In this Analysis,

Appellants claimed that the net loss of 0.5 acres of wetlands

(13% of the total on the Site) was offset by the following public

benefits:

(a) elimination of illegal dumping that takes place on

the Site adjacent to Easton Road;

(b) reduction in air and noise pollution by the

establishment of an auto maintenance facility specializing

in replacement of mufflers and air filtration devices;

from off-site surface water by carrying these flows to Pine

Run Creek by extending the 36-inch reinforced concrete

pipe;

(d) creation of 20-30 permanent jobs; and

(e) providing an additional auto maintenance facility

convenient to the growing population of the area

(N.T. 84-89; Appellants’ Exhibit No. 20).

30. Dennis Brown, afish and wildlife biologist for the U.S.

Fish and Wildlife Service, visited the Site on June 22, 1988. As

a result of his observations, the Fish and Wildlife Service

recommended that the C.O.E. deny Appellants’ Application. The

39a

Appendix E

Service’s June 28, 1988 letter stated that the “filling of high

quality wetlands for building and parking lot construction is

clearly inconsistent with the 404(b)(1)* Guidelines.” (Stip.; N.T.

295-298; DER’s Exhibit No. 26).

31. On July 8, 1988 the U.S. Environmental Protection

Agency (EPA), relyirg on the Fish and Wildlife Service’s

observations, recommended that the C.O.E. deny Appellants’

Application (Stip.; N.T. 143-144; DER’s Exhibit No. 28).

32. On July 7, 1988 the Pennsylvania Fish Commission,

relying on the Fish and Wildlife Service’s observations,

recommended that the C.O.E. deny Appellants’ Application

(Stip.; N.T. 287-288; DER’s Exhibit No. 27).

33. Appellants responded to the comments of the Fish and

Wildlife Service, EPA, and the Pennsylvania Fish Commission

in a letter to the C.O.E. dated July 26, 1988. Among the

statements made in this letter, Appellants agreed to pipe waters

from a spring (that would be covered with fill) from the mouth of

the spring to Pine Run Creek (N.T. 92-93; Appellants’ Exhibit

No. 21).

34. August 19, 1988 the Pennsylvania Fish Commission,

having reviewed Appellants’ Application, recommended that

DER deny the Application. The reviewer’s comments made light

of the public benefits that Appellants cited and observed that

they cowld be provided just as easily from an alternative upland

location ‘Stip.; N.T. 282-287; DER’s Exhibit No. 29).

4. The reference is to section 404(b)(1) of the Clean Water Act, Public

Law 92-500, 82 Stat. 816, 33 U.S.C.A. §1344(b)(1).

40a

Appendix E

35. The Pennsylvania Fish Commission also advised DER

on the same date that Pine Run Creek is a warmwater fishery with

low fishing pressure. As such, it would be used primarily as a bait

fishery — providing minnows for use elsewhere (N.T. 285, 292-

293; DER’s Exhibit No. 29).

36. On September 23, 1988 DER notified Appellants of its

concern about the impact of the proposed project on the

wetlands. Appellants were instructed to provide additional

information and justification with respect to 5 specific concerns

related to 25 Pa. Code §105.14, §105.15 and §105.16(N.T. 146-

147; DER’s Exhibit No. 4).

37. Appellants responded to DER’s September 23, 1988

letter on September 30, 1988, enclosing a copy of their July 26,

1988 letter to the C.O.E. (See Finding of Fact No. 33). At the

conclusion of their response, Appellants informed DER that no

additional clarification of their position could be provided and

that DER should take action on their Application (N.T. 89-92;

Appellants’ Exhibit No. 21).

38. Applications for Encroachment Permits are reviewed

by DER by considering the factors listed in 25 Pa. Code

§105.14(b).* If that review discloses the potential for significant

environmental harm, then under the provisions of §105.16(a)

DER consults with the applicant to examine ways to reduce or

eliminate the harm. This includes consideration of mitigation

measures defined in §105.1. DER also consults with other

governmental agencies. If, after these consultations, DER is still

5. Chapter 105 of the regulations was substantially revised effective

October 12, 1991. The references to sections of Chapter 105 in this Adjudication

are to versions in existence on April 12, 1990 when the Application was denied.

4la

Appendix E

convinced that significant environmental harm will occur, then

the public benefits of the project are evaluated and weighed

against the environmental harm. The benefits must outweigh the

harm in order to justify issuance of a permit to place fill in

wetlands (N.T. 133-135).

39. Most of DER’s review of Appellants’ Application was

performed by Roland Bergner, a water pollution biologist, but he

left his position with DER prior to making a final

recommendation on the Application. Richard C. Shannon, Jr.,

another water pollution biologist, completed the review by

utilizing the material already in the file (N.T. 129, 138-139).

40. Shannon concluded that only 2 of the 10 factors listed

in §105.14(b) were of concern — (a) the effect on water quality

and aquatic habitat, and (b) the need to be located in close

proximity to water (N.T. 159-164).

41. Having concluded that the project would involve the

potential for significant environmental harm, Shannon then

considered Bergner’s consultations with Appellants, examining

ways to reduce or eliminate the harm by utilizing mitigation

measures in § 105.1. Shannon concluded (a) that Appellants had

not fully addressed factor (i) by considering alternative uses and

alternative sites, (b) that factor (ii) was not applicable, (c) that

Appellants had addressed factor (iii) by proposing a buffer zone

and deed restrictions, (d) that the replacement wetlands

proposed with respect to factor (iv) were not sufficient either in

size or quality to be a suitable substitute, and (¢) that replacement

wetlands could not properly be considered, in any event, since

Appellants had not adequately considered factor (i) (N.T. 166-

172).

42a

Appendix E

42. Still convinced that significant environmental harm

would occur, Shannon evaluated the public benefits of the

project and weighed them against the environmental harm. he

concluded that the benefits claimed by Appellants (Finding of

Fact No. 29) were marginal at best, and not enough to outweigh

the environmental harm (N.T. 173-182).

43. Shannon prepared a Record of Decision on October 27,

1989 recommending denial of the Application for three reasons:

(a) an auto repair facility is not a water dependent

activity;

(b) the loss of wetlands will eliminate fish and wildlife

habitat, alter flood storage capabilities and decrease water

quality improvement; and

sufficient to offset the environmental harm.

(N.T. 182; DER’s Exhibit No. 7).

44. Shannon visited the Site on January 25, 1990, found the

wetlands to be exceptional, in his opinion, and took a number of

_photographs (N.T. 149-156; DER’s Exhibits Nos. 10 through

21).

45. Shannon’s supervisor, Khervin D. Smith (Chief of the

Environmental! Review Section of the Division of Rivers and

Wetland Conservation), agreed with Shannon’s conclusions and

recommended denial of the Application (N.T. 320, 323-325).

46. Eugene E. Counsil (Chief of the Division of Waterways

43a

Appendix E

and Stormwater Management) reviewed Shannon’s and Smith’s

recommendations, agreed with them and recommended to his

superior, Joseph J. Eliam (Director, Bureau of Dams and

Waterways Management), that the Application be denied (N.T.

353-354, 356-358).

47. The Application was denied in a letter dated April 12,

1990 and signed by Ellam (Stip.; N.T. 358; DER’s Exhibit No. 9).

48. In August 1990 Appellants met with representatives of

DER to discuss possible alternatives to the design of the project

that would address DER’s concerns. DER officials made two

suggestions: develop the Site as a wetlands nursery; or limit

commercial development to the upland area in the southeast

corner of the Site with access provided from the Easton Road

either by securing permission to use an existing access road on

the land south of the Site or by constructing a bridge over the

wetlands separating the two upland areas on the Site (N.T. 19-20,

359-360).

49. Developing the Site as a wetlands nursery did not make

sense to Appellants (N.T. 20).

50. Appellants were unsuccessful in gaining permission to

use the access road on the land south of the Site. Besides, they

considered the idea of limiting commercial development to the

uplands in the southeast corner of the Site to be unsound for the

following reasons:

(a) too little visibility;

(b) too close (30-40 feet) to the noise and dust of the

cement factory;

44a

Appendix E

acre (N.T. 20-22, 38-40, 43, 56-58, 80, 118; Appellants’

Exhibit No. 5).

51. Placing the proposed commercial development, as

presently designed, in the southeast corner of the Site would still

impact about .5-acre of wetlands (N.T. 373-379; Appellants’

Exhibit No. 25).

52. Plumstead Township’s Zoning Ordinance lists 25

categories of uses permitted by right in the C-2 Highway

Commercial District, 3 categories of uses permitted by

conditional use and 17 categories of uses permitted by special

exception. The uses encompass a broad range of commercial,

office and institutional activities (N.T. 60; Appellants’ Exhibit

No. 12).

53. Subsequent to DER’s denial of their Application,

Appellants sought and obtained a reduction in the assessed value

of the Site for Tax purposes from $5460 to $650 (N.T. 23-25;

. Appellants’ Exhibit No. 8). |

54. The Site in its present condition and without a permit to

fill in a portion of the wetlands is essentially valueless. Witha

permit similar to that applied for by Appellants, the Site could

have a value of $175,000 (the amount offered by Midas) or more

(N.T. 16, 25, 80-82, 94; Appellants’ Exhibit No. 9).

55. The wetlands on the Site are classified as palustrine

forested wetlands with substantial areas of scrub/shrub wetlands

and emergent wetlands. This diverse system provides high

quality habitats for certain fish and wildlife species and is

valuable for water quality improvement and flood storage (N.T.

149-157, 297).

45a

Appendix E

56. Appellants’ proposed project would completely

destroy 0.87 acres of these wetlands, eliminating their ability to

function as a habitat for fish and wildlife species and to provide

water quality improvement and flood storage (N.T. 158-159).

57. Most wetlands in the Doylestown area exist along

stream corridors and provide important refuges for wildlife in

the midst of highly developed areas (N.T. 152, 298).

58. The wetlands on the Site are classified by the Fish and

Wildlife Service as Category 2— wetlands which are considered

replaceable — rather than Category 1 — wetlands too unique to

be replaced. Category 1 wetlands would all be considered

“important” wetlands as defined in 25 Pa. Code §105.17(a)(N.T.

315-318).

59. DER did not treat the wetlands on the Site as

“important” wetlands during its consideration of Appellants’

Application. Shannon and Smith now believe that the wetlands

are “important” (N.T. 183-184, 340).

DISCUSSION

Appealing from a permit denial, Appellants have the burden

of proof: 25 Pa. Code §21.101(c)(1). To carry the burden,

Appellants have the burden of proof: 25 Pa. Code §21.101(c)(1).

To carry the burden, Appellants must show by a preponderance

of the evidence that DER acted unlawfully or abused its

discretion: 25 Pa. Code §21.101(a).

Appellants make two arguments. The first, to which they

devoted most of their brief, is that DER’s denial of the

Application constitutes an unconstitutional taking of their

46a

Appendix E

property. The second, stated as an alternative, is that the permit

should have been granted. Unfortunately, they barely outline the

second argument. It seems to us that, before considering whether

the denial amounts to an unconstitutional taking, we need to

determine whether the denial was supported by statute and

regulation and was an appropriate exercise of DER’s discretion.

There is no suggestion that Appellants could have

proceeded with their project without a permit. Section 6(a) of the

DSEA, 32 P.S. §693.6(a), mandates a permit for every water

obstruction or encroachment, including the placement of fill (see

definitions in §3, 32 P.S. §693.3). To be entitled to a permit,

Appellants had to show compliance with the provisions of the

DSEA and of the regulations adopted under it: §9(a), 32 P.S.

§693.9(a). Those regulations constitute Chapter 105 of 25 Pa.

Code and, more specifically, the sections on permit application

processing at §105.14 and §105.16. In addition, §105.17 and

§105.411(3) are potentially applicable where wetlands are

involved.

The procedure to be followed in reviewing applications is

set forth in §105.14 where 10 specific factors are listed for DER’s

consideration. Shannon found only 2 of these factors to cause

concern — the effect of the project on water quality and aquatic

habitat (§ 105.14(b)(4)), and the need for the project to be located

near water (§105.14(b)(7)). Appellants made no effort to

undermine or rebut Shannon’s findings in this regard, and we

find them to be reasonable. Obviously, these concerns involved

the potential for significant environmental harm, requiring DER

to proceed under § 105.16(a) by consulting with Appellants and

other governmental agencies.

DER held such consultations, one purpose of which was to

47a

Appendix E

explore ways to reduce the potential environmental harm to a

minimum. This included “mitigation”, defined in §105.1 as

follows:

an action or actions undertaken to:

(i) minimize impacts by limiting the

degree or magnitude of the action and its

implementation;

(ii) rectify the impact by repairing,

rehabilitating, or restoring the impacted

environment;

(iii) reduce or eliminate the impact over

time by preservation and maintenance

operations during the life of the action; or

(iv) if the results listed in subparagraphs

(i)-(iii) of this definition cannot be achieved,

compensate for the impact by replacing or

providing substitute resources or

environments.

DER determined that factor (ii) was inapplicable and that

factor (iii) had been adequately addressed by proposals for a

buffer zone and deed restriction. We need to focus only on factors

(i) and (iv). Potential ways to minimize environmental impacts

under factor (i) are relocating the project off-Site, confining it to

the upland areas on-Site, reducing the size, or changing the use.

Since an auto repair facility does not have to be located near

water, it is nota use bound by its nature toa wetland environment.

For this reason, there is less justification for tolerating the impact

48a

Appendix E

on wetlands when a facility of this sort is proposed. DER was

correct in concluding that Appellants had not given this option

serious consideration.

Confining development to the upland areas was considered,

however, and rejected by Appellants. Since most of the upland

area is in the southeast corner of the Site, it follows that the

proposed building and parking areas would have to be located

there. Appellants found this objectionable from a business

standpoint. First of all, the facilities would have low visibility

from Easton Road — located at the rear of a wooded Site.

Second, they would be too close to the noise and dust of the

cement factory. DER made no effort to counter this testimony,

and we will accept it as reasonable. It is also apparent that, even

if the facilities were placed in the southeast corner of the Site, it

would still be necessary to destroy wetlands in the course of

building an access road. Appellants estimate that the impacted

area — 1/2 acre — would be similar to the net impact of their

project as proposed.

Nothing in the record suggests that Appellants considered

reducing the size of the project or changing it to a different use.

DER maintains that, since Appellants did not fully satisfy

factor (i), the proposal for replacement wetlands under factor

(iv) could not technically be considered. Despite this legal

position, DER reviewed the replacement proposal and found it to

be inadequate because it involved the replacement of 0.87 acres

of natural wetlands by only 0.38 acres of manmade wetlands.

Appellants made no claim that their proposal constituted an

2ppropriate replacement. They simply pointed out that no other

space was available on the Site to construct replacement

wetlands. While this certainly is true on the basis of their project

Penne rier semenecen

49a

Appendix E

as designed; it overlooks the possibility that the proposed facility

could be reduced in size and the possibility that on-Site wetlands

can be supplemented by off-Site wetlands. We agree with DER

that Appeliants’ replacement proposal does not “compensate””®

for the environmental impact by “replacing or providing

substitute resources or environments” as stated in factor (iv).

Convinced that, after considering mitigation measures,

significant environmental harm would still occur, DER was

required by 25 Pa. Code §105.16 to evaluate the public benefits

of the proposed project and weigh them against the

environmental harm. DER went through this procedure and

concluded that the harm outweighed the benefits. Appellants did

little to challenge this conclusion. Our review of the benefits

cited by Appellants leads us to the same conclusion reached by

DER. Of the 5 benefits listed, 2 pertain to the Site itself and 3

pertain to the proposed auto maintenance facility. In the former

category are elimination of illegal dumping and elimination of

erosion and sediment pollution. The evidence of dumping along

Easton Road indicates that this is a minor matter that, if

important enough, could be controlled by fencing or some other

device. Similar comments can be made about erosion and

sediment pollution. To the extent this is a problem, it can be

corrected by extending the 36-inch reinforced concrete pipe to

the creek bank — work authorized in 1986 by the General Permit

issued by DER.

6. “Compensate”: to be equivalent to. Webster’s Ninth New Collegiate

Dictionary 1987.

“Compensation”: giving an equivalent or substitute of equal value.

Black’s Law Dictionary, Revised Fourth Edition 1968.

50a

Appendix E

The benefits of the proposed auto maintenance facility —

reduction of air pollution, creation of 20 to 30 jobs and

fulfillment of a need for such facilities — would result no matter

where the facility is placed. They are not site specific. Appellants

have not shown that other sites suitable for this type of business

do not exist in the Doylestown area and that the benefits will not

occurif Appellants’ Site is not used. Without such a showing, we

cannot assign great weight to these 3 benefits. Even when all 5

are lumped together, they fail, in our judgment, to outweigh the

environmental harm associated with the loss of wetlands in a

rapidly urbanizing region of the Commonwealth.

Because the harm will outweigh the benefits, DER was

prohibited by §105.16 and by §105.411(3) from issuing a permit.

We find the denial to be lawful and an appropriate exercise of

DER’s discretion.

Before leaving this issue, however, we feel compelled to

comment on DER’s eleventh-hour attempt to characterize the

wetlands on the Site as “important.” Wetlands in this category

are accorded greater protection by special criteria set forth in 25

Pa. Code §105.17. Part of this protection stems from the fact that

mitigation measures (including replacement) are not

considered. Appellants’ Application was not reviewed under

§105.17 because DER did not consider the wetlands to be

“important.” Shannon changed his thinking on that point

sometime after his deposition on November 13, 1990 and near

the end of his direct testimony at the hearing on July 9, 1991 (N.T.

188-189). There is no suggestion in DER’s pre-hearing

memorandum (filed April 18, 1991) or its filing in response to

Pre-Hearing Order No. 2 (filed July 1, 1991) that the appeal

would be defended, at least in part, on the ground that the

wetlands are “important.”

Sla

Appendix E

Appellants made no motion to strike this part of Shannon’s

testimony or to contest it in any other fashion, perhaps because

they viewed it as enhancing their taking claim or perhaps

because their cross-examination uncovered a rationale that can

only be termed sophistry. We will not burden this Adjudication

with a discussion of the rationale because DER has not

convinced us that the wetlands are “important.” The

characteristics cited by Shannon, while vital to “important”

wetlands, are typical of whatcan be found in nearly all wetlands.

Unless we are to treat all wetlands as “important,” we fail to see

how these characteristics should be accorded greater protection

on the Site than they receive elsewhere.’

We now turn our attention to Appellants’ claim that denial of

the permit constitutes an unconstitutional taking of their

property. DER asserts (for the first time in its post-hearing brief)

that the Board has no jurisdiction to rule on this issue. Litigants

often raise constitutional issues in proceedings before the Board

and our authority to rule on them has not, to our knowledge,

previously been questioned. Like all administrative agencies,

we lack the power to declare a statute unconstitutional. But

where a litigant concedes the constitutionality of the statute but

claims that DER’s manner of administering it impinges on

constitutional rights or protections, we rule on such claims as a

necessary part of determining whether DER acted in an unlawful

manner or abused its discretion.* Such claims have included the

7. We note that the “important” classification has been abandoned in the

revised Chapter 105 of the regulations in favor of what appears to be a more

workable distinction between those wetlands too valuable to be affected and

those that are not.

8. Forsome representative cases, see John R. Yenzi, Jr. v. DER, 1988 EHB

643 (due process clause); Chambers Development Company, Inc. etal. v. DER,

(Cont'd)

52a

Appendix E

unconstitutional taking of property on at least one occasion:

Willowbrook Mining Company v. DER, 1984 EHB 333, in which

our decision was affirmed by Commonwealth Court, 92 Pa.

Cmwith. 163,499 A.2d2 (1985) without any suggestion that we

exceeded our jurisdiction.

DER argues, however, that the Eminent Domain Code, Act

of June 22, 1964, P.L. 84, 26 P.S. §1-201 et seq., provides the

“complete and exclusive procedure and law” applicable to the

taking of property for public purposes: 26 P.S. § 1-303, including

de facto takings referred to in 26 P.S. §1-502(e). With such a

statute establishing an exclusive remedy and vesting exclusive

jurisdiction in the Courts of Common Pleas, DER asserts, the

Board is deprived of any jurisdiction it otherwise might have to

rule on such an issue.

This argument is persuasive on its face, but ignores

appellate court decisions construing the Eminent Domain Code.

The seminal case, Gaebel v. Thornbury Township, Delaware

County, 8 Pa. Cmwilth. 379, 303 A.2d 57 (1973), held that aclaim

for de facto taking cannot be filed under the Eminent Domain

Code where the taking involves the exercise of the police power.

The property owner must first challenge the constitutionality of

that exercise by the means provided by the Legislature. In the

case of a zoning ordinance, as was involved there, the challenge

must be made through procedures contained in the

Municipalities Planning Code (MPC), Act of July 31, 1968, P.L.

805, as amended, 53 P.S. §10101 et seg.

(Cont'd)

1988 EHB 68 (commerce clause; contracts clause); and Dale A. Torbert et al. v.

DER, 1989 EHB 834 (Fourth Amendment). Of course, the provisions of Article

I, Section 27, of the Pennsylvania Constitution frequently are cited to us as they

were by DER on page 54 of its post-hearing brief.

53a

Appendix E

The Gaebel decision was followed in a number of

subsequent cases, including Reilly v. Commonwealth, Dept. of

Environmental Resources, 37 Pa. Cmwith. 608, 391 A.2d 56

(1978); Kraiser v. Horsham Township, 72 Pa. Cmwith. 16, 455

A.2d 782 (1983); and Merlin v. Commonwealth, 72 Pa. Cmwilth.

45,455 A.2d 789 (1983). Like the MPC, the DSEA represents an

exercise of the Commonwealth’s police power. Any claim that

the exercise of that power by DER amounts to an

unconstitutional taking of property must be pursued through the

procedures contained in the statute — appeal to this Board: 32

P.S. §$693.24(a). We clearly have the jurisdiction to consider it.

The Fifth Amendment to the U.S. Constitution and Article I,

Section 10, of the Pennsylvania Constitution both prohibit the

taking of property for public use without the payment of just

compensation. While these protections have been enforced with

little difficulty where the taking consists of actual governmental

appropriation and use of the property, enforcement has proved

troublesome where the taking consists of governmental

regulation of the use of the property. The courts have been

unsuccessful in drawing areliable line dividing regulations that

do not constitute a taking and those that do. Such boundaries as

are discernible have been influenced more by the facts of each

particular case than by any application of legal dogma.

State regulation is based upon the police power. In order to

pass constitutional muster at the federal level, the

Commonwealth’s exercise of the police power through the

DSEA and Chapter 105 of 25 Pa. Code must satisfy the three-

prong test articulated by the U.S. Supreme Court in Lawton v.

Steele, 152 U.S. 133 (1894). Thus, (1) the interests of the public

must require it, (2) the means chosen must be reasonably

necessary for the accomplishment of the purpose, and (3) the

54a

Appendix E

means chosen must not be unduly oppressive upon individuals.

Appellants concede that the first two prongs have been satisfied

and maintain that only the third prong is in issue. They claim that

their property is rendered valueless by the denial of their permit

application, causing them a loss of at least $175,000, and placing

upon them an unduly oppressive burden which they are being

forced to bear alone for the public benefit.

To constitute a taking, a regulation must deprive the owner

of any reasonable use of the property. If it does not go that far, the

regulation is constitutional even though it prevents the most

profitable use of the property: Andrus v. Allard, 444 U.S. 51

(1979), or results in a significant reduction in value: Euclid v.

Ambler Realty Co., 272 U.S. 365 (1926). In considering

Appellants’ contention that DER’s action has deprived them of

any reasonable use of the Site, it is important to note that DER’s

action has not interfered in any manner with the present and

historical use of the Site. That is significant: Penn Central

Transportation Co. v. New York City, 438 U.S. 104 (1978),

because it focuses attention solely on Appellants’ investment-

backed expectations for prospective use.

There is no evidence of what Appellants’ intentions were

when they purchased the Site in 1963. Since they never put the

place to any use, it is reasonable to assume that they intended

from the start to develop it for some commercial, residential or

other purpose. The nature of the Site should have made it

apparent to them at the outset that development would

necessitate filling in some or all of the wetlands. Being able todo

this was absolutely essential to realizing their investment

expectations; and yet, they never possessed absolute freedom to

go ahead with it.

55a

Appendix E

The Site is riparian land — the subject of regulation for

centuries. Even at common law, the owner of such land could not

place obstructions on it without regard to the interests of others:

White v. Pennsylvania R. Co., 354 Pa. 397, 47 A.2d 200 (1946).

Statutory law has regulated it in Pennsylvania at least since 1913

when the predecessor to the DSEA was enacted (see Act of June

25, 1913, P.L. 555, now repealed). Appellants’ investment-

backed expectations had to take into account the possibility that

land already subject to long-standing regulation might have

additional restrictions imposed upon it: Pace Resources, Inc. v.

Shrewsbury Township, 808 F.2d 1023 (U.S.C.A., 3d Cir., 1987).

“One buys land as itis... ,” Helms v. Zeitzeff, 407 Pa. 482, 181

A.2d277 at 278 (1962). They could not realistically be confident

that they would be able to place fill on the Site — congenial! in

areas within the 100-year floodplain.’

To the extent Appellants’ investment-backed ¢ expectation

relied upon the placement of fill for commercial, residential or

institutional development it was too specutative to be given the

constitutional protection Appellants seek. It follows that even

the complete destruction of that expectation by government

regulation cannot be considered a taking. We are not convinced,

however, that a complete destruction has been demonstrated.

DER's action was to deny permission for Appellants to

proceed with a specific project design. It does not go beyond that

point. A wide variety of uses are allowed in the C-2, Highway

Commercial District (see Finding of Fact No. 52). Appellants’

9. Our conclusion here remains despite Appellants’ 1979 application for

a permit to build a retaining wall and piace fill behind it. Although Appellants

assert some DER acceptance of the idea. no approval was given and no permits

were issued

“it

56a

Appendix E

engineer concluded that none of these uses would have a lesser

impact upon the wetlands. While this conclusion was not

challenged by DER, we are unwilling to accept it without

knowing the details on which it is based. Common sense tells us

that some of the other permitted uses do not require a 5,000

square foot building and may not require as many parking

spaces. Any reduction in size would almost certainly involve a

reduction in the amount of wetlands to be affected, perhaps

inducing DER to issue a permit. Since Appellants did not seek

approval for a smaller facility, we cannot conclude that they will

be denied any use of the wetlands: Penn Central Transportation

Co. v. New York City, supra.

We conclude that DER’s action is not unduly oppressive

upon Appellants and that, therefore, the third prong of the

Lawton v. Steele test is fulfilled. This exercise of the police

power is constitutional.

In reaching this conclusion, we have cited and relied

primarily on cases construing the Fifth Amendment to the U.S.

Constitution. We have done so because the Pennsylvania

Appellate Court decisions construing Article I, Section 10, of the

Pennsylvania Constitution have consistently followed the

federal cases. We have reviewed the Pennsylvania Supreme

Court's recent decision in United Artists Theater Circuit v. City

of Philadelphia, __ Pa. _, 595 A.246(1991), which appeared to

depart from this tradition. We are satisfied that it does not affect

our holding. Accordingly, both the U.S. and Pennsylvania

Constitutions support the action challenged in this appeal.

S7a

Appendix E

CONCLUSIONS OF LAW

1. The Board has jurisdiction over the parties and the

subject matter of the consolidated appeal.

2. Appellants have the burden of proving by a

preponderance of the evidence that DER acted unlawfully or

abused its discretion in denying Appellants’ Application.

3. Appellants did not fully satisfy factor (i) in the definition

of “mitigation” in 25 Pa. Code §105.1 by considering options to

minimize or eliminate the impact of their proposed project on the

wetlands.

4. Appellants’ proposal for replacement wetlands did not

satisfy factor (iv) in the definition of “mitigation” in 25 Pa. Code

§105.1 because its size and quality did not compensate for the

impact of their proposed project on the wetlands.

5. The public benefits cited by Appellants for their

proposed project did not outweigh the environmental! harm of

destroying 0.87 acres of wetlands andeliminating their capacity

to function as a fish and wildlife habitat and to provide water

6. DER was prohibited by 25 Pa. Code §105.16 and

§105.411(3) from approving Appellanis’ application and issuing

a permit.

7. The wetlands on the Site are act “important” wetlands as

defined in 25 Pa. Code §105.17.

8. The Board has jurisdiction to tule on Appellants’ claim

58a

Appendix E

that DER’s denial of their Application amounts to an

unconstitutional taking of their property.

9. DER’s action was not an unconstitutional taking of

Appellants’ property.

10. DER’s action was lawful and an appropriate exercise of

discretion.

ORDER

AND NOW, this Ist day of May, 1992, itis ordered that the

consolidated appeals are dismissed.

ENVIRONMENTAL HEARING BOARD

s/ Maxine Woelfling

MAXINE WOELFLING

Administrative Law Judge

Chairman

s/ Robert D. Myers

ROBERT D. MYERS

Administrative Law Judge

Member

s/ Richard S. Ehmann

RICHARD S. EHMANN

Administrative Law Judge

Member

s/ Joseph N. Mack

JOSEPH N. MACK

Administrative Law Judge

Member

59a

Appendix E

Board Member Terrance J. Fitzpatrick has a concurring opinion

which is attached.

DATED: May 1, 1992

cc: Bureau of Litigation

Library: Brenda Houck

Harrisburg, PA

For the Commonwealth, DER:

Martha Blasberg, Esq.

Southeast Region

For the Appellant:

Jonathan E. Rinde, Esq.

Joseph M. Manko, Esq.

MANKO, GOLD & KATCHER

Bala Cynwyd, PA

60a

APPENDIX F — COMMONWEALTH OF PENNSYLVANIA

ENVIRONMENTAL HEARING BOARD, CONCURRING

OPINION OF BOARD MEMBER TERRANCE J.

FITZPATRICK ISSUED MAY 1, 1992

COMMONWEALTH OF PENNSYLVANIA

ENVIRONMENTAL HEARING BOARD

101 SOUTH SECOND STREET

SUITES THREE FIVE

HARRISBURG, PA 17101-0105

717 787 3483

TELECOPIER 717 783-4738

M. DIANE SMITH

SECRETARY TO THE BOARD

EHB Docket No. 90-166-MR

(consolidated)

Issued: May 1, 1992

MR. AND MRS. CONRAD MOCK

Vv.

COMMONWEALTH OF PENNSYLVANIA DEPARTMENT

OF ENVIRONMENTAL RESOURCES

CONCURRING OPINION OF BOARD MEMBER

TERRANCE J. FITZPATRICK

l agree with the conclusions and the reasoning in the boad’s

Opinion. I file this Concurring Opinion only to add acommert of

6la

Appendix F

my own regarding the takings issue. The U.S. Supreme Court has

recognized that in deciding whether a taking has occurred, it is

necessary to weigh the public and private interests involved.

Keystone Bituminous Coal Association v. DeBenedictis, 480

U.S. 470, 492 (1987). In cases such as the present one, where a

landowner’s use of his property has been restricted pursuant to

laws designed to protect the environment, I believe it is

necessary to remember that we are dealing with land. While land

is a form of property, it differs from buildings, bank notes, and

automobiles in that all forms of life are biologically dependent

upon it. It does not bode well for the future if we insist on treating

land as if it were nothing more than an economic commodity.'

In my view, when a person asserts that his land has been

taken due to environmental restrictions, he should face a heavier

burden than in other types of takings cases.

ENVIRONMENTAL HEARING BOARD

s/ Terrance J. Fitzpatrick

TERRANCE J. FITZPATRICK

Administrative Law Judge Member

DATED: MAY 1, 1992

cc: Bureau of Litigation

Library, Brenda Houck

For the Commonwealth, DER:

Martha Blasberg, Esq.

Southeast Region

1. Seethe discussion of the “land ethic” in Aldo Leopold, “A Sand County

Almanac” (Oxford Univ. Press, 1987) pp. 201-226.

62a

Appendix F

For Appellant:

Jonathan E. Rinde, Esq.

MANKO, GOLD & KATCHER

Bala Cynwyd, PA

63a

APPENDIX G — LETTER OF JOSEPH J. ELLAM,

ACTING DIRECTOR, BUREAU OF DAMS AND

WATERWAY MANAGEMENT, COMMONWEALTH OF

PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL

RESOURCES, DENYING PERMIT APPLICATION

No. E 09-357 DATED APRIL 12, 1990

COMMONWEALTH OF PENNSYLVANIA

DEPARTMENT OF ENVIRONMENTAL RESOURCES

Post Office Box 8554

Harrisburg, Pennsylvania 17105-8554

April 12, 1990

717-541-7900

Bureau of Dams and Waterway Management

CERTIFIED MAIL NO. P 899 341 595

Mr. and Mr. Conrad Mock

102 West Street Road

Feasterville, PA 19047-7817

Re: Encroachment Permit Application

DER File No. E 09-357

Dear Mr. and Mrs. Mock:

Please accept this letter as the Commonwealth of

Pennsylvania, Department of Environmental Resources’

response to your Permit Application No. E 09-357 to place and

maintain fill on approximately 0.87 acres of wetlands in

Plumstead Township, Bucks County. The purpose of the

proposed fill is for site development to facilitate the construction

64a

Appendix G

of an auto maintenance facility on property owned by you. Your

permit application and the documents you submitted subsequent

thereto are herby incorporated by reference into this notice as if

set forth in full.

A review of your application has been completed by the

Department based upon the requirements of the Pennsylvania

Clean Streams Law, Act of June 22,1937, P.L. 1987, as amended,

35 PS. Section 691.1 et seq.; the Pennsylvania Dam Safety and

Encroachment Act, Act of November 26, 1978, P.L. 1375, as

amended, 32 P.S. Section 693.1, et seq., and upon Chapter 105 of

the Commonwealth’s Regulations, 25 Pa. Code Chapter 105.

Based upon that review, your permit application is hereby denied

for the following reasons:

1. A review of the site and plans filed with the application

confirmed that the area proposed to fill constitutes a wetland

as that term is defined in 25 Pa. Code Section 105.1.

2. Your application does not adequately address the impact of

the proposed fill upon the regimen and ecology of the body

of water, water quality, streamflow, fish and wildlife and

aquatic habitat, as required by 25 Pa. Code Section

105.14(b)(4).

3. Your application does not demonstrate that other

alternatives do not exist to attain the proposed project

purpose with those alternatives ‘!essening the adverse

impact to the wetland in question, as required by 25 Pa. Code

Section 105.14(b)(7).

4. Your application does not demonstrate that the public

benefit of the proposed project outweigh the harm to the

65a

Appendix G

environment and public natural resources, as required by 25

Pa. Code Section 105.14(b). Consequently, the Department

may not approve the application to discharge fill material

into the wetland according to 25 Pa. Code Section

105.411(3).

In summary, based upon the Department’s review of your

application, the materials submitted with it, and the criteria set

forth in the above cited regulations, the Department finds the

proposed fill would result in destruction of aquatic habitat which

would not be outweighed by acountervailing public benefit. For

these reasons, your application for a permit is hereby denied.

This action of the Department may be appealable to the

Environmental Hearing Board, 101 South Second Street, Suites

3-5, Harrisburg, PA 17101, (717-787-3483) by any aggrieved

person pursuant to Section 4 of the Environmental Hearing

Board Act, 35 P.S. Section 7514, and the Administrative Agency

Law, 2 Pa. C.S., Chapter 5A. Appeals must be filed with the

Environmental Hearing Board within 30 days of receipt of

written notice of this action unless the appropriate statute

provides a different time period. Copies Or the appeal form and

regulations governing practice and procedure before the Board

may be obtained from the Board. This paragraph does not, in and

of itself, create any right of appeal beyond that permitted by

applicable statutes and decisional law.

Sincerely,

s/ Joseph J. Ellam

Joseph J. Ellam, P.E.

Acting Director

Bureau of Dams and Waterway Management

Department of Environmental Resources

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.