Opposition Brief — Volkema v. Michigan

2D

nal FILED |

No. 98-388

In the Supreme Court of the United Btates NOV 3 1998

October Term, 1998

QEEICE OF THE CLERK

| | SUPREME COURT, U.S.

RUSSELL H. VOLKEMA and

LOIS J. VOLKEMA,

Petitioners,

Vv.

STATE OF MICHIGAN;

DEPARTMENT OF ENVIRONMENTAL

QUALITY, and RUSSELL HARDING,

Director of Department of Environmental Quality,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE MICHIGAN SUPREME COURT

BRIEF OF RESPONDENTS IN OPPOSITION

FRANK J. KELLEY

Attorney General

Thomas L. Casey

Solicitor General

Counsel of Record

P. O. Box 30212

Lansing, Michigan 48909

(517) 373-1124

. S. Peter Manning

Assistant Attorney General

Attorneys for Respondents

‘

aN

COUNTER-STATEMENT OF QUESTION PRESENTED

When a property owner is denied a permit to fill 4.3

acres of wetland does the Constitution require a court to

focus only on the 6 acres which allegedly cannot be

commercially developed due to that decision in determining

whether a taking has occurred or, consistent with longstanding

takings jurisprudence, should the court consider the entire

undeveloped 24.6 acre parcel of property currently owned by

the property owner?

Be Ry ee ss ES ee Se em ae es a CRIS © LEE eo ib alt! vo es

Fie Ng Sa hd ae ies a 8 bie bd aia Che a hs i aks Baie

~

LIST OF PARTIES

In the courts below, the State of Michigan, the Michigan

Department of Natural Resources (MDNR) and its Director,

Roland Harmes, were listed as respondents. In 1995 the

Michigan Department of Environmental Quality (MDEQ) was

' created and assumed the obligations and authority for the

regulatory scheme under which the permit decision at issue

was rendered. Executive Reorganization Order 1995-18, Mich

Comp. Laws Ann. § 324.99903 (West Supp. 1998). Russell J.

Harding has succeeded Roland Harmes as MDEQ's Director.

Director Harding and the Michigan Department of

Environmental Quality are automatically substituted as

parties. Supreme Court Rule 3.5.3. All three respondents will

be collectively referred to as "MDEQ."

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TABLE OF CONTENTS

Page

COUNTER-STATEMENT OF QUESTION

EE NE ai cts hinthth daira desandndasbatenniennsicaninines vads terrapins i

a a OE caster ancacs shectagncnaen vapansdcovaphepestesnvsaninannsesice ii

Sp I PIE EEF SR cscgacnccccarsensessencvnsnsceceneccsnseeveneiees Vv

SIEMENS MIEN sinsscsc srenascs banoannasensersusadenssayssedebivasosgecessnes 1

a Tia na saan acest ntemenaiile apesgcesbensevdstosic ints icesecases 1

SR UPIINIIEE, GED EEIE OIA cscccccsssvosccarceccenccacocndecoasccegeocs 1

REASONS FOR DENYING THE WRIT...............ccccceceee 4

I. BECAUSE OF ITS UNIQUE FACTS AND

PROCEDURAL POSTURE THIS IS AN

INAPPROPRIATE CASE TO RESOLVE THE

QUESTION RAISED IN THE PETITION..................... 3

Il. THE DECISION OF THE MICHIGAN COURT OF

APPEALS IS CONSISTENT WITH ESTABLISHED

PRECEDENT OF THIS COURT, AS WELL AS THE

EA FUP MEER PEPE, COIR Seccnsscscccsccnssscescestceessensenens 4

A. The Court Of Appeals Decision ¢o Not Limit

Its Analysis To The Discrete Portion Of The

Property Impacted By The Government Action

Is Consistent With This Court's Longstanding

TEL iasciissbthigslabasnissnsseeserisacseaicedvsesnacee 5

B. Lower Federal Courts Which Have Addressed

The Relevant Parcel Issue Have Reached

Conclusions Consistent With The Michigan

Court Of Appeals And Have Expressly Rejected

The Type Of "Per Se" Rule Advocated By

I Scala ari snchacsitveinnsdonna ced janeasecrevensovesseiess 7

-iv-

Il. PETITIONERS HAVE FAILED TO DEMONSTRATE

ANY COMPELLING NEED TO ADOPT THE RULE

THEY ADVOCATE, AND THE RULE

CONTRAVENES SETTLED TAKINGS DOCTRINE...9

IV. THERE IS NO CONFLICT BETWEEN THE

VARIOUS STATE COURTS OR THE FEDERAL

CIRCUIT COURTS NECESSITATING THE

INVOLVEMENT OF THIS COURT............ccccscecees 11

A. The Oregon Supreme Court's Decision In

Boise Cascade Corp. v Board of Forestry Was

Limited To The Interpretation Of The Oregon

Constitution And Did Not Directly Address

The Relevant Parcel Issue...................ssssssessesesees 11

B. The Holding In Loveladies Harbor Is Not In

Conflict With The Michigan Court Of Appeals

ODER os nse se ciiniygrteinitnind ntefermtpictnnpan aes 13

C. American Savings And Loan Association v.

County of Marin Is Of Dubious Precedential

URIRII acne ssssnensesesiomcanidin nak anooy Uinin Saiegsamiataaes monean’ 14

-y-

INDEX OF AUTHORITIES

Page

Cases

American Savings and Loan Association v County of Marin,

653 F.2d 364 (9th Cir. 1981)............cceeseseees 14, 15, 16

Andrus v. Allard,

ON Fie IND CRED dhewietns dacs dessins bviseeton oiokeiachoseabeb 5

Boise Cascade Corp. v Board of Forestry,

we ee 411 Ce, 1997)....kdniiign nncusn-« 11, 12, 16

Ciampitti v. United States,

ee 0, OO oh inuudaus 8, 9, 16

Concrete Pipe & Products of California, Inc. v.

Construction Laborers Pension Trust,

BO US. GUD CN a dik nis iksiciesiieemserscccrcns 6, 9, 16

Deltona Corp. v. United States,

657 F.2d 1184 (Ct. Cl. 1981),

obt..den. €55 US. 1017 (1982)........c5ciidecresesnci. 8, 16

Dolan v. Tigard,

ee |” SRST Cr alae ie erm 7,9, 16

Forest Properties, Inc. v. United States,

ee Re SA ee Rachid babii chases cdhdeossseengescestapndntocde 7

Gorieb v Fox, )

At a Ri: GR PE ainiitidh. (essential tq.teacermicssneraidreree 10

Jentgen v. United States,

657 F.2d 1210 (Ct. Cl. 1981),

cert. den. 455 U.S. 1017 (1982)....c.ccscsecssesesseessessessecseenes ~

K & K Construction v. Department of Natural Resources,

456 Mich. 570; 575 N.W.2d 531 (1998).......... 1,3, 9,13

-Vi-

Keystone Bituminous Coal Association v. DeBenedictis,

460 US. GO (067). ind Ea 5, 6, 9, 15

Loretto v. Teleprompter Manhattan CATV Corp.,

450-U.G: 410 SIG a La nk. 10

Loveladies Harbor, Inc. v. United States,

28 F.3d 1171 (Fed. Cir. 1994)..........0000 9, 13, 14, 16

Lucas v. South Carolina Coastal Council,

SOS: UG: 20GB 490A vacitiiscrriasirteien dla. deas 6, 7,9

MacLeod v Santa Clara County,

749 F.2d 541 (9th Cir. 1984),

cert. den 472 U.S. 1009 (1985)............ccccccccceseeeees 7,14

Mountain States Legal Foundation v. Hodel,

799 F.2d 1423 (10th Cir. 1986),

cert..dew. 480 U.S. GBT (USBE)sviciisccc cre scsinesinncccodetennd 7

Naegele Outdoor Advertising v City of Durham,

B44 F.2d 172 (4th Cir. 1988)... dccccccccsssccsccccsccescseeseeess 7

Penn Central Transportation Co. v. New York City,

4358 DS. 106 TSF B een cdi 5, 6, 8, 14

Tabb Lakes, Ltd. v. United States,

10 F.3d 796 (Fed. Cir. 1993)............cccccecccees 8, 9, 16

Volkema v. Department of Natural Resources,

214 Mich. App. 66; 542 N.W.2d 282 (1995),

lv. app. den. (Jue 9, 1998)........cccccsereerseeeees 1, 2, 4, 14

Volkema v. Department of Natural Resources,

ET RO Te Rr tents sees crncasneecincarscnsivetasaniel 1, 4, 13

Zealy v. City of Waukesha,

548 N.W.2d 528 (Wis. 1996).........cccccccceessesseeeeeees 7

Zilber v. Town of lage

692 F. Supp. 1195 (N.D. Cal. 1988).............ccceeeees 15

Se 8s ae ee ane ee ee ee Le ee ie ee el ~

a S eh ether, o's . -

-vii-

Statutes

Clean Water Act, 33 U.S.C. § 1251 et SG.......cccccessesseseeeeenes 7

Clean Water Act, 33 U.S.C. § 1344... cccccccccscsceeseeeneeees 13

Executive Reorganization Order 1995-18,

Mich. Comp. Laws Ann. §324,99903 ........cccessssesee ii

Goemaere-Anderson Wetland Protection Act,

Mich. Comp. Laws Ann. § 281.701 et $€q.......00000e0e 2

Natural Resources and Environmental Protection Act,

Mich. Comp. Laws Ann. § 324.30301 et Seq............000+ 2

Constitution

Oregon Constitution, Article I, section 18............0s0000 11

adn

OPINIONS BELOW

Petitioners’ Application for Leave to —— to the

Michigan Supreme Court was denied in an Order dated June 9,

1998. Volkema v. Department of Natural Resources, 457 Mich.

884 (1998). The application for leave to appeal had been held

in abeyance pending the Michigan Supreme Court's decision in

K & K Construction v. rtment of Natural Resources, 456

Mich. 570; 575 N.W.2d 531 (1998), cert. den. ss ~*U.S.

(1998).

The Michigan Court of Ps decision in the

underlying case is reported as Volkema v. Department of

Natural Resources, 214 Mich. App. 66; 542 N.W.2d 282 (1995).

The various state Court of Claims opinions are not published.

The pertinent orders and opinions are reproduced as

Appendices A-E to the Petition.! Respondents have not

attached these documents to this brief and will reference

Petitioners’ Appendices as required.

JURISDICTION

Respondents do not dispute Petitioners’ statement

concerning the jurisdiction of the Court.

STATEMENT OF THE CASE

Respondents, the State of Michigan, the Michigan

Department of Environmental Quality and Russell Harding,

Director of the Michigan Department of Environmental

Quality ("“MDEQ"), will primarily rely on the recitation of facts

contained in the Michigan Court of Appeals opinion in the

ype | case. 214 Mich. App. at 66-67; Petitioners’

Appendix B, pp. 1-2. This concise, two- paragraph narration

adequately presents the factual background in this case for

purposes of addressing the issue raised by Petitioners.

However, two areas of potentiai confusion should be

clarified. The first involves the nature of the government

action at issue which, contrary to Petitioners’ rhetoric, was

I Petitioners cite to an “A ix F’ in their Petition. However, there was no

Appendix F appended to Respondents’ copy of the Petition.

-2-

solely the denial of Petitioners’ permit application to fill an

area of wetland under the former Goemaere-Anderson

Wetland Protection Act ("WPA"), Mich. Comp. Laws Ann. §

281.701 et seq (West 1979),2 for purposes of a proposed

commercial development. Trial Exhibits E and F; Petitioners’

Appendix B, p. 2. Nothing in the government's decision on

that application requires that Petitioners allow the government

or the general public to enter their propery: that they take any

affirmative action to maintain the we , or that they utilize

the property in any particular way. Petitioners’ persistent

characterization of the government action in this matter as

iring that a portion of their property be "pressed into

public use or service," "devoted exclusively to public use" or

dedicated for use exclusively as a wetlands preserve" (see,

ef Petition, pp. 4, 5, 6, 16, 19, 25, and 26), raises the specter

of permanent government invasion, public easements, or

affirmative deed restrictions none of which occurred in this

case.

Additionally, the Court of Appeals statement that,

“approximately half of that land [Petitioners' 50 acres of

property] already had been developed before the enactment of

the Wetland Protection Act"3 is erroneous. The WPA was

enacted in 1979 and became effective in October of 1980. The

testimony of Mr. Volkema at trial established tnat 26 of the 50

acres were sold between August of 1981 and August of 1987,

in four separate transactions, for a total vf $1.987 million.

November 9, 1992 Trial Transcript, pp. 21-24. On the basis of

this erroneous determination, the Court of Appeals excluded

the 26 acres from its takings analysis.4 The MDEQ cross-

appealed in the Court of Appeals and sought application for

leave to appeal as a cross-appellant in the Supreme Court in

order to chall the lower courts’ exclusion of the 26 acres of

the original 50 acre parcel owned by the Volkemas in

determining the relevant parcel. The application for leave to

2 The Wetland Protection Act has since been recodified as Part 303 of the

Natural Resources and Environmental Protection Act ("NREPA"), Mich.

Comp. Laws Ann. § 324.30301 et seq (West Supp. 1998) without substantive

3 214 Mich. App. at 73-74; Petitioners’ Appendix B-7.

4 The trial court had also excluded the 26 acres without detailed

explanation. June 18, 1992 Opinion and Order.

2.

appeal as cross-appellant was denied by the Michigan

Supreme Court in the same order denying petitioners’

application. Petitioners’ Appendix A-1.

REASONS FOR DENYING THE WRIT

I.

BECAUSE OF ITS UNIQUE FACTS AND

PROCEDURAL POSTURE THIS IS AN

INAPPROPRIATE CASE TO RESOLVE THE

QUESTION RAISED IN THE PETITION.

MDEQ wishes to highlight an important aspect of the

procedural background in this matter not fully addressed by

Petitioners. Petitioners purport to be seeking issuance of a

writ of certiorari to review the Michigan Court of Appeals

decision in this case. Specifically, Petitioners seek review of

the opinion as it concerns the determination of the relevant

parcel in a regulatory takings case. Petition, p. 1. However,

the Michigan Court of Appeals opinion is not the controlling

authority on that issue in the State of Michigan. Rather, the

test to be applied by the courts in Michigan is governed by the

Michigan Supreme Court's opinion in K & K Construction,

supra.> The Order of the Michigan Supreme Court disposing

of Petitioners’ Application for Leave to Appeal in the

underlying case makes it clear that the analysis of the

Michigan Court of Appeals is not controlling to the extent it is

inconsistent with K & K Construction:

The application is again considered, and it is

DENIED, because we are not persuaded that

the yoga presented should be reviewed by

this Court. The result reached by the Court of

Appeals is correct pursuant to this Court's

decision in K & K Construction, Inc., supra. The

Court of Appeals’ analysis, particularly its

reliance on Loveladies Harbor, Inc. v. United

2 The Petition for a Writ of Certiorari in K & K Construction, Inc. v.

Department of Natural Resources and Michigan, No. 97-1957, was recently

denied by this Court in an order dated Oc 5, 1998. That Petition, also

authored by the Pacific op Foundation, similarly sought to have this Court

address the relevant parcel issue.

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States, 28 F 3d 1171 (1994), is disavowed

insofar as it is inconsistent with this Court's

decision in K & K Construction.®

Petitioners seek to have this Court review the decision of

the Michigan Court of Appeals for the purpose of arguing for

the adoption of a new "partial categorical taking" rule,

Petition, p. 7, but this case is an inappropriate vehicle for

exploring any such new principle for several reasons. First, the

Michigan itae. Court has severely limited any precedential

authority of the Court of Appeals opinion by expressly

disavowing, at least in part, its analysis. Petitioners are

seeking review of a result, not a rationale. Second, Petitioners

rely on a dissenting opinion in the Michigan Court of Appeals.

Petition, p. 27. Third, Petitioners have failed to demonstrate

any tenable legal authority or policy basis for the new "per se"

rule they advocate. Fourth, the alleged confiicts between

opinions they rely upon are illusory. The petition should be

denied.

Il.

THE DECISION OF THE MICHIGAN COURT OF

APPEALS IS CONSISTENT WITH ESTABLISHED

PRECEDENT OF THIS COURT, AS WELL AS THE

LOWER FEDERAL COURTS.

Petitioners essentially acknowledge that the rule they

propose is not supported by existing legal authority. Petition,

p. 27. The rule Petitioners would have this Court adopt is the

view of the dissenting judge in the Michigan Court of Appeals

below that, "[A] taking occurs where a regulation precludes the

use of an identifiable, discrete piece of property, even if that

property forms only a portion of a larger parcel." 214 Mich.

App. at 80; Petitioners’ Appendix B-13. Such a rule would

represent a radical departure from this Court's established

takings jurisprudence and would fundamentally alter the

playing field for regulators and private parties. By

comparison, the decision of the Court of Appeals represents a

6 457 Mich. 884; Petitioners’ Appendix A.

"mainstream" analysis of the relevant parcel issue” which is

consistent with a long line of decisions from this Court and the

emerging rule in the lower federal courts.

A. The Court Of Appeals Decision To Not

Limit Its Analysis To The Discrete

Portion Of The Property Impacted By

The Government Action Is Consistent

With This Court's Longstanding

Precedent.

The genesis of the modern "parcel-as-a-whole" or "non-

segmentation" doctrine is Penn Central Transportation Co. v New

York City, 438 U.S. 104 (1978), wherein this Court dismissed

the argument that the “air rights" impacted by a landmarks

ordinance were taken "irrespective of the value of the

remainder of their parcel. . . ." 438 U.S. at 130. Instead this

Court held that Taking’ jurisprudence does not divide a single

parcel into discrete segments and attempt to determine

whether rights in a Legros segment have been entirely

abrogated." Id. See also, Andrus v. Allard, 444 U.S. 51, 65-66

(1979) ("Where an owner possesses a full ‘bundle’ of property

rights, the destruction of one ‘strand’ of the bundle is not a

taking because the aggregate must be viewed as a whole").

To the extent there was any ambiguity concerning the

scope of this rule, in Keystone Bituminous Coal Association v.

DeBenedictis, 480 U.S. 470 (1987), this Court made it clear that

even if it was alleged that discrete portions of a claimant's

property were taken in their entirety, as opposed to "strands"

or rights in a piece of property, the focus would still not be

limited to the impacted areas. 480 U.S. at 498-502. In

Keystone, an identifiable 27 million tons of coal were required

to be left in place as a result of apes ma Subsidence Act

and, consequently, would have no value to the claimant. Id. at

498. The claimants accordingly sought to "narrowly define

certain segments of their property and assert that, when so

defined, the Subsidence Act denies them economically viable

use.” Id. at 496. In rejecting this strategy, the Court made it

clear that this rule did not simply apply to vertical rights in

7 As discussed, supra, MDEQ believes the entire 50-acre parcel, which was

still undeveloped when the WPA was enacted, should have been included in

the relevant parcel.

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land, e.g., air or mineral rights, but also — horizontally:

— zoning ordinances place limits on the property owner's

ght to make sie use of some segments of lis property. A

imamate that a building occupy no more than a specified

percentage of the lot on which it is located could be

characterized as a ta of the vacant area as readily as the

requirement that coal pillars be left in place. Similarly, under

petitioners’ theory one could always argue that a setback

ordinance requiring that no structure be built within a certain

distance from the property line constitutes a taking because

the footage represents a distinct segment of property for takings

law purposes.8

Petitioners assert that the language in footnote 7 of the

opinion in Lucas v. South Carolina Coastal Council, 505 U.S.

1003 (1992),9 opened the door to revision of the rule

established in Penn Central and Keystone. Petition, pp. 6 and

27. However, whatever may have been the import of that

language, this Court has not subsequently indicated that it

was prepared to contemplate a rule such as that proposed by

Petitioners. To the contrary, in Concrete Pipe and Products of

California Inc. v. Construction Laborers Pension Trust, 508 U.S.

602, 644 (1993), the Court emphatically disavowed any

intention to adopt such a rule:

[W]e rejected this analysis years ago in Penn

Central Transportation Co. v. New York City, 438

U.S. 104, 130-131 (1978), where we held that a

claimant's parcel of property could not first be

divided into what was taken and what was left

for the purpose of demonstrating the taking of

the former to be complete and hence

compensable. To the extent that any portion of

property is taken, that portion is always taken in its

entirety; the relevant question, however, is whether

the property taken is all, or only a portion of the

parcel in question.10

8.480 U.S. at 498 (emphasis added).

9 505 U.S. at 1016 n. 7.

10 Emphasis added.

Moreover, in a case involving the required dedication of

a portion of real oe ek to the government, Dolan v Tigard,

512 U.S. 374, 384 n. 5 (1994), this Court, citing Lucas, opined,

“There can be no argument that the permit conditions would

deprive petitioner of ‘economically beneficial us[e]' of her

he ond as she currently operates a retail store on the lot.

titioner assuredly is able to derive some economic use from

her property.” (Emphasis in the original).

B. Lower Federal Courts Which Have

Addressed The Relevant Parcel Issue

Have Reached Conclusions Consistent

With The Michigan Court Of Appeals

And Have Expressly Rejected The Typ.

Of “Per Se" Rule Advocated

Petitioners.

y

In Section III, infra, the only three cases which Petitiorers

have identified as being in conflict with the Michigan Court of

Appeals are specifically addressed. Even a cursory analysis

of those cases demonstrates that there is no serious conflict in

principle created by the opinions in those cases. Moreover, it

is clear that a number of federal circuit and state courts, which

have directly addressed the relevant parcel issue, reject the

notion that discrete portions of a larger property must be

viewed separately in measuring the im AN a government

regulation. See, e.g., MacLeod v. Santa , 749 F.2d

541, 547 (9th Cir. 1984), cert. den. ‘72. U 51 1 (1985);

Mountain States Legal Foundation v. Hodel, 799 F.2d 1423, 1430

(10th Cir. 1986), cert. den. 480 U.S. 951 (1986) (citing MacLeod,

supra); Naegele Outdoor Advertising v. City of Durham, 844 F.2d

172, 176 (4th Cir. 1988); Forest Properties, Inc. v. United States,

39 Fed. Cl. 56, 74 (1997); Zealy v. City of Waukesha, 548

N.W.2d 528, 533 (Wis. 1996).

In addition to these cases, and of particular relevance to

the underlying case, are a series of takings cases based on

actions taken by the federal government under the Clean

Water Act ("CWA"), 33 U.S.C. § 1251 et seq. These cases are

significant because they involve the same kind of government

action which is the subject of the Petitioners’ takings claim, 1.e.,

permit denials for wetland fill. Importantly, all of these cases

repudiate the existence of any legal authority or public interest

-8-

justification for the Petitioners’ proposed per se rule requiring

that discrete portions of affected property be parsed out from

a larger whole.

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

1981), cert. den. 455 U.S. 1017 (1982); Jentgen v. United States,

657 F.2d 1210 (Ct. Cl. 1981), cert. den. 455 U.S. 1017 (1982);

Ciampitti v. United States, 22 Cl. Ct. 310 (1991); and Tabb

Lakes, Ltd. v. United States, 10 F.3d 796 (Fed. Cir. 1993), each

involved the application of § 404 of the CWA to property that

contained both wetland and upland. In none of these cases

did the courts consider the denial of a permit to fill a wetland

an, “attempt to carve out a discrete portion of the owner's

property and require it to be devoted to some public use",!1

mandating compensation for those specific wetland areas.

The discussion of the relevant parcel issue in Ciampitti

and Tabb Lakes is particularly instructive. Tabb Lakes involved

a temporary taking claim er “ the improper assertion of

jurisdiction by the Army Co Engineers.!2 In responding

to the claimant's argument that ioe use of certain areas of the

property had been taken the court held:

Clearly, the quantum of land to be considered is

not each individual lot containing wetlands or

even the combined area of wetlands. If that

were true, the Corps' protection of wetlands via

a permit system would, ipso facto constitute a

taking in every case where it exercises its

statutory authority.13

Similarly, in Ciampitti the Court of Claims reasoned:

In the case of a landowner who owns koth

wetlands and adjacent uplands, it would

clearly be unrealistic to focus exclusively on the

wetlands, and ignore whatever rights might

remain in the uplands. If a governmental entity

11 See, e.g., Petition, p. 16.

12 10. F.3d at 799. .

13 Jd. at 802.

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required a buffer, for example, around a

housing development, a court would not

entertain a separate claim for the land

dedicated to the buffer. It would no doubt take

into consideration the extent to which the whole

parcel could be developed. !4

These cases are directly applicable to the situation

presented in the underlying case where Petitioners argue that

they should be compensated for the discrete area impacted by

the regulation regardless of the large area of developable land

remaining on their property. These cases reaffirm the doctrine

established in Keystone and Penn Central, supra, which reject

such claims. se

Il.

PETITIONERS HAS FAILED TO DEMONSTRATE ANY

COMPELLING NEED TO ADOPT THE RULE THEY

ADVOCATE, AND THE RULE CONTRAVENES

SETTLED TAKINGS DOCTRINE.

As discussed above, despite the opportunity to opine on

the subject after Lucas, in Concrete Pipe and Dolan, supra, this

Court has not indicated any intention to create a em rule

for “partial categorical takings" as proposed by Petitioners.

Moreover, the federal circuit has directly addressed the issue,

and rejected the pronnays: such a rule in Tabb Lakes, supra.15

In fact, the emerging rule for defining the relevant parcel, as

represented by cases like Loveladies Harbor, Inc. v. United

States, 28 F.3d 1171 (Fed. Cir. 1994), Ciampitti, and K & K

Construction, supra, is a fact-based inquiry designed to

"identify the parcel as realistically and fairly as possible."!®

Such a rule is consistent with traditional takings analysis

which has relied on ad hoc, factual inquiries and is based on

the fundamental underpinning of fairness.

Undaunted, Petitioners seek to demonstrate the need for

imposition of a bright-line rule in the context of this case.

14 22 Ct. Cl. at 318.

15 As discussed in Section IILB., infra, Loveladies is not to the contrary.

16 See, e.¢., Ciampitti, 22 Ct. Cl. at 319.

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However, Petitioners have failed to do so, in large part

because their arguments are based on mischaracterization of

the government action at issue and the application of

inapposite jurisprudential principles.

As noted in MDEQ's statement of the case, Petitioners

take — ins to characterize the permit denial at issue as a

physical taking with the obvious aim of shoehorning this case

into the analysis employed in Loretto v. Teleprompter

Manhattan CATV Corp., 458 U.S. 419 (1982), and its progeny,

where the determination of the relevant parcel is irrelevant.

However, the record clearly discloses that this is not a

physical takings case because there has been no physical

pig oo nor is there we support for Petitioners’ assertion

that MDEQ has “exerci complete dominion and control."

Despite Petitioners’ characterization to the contrary,!7 the

fundamental underpinning of Loretto is the loss of the right to

exclude others,!8 which is simply not at issue in this case.

Unlike a physical taking, the restriction in this case is

precisely analogous to setbacks, buffer zones, height

restrictions, septic requirements, etc., which preclude

development of specific areas or segments of property, and

control where and how property is utilized. Such restrictions

have long been upheld despite the significant use limitations

they impose, and the cases have been decided by reference to

the whole property and the uses that remain.!9 An exception

such as that proposed by Petitioners, based on the

"independent economic viability" of the discrete portion of

property subject to the regulation, would turn traditional

parcel analysis on its head. Such micro-examination of areas

or segments of property impacted by regulation, without

reference to the larger whole, is antithetical to the parcel-as-a-

whole principle established by this Court because it places the

focus on what was taken without any point of reference.20

17 Petition, p.17. ("Although usually classified as a ‘physical invasion’ case,

Loretto is reese Papen characterized as one in which the state dictated the

specific use to w part of Mrs. Loretto's property would be devoted.”)

18 458 US. at 435.

19 See, ¢.¢., Gorieb v Fox, 274 US. 603 (1927).

20 it is significant that, to MDEQ's knowledge, this “test” has never been

applied by a court.

-l]1-

Petitioners have failed to demonstrate any compelling

reason to alter established takings jurisprudence and create a

new rule to accommodate their taking claim. This is not a

physical takings case and there is nothing to distinguish the

permit denial at issue from any of a range of legitimate

government actions which impact the use of a portion of a

larger property. Accordingly, there is no reason to analyze

this case, or others like it, any differently.

IV.

THERE IS NO CONFLICT BETWEEN THE

VARIOUS STATE COURTS OR THE FEDERAL

CIRCUIT COURTS NECESSITATING THE

INVOLVEMENT OF THIS COURT.

Recognizing that this Court must reserve its oversight to

cases of significant jurisprudential importance, Petitioners

seek to create a conflict worthy of this Court's attention. This

effort fails, not only because the conflict constructed by

Petitioners, one state court out of fifty and two federal circuit

courts, would be insignificant, but, more importantly, because

the conflict is illusory.

A. The Oregon Supreme Court's Decision In

Boise Cascade Corp. v Board of Forestry

Was Limited To The Interpretation Of

The Oregon Constitution And Did Not

Directly Address The Relevant Parcel

Issue.

Petitioners argue that in Boise Cascade Corp. v Board of

Forestry, 935 P.2d 411 (Ore. 1997), the Oregon Supreme Court,

“arrived at precisely the opposite conclusion from the court

below on the application of I constitutional law." Petition,

p. 20 (emphasis added). Further, that “the Oregon Supreme

Court (correctly) applied the Takings Clause in a manner

completely contrary to the doctrine of the Michigan court

below. Petition, p. 21 (emphasis added). This

characterization of the holding in Boise Cascade is simply not

accurate. Although the claimant in that case brought its claims

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under the Oregon2! and United States Constitutions, the

decision of the on Supreme Court was expressly limited

to the state constitution:

In order to determine whether the complaint

states a claim for relief, we must first discern

what is required to establish a "takings" claim

under Oregon law. 13

13 This Court considers state constitutional

claims before considering federal constitutional

claims. State v Kennedy, 295 Or. 260, 262, 666

P.2d 1316 (1983); Sterling v. Cupp, 290 Or. 611,

614, 625 P.2d 123 (1981).

It is also significant that the limited issue before the court

was whether the claimanis allegations in that case were

adequate to survive a dismissal motion based on the failure to

state a claim, "Assuming the truth of all well-pleaded facts

alleged in the complaint and giving plaintiff the benefit of all

favorable inferences that may be drawn from those facts. . . ."

Boise Cascade at 420. Among the allegations cited by the court

was the somewhat unfocused allegation that, "Apart from the

the subject merchantable timber, the underlyin Sept forest

land has no separate economic value until the timber has been

logged." Id. n. 14 (emphasis in the original). Moreover, there is

no direct discussion of the relevant parcel issue.

The premise of Petitioners’ conflict argument is, “It is

antithetical to our constitutional form of government that

rights secured under the Fifth Amendment should be a

in some states but not in others." Petition, p. 21. Although

true as a general principle, Petitioners’ reliance on the Oregon

Supreme Court's decision in Boise Cascade does not support

this premise because that decision was based on the Oregon

Constitution and did not determinatively decide the relevant

parcel issue.

21 Oregon Constitution, Article I, section 18.

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B. The Holding In Loveladies Harbor Is Not

In Conflict With The Michigan Court Of

Appeals Opinion.

Petitioners assert that the holding in Loveladies Harbor,

Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1994), "stands in

stark contrast to the approach of the Michigan courts in the

present case." Petition, P. 23.22 This alleged conflict is

apparently based on the Petitioners’ view that Loveladies is

supportive of the new "partial categorical takings" rule they

advocate because the court "focus[ed] . . . on the property

actually carved out for dedication to a public use by the

operation of land use regulations, ...." Id.

Loveladies involved a permit to fill wetlands on a 250-

acre parcel, which had originally been purchased in 1958, and

199 acres of which had been developed and sold prior to

enactment of the relevant regulation.23 28 F.3d at 1173-1174.

Of the remaining 51 acres, 38.5 acres had been dedicated to

the State of New Jersey in ays for a state permit to

develop the remaining 12.5 acres. Id. When the applicant

then applied to the federal government for a permit to develop

the 12.5 acres, the state strenuously objected to the permit and

the federal government ultimately denied it. Id.

It was based on this distinctive set of facts that the

Federal Circuit determined that the relevant parcel was the

12.5 acres and that a taking had occurred because no

development could take place in light of the permit denial. Id.

at 1181. It is not the case that the Federal Circuit simply

focused on the 12.5 acres for which the permit was sought and

22 This assertion is somewhat ironic in that the Court of Appeals relied upon

Loveladies in excluding (albeit erroneously) over half of the Petitioners’

original 50-acre parcel from its takings analysis. It is also ironic that

Loveladies is often cited for a “flexible,” fact- approach to determination

of the relevant parcel which is arguably similar to the “inherent[ly] factual

inquiry” outlined by the Michi reme Court in K & K Construction,

supra. 456 Mich. at 580. Al the fas ton Court "disavowed"

the Court of A Is reliance on Loveladies (see, 457 Mich. 884; Petitioners’

Appendix A) this was likely in large part due to the erroneous factual basis

for the Court of A Is determination that 26 acres of the 50-acre eaey

should be excl from the relevant parcel. In fact, Loveladies is cited wit

approval by the Michigan Supreme Court in outlining various factors of

importance in determining the relevant parcel. 456 Mich. at 585 n. 10.

23 Section 404 of the Clean Water Act, 33 U.S.C. § 1344.

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denied, without any further analysis. Accordingly, the

Michigan Court of Appeals properly distinguished the facts of

the underlying case, where Petitioners still owned 24.6 acres of

roperty and could develop 18.6 acres of that parcel,24 from

veladies where 199 acres had been sold before the enactment

of the relevant regulation25 and prior to the permit

application 38.5 acres “for all practical purposes had been

promised to New Jersey in exchange for the NJDEP permit."26

The Michigan Court of Appeals decision was entirely

consistent with Loveladies and, in fact, the Court relied on

Loveladies in excluding 26 acres of Petitioners’ property from

the relevant parcel. Thus, Loveladies does not provide any

basis for Petitioners’ conflict argument.

C. American Savings And Loan Association v.

County of Marin Is Of Dubious

Precedential Value.

The final case cited by Petitioner as presenting a conflict

with the Michigan Court of Appeal's determination in the

instant action is American Savings And Loan Association v.

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

The primary reason American Savings and Loan does not

support Petitioners’ conflict argument is that two subsequent

decisions in the Ninth Circuit call into question its continuing

validity. In MacLeod v. Santa Clara County, supra,27 a pane! of

the Ninth Circuit Court of Appeals took a position contrary to

the holding petitioner has attributed to the American Savings

and Loan panel. Relying on Penn Central the panel held that

government action which denied the use of a portion of a

claimant's property did not necessarily result in a taking:

The Supreme Court has long since rejected any

contention that denial of the use of a portion of

a parcel of property is so bound up with the

24 214 Mich. App. at 74; Petitioners’ Appendix B-7.

25 28 F.3d at 1174.

26 id. at 1181.

27 749 F.2d 541 (9th Cir. 1984); cert. den. 472 US. 1009 (1985).

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investment-backed expectations of a claimant

that government deprivation of the right to use

a portion of the property in issue invariably

constitutes a taking, irrespective of the impact

of the restriction on the value of the parce as a

whole.28

Subsequently, in Zilber v. Town of Moraga, 692 F.Supp.

1195 (N.D. Cal. 1988), the District Court for the Northern

District of California rejected an argument based on American

Savings and Loan because the court determined it was likely

not still good law in light of this Court's subsequent decision in

Keystone, supra:

In Keystone, the Supreme Court essentially

rejected the American Savings court's notion that

segments of property may be analyzed

separately if a "nonuniform regulation" affects

various segments differently.29

These two subsequent decisions from the Ninth Circuit

strongly indicate that American Savings and Loan is no longer

law in that Circuit. At a minimum, they call into question

Petitioners’ assertion that a conflict exists between the

Michigan courts and the Ninth Circuit and that any such

conflict warrants review by this Court.

28 id. at 547.

29 692 F. Supp. at 1205.

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CONCLUSION

The underlying opinion of the Michigan Court of

Appeals, on which Petitioners base their request for certiorari,

does not represent the law in Michigan concerning the proper

determination of the relevant parcel in a takings case. It

would seem incongruous for this Court to review an

intermediate appellate court decision of limited precedential

value.

Moreover, the decision of the Michigan Court of Appeals

clearly falls within the parameters established by this Court

for determination of the relevant parcel, arguably erring on the

conservative side by excluding half of the property owned by

Petswoners. Keystone, Concrete Pipe, and Dolan establish that

this Court will not simply focus on the area, right, or thing

alleged to have been taken without considering the potential

larger whole against which to measure the economic impact of

a government action. This interpretation is confirmed by

numerous federal cases specifically dealing with the takings

implications of wetlands regulations. See, Deltona, Ciampitti,

ana Tabb Lakes, supra. The various policy arguments proffered

by Petitioner in an attempt to counter the lack of legal

authority for their position are inapposite and do not justify

deviation from an established body of law.

Similarly, the asserted conflict with the Oregon Supreme

Court, the Federal Circuit and the Ninth Circuit is not

supported by the cases themselves. Boise Cascade, supra, was

decided based on takings principles contained in the C ~egon

Constitution and did not squarely address the relevant parce!

issue. There is no y sna with the Federal Circuit because the

~ Michigan Court of Appeals relied upon Loveladies, in part, and

p.uperly distinguis od the underlyi api from the distinctive

circumstances present in that case. Finally, American Savings

and Loan is likely no longer of any precedential value in the

Ninth Circuit.

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Based on the foregoing this Petition presents no issues

worthy of consideration by this Court. Accordingly, MDEQ

respectfully submits that the Petition should be denied.

Respectfully submitted,

FRANK J. KELLEY

Attorney General

Thomas L. Casey

Solicitor General

Counsel of Record

P. O. Box 30212

Lansing, Michigan 48909

(517) 373-1124

S. Peter

Assistant Attorney General

Attorneys for Respondents

November, 1998