Petition for Writ of Certiorari — Good v. United States, 120 S. Ct. 1554 (2000) (No. 99-881)
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—Bupreme Court, U.S.
ee F I L. KD
No.9 99 881 NOV 241999
. OCT Ur fr Gach
IN THE
Siew Court of the United States
LLoyp A. Goon, Jr.,
Petitioner,
Vv.
UNITED STATES,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Federal Circuit
PETITION FOR A WRIT OF CERTIORARI
E. BARRETT PRETTYMAN, JR.*
JOHN G. ROBERTS, JR.
H. CHRISTOPHER BARTOLOMUCCI
HOGAN & HARTSON L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-5685
RICHARD R. NAGEOTTE
NAGEOTTE, NAGEOTTE & NAGEOTTE
385 Garrisonville Road
Suite 201 & 202
Stafford, Virginia 22554
(540) 659-5050
* Counsel of Record Counsel for Petitioner
WILSON-EPES PRINTING Co., INC. - (202) 789-0096 - WASHINGTON, D.C. 20001
QUESTIONS PRESENTED
1. Whether the Federal Circuit erred in holding—
contrary to Lucas v. South Carolina Coastal Council,
505 U.S. 1003 (1992), and in conflict with the decisions
of many other federal courts of appeals and state appel-
late courts—that a government regulation depriving a
property owner of all economically viable use of his land
does not result in a per se or categorical taking under
Lucas unless the property owner can also prove “reason-
able, investment-backed expectations.”
2. Whether the Federal Circuit erred in holding that
a property owner who is denied federal permission to
develop his property because of the presence of endan-
gered species lacks a reasonable expectation of developing
the property—even though he purchased it prior to enact-
ment of the Endangered Species Act and the listing of the
species in question—because he should have been aware
that “the growing consciousness of and sensitivity toward
environmental issues” would ultimately change “the regu-
latory climate” so as to bar his planned development.
(i)
TABLE OF CONTENTS
QUESTIONS PRESENTED ........0.20..... ssadiainisahaiceen
URGE GEE AT NEI ccs voineeneesansentccnatecnntandomstacts
ETERS I SR ARN STO
JURISDICTION |... 0... talsenibaieedsacedbemiehs seiataaadeiecicate
REASONS FOR GRANTING THE WRIT
I.
Il.
III.
CONCLUSION
THE FEDERAL CIRCUIT’S DECISION IS
CONTRARY TO LUCAS AND CONFLICTS
WITH THE DECISIONS OF OTHER FED-
ERAL AND STATE APPELLATE COURTS...
A. The Federal Circuit Misconstrued The Cate-
gorical Rule Of Liacas
B. The Federal Circuit’s Decision Conflicts With
The Decisions Of Numerous Other Federal
And State Appellate Courts ......0000000000.
THE FEDERAL CIRCUIT’S HOLDING THAT
GOOD LACKED REASONABLE, INVEST-
MENT-BACKED EXPECTATIONS CANNOT
BE RECONCILED WITH THIS COURT’S
TAKINGS CASES, OTHER APPELLATE
COURT DECISIONS, OR THE FACTS OF
a SIRES PRR Set eh ore ace
THERE ARE COMPELLING REASONS TO
GRANT CERTIORARI IN THIS CASE
TERROR OO OEE HEE HERE HEE EE EHEEEEEEEEOSEOOSEEEEEEEEEEESSOH OSE OEES
12
20
25
28
iv
TABLE OF CONTENTS—Continued
APPENDICES Page
A. Opinion of the United States Court of Appeals
for the Federal Circuit (August 31, 1999) la
B. Opinion of the United States Court of Federal
Claims (August 22, 1997) ; ao 16a
v
TABLE OF AUTHORITIES
Cases Page
Adams Outdoor Adver. vy. City of East Lansing,
591 N.W.2d 404 (Mich. Ct. App. 1998) ............... 15
Anchorage v. Sandberg, 861 P.2d 554 (Alaska
| NaN na EME EE EMME SPR ie are Re ge 16
Babbitt v. Youpee, 519 U.S. 234 2: , BAeSpeeee Peay, 1!
Bormann V. Board of Supervisors, 584 N.W.2d 309
(lowa 1998), cert. denied, 119 S. Ct. 1096
Do Fe REGIE egy FILL IN SAE SOIT CPR 16
Central Colo. Water Conservancy Dist. v. . Simpson,
Our fn aoe Ges. FO a 16
Chioffi v. City of Winooski, 676 A.2d 786 (Vt.
ee AN IO TERI SO IS LET ECON OS Ne 14
City of Miami v. Keshbro, Inc., 717 So. od 601 (Fla.
Dist. Ct. App. 1998), review granted, 729 So.2d
392 (Fila. 1999) ............... EOE RT Te ONO CaM 15
Clay County v. Harley & Susie Bogue, Inc., 988
S.W.2d 102 (Mo. Ct. App. 1999) _..... sauanileasmeateie 17
Del Monte Dunes at Monterey, Ltd. v. City of
Monterey, 95 F.3d 1422 (9th Cir. 1996), aff'd,
SO Ue Ge CHI inickechci 12-13
Dodd v. Hood River County, 136 F.: sd 1219 (9th
Cir.), cert. denied, 119 S. Ct. 278 (1998) ......... 12
Eastern Enterprises v. Apfel, 118 S. Ct. 2131
CREE aticnzinn, sinictibnsaaedia chil eh ies ata poet Neer 26, 2
Hodel v. Irving, 481 U.S. 704 (1987) . jini idl AS 12
FIC Homes of Blackstone, Inc. v. Conservation
Comm’n of Blackstone, 673 N.E.2d 61 (Mass.
App. Ct. 1996), rev. denied, 676 N.E.2d 55
jk 5 SMEAR OT epee ED ny ee oe 17, 25
Florida Rock Indus., Ine. v. United States,
Fed. Cl. 1999 WL 692836 (Aug. 31,
TEE osibe en es .. 22-23
Gil v. Inland Wetlands & Watercourses Agency,
S96 A.2d 1868 (Comm. 1901) -.c.......sccccccc.cc.-0c...... 24
Guimont v. City of Seattle, 896 P.2d 70, 81 (Wash.
Ct. App.), rev. denied, 904 P.2d 1157 (Wash.
BUIED seetinticnsssustingitaaicieee somes 17
K&K Constr., Ine. V. Department of Natural Re-
sources, 575 N.W.2d 531 (Mich.), cert. denied,
550 @ Ge OP Cie ki 15
vi
TABLE OF AUTHORITIES—Continued
Page
Kavanau v. Santa Monica Rent Control Bd., 941
P.2d 851, 860 (Cal. 1997), cert. denied, 118 S. Ct.
BEC (1998) ............cecececeescnseereeerecessesarncesnrerensnsacnanes 16
Loretto v. Teleprompter Manhattan CATV Corp.,
ABS U.S. 419 (1982) ...........--ccecceeeeeeceeseeeeneeesesesenens 8, 11
Loveladies Harbor, Inc. v. United States, 28 F.3d
1171 (Fed. Cir. 1994) ............. Seer ee Se A 6, 14-15
Lucas Vv. South Carolina Coastal Council, 505 U.S.
1003 (1992) ........-.-..-..s-cecsscsnccses-nseesncnnsosenenennanenasoes passim
Lucas Vv. South Carolina Coastal Council, 404
S.E.2d 895 (S.C. 1991), rev'd, 505 U.S. 1003
(19GB) ....-.-.....--s.ososcecesecnseensensennnrsnnnsensnasnnsnanscesenssserss 10
McQueen v. South Carolina Coastal Council, 496
S.E.2d 643 (S.C. Ct. App. 1998), cert. granted
(S.C. Mar. 18, 1999) ...........------s---e-esesrecsesete 14-15
Nollan v. California Coastal Comm'n, 483 U.S. 825
(10BT) iccceececcisosnsosscnscudssasensvnncsanstannensnonstenssaceussnawasssss 21-22
Penn Cent. Transp. Co. v. City of New York, 438
U.S. 104 (1978). .........-...-...---scec0----n00s can 5 eas passim
Steinbergh v. City of Cambridge, 604 N.E.2d 1269
(Mass. 1992), cert. denied, 508 U.S. 909 (19938).. 11, 17,
24
Stevens v. City of Canon Beach, 510 U.S. 1207
(1904) nnn. nencccececccscssensesnecsosesenseenenensenennenss penal nee 27
Tahoe-Sierra Preservation Council, Inc. v. Tahoe
Reg’l Planning Agency, 34 F. Supp.2d 1226 (D.
Nev. 19080) .:......-;........- iste 13
United States v. Riverside Bayview Homes, Inc.,
ATA U.S. 121 (1985) .......-..-----:---eceeeeesessertesteseesetens 22
Vatalaro v. Department of Envtl. Regulation, 601
So.2d 1223 (Fla. Dist. Ct. App.), rev. denied,
613 So.2d 3 (Fila. 1992) ..........-.---------- de epee ea 24
Woodbury Place Partners Vv. City of Woodbury, 492
N.W.2d 258 (Minn. Ct. App. 1992), review de-
nied (Minn.), cert. denied, 508 U.S. 960
(29BB) ana ccn ence ences coensnensnensstasnssasccneresetnessenannbasannnnsass 11
Constitutional Provisions, Statutes and Rules
Takings Clause, U.S. Const., Meseeeth F cccsievcvncenonnh 2
28 U.S.C. § 1254 (1) .....-...---.0----00+2-- Saeren PA aE ations 1
28 U.S.C. § 1295 (a) (3) ...-------------ecceeceeeeeeeeseeesseceteeerts 1
scent
vii
TABLE OF AUTHORITIES—Continued
Page
Endangered Species Act, 16 U.S.C. §§ 1531 et seq... 4
Tucker Act, 28 U.S.C. § 1491 (a) (1) 000... 27
Bs Ta Ts TD cass es aeadleceakadigchensceadaks aeRO ak TE ODE 25
| EEE Rarer We mrere Rui eRe oe IN a 26
Other Authorities
Abraham, Windfalls or Windmills: The Right of
a Property Owner to Challenge Land Use Reg-
ulations, 13 J. Land Use & Envtl. L. 161 (1997). 26
Callies, Regulatory Takings and the Supreme
Court, 28 Stetson L. Rev. 523 (1999) 18, 26
Comment, A Constitutionally Valid Justification
for the Enactment of No-Growth Ordinances, 19
a es Bas CE a i 26
Federal Appeals Court Rules Against Developer
in Precedent-Setting Property Rights Case, DOJ
Press Release (Sept. 2, 1999) .....0 2, 26
W. Fischel, REGULATORY TAKINGS: Law, Eco-
NOMICS, AND POLITICS (1995) 18
Freilich, Garvin & Martin, Regulatory Takings:
Factoring Partial Deprivations Into the Taking
Equation, in TAKINGS: LAND-DEVELOPMENT
CONDITIONS AND REGULATORY TAKINGS AFTER
DOLLAN AND LucASs (D. Callies ed. 1996)... 18
Gardner, Banking on Entrepreneurs: Wetlands,
Mitigation Banking, and Takings, 81 Iowa L.
I 19
Hetzel & Gough, Assessing the Impact of Dolan v.
City of Tigard on Local Governments’ Land-Use
Powers, in TAKINGS: LAND-DEVELOPMENT COoN-
DITIONS AND REGULATORY TAKINGS AFTER DOL-
LAN AND LuCAS (D. Callies ed. 1996) _........ 13 18
D. Lucas, LUCAS vs. THE GREEN MACHINE (1995). 19-20
Mandelker, Investment-Backed Expectations in
Taking Law, 27 Urb. Law. 215 (1995) 19
Ogle, The Ongoing Struggle Between Private Prop-
erty Rights and Wetlands Regulation: Recent
Developments and Proposed Solutions, 64 U.
ee ee es Ee COE ee ee 19
viii
TABLE OF AUTHORITIES—Continued
Oswald, Cornering the Quark: Investment-Backed
Expectations and Economically Viable Uses in
Takings Analysis, 70 Wash. L. Rev. 91 (1995)..
Ward, Lucas v. South Carolina Coastal Council:
A Categorical Rule in the Muddle of Takings
Analysis, 61 UMKC L. Rev. 165 (1992)
Washburn, “Reasonable Investment-Backed Ex-
pectations” As a Faclor in Defining Property
Interest, 49 Wash. U. J. Urb. & Contemp. L. 63
REIN nccesnctinet
Page
nN
a |
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19
IN THE
Supreme Court of the United States
No. 99- ———
Lioyp A. Goon, Jr.,
Petitioner,
Vv.
UNITED STATES,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Federal Circuit
PETITION FOR A WRIT OF CERTIORARI
Petitioner Lloyd A. Good, Jr., respectfully petitions this
Court for a writ of certiorari to review the judgment of
the Court of Appeals for the Federal Circuit in this case.
OPINIONS BELOW
The opinion of the Federal Circuit is reported at 189
F.3d 1355 and reprinted in the appendix hereto (“App.”)
at la. The opinion of the Court of Federal Claims is
reported at 39 Fed. Cl. 81 and reprinted at 16a.
JURISDICTION
The judgment of the Federal Circuit was entered on
August 31, 1999. App. la. The jurisdiction of the Fed-
eral Circuit was based on 28 U.S.C. § 1295(a)(3). The
jurisdiction of this Court is invoked under 28 U.S.C.
§ 1254(1).
2
CONSTITUTIONAL PROVISION INVOLVED
The Takings Clause of the Fifth Amendment to the
United States Constitution provides: “[NJor shall pri-
vate property be taken for public use without just
compensation.”
INTRODUCTION
In this case, the Federal Circuit rendered what the
Department of Justice has called “a significant environ-
mental ruling” that “sets an important precedent.” F ederal
Appeals Court Rules Against Developer in Precedent-
Setting Property Rights Case, DOJ Press Release (Sept. 2,
1999). The court held that the categorical rule of Lucas
v. South Carolina Coastal Council, 505 U.S. 1003 (1992)
—that a taking occurs, without more, when a regulation
deprives a property owner of all economically viable use
of his land—is not categorical after all. Instead, a prop-
erty owner who has suffered even a total deprivation must
also show that he had reasonable, investment-backed
expectations—a_ factor considered in ordinary takings
cases. That holding is both contrary to Lucas and in con-
flict with the decisions of numerous other courts.
The Federal Circuit also held that petitioner, who was
denied a permit to build on his property because of the
discovery of two endangered species, lacked such reason-
able expectations as a matter of law, even though he
bought the property before the enactment of the Endan-
gered Species Act and the placing of the species on the
endangered list. The court held that in light of “the
growing consciousness of and sensitivity toward environ-
mental issues,” petitioner should have foreseen that “the
regulatory climate” would in the future bar his proposed
development. Thus, the Federal Circuit held that, even if
petitioner suffered a deprivation of all economically viable
use of his property. and even though he purchased that
property prior to the enactment of the statute that barred
3.
his plans, he was not entitled to compensation. The deci-
sion below plainly warrants this Court’s review.
STATEMENT OF THE CASE
1. In 1973, petitioner Lloyd A. Good, Jr., and his
mother purchased 40 acres of undeveloped land in the
Florida keys known as “Sugarloaf Shores” for approxi-
mately $93,000. Good invested an equivalent amount in
the land over the years trying to develop the property.
Good first took steps to develop the property in 1980,
when he hired a land planning and development firm.
App. 2a, 20a-21a.
In March 1981, Good submitted a permit application
to the United States Army Corps of Engineers (“Corps”).
Good proposed filling or excavating approximately 13
acres of salt marsh to develop a 54-lot subdivision and a
48-slip marina. The Corps granted the requested permit
in May 1983. The Corps also issued Good a modified
permit in January 1984. Under both permits, all work
had to be completed within five years. App. 2a-3a.
Good also pursued the necessary state and county
approvals and received permits from the Florida Depart-
ment of Environmental Regulation and the Monroe
County Commission in 1983 and 1984. respectively. At
this point, in mid-1984, Good had received federal, state,
and county approval to develop his property. App. 3a.
In September 1984, however, the Florida Department
of Community Affairs appealed the county’s approval to
‘the Florida Land and Water Adjudicatory Commission
(“FLAWAC”), which, in 1986, ordered the county to
review the project under a more stringent standard. Good
filed suit against FLAWAC. challenging its order as an
1 Sugarloaf Shores was included in a rrouy of properties the
Goods purchased for $2 million. Good inheritéd his mother’s 30°
interest in the property upon her death in A975. App. 20a & n.2.
4
uncompensated taking and an unreasonable exercise of
police power. That suit was settled in 1987. The action
therefore returned to the county which, in November
1989, once again granted preliminary approval of Good's
plans. App. 4a-Sa.
The FLAWAC proceedings and litigation consumed
most of the five-year limit on Good's permit from the
Corps. The Corps, however, granted Good a new permit
in October 1988 allowing substantially the same develop-
ment. In July 1990, out of caution that final county
approval of his plans for 54 lots and 48 slips might be
denied, Good submitted a second permit application to
the Corps for a scaled-down development consisting of
only 16 homes, a canal, and a tennis court. App. 5a-6a.
Subsequent to the issuance of Good’s 1988 permit,
however, the Lower Keys marsh rabbit was listed as an
endangered species under the Endangered Species Act,
16 U.S.C. §$§ 1531 et seg. The Corps therefore consulted
with the Fish and Wildlife Service (“FWS”) to ensure
that the requested new permit would not jeopardize the
marsh rabbit. App. 6a.
In February 1991, the FWS issued a biological opinion
in which it concluded that the project proposed in Good's
1990 permit application would not jeopardize the marsh
rabbit but nevertheless recommended that the permit be
denied. Shortly after the FWS issued its opinion, the
silver rice rat was also listed as an endangered species.
In December 1991 FWS issued a second biological opin-
ion concluding that both the 1988 and 1990 plans would
jeopardize the marsh rabbit as well as the silver rice rat.
The new opinion recommended that the Corps deny
Good’s 1990 permit application and modify the 1988
permit along lines suggested by FWS. App. 6a-7a.
In March 1994, the Corps denied Good's 1990 permit
application based on the threat to the endangered rabbit
FI
5
and rat. It also informed Good that his 1988 permit
had expired. App. 7a.
2. In July 1994, Good filed suit in the Court of Fed-
eral Claims alleging that the Corps’ denial of his 1990
Xermit application violated the Takings Clause of the
Fifth Amendment. He argued that the Corps’ “denial of
iis 1990 permit application pursuant to the Endangered
Species Act (‘ESA’) of 1973, 16 U.S.C. 88 1531-1543
‘1994), deprived his property of all economic value, and
that his claim therefore falls squarely within the per se
lakings rule of Lucas * * *.” App. 16a-17a. He argued
‘in the alternative that even if his claim does not fall
within the Lucas per se rule, he had reasonable investment-
backed expectations in his development plans. and there-
fore can demonstrate a taking under Penn Central Trans-
portation Co. v. New York, 438 U.S. 104 (1978).”
App. 17a.
The Court of Federal Claims recognized that Penn
Central “identified three factors to consider in analyzing
1 regulatory takings claim: the character of the govern-
nent action, the economic impact of the regulation, and
the extent to which the regulation interferes with reason-
able, investment-backed expectations.” App. 43a. The
Court of Federal Claims also recognized that in Lucas
this Court had articulated a “per se rule” that “a regula-
lion depriving property of all economic value would give
tise to a taking without considering the other Penn Central
factors.” App. 44a. Nevertheless, the Court of Federal
Claims granted summary judgment in favor of the govern-
ment, holding that the 1990 permit denial did not consti-
tute a taking under the per se rule of Lucas or the multi-
factor analysis of Penn Central. App. 18a.
6
3. a. The Federal Circuit affirmed.” Significantly, the
court did not dispute Good’s contention that he had been
deprived of all economically viable use of his property.
App. 9a. Instead, the court held, as a matter of law, that
even such a total deprivation is insufficient to establish
a per se taking under Lucas.
The Federal Circuit stated that “[rJeasonable, invest-
ment-backed expectations are an element of every regula-
tory takings case.” App. 10a (emphasis added) (citing
Loveladies Harbor, Inc. v. United States, 28 F.3d 1171,
1179 (Fed. Cir. 1994)). Good had argued that no such
showing need be made to establish a categorical taking
under Lucas, but the Federal Circuit disagreed, saying
that “we agree with the Loveladies Harbor court that the
Supreme Court in Lucas did not mean to eliminate the
requirement for reasonable, investment-backed expecta-
tions to establish a taking.” App. 10a. The Federal Cir-
cuit explained:
It is true that the Court in Lucas set out what it
called a “categorical” taking “where regulation denies
all economically beneficial or productive use of land.”
505 U.S. at 1015. The Lucas Court. however, clari-
fied that by “categorical” it meant those “categories
of regulatory action [that are] compensable without
case-specific inquiry into the public interest advanced
in support of the restraint.” Id. (emphasis added).
A Lucas-type taking, therefore, is categorical only in
the sense that the courts do not balance the impor-
tance of the public interest advanced by the regula-
tion against the regulation’s imposition on private
2 Since the Court of Federal Claims ruled on a motion for sum-
mary judgment, the Federal Circuit correctly recognized that it
had to view the facts in the light most favorable to Good and could
affirm only if the government were entitled to judgment as a matter
of law. App. 8a.
ee eens ricenrereanenaeaaienilieaaneeieemn
i
7
property rights. [App. 10a-11a (emphasis and brack-
ets added by the Federal Circuit).]
b. Good “alternatively argue[d] that he had reason-
able, investment-backed expectations of building a residen-
tial subdivision on his property.” App. 1la (emphasis in
original). He contended that “since the ESA [Endangered
Species Act] did not exist when he bought his land, he
could not have expected to be denied a permit based on
its provisions.” App. 12a. The Federal Circuit. however,
held that Good’s “lack of reasonable, investment-backed
expectations defeats his takings claim as a matter of law.”
App. 15a.°
While conceding that Good’s “position is not entirely
unreasonable,” the Federal Circuit said that “we must
ultimately reject it” in “view of the regulatory climate
that existed when [Good] acquired the subject property.”
App. 12a. The Federal Circuit explained that, although
the ESA had not yet been enacted when Good purchased
the property in 1973, between that year and 1980—when
Good first took steps to develop the property—‘“public
concern about the environment resulted in numerous laws
and regulations affecting land development” and this “ris-
ing environmental awareness translated into ever-tightening
land use regulations.” App. 13a, 14a. Good, said the
court, must “be presumed to have been aware of the
greater general concern for environmental matters during
the period of 1973 to 1980.” App. 14a.
The Federal Circuit thus concluded that “TiJn light of
the growing consciousness of and sensivitivity toward en-
vironmental issues, [Good] must also have been aware
3 Good signed a contract to purchase the property on April 18,
1973, and closed on the property on October 8, 1973. App. 20a. The
ESA was enacted in December 1973. App. 13a. The marsh rabbit
and silver rice rat were not placed on the endangered species list
until 1990 and 1991, respectively. App. 6a-7a.
8
that standards could change to his detriment, and that
regulatory approval could become harder to get.” App.
15a. In other words, the Federal Circuit held that, even
though the ESA had not yet come into existence when
Good purchased his property, and even though the two
protected species on his property had not yet been listed
as endangered, Good lacked a reasonable expectation of
building on the land—as a matter of law—because he
should have foreseen that the wave of environmentalism
in the 1970s would resu!t in laws and regulations preclud-
ing him from developing his property.
REASONS FOR GRANTING THE WRIT
I. THE FEDERAL CIRCUITS DECISION IS CON-
TRARY TO LUCAS AND CONFLICTS WITH THE
DECISIONS OF OTHER FEDERAL AND STATE
APPELLATE COURTS.
In this case, the Federal Circuit squarely held that a
regulation depriving a property owner of all economically
viable use of his property is not a categorical taking
under Lucas; the property owner must also satisfy the
reasonable, investment-backed expectations prong of the
Penn Central test. As shown below, that holding is con-
trary to the per se rule of Lucas and conflicts with numer-
ous other federal and state appellate court decisions, as
well as critical commentary.
A. The Federal Circuit Misconstrued The Categorical
Rule Of Lucas.
1. In Lucas, this Court explained that there are two
types of takings cases “in which we have found categorical
treatment appropriate.” 505 U.S. at 1015. “The first
encompasses regulations that compel the property owner
to suffer a physical ‘invasion’ of his property.” /d. (citing
Loretto v. Teleprompter Manhattan CATV Corp., 458
U.S. 419 (1982)). The second is “where regulation
denies all economically beneficial or productive use of
9
land.” Jd. Lucas involved the second category—the
“ “total taking.’ Jd. at 1030. The Court explained that,
without more, “when 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, he has suffered a taking.” 7d.
at 1019 (emphasis in original). The Court made clear
that the “ ‘total taking’ inquiry” (id. at 1030) is a per se
rule. Cases involving deprivations of all economic value,
said the Court, are subject to “categorical formulation”
and obviate the need for “case-specific inquiry.” Jd. at
1019 n.8, 1015. See id. at 1026 (“our categorical rule
lis] that total regulatory takings must be compensated” ).°
The Federal Circuit’s holding that a deprivation of all
economically viable use, by itself, is not enough to estab-
lish a per se taking is a blatantly incorrect misreading of
Lucas. In Lucas this Court specifically contrasted its
“categorical formulation” with “takings analysis gener-
ally.” in which the extent of a property owner’s reason-
able, investment-backed expectations is a relevant factor.
Id. at 1019 n.8 (citing Penn Central). When a property
owner suffers less than a total deprivation, the multi-factor
Penn Central test—including the expectations factor—ap-
plies. That factor is not considered in a Lucas-type case.®
4The Court recognized a single exception to the per se rule.
A regulation that renders property valueless is not a taking if the
regulation merely prohibits uses of property that were already im-
permissible under “background principles of the State’s law of prop-
erty and nuisance.” 505 U.S. at 1029.
5 See also Lucas, 505 U.S. at 1046-47 (Blackmun, J., dissenting)
(“From now on, there is a categorical rule finding these regulations
to be a taking unless the use they prohibit is a background common-
Jaw nuisance or property principle.”); id. at 1067 (Stevens, J., dis-
senting) (referring to the Court’s ‘per se rule for total regulatory
takings’); id. at 1076 (statement of Souter, J.) (‘the concept of
total (and, in the Court’s view, categorically compensable) taking’’).
6In Lucas, the South Carolina Supreme Court, while concluding
(wrongly) that regulations depriving all economic value do not
10
2. The Federal Circuit seized upon this Court’s state-
ment that there are two “ ‘categories of regulatory action
[that are] compensable without case-specific inquiry into
the public interest advanced in support of the restraint.’ ”
App. 10a-1la (quoting Lucas, 505 U.S. at 1015) (em-
phasis and brackets added by the Federal Circuit). Based
on this, the Federal Circuit held that “[a] Lucas-type
taking, therefore, is categorical only in the sense that the
courts do not balance the importance of the public inter-
est advanced by the regulation against the regulation’s
imposition on private property rights.” App. lla. But
the Federal Circuit overlooked the context in which the
statement was made. In Lucas, the South Carolina Su-
preme Court had rejected David Lucas’ takings claim on
the ground that the State had an important public pur-
pose in preserving its beaches. See 505 U.S. at 1009-10,
1020-22. Thus, the point of this Court’s statement was
that the South Carolina Supreme Court had erred in
holding that the public interest behind a regulation can
defeat a takings claim when the regulation deprives all
economically viable use of property. See id. at 1031
(“We emphasize that to win its case South Carolina must
do more than proffer the legislature’s declaration that the
uses Lucas desires are inconsistent with the puble in-
terest”).
This Court surely did not mean to say that considera-
tion of the public interest is the only factor otherwise
necessarily result in a taking, conceded that “[i]f Lucas can demon-
strate a deprival of all economically viable use of his land, there is
no need to weigh factors such as the economic impact of the regula-
tion and/or the regulation’s interference with investment backed
expectations. Such a showing by Lucas would by necessity weigh
these factors in his favor.” Lucas v. South Carolina Coastal Coun-
cil, 404 S.E.2d 895, 900 n3. (S.C. 1991), rev’d, 505 U.S. 1003
(1992). The views of the Federal Circuit are thus even more ex-
treme than those of the South Carolina Supreme Court rejected in
Lucas.
——EEEE aa a0
11
relevant to takings analysis that is omitted in a Lucas case.
The Court cited that factor only as an example. See Stein-
bergh v. City of Cambridge, 604 N.E.2d 1269, 1273
(Mass. 1992) (deprivation of all economic value is a
taking under Lucas “without regard to other considera-
tions, such as the public interest sought to be advanced”)
(emphasis added), cert. denied, 508 U.S. 909 (1993):
Woodbury Place Partners v. City of Woodbury, 492
N.W.2d 258, 260 (Minn. Ct. App. 1992) (Lucas “rec-
ognized two categories of regulatory action that constitute
compensable takings without a case-specific inquiry or
balancing of public and private interests’) (emphasis
added), review denied (Minn.), cert. denied, 508 US.
960 (1993).7
3. It is clear that consideration of investment-backed
expectations plays no role in the other category of per se
takings. In Loretto, this Court held that a permanent
physical occupation of property “is a taking without re-
gard to other factors that a court might ordinarily exam-
ine.” 458 U.S. at 432. And the Court contrasted this
per se rule with the “ordinar[y] ad hoc inquiry” in which
“the extent to which fa regulation] interferes with in-
vestment-backed expectations” is relevant. Jd. Thus, the
Court held the physical invasion at issue (a New York
law requiring property owners to permit the installation
of cable television lines) was a taking despite the New
York Court of Appeals’ ruling that the law did “not in-
terfere with any reasonable investment-backed expecta-
tions.” Jd. at 425 (emphasis added). It would be odd
indeed for expectations to be relevant to one kind of
categorical takings analysis but not to the other, espe-
cially since one of the reasons for the Lucas rule is that
“total deprivation of beneficial uses is, from the land-
7 See also Babbitt v. Youpee, 519 U.S. 234, 243 n.8 (1997) (dis-
tinguishing the Penn Central test from “the more stringent analysis
employed in Lucas’’).
12
owner's point of view, the equivalent of a physical appro-
priation.” 505 U.S. at 1017 (emphasis added)?
B. The Federal Circuit’s Decision Conflicts With The
Decisions Of Numerous Other Federal And State
Appellate Courts.
1. The Federal Circuit's reading of Lucas squarely
conflicts with that of the Ninth Circuit. In Dodd v. Hood
River County, 136 F.3d 1219, 1228 (9th Cir.), cert.
denied, 119 S. Ci. 278 (1998), the Ninth Circuit held as
follows:
In Lucas, the Supreme Court held that there is a
categorical taking when a regulation prohibits all
economically beneficial use of land, and no balanc-
ing of other factors commonly analyzed in takings
law—reasonable investment backed expectations and
legitimate government interest—would be necessary.
The Ninth Circuit went on to say that the Penn Central
test is used when “there has been no categorical taking”
and the “government regulation prohibits something less
than all economically beneficial use.” Jd.
In Del Monte Dunes at Monterey, Ltd. v. City of Mon-
terey, 95 F.3d 1422 (9th Cir. 1996), aff'd, 526 U.S. 687
(1999), the City denied Del Monte a permit to develop
its ocean-front property into a residential complex. The
Ninth Circuit held that the jury properly “found the City
liable for a taking because it denied Del Monte all eco-
nomically viable use of its property.” 95 F.3d at 1432.
The court noted that “compensation is required where
regulations ‘leave the owner of land without economically
beneficial or productive options for its use.’” Jd. (quot-
8 The Federal Circuit’s view that “[r]easonable, investment-
backed expectations are an element of every regulatory takings
case,” App. 10a (emphasis added), is demonstrably incorrect. See,
e.g., Hodel v. Irving, 481 U.S. 704, 715 (1987) (finding a taking
even though presence of such expectations was “dubious”’).
EO
13
ing Lucas, 505 U.S. at 1018). In contrast, said the
court, “where an owner is denied only some economically
viable uses, a taking may still have occurred where gOov-
ernment action has a sufficient economic impact and in-
terferes with distinct investment-backed expectations.” Id.
(emphasis added). In keeping with this distinction, the
Ninth Circuit affirmed the judgment that Del Monte had
been deprived of all economically viable use—and hence
suffered a taking—without considering whether Del
Monte had reasonable, investment-backed expectations.
See id. at 1432-34.
Tahoe-Sierra Preservation Council, Inc. v. Tahoe Re-
gional Planning Agency, 34 F. Supp.2d 1226 (D. Nev.
1999), involved a takings challenge to regulations re-
Stricting development around Lake Tahoe. In keeping
with the Ninth Circuit’s precedents and understanding of
Lucas, the court observed that if the regulations deprived
the property owners of some, but not all. economically
viable use of their land, the three Penn Central factors
must be considered—but that if all economically viable
use is denied, this “would constitute what have been re-
ferred to as ‘categorical’ takings with no further inquiry
necessary.” Id. at 1240 (emphasis added). Under this
framework, the court first held that “consideration of the
Penn Central factors clearly leads to the conclusion that
there was no taking. Given the temporary nature of the
regulations at issue here, we cannot say that the plaintiffs’
reasonable, investment-backed expectations were unduly
interfered with.” Id. The court went on to hold. however,
that a categorical taking under Lucas had occurred be-
cause the regulations “did in fact deny the plaintiffs all
economically viable use of their land.” Jd. at 1245. The
conflict between Tahoe-Sierra and the decision below thus
could not be more direct. Under the Federal Circuit’s rule,
the property owners’ lack of reasonable, investment-
14
backed expectations would have caused their Lucas claim
to fail.
In Chioffi v. City of Winooski, 676 A.2d 786 (Vt.
1996), the plaintiff property owner was denied a permit
to reconstruct a building destroyed by fire. The Vermont
Supreme Court held that the “plaintitf! must show a denial
of all economically beneficial use to prevail.” /d. at 790.
This was so, the court explained, because the “plaintiff
had no ‘distinct investment-backed expectations’ in re-
storing” the building. /d. (quoting Penn Central). Since
“[a|ny expectation of a three-unit residential development
was no longer ‘reasonable,’ * * * only the total denial of
all economically beneficial use would, under the circum-
stances, create a taking.” Jd. (quoting Lucas). Thus, un-
like the court below, the Vermont Supreme Court recog-
nized that a Lucas claim is viable even in the absence of
reasonable, investment-backed expectations.
In McQueen v. South Carolina Coastal Council, 496
S.E.2d 643 (S.C. Ct. App. 1998), cert. granted (S.C.
Mar. 18, 1999), the property owner was denied permis-
sion to develop two beachfront lots in Myrtle Beach. Con-
cluding that “the case at bar epitomizes a remarkable
similitude to Lucas,” id. at 648, the South Carolina Court
of Appeals held that “McQueen has suffered a textbook
taking” under Lucas because “the Coastal Council’s de-
nial of McQueen’s permit applications for the two lots
deprives him of all economically beneficial use of the
land.” /d. at 650. Notably, McQueen’s expectations
played no part in the court’s decision, a point made clear
by a dissenting judge who, relying on the same Federal Cir-
cuit case cited by the court below in this case, would have
held there was no taking because McQueen lacked reason-
able, investment-backed expectations. See id. at 652
(Connor, J., concurring in part & dissenting in part).®
9 Judge Connor wrote that in Loveladies Harbor, “the Federal
Circuit of the United States Court of Appeals, interpreting Lucas
ee
15
In Adams Outdoor Advertising v. City of East Lansing,
S91 N.W.2d 404 (Mich. Ct. App. 1998), it was held
that the City’s sign code, which made unlawful and re-
quired removal of Adams’ rooftop billboards, “denfied]
Adams all economically beneficial use of its property”
and thus “constituted a categorical taking.” Jd. at 411,
412. The Michigan Court of Appeals quoted and fol-
lowed the Michigan Supreme Court's instruction that, in
cases involving a “ ‘categorical taking, a revicwing court
need not apply a case-specific analysis, and the owner
should automatically recover for a taking of his prop-
erty.” Jd. at 411 (quoting K & K Constr., Inc. v. De-
partment of Natural Resources, 575 N.W.2d 531, 535
(Mich.), cert. denied, 119 S. Ct. 60 (1998)). Only in
non-categorical cases does the court consider “ ‘the ex-
tent by which the regulation has interfered with distinct.
investment-backed expectations.’” /d. (quoting K & K
Constr., 575 N.W.2d at 539-540). Thus, the Adams Out-
door Advertising court held that there had been a cate-
gorical taking without any considération of such ex-
pectations.
In City of Miami v. Keshbro, Inc., 717 So.2d 601 (Fla.
Dist. Ct. App. 1998), review granted, 729 So.2d 392
(Fla. 1999), property owners challenged the City’s clo-
sure of their motel. The Florida District Court of Ap-
peals held that “Lucas provides the controlling principles”
because the City’s action “denied the owners all econom-
ically beneficial uses of the property.” /d. at 604. And
in light of the entire history of regulatory takings, held courts must
consider whether or not the property owner had distinct ‘investment-
backed expectations’ in determining whether or not a regulatory
taking had occurred. * * * Under a Lucas and Loveladies Harbor
analysis, I do not believe the state has taken McQueen's property.
* * * McQueen took no actions to protect his investment, and there-
fore failed to show he had ‘investment-backed expectations’ under
Lucas and Loveladies Harbor.” 496 S.E.2d at 652 (citations
omitted).
16
the court rejected the City’s argument that the Penn Cen-
tral test—including consideration of “the extent to which
the regulation interferes with distinct investment-backed
expectations,” id. at 603—should be applied. The court
held that “[i]n this case, however, we are not faced with
the Penn Central test as the owners here have * * * been
deprived of all economic uses of the Stardust Motel, thus
; Lucas applies.” Id. at 603-604.
Numerous other state appellate and supreme courts
have also recognized that the Penn Central factors—in-
| cluding whether the property owner had reasonable in-
vestment-backed expectations—are to be considered in
a partial takings case, but not in a Lucas case involving
deprivation of ail economic value. See Anchorage v.
Sandberg, 861 P.2d 554, 557 (Alaska 1993) (“cases
where a regulation denies a landowner of all economically
feasible use of the property” are “per se takings” under
Lucas; in non-categorical cases, “courts must engage in
a case-specific inquiry to deter~ine whether governmental
action effects a taking”); Kavanau v. Santa Monica Rent
Control Bd., 941 P.2d 851, 860 (Cal. 1997) (“When a
regulation * * * does not deprive the property owner of
all economic use of the property, a reviewing court must
evaluate the regulation in light of the ‘factors’ * * * in
Penn Central’), cert. denied, 118 S. Ct. 856 (1998):
Central Colo. Water Conservancy Dist. v. Simpson, 877
P.2d 335, 346-347 (Colo. 1994) (under Lucas, “regu-
lations that effectively deny all economically beneficial
use of land” are “prima facie takings’; “When a chal-
lenged regulation does not * * * render the property eco-
nomically useless, the Court has adopted a factually based
approach that encompasses such factors as * * * inter-
ference with reasonable investment-backed expectations”);
Bormann Vv. Board of Supervisors, 584 N.W.2d 309, 316
(Iowa 1998) (“There are two categories of state action
that must be compensated without any further inquiry
eT Se. — — — . . _—_—a=EI=IC~O
17
into additional factors”; “in all other cases” a court “en-
gages in a case-by-case examination” of the Penn Central
factors) (emphasis in Original), cert. denied, 119 S. Ct.
1096 (1999); Steinbergh v. City of Cambridge, 604
N.E.2d at 1274 (Mass. 1992) (“If the governmental reg-
ulation neither results in a physical invasion of the prop-
erty nor deprives a landowner of all economically bene-
ficial use of land, there may nevertheless be a regulatory
taking based, in part, on * * * the extent to which the
regulation has interfered with a property owner’s distinct
investment-backed expectations.”); FIC Homes of Black-
stone, Inc. v. Conservation Comm'n of Blackstone, 673
N.E.2d 61, 67 (Mass. App. Ct. 1996) (“As provided by
Lucas * * * if application of the wetlands by-law de-
prived the plaintiffs of all economically beneficial use of
their property, a per se taking would have been effected”:
“If, however, the regulation has resulted in less than a
total loss of the economic value of the plaintiffs’ property,
the question * * * must be analyzed under pre-Lucas prin-
ciples requiring the consideration of several interrelated
factors [including] * * * reasonable, investments-backed
expectations”), rev. denied, 676 N.E.2d 55 (Mass. 1997);
Clay County v. Harley & Susie Bogue, Inc., 988 S.W.2d
102, 106-107 (Mo. Ct. App. 1999) (under Lucas “a
property owner is entitled to compensation for a regula-
tory taking without a ‘case specific inquiry’”; if a case
“does not fall into either of thef] two per se taking cate-
gories, courts are to undertake a factual inquiry” under
Penn Central); Guimont v. City of Seattle, 896 P.2d 70.
76 (Wash. Ct. App.) (“If a property owner can estab-
lish a per se violation and the government cannot rebut
the claim, a taking has occurred. No further analysis is
required, and the owner is entitled to ‘categorical treat-
ment’ and must receive just compensation under the Fifth
Amendment.”), rev. denied, 904 P.2d 1157 (Wash.
1995).
a
18
2. The Federal Circuit’s reading of Lucas is also in-
consistent with the scholarly commentary upon the deci-
sion. For example, Professor David Callies has recently
written that “[t]he principle rule from Lucas is, of course,
that when a regulation takes all economically beneficial
use from an owner’s land, it is a taking under the Fifth
Amendment without further investigation” (unless the
nuisance exception applies). Callies, Regulatory Takings
and the Supreme Court, 28 Stetson L. Rev. 523, 552
(1999) (emphasis added). He noted that although the
Lucas Court did not reject the relevance of the “ ‘frustra-
tion of investment-backed expectations’ standard” in all
takings cases, “the Court chose not to apply [it] in Lucas
because it characterized the regulatory taking as total.”
Id. at 548. He concluded that “[t]he Lucas rule is cate-
gorical, or per se. * * * What the investment-backed
expectations were of the owner when the property was
acquired is in all probability irrelevant. That's a part
of the partial takings analysis.” Jd. at 575.
Professor Callies is by no means alone in his reading
of Lucas. See W. Fischel, REGULATORY TAKINGS: Law,
ECONOMICS, AND Po .itics 61 (1995) (when “regulation
leaves an owner without any economic value, the case-by-
case balancing of Penn Central is to be discarded”);
Freilich, Garvin & Martin, Regulatory Takings: Factor-
ing Partial Deprivations Into the Taking Equation, in
TAKINGS: LAND-DEVELOPMENT CONDITIONS AND REGU-
LATORY TAKINGS AFTER DOLLAN AND Lucas 183 n.44
(D. Callies ed. 1996) (Lucas “giv[es] landowners two bites
at the takings apple. First the landowner can seek to
establish entitlement to a liability determination under the
new categorical rule * * * and, if unsuccessful, may still
present a takings claim under the traditional multifactor
test of Penn Central”); Hetzel & Gough, Assessing the
Impact of Dolan v. City of Tigard on Local Governments’
Land-Use Powers, in TAKINGS, supra, at 228 (“When the
19
governmental action is not * * * a complete deprivation
of all economically viable use, the cases will be decided
by analyzing the economic impact of the regulation and
the extent to which the regulation has interfered with dis-
tinct investment-backed expectations.”); Washburn, “Rea-
sonable Investment-Backed Expectations” As a Factor in
Defining Property Interest, 49 Wash. U. J. Urb. & Con-
temp. L. 63, 93 n.214 (1996) (“Justice Scalia’s cate-
gorical formulation does not depend on inquiry into the
interference with investment-backed expectations. Justice
Scalia reserved that inquiry for non-categorical cases.”);
Gardner, Banking on Entrepreneurs: Wetlands, Mitiga-
tion Banking, and Takings, 81 Iowa L. Rev. 527, 543
(1996) (“If the permit denial allows the landowner no
use of the property, thereby destroying the property’s
value, categorical treatment is appropriate and the denial
constitutes a taking per se. There is no need to consider
any other factors; the landowner is entitled to just com-
pensation.”); Mandelker, Investment-Backed Expectations
in Taking Law, 27 Urb. Law. 215, 224 (1995) (Lucas’
“holding clearly means courts are not to apply the Penn
Central balancing test if a land-use regulation is a taking
per se.”); Ogle, The Ongoing S. ruggle Between Private
Property Rights and Wetlands Regulation: Recent De-
velopments and Proposed Solutions, 64 U. Colo. L. Rev.
573, 583 (1993) (“Any discussion of the landowner’s
investment-backed expectations was conspicuously absent
from the body of the [Lucas] opinion. Justice Scalia * * *
did not include the factor as part of his categorical ‘total
takings’ rule.”); Ward, Lucas v. South Carolina Coastal
Council: A Categorical Rule in the Muddle of Takings
Analysis, 61 UMKC L. Rev. 165, 165 (1992) (the Lucas
“total deprivation rule adds a second categorical rule to
takings analysis where inquiry into the three traditional
takings factors is not necessary”) 1°
1” The plaintiff in Lucas also understood this Court’s opinion to
mean that “when a regulation takes all economic value, that con-
ESS
20
| Il. THE FEDERAL CIRCUIT’S HOLDING THAT GOOD
LACKED REASONABLE, INVESTMENT-BACKED
EXPECTATIONS CANNOT BE RECONCILED WITH
THIS COURT’S TAKINGS CASES, OTHER APPEL-
LATE COURT DECISIONS, OR THE FACTS OF
THIS CASE.
Even if this Court disagrees with our interpretation of
Lucas, it should review the Federal Circuit’s holding that,
as a matter of law, Good lacked a reasonable expectation
of receiving a permit to develop his property—even
though he purchased it prior to the enactment of the En-
dangered Species Act and the listing of the two species—
because he should have been aware that “the growing
consciousness of and sensitivity toward environmental is-
sues” would ultimately change “the regulatory climate”
so as to bar his planned development. App. 15a, 12a.
1. To see the error and effect of the Federal Circuit's
decision, the Court need look no further than Lucas.
Under the Federal Circuit’s approach, David Lucas’ tak-
ings challenge surely would have failed. Lucas purchased
two beachfront lots in Charleston County, South Caro-
lina in 1986. He was denied a permit to build homes on
those lots based on the South Carolina Beachfront Man-
agement Act of 1988. Although Lucas purchased his lots
prior to the Beachfront Management Act, it is clear that
his takings claim would not have survived the Federal
Circuit’s mode of analysis. This Court’s own opinion
notes that “South Carolina’s expressed interest in inten-
sively managing development activities in the so-called
‘coastal zone’ dates from 1977 when, in the aftermath of
Congress’ passage of the federal Coastal Zone Manage-
ment Act of 1972, the legislature enacted a Coastal Zone
stitutes a unique category of taking, and requires compensation
from the regulating body without meeting any other tests.” David
Lucas, LUCAS VS. THE GREEN MACHINE 232 (1995) (emphasis
added).
ee
21
Management Act of its own.” 505 U.S. at 1007 (cita-
tions omitted). See also id. at 1074 (Stevens, J., dis-
senting) (“South Carolina’s Act is best understood as part
of a national effort to protect the coastline, one initiated
by the federal Coastal Zone Management Act of 1972.”);
id. at 1037-38 (Blackmun, J., dissenting) (noting that in
1986 South Carolina formed a “Blue Ribbon Commission
on Beachfront Management”). Thus, it could have been
said in Lucas, just as easily as the Federal Circuit said
here, that “[i]n light of the growing consciousness and of
sensitivity toward environmental issues. Appellant must
also have been aware that standards could change to his
detriment, and that regulatory approval would become
harder to get.” App. 15a.
The Federal Circuit's approach also would have re-
quired a different outcome in Nollan v. California Coastal
Commission, 483 U.S. 825 (1987). In Nollan, this Court
held that the California Coastal Council could not, con-
sistent with the Takings Clause. condition its grant of a
permit to the Nollans to rebuild their beachfront house
on their agreement to grant the public an easement across
their property. Justice Brennan dissented on the ground
that, “[w]ith respect to appellants’ investment-backed ex-
pectations, appellants can make no reasonable claim to
any expectation of being able to exclude members of the
public from crossing the edge of their property to gain
access to the ocean.” Jd. at 857. Justice Brennan ob-
served that the Nollans “were aware that stringent regu-
lation of development along the California coast had been
in place since at least 1976. The specific deed restriction
to which the Commission sought to subject them had been
imposed since 1979 on all 43 shoreline new development
projects in the” area. Jd. at 859. Thus. the Nollans
“were on notice that new developments would be ap-
proved only if provisions were made for lateral beach
22
access.” Id. at 860. See also id. at 866 (Blackmun, J.,
dissenting).
This Court, however, rejected the dissenters’ analysis
and held that the Nollans’ rights were not “altered be-
cause they acquired the land well after the Commission
had begun to implement its policy.” Jd. at 833-834 n.2.
The Court explained that “[s]o long as the Commission
could not have deprived the prior owners of the easement
without compensating them, the prior owners must be un-
derstood to have transferred their full property rights in
conveying the lot.” /d.
2. In this case, the Federal Circuit’s conclusion that
Good lacked reasonable, investment-backed expectations
—as a matter of law, no less—is simply insupportable.
Good’s permit was denied based on the Endangered Spe-
cies Act and the presence of two endangered species on
his property, yet Good purchased the property in 1973,
cight months prior to enactment of the ESA, and some
17 years before the marsh rabbit was listed as endangered
in 1990. (The silver rice rat was listed the next year.)™
Good’s actual notice of, or ability to foresee, what the
reeulatery regime might be in the future after he pur-
chased the property is not relevant to the reasonability of
his expectation of developing the property. See Nollan, 483
US. at 833-834 n.2.12 But even if it were, Good did not
11 The fact that Good had to obtain various permits prior to
developing his property does not mean that his expectations were
unreasonable. On the contrary, “the very existence of a permit
system implies that permission may be granted, leaving the land-
owner free to use the property as desired.” United States v. River-
side Bayview Homes, Inc., 474 U.S. 121, 127 (1985).
120n the same day the Federal Circuit decided this case, the
Court of Federal Claims held in Florida Rock Industries, Inc. V.
United States, Fed. Cl. , 1999 WL 692836 (Aug. 31, 1999),
that the Army Corps of Engineers’ denial of a permit to mine lime-
stone pursuant to the Clean Water Act was a taking. Holding that
23
—and could not—know or predict that he would be de-
nied permission to develop his property based on a statute
not yet enacted and the presence of species only later
determined to be endangered.}3
When Good purchased the property, he had a reason-
able expectation of obtaining government approval of his
development plans under the existing regulatory scheme.
Indeed, the record reflects that he nearly succeeded in
securing every permit he needed. As the Federal Circuit
noted, by mid-1984 “Good had received federal, state,
and county approval to develop the property.” App. 3a.
The Army Corps of Engineers granted Good no fewer
than three permits or permit modifications between 1983
and 1988. App. 3a, Sa. Thus, the Federal Circuit’s con-
clusion that Good “could not have had a reasonable ex-
pectation that he would obtain approval” to develop his
property is refuted by the actual events in this case. App.
12a.14
3. The Federal Circuit’s holding that Good lacked rea-
sonable, investment-backed expectations despite having
“Florida Rock’s reasonable, investment-hacked expectations were
frustrated,” the court explained that “[t]he Clean Water Act was
passed after Florida Rock already owned the land” and thus “the
Clean Water Act could not have put Florida Rock on notice that its
property might be taken from it so as to destroy investment-backed
expectations.” Jd. at *21 (emphasis added).
13 Even if it could somehow be said that Good should have fore-
seen the passage of the Endangered Species Act, he would also have
had to foresee an event 17 years down the road, because that is
when the ESA first had legal effect against him upon the listing of
an endangered species found on his property.
14 That Good in his purchase contract “acknowledged both the
necessity and difficulty of obtaining regulatory approval” does not
mean that his expectations were unreasonable. App. 13a. If cer-
tainy were the standard, no developer could ever demonstrate rea-
sonable expectations. Furthermore, the reason cited for that diffi-
culty had nothing to do with endangered species.
24
purchased prior to the enactment of the ESA conflicts
with Gil v. Inland Wetlands and Watercourses Agency,
593 A.2d 1368 (Conn. 1991). There, the property owner
was “denied his fourth application for a building permit
because of the perceived adverse impact that the proposed
development would have had on the wetlands portion of
his property.” Jd. at 1369. And although “the property
was classified, at the time of purchase * * * as wetlands
subject to the authority of the agency,” id. at 1370, the
Connecticut Supreme Court held that the property owner
had a reasonable, investment-backed expectation that he
could build upon his lot. See id. at 1372-74.
The decision below also conflicts with Vatalaro V.
Department of Environmental Regulation, 601 So.2d
1223 (Fla. Dist. Ct. App.), rev. denied, 613 So.2d 3
(Fla. 1992). In that case, the property owners claimed
that state wetlands protection legislation deprived them
“of all economically viable or reasonable uses” of their
property, but the trial court granted summary judgment
against them on the ground that the State’s denial of rer-
mission to build on the land “did not frustrate a reason-
able and distinct investment backed expectation.” 60]
So.2d at 1224. The Florida District Court of Appeals,
however, reversed and held that “fijn the case at bar. all
economically viable use of the property has been taken.”
Id. at 1229. And the court rejected the argument that
the property owners lacked reasonable expectations be-
cause they “purchased their property after the enactment
of the Warren S. Henderson Wetlands Protection Act of
1984.” Id. (emphasis added). The facts of Gil and
Vatalaro thus go beyond those here, since Good purchased
his property before the enactment of the Endangered
Species Act.?°
15 Cf. Steinbergh, 604 N.E.2d at 1274 (“The challenged rerulation
did not interfere with the plaintiffs’ investment-backed expectations.
25
The implications of the Federal Circuit’s decision in
this case are far-reaching. Under the decision below,
anyone who purchased property prior to the wave of
environmental legislation enacted in the 1970s can be
denied the right to build on his land—without just com-
pensation. Similarly, no one who purchases property
today can be sure that he will be compensated should his
currently-lawful development plans be barred by future
legislation. As Professor Lynda Oswald has written, the
approach taken by the Federal Circuit in this case “leads
to perverse outcomes”:
If we accept the premise that enactment of one piece
of legislation puts a property owner “on notice” that
more restrictive regulations might be enacted in the
future as well, we find ourselves faced with a reductio
ad absurdum—the existence of the first regulation
will defeat any claims the owner might have regard-
ing the sanctity of the property interest in the future.
By merely enacting one regulation (even a relatively
non-intrusive one that is clearly a legitimate exercise
of the police power), the government opens a path
for eventual, incremental taking of the entire prop-
erty interest without payment of compensation. [Os-
wald, Cornering the Quark: Investment-Backed Ex-
pectations and Economically Viable Uses in Takings
Analysis, 70 Wash. L. Rev. 91, 114 (1995).]
Ill. THERE ARE COMPELLING REASONS TO GRANT
CERTIORARI IN THIS CASE.
A number of “compelling reasons” support the grant
of certiorari in this case. S. Ct. R. 10. First, as discussed
above, there is a square conflict between the decision
They acquired the property when the regulation was already in
effect.”) ; FIC Homes of Blackstone, 673 N.E.2d at 70 (“When FIC
purchased the property in 1992, the Blackstone wetlands by-law was
already in effect * * * FIC therefore had no reasonable expectation
that it could build’).
26
below and numerous other federal and state appellate
decisions. Second, that stark conflict is over the correct
reading of this Court’s opinion in Lucas, an issue only
this Court can resolve.
Third, the dispute over what showing is necessary to
establish a categorical or per se taking under Lucas is
unquestionably “an important federal question,” id. 10(a),
recurring in the law on a regular basis. As the Justice
Department said in its own press release, this is a “sig-
nificant” and “precedent-setting” case.
Fourth, the Federal Circuit is but one of a number of
courts that are deeply confused about—if not openly
hostile to—the total taking rule of Lucas.® “Cases at-
tempting to decide when a regulation becomes a taking
are among the most litigated and perplexing in current
law.” Eastern Enterprises v. Apfel, 118 S. Ct. 2131,
2155 (1998) (Kennedy, J., concurring in the judgment
and dissenting in part). This case presents the Court
with an opportunity to clarify this important area of law.
Fifth, it is extremely significant that the decision below
was rendered by the Federal Circuit, which has exclusive
16 See Callies, 28 Stetson L. Rev. at 551 (“A survey of state and
federal decisions reveals * * * [t|he standard for total takings is
often confused with the standard for partial takings. In some in-
stances, state courts appear to ignore the holding in Lucas alto-
yether.”); id. at 556, 557 (“As clear as Lucas appears to be with
respect to total takings, many courts are having an inordinately
difficult time applying the standard. * * * [T]here is some purpose-
ful ignoring of the per se rule by some state and federal courts.) ;
Abraham, Windfalls or Windmills: The Right of a Property Owner
to Challenge Land Use Regulations, 13 J. Land Use & Envtl. L. 161,
163 (1997) (“a number of courts are not applying the Lucas and
Nollan holdings.” ) ; Comment, A Constitutionally Valid Justification
for the Enactment of No-Growth Ordinances, 19 U. Haw. L. Rev.
93, 142 (1997) (“Some lower courts * * * have shown a genuine
reluctance to follow the categorical path created by Justice Scalia in
Lucas.”).
27
jurisdiction over appeals from the Court of Federal Claims,
which, pursuant to the Tucker Act, 28 U.S.C. § 1491
(a)(1), has exclusive jurisdiction over all takings cases
against the United States exceeding $10,000. See Eastern
Enterprises, 118 S. Ct. at 2144 (plurality opinion) .7
Thus, the Federal Circuit’s erroneous decision will control
every substantial takings case brought against the federal
government.
Finally, although either one of the holdings at issue in
the two questions presented in this case would, standing
alone, warrant review by this Court, the combination of
the two holdings makes the need for review imperative.
It may be no exaggeration to say that the effect of the
decision below is to render this Court’s “opinion in Lucas
* * * a nullity” in the Federal Circuit. Stevens v. City
of Cannon Beach, 510 U.S. 1207, 1211 (1994) (Scalia,
J., joined by O’Connor, J., dissenting from the denial of
certiorari).
Under the Federal Circuit’s first holding, a property
owner whose land has been deprived of all economic
value does not have a Lucas claim unless he can also
prove that he had reasonable, investment-backed expecta-
tions. And under the court’s second holding, a property
owner will be held to lack such expectations—even if
nothing barred his proposed development on the day he
purchased the land—if the development is contrary to
some future law or as yet unpromulgated regulation. The
combined effect of the two holdings may well be to make
successful Lucas claims even rarer than the marsh rabbit
or the silver rice rat.
17 The exclusive jurisdiction of the Court of Federal Claims and
the Federal Circuit over most takings cases against the federal gov-
ernment explains why the conflicting decisions discussed herein
mainly come from state appellate courts.
28
CONCLUSION
For the foregoing reasons, the petition for a writ of
certiorari should be granted.
Respectfully submitted,
E. BARRETT PRETTYMAN, JR.*
JOHN G. ROBERTS, JR.
H. CHRISTOPHER BARTOLOMUCCI
HOGAN & HARTSON L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-5685
PRL APOE AD RPL BOG M aN tithe ceTUAt Seooresbscsons ogee 8
RICHARD R. NAGEOTTE
NAGEOTTE, NAGEOTTE & NAGEOTTE
385 Garrisonville Road
Suite 201 & 202
Stafford, Virginia 22554
(540) 659-5050
* Counsel of Record Counsel for Petitioner
APPENDICES
la
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
97-5138
Lioyp A. Goon, Jr.,
Plaintiff-A ppellant,
Vv.
UNITED STATES,
Defendant-A ppellee.
DECIDED: August 31, 1999
Before NEWMAN, Circuit Judge, SMITH, Senior Circuit
Judge, and GAJARSA, Circuit Judge.
SMITH, Senior Circuit Judge.
This is a regulatory takings case. Lloyd A. Good, Jr.
sued the federal government on the basis that it effectively
took his property without just compensation when the
U.S. Army Corps of Engineers denied him permission to
dredge and fill on land he owns in the Florida Keys. The
U.S. Court of Federal Claims granted summary judgment
to the United States. Lloyd A. Good, Jr. v. United States,
39 Fed. Cl. 81 (1997). We affirm.
2a
Facts
Lloyd A. Good, Jr. (“Good”) and his mother pur-
chased a forty-acre tract of undeveloped land on Lower
Sugarloaf Key, Florida, in 1973, as part of a much
larger real estate purchase. The tract, known as Sugar-
loaf Shores, consists of thirty-two acres of wetlands (a
combination of salt marsh and freshwater marsh) and
eight acres of uplands. The sales contract for the land
stated that:
The Buyers recognize that certain of the lands cov-
ered by this contract may be below the mean high
tide line and that as of today there are certain prob-
lems in connection with the obtaining of State and
Federal permission for dredging and filling opera-
tions.
Good’s efforts to develop the property began in 1980,
when he hired Keycology, Inc., a land planning and de-
velopment firm, to obtain the federal, state, and county
permits necessary to develop Sugarloaf Shores into a resi-
dential subdivision. In their contract, Good and Key-
cology acknowledged that “obtaining said permits is at
best difficult and by no means assured.”
Good submitted his first permit application to the U.S.
Army Corps of Engineers (“Corps”) in March 1981. The
Corps permit was required for dredging and filling navi-
gable waters of the United States, including wetlands
adjacent to navigable waters, under the Rivers and Har-
bors Act of 1899? and under § 404 of the Clean Water
1 Good became the sole owner of the property on his mother’s
death in 1975.
233 U.S.C. § 403 (1994).
‘aii
3a
Act.’ Good proposed filling 7.4 acres of salt marsh and
excavating another 5.4 acres of salt marsh in order to
create a 54-lot subdivision and a 48-slip marina. The
Corps granted the requested permit in May 1983. Good
modified the permit in response to county environmental
concerns and the modified permit was issued January 6,
1984. Under both permits, the authorized work had to
be completed within five years. See 33 CFR § 325.6
(1998).
Good and Keycology were also pursuing the required
State and county permits. In February 1983, the state
Department of Environmental Regulation issued a permit
for the requested dredging and filling. The state permit
was conditioned, however, on Good obtaining county
approval for the project.
On May 10, 1983, Good applied for county approval
of the dredge-and-fill proposal that had been approved by
the federal and state permits. The county determined that
the plan was a “major development” subject to a more
stringent environmental review than under standard pro-
cedures. After Good appealed the “major development”
determination, the County Commission ordered the county
to process the permit application under standard review
procedures. The county granted Good’s permit on July 13,
1984.
At this point, Good had received federal, state. and
county approval to develop the property. Florida law,
however, presented one more hurdle, in the form of the
Environmental Land and Water Management Act, FLa.
STAT. ANN. §§ 380.012 to 380.12 (West 1997). The
Act created a statutory regime for regulating development
3 Pub. L. No. 92-500 § 2, 86 Stat. 884 (Oct. 18, 1972), amending
the Federal Water Pollution Control Act (codified as amended at
33 U.S.C. § 1344 (1994)).
4a
in Areas of Critical State Concern, including the entire
Florida Keys.* Under the Act, the Florida Department of
Community Affairs (“DCA”) reviews local land develop-
ment orders in Areas of Critical State Concern and may
appeal those orders to the Florida Land and Water Ad-
judicatory Commission (“FLAWAC”).> See Fia. STAT.
ANN. § 380.07 (West 1997). On September 10, 1984,
the DCA appealed the county’s approval of Good’s dredge-
and-fill project. FLAWAC held that the county had erred
in subjecting Good’s plan only to the standard review,
and on May 29, 1986 ordered the county to review the
project as a “major development.”
Making matters worse for Good, the county in the
meantime had adopted a new land use plan and new de-
velopment regulations. The new regulations prohibited
dredging to provide access to docks, prohibited filling
of salt marsh for building sites, and limited filling of
salt marsh to 10% of the salt marsh on a parcel.
Monror County, FLA. Cope, art. II, § 9.5-345 (1986).
Since Good’s plan involved dredging to provide boat ac-
cess between the proposed marina and Upper Sugarloaf
Sound, and required filling roughly 25% of the parcel’s
salt marsh to provide building sites, Good’s project would
not have been allowed under the new regulations.
Good filed suit in state court, alleging that the state
had taken his property without just compensation and that
FLAWAC’s order was an unreasonable exercise of police
4 The Keys were designated an Area of Critical State Concern in
1977. Although the Florida Supreme Court later held the Act’s
procedure for designating Areas of Critical State Concern to be
unconstitutional, see Askew v. Cross Key Waterways, 372 So. 2d
913, 918 (Fla. 1978), the Florida Legislature formally so designated
the Keys in the Florida Keys Protection Act of 1979, FLA. STAT.
ANN. § 380.0552 (West 1997).
5 FLAWAC is composed of the Governor and Cabinet of the State
of Florida. FLA. STAT. ANN. §§ 14.202, 380.07 (West 1997 ).
5a
power. That suit was settled on October 22, 1987. The
consent decree provided that Good’s application would be
evaluated under the repealed major development review
standard but that any future development of Sugarloaf
Shores would be subject to later-enacted land use regu-
lations.
Good’s efforts to get state and county approval for his
project had used up most of the five-year time limit on the
federal permits issued in 1983 and 1984. Good there-
fore requested that the Corps extend the time limits of
the permits. The Corps denied Good’s request to reissue
the permits without changes, but granted a new permit
allowing substantially the same development on October
17, 1988.
The county gave preliminary approval to Good’s plan
on November 9, 1989. Final county approval, however,
was subject to fifteen conditions, the most significant of
which was approval of the project by the South Florida
Water Management District ( SFWMD).
Good filed an application with SWFMD. A few months
later, SFWMD notified Good that its staff recommended
denying the application, based on “the unmitigated loss
of wetlands, the loss of habitat for the endangered species
within them [i.e., the state-listed mud turtle and Lower
Keys marsh rabbit] and the lack of reasonable assurance
that future unmitigated wetlands destruction will not oc-
cur due to the lack of the above-requested dedication.”
In view of this negative review, Good requested that his
application be removed from SFWMD’s agenda. He never
reactivated the application or otherwise obtained SEWMD
approval for his project.
Apparently despairing of ever obtaining approval for
his 54-lot plan, Good submitted a new, scaled-down plan
6a
to the Corps in July 1990. In his 1990 permit applica-
tion, Good proposed building only sixteen homes, together
with a canal and tennis court. Although the new plan
greatly reduced the overall number of houses, it located
all of them in the wetlands area. The overall wetlands
loss, therefore, was only reduced from 10.53 acres to
10.17 acres.
Between the time the Corps issued Good’s 1988 permit
and the time he applied for the 1990 permit, the Lower
Keys marsh rabbit was listed as an endangered species
under the Endangered Species Act (“ESA”). See 16
U.S.C. § 1533 (1994); 55 Fed. Reg. 25,588 (June 21,
1990). The Corps was therefore required to consult with
the Fish and Wildlife Service (“FWS”) to insure that
issuing the requested permit would not place the continued
existence of the species in jeopardy. See 16 U.S.C. § 1536
(a)(2) (1994).
Under this so-called “section 7 consultation,” FWS
prepared a biological opinion as to whether the proposed
permit would put the rabbit in jeopardy. In its biological
opinion, issued February 19, 1991, FWS concluded that
the project proposed in Good’s 1990 permit application
would not jeopardize the continued existence of the marsh
rabbit. Nevertheless, it recommended denial of the permit
based on the development’s overall environmental impact.®
The FWS biological opinion also instructed the Corps
to notify Good not to proceed under his 1988 permit.
The 1988 permit had been issued before the marsh rabbit
was listed as an endangered species and proposed a differ-
ent project than the 1990 permit application. Therefore,
6 FWS made its recommendation pursuant to the Fish and Wild-
life Coordination Act of 1934, 16 U.S.C. §§ 662-666 (1994). The
Corps was not required to follow this recommendation.
|
7a
the FWS “no jeopardy” finding did not apply to the earlier
permit, and development pursuant to the 1988 permit
could violate the ESA.
On May 14, 1991, the Corps notified FWS that Good
intended to proceed with the project allowed by the 1988
permit. The Corps also noted that it did not believe the
project would jeopardize the marsh rabbit, but noted that
the silver rice rat had been listed as an endangered species
subsequent to the FWS biological opinion on the 1990
permit application. See 56 Fed. Reg. 19,809 (April 30,
1991).
In response, FWS initiated consultation under the ESA
and notified the Corps that it would prepare a new biolog-
ical opinion evaluating the effect of Good’s 1988 plan on
both endangered species. On December 18. 1991, FWS
released its new biological opinion, concluding that both
the 1988 and 1990 plans jeopardized the continued exist-
ence of both the Lower Keys marsh rabbit and the silver
rice rat." FWS recommended that the Corps deny the
1990 application and modify the 1988 permit to include
FWS’s “reasonable and prudent alternatives,” which in-
cluded locating all homesites in upland areas and limiting
water access to a single communal dock.
The Corps denied Good’s 1990 permit application on
March 17, 1994. At the same time, the Corps notified
Good that his 1988 permit had expired. The Corps based
its denial on the threat that either project posed to the
endangered rat and rabbit.
Proceedings in the Court of Federal Claims
On July 11, 1994, Good filed suit. alleging that the
Corps’ denial of his permit worked an uncompensated
7 FWS had earlier concluded that the 1990 plan did not place the
marsh rabbit in jeopardy, but changed its mind in view of informa-
tion showing further decline in the marsh rabbit population.
8a
taking in violation of the Fifth Amendment. On cross-
motions for summary judgment, the Court of Federal
Claims granted summary judgment in favor of the govern-
ment. The court held that the Corps’ denial of Good's
permit did not constitute a “per se” taking under Lucas
vy. South Carolina Coastal Council, 505 U.S. 1003 (1992),
because the ESA did not require that the property be left
in its natural state and because the government had shown
that the property retained value, either for development
or for sale of transferrable development rights (TDRs),
after the permit denial. The court found that Good had
not presented sufficient evidence to show a reasonable
dispute over the value of the property and rejected Good’s
legal challenge to the use of TDRs in the value calculation.
The court also held that there had been no taking
under the ad hoc analysis of Penn Central Transporta-
tion Co. v. New York City, 438 U.S. 104, 124 (1978).
The court held that Good lacked reasonable, investment-
backed expectations since federal and state regulations
imposed significant restrictions on his ability to develop
his property both at the time he purchased it and at the
time he began to develop it. Finding the lack of reason-
able expectations determinative, the court held that no
taking had occurred.
Jurisdiction and Standard of Review
This court has jurisdiction over an appeal from a final
judgment of the Court of Federal Claims. See 28 U.S.C.
§ 1295(a)(3) (1994). We review a grant of summary
judgment completely and independently, construing the
facts in the light most favorable to the non-moving party.
Summary judgment is appropriate only when there is no
genuine issue of material fact and the moving party is
entitled to judgment as a matter of law. See State of
Montana v. United States, 124 F.3d 1269, 1273 (Fed.
Cir. 1997).
9a
Analysis
The Fifth Amendment to the United States Constitution
provides that private property shall not “be taken for
public use, without just compensation.” U.S. Const.
amend. V. The government can “take” private property
by either physical invasion or regulatory imposition. See,
e.g., Loretto v. Teleprompter Manhattan CATV Corp.,
458 U.S. 419 (1982); Lucas, 505 U.S. 1003. Appellant
in this case alleges a regulatory taking.
It has long been recognized that “while property may
be regulated to a certain extent, if regulation goes too far
it will be recognized as a taking.” Pennsylvania Coal Co.
v. Mahon, 260 U.S. 393, 415 (1922). The Supreme
Court has set out “several factors that have particular
significance” in determining whether a regulation effects a
taking. Penn Central, 438 U.S. at 124. These factors
are (1) the character of the government action, (2) the
extent to which the regulation interferes with distinct,
investment-backed expectations, and (3) the economic
impact of the regulation. See id. See also Loveladies
Harbor, Inc. v. United States, 28 F.3d 1171, 1179 (Fed.
Cir. 1994); Florida Rock Inds., Inc. v. United States, 18
F.3d 1560, 1567 (Fed. Cir. 1994); Creppel v. United
States, 41 F.3d 627, 632 (Fed. Cir. 1994). Because we
find the expectations factor dispositive, we will not further
discuss the character of the government action or the
economic impact of the regulation.
Reasonable, Investment-backed Expectations
For any regulatory takings claim to succeed, the claim-
ant must show that the government’s regulatory restraint
interfered with his investmént-backed expectations in a
manner that requires the government to compensate him.
See Loveladies Harbor, 28 F.3d at 1179. The require-
10a
ment of investment-backed expectations “limits recovery
to owners who can demonstrate that they bought their
property in reliance on the non-existence of the challenged
regulation.” Creppel, 41 F.3d at 632. These expectations
must be reasonable. See Ruckelshaus v. Monsanto Co.,
467 U.S. 986, 1005-1006 (1984).
Reasonable, investment-backed expectations are an ele-
ment of every regulatory takings case. See Loveladies
Harbor, 28 F.3d at 1179. See also id. at 1177 (“In legal
terms, the owner who bought with knowledge of the re-
straint could be said to have no reliance interest, or to
have assumed the risk of any economic loss. In economic
terms, it could be said that the market had already dis-
counted for the risk, so that a purchaser could not show
a loss in his investment attributable to it.”); Creppel, 41
F.3d at 632 (“One who buys with knowledge of a re-
straint assumes the risk of economic loss.”).
Good argues that the Supreme Court has eliminated
the requirement for reasonable, investment-backed expec-
tations, at least in cases where the challenged regulation
eliminates virtually all of the economic value of the land-
owner’s property. In support, Appellant cites Lucas, 505
U.S. at 1015, and argues that Loveladies Harbor should
be reversed as contrary to Lucas.
However, we agree with the Loveladies Harbor court
that the Supreme Court in Lucas did not mean to elim-
inate the requirement for reasonable, investment-backed
expectations to establish a taking. It is true that the
Court in Lucas set out what it called a “categorical”
taking “where regulation denies all economically beneficial
or productive use of land.” 505 U.S. at 1015. The Lucas
Court. however. clarified that by “categorical” it meant
those “categories of regulatory action [that are] compensa-
ble without case-specific inquiry into the public interest
lla
advanced in support of the restraint.” Id. (emphasis
added). A Lucas-type taking, therefore, is categorical only
in the sense that the courts do not balance the importance
of the public interest advanced by the regulation against
the regulation’s imposition on private property rights.
See Loveladies Harbor, 28 F.3d at 1179.
The Lucas Court did not hold that the denial of all
economically beneficial or productive use of land elimi-
nates the requirement that the landowner have reasonable,
investment-backed expectations of developing his land.
In Lucas, there was no question of whether the plaintiff
had satisfied that criterion. See id. at 1006-1007 (“In
1986, petitioner David H. Lucas paid $975,000 for two
residential lots on the Isle of Palms in Charleston County,
South Carolina, on which he intended to build single-
family homes. In 1988, however, the South Carolina
Legislature enacted the Beachfront Management Act. S.C.
Code Ann. § 48-39-250 et seq. (Supp. 1990), which had
the direct effect of barring petitioner from erecting any
permanent habitable structures on his two parcels.”).
In addition, it is common sense that “[o]ne who buys
with knowledge of a restraint assumes the risk of eco-
nomic loss. In such a case, the owner presumably paid
a discounted price for the property. Compensating him
for a ‘taking’ would confer a windfall.” Creppel, 41 F.3d
at 632 (citations omitted).
Appellant alternatively argues that he had reasonable,
investment-backed expectations of building a residential
subdivision on his property. Appellant reasons that the
permit requirements of the Rivers and Harbors Act and
the Clean Water Act are irrelevant to his reasonable
expectations at the time he purchased the subject property,
12a
because he obtained the federal dredge-and-fill permits
required by those acts three times, and was only denied
a permit, based on the provisions of the Endangered
Species Act (“ESA”), when two endangered species were
found on his property. Therefore, since the ESA did not
exist when he bought his land, he could not have expected
to be denied a permit based on its provisions.
Appellant’s position is not entirely unreasonable, but we
must ultimately reject it. In view of the regulatory climate
that existed when Appellant acquired the subject prop-
erty, Appellant could not have had a reasonable expecta-
tion that he would obtain approval to fill ten acres of
wetlands in order to develop the land.
In 1973, when Appellant purchased the subject land,
federal law required that a permit be obtained from the
Army Corps of Engineers in order to dredge or fill in
wetlands adjacent to a navigable waterway. Even in 1973,
the Corps had been considering environmental criteria in
its permitting decisions for a number of years. See Del-
tona Corp. v. United States, 657 F.2d 1184, 1187 (Ct. Cl.
1981) (“[O]n December 18, 1968, in response to a grow-
ing national concern for environmental values and related
federal legislation, the Corps [announced that it] would
consider the following additional factors in reviewing per-
mit applications: fish and wildlife, conservation, pollution,
aesthetics, ecology, and the general public interest.”).
See also id. at 1190 (“[S]ince the late 1960’s the regula-
tory jurisdiction of the Army Corps of Engineers has sub-
stantially expanded pursuant to § 404 of the [Clean Water
Act] and—under the spur of steadily evolving legislation—
the Corps has greatly added to the substantive criteria
governing the issuance of dredge and fill permits.”). By
1973, the Corps had denied dredge-and-fill permits solely
on environmental grounds. See, e.g., Zabel v. Tabb, 430
F.2d 199 (Sth Cir. 1970).
13a
In addition to the federal regulations, development of
the subject land required approval by both the state of
Florida and Monroe County. See the discussion of Good’s
permit application process, supra.
At the time he bought the subject parcel, Appellant
acknowledged both the necessity and the difficulty of ob-
taining regulatory approval. The sales contract specifically
stated that “[t]he Buyers recognize that . . . as of today
there are certain problems in connection with the obtain-
ing of State and Federal permission for dredging and filing
operations.” Appellant thus had both constructive and
actual knowledge that either state or federal regulations
could ultimately prevent him from building on the prop-
erty. Despite his knowledge of the difficult regulatory
path ahead, Appellant took no steps to obtain the required
regulatory approval for seven years.
During this period, public concern about the environ-
ment resulted in numerous laws and regulations affecting
land development. For example:
* In December 1973, the Endangered Species Act
was enacted. 16 U.S.C. § 1531 et seq. (1994). The
ESA prohibited federal actions that would be “likely
to jeopardize the continued existence of any endan-
gered species,” 16 U.S.C. § 1536(a)(2), and made
it unlawful to “take” (i.e., kill, harass, ete.) any
endangered animal. See 16 U.S.C. §§ 1532(19),
1538(a)(1)(B).
* In 1975, the Corps of Engineers issued regulations
broadening its interpretation of its § 404 authority to
regulate dredging and filling in wetlands. See United
States v. Riverside Bayview Homes, 474 U.S. 121,
123-124 (1985). In 1977, the Corps further broad-
ened its definition of wetlands subject to § 404’s
permit requirements. See id.
l4a
* Also in 1977, Florida enacted its own Endangered
and Threatened Species Act, Fra. Stat. ANN.
S 372.072 (West 1997), further emphasizing the
public concern for Florida’s environment. In 1979,
the Florida Keys Protection Act was enacted, desig-
nating the Keys an Arca of Critical State Concern.
Fra. Stat. ANN. § 380.0552 (West 1997).
Thus, rising environmental awareness translated into
ever-tightening land use regulations. Surely Appellant was
not oblivious to this trend.
The picture emerges, then, of Appellant in 1973 ac-
knowledging the difficulty of obtaining approval for his
project, then waiting seven years, watching as the applica-
ble regulations got more stringent, before taking any steps
to obtain the required approval. When in 1980 he finally
retained a land development firm to seck the required
permits, he acknowledged that “obtaining said permits 1s
at best difficult and by no means assured.”
While Appellant's prolonged inaction does not bar his
takines claim, it reduces his ability to fairly claim sur-
prise when his permit application was denied. Appellant
was aware at the time of purchase of the need for regula-
tory approval to develop his land. He must also be pre-
sumed to have been aware of the greater general concern
for environmental matters during the period of 1973 to
1980. As our predecessor court stated on similar facts:
“(When Deltona acquired the property in 1964, it knew
that the development it contemplated could take place
only if it obtained the necessary permits from the Corps
of Engineers. Although at that time Deltona had every
reason to believe that those permits would be forthcoming
when it subsequently sought them, it also must have been
aware that the standards and conditions governing the
issuance of permits could change. Deltona had no assur-
15a
ance that the permits would issue, but only an expecta-
tion.” Deltona, 657 F.2d at 1193.
Here, as in Deltona, Appellant “must have been aware
that the standards and conditions governing the issuance
of permits could change.” /d. In light of the growing
consciousness of and sensitivity toward environmental
issues, Appellant must also have been aware that stand-
ards could change to his detriment, and that regulatory
approval could become harder to get.
We therefore conclude that Appellant lacked a reason-
able, investment-backed expectation that he would obtain
tue regulatory approval needed to develop the property
at issue here. We have previously held that the govern-
ment is entitled to summary judgment on a regulatory
takings claim where the plaintiffs lacked reasonable, in-
vestment-backed expectations, even where the challenged
government action “substantially reduc[ed] the value of
plaintiffs’ property.” Avenal v. United States, 100 F.3d
933, 937 (Fed. Cir. 1996). Here, too, Appellant’s lack
of reasonable, investment-backed expectations defeats his
takings claim as a matter of law.
Conclusion
Appellant lacked the reasonable, investment-backed ex-
pectations that are necessary to establish that a govern-
ment action effects a regulatory taking. Therefore, we :
affirm the grant of summary judgment to the United States.
AFFIRMED.
16a
APPENDIX B
IN THE UNITED STATES COURT
OF FEDERAL CLAIMS
No. 94-442L
(Filed August 22, 1997)
LiLoyp A. Goon, JR.,
Plaintiff,
V.
Tue UNITED STATES,
Defendant.
OPINION
MEROW, Judge.
Plaintiff Lloyd A. Good Jr. alleges that the U.S. Army
Corps of Engineers (“Corps”) denial of his 1990 permit
application to dredge and fill wetlands and access navi-
gable waters gave rise to a taking under the Fifth
Amendment of the U.S. Constitution entitling him to
$2.500,000.00 in just compensation. This matter is now
before the court on cross-motions for summary judgment
on liability. The principal issues raised in those motions
is whether the federal denial deprived plaintiff's property
of all economic value and, if not, whether that denial
interfered with reasonable investment-backed expectations.
Plaintiff claims that the Corps denial of his 1990 per-
mit application pursuant to the Endangered Species Act
17a
(“ESA”) of 1973, 16 U.S.C. §§ 1531-1543 (1994), de-
prived his property of all economic value, and that his
claim therefore falls squarely within the per se takings
rule of Lucas v. South Carolina Coastal Council, 505 U.S.
1003 (1992). Plaintiff advances two main arguments in
support of this Lucas claim. First, plaintiff maintains that
even if development would not violate the ESA, develop-
ment pursuant to U.S. Fish and Wildlife Service (“FWS”)
recommendations would not be economically viable, and
therefore has the same effect as an outright prohibition
on development.
Plaintiff argues in the alternative that even if his claim
does not fall within the Lucas per se rule, he had reason-
able investment-backed expectations in his development
plans, and therefore can deronstrate a taking under Penn
Central Transportation Co. v. New York, 438 U.S. 104
(1978).
Defendant contends that plaintiff's claim fails under the
Lucas “antecedent inquiry” which requires that plaintiff
demonstrate title to the right claimed to have been taken.
In particular, defendant argues that plaintiff could not
derive any economically viable use from_ his property
without obtaining access to navigable waters of the United
States. Defendant maintains that since the federal naviga-
tional servitude reserves that right to the federal govern-
ment, the only economically relevant property interest at
issue here belonged to the federal government, not the
plaintiff. Defendant also maintains that plaintiff's claim
fails under this inquiry because he did not acquire a
vested right in his development plans under Florida law.
Defendant argues in the alternative that the federal re-
strictions do not have any effect on the value of plaintiff's
property because plaintiff cannot show a “reasonable
probability” that such development would be permitted
18a
under state and county law. Thus, defendant concludes,
plaintiff can neither demonstrate that the federal denial
caused any economic impact, nor frustrated reasonable
investment-backed expectations under Penn Central.
It is decided that no taking occurred in this case. As
discussed more fully below, although plaintiff has a prop-
erty interest that is the proper subject of a takings claim,
that claim does not fall within the Lucas per se rule.
Contrary to plaintiff's contention, the ESA does not re-
quire that his property be left in its natural state. Further,
the EWS restrictions on development imposed pursuant
to the ESA do not deprive plaintiff's property of all
economic value. The property retains value both for de-
velopment, or for the sale of transferable development
rights.
Plaintiff's claim also fails under Penn Central because
the Corps denial did not interfere with reasonable invest-
ment-backed expectations. At the time of plaintiff's initial
1973 investment in his property, both the federal and
state regulatory regimes at issue here imposed significant
development restrictions on plaintiff's use of that property.
Although plaintiff would otherwise be constructively
charged with knowledge of those restrictions, plaintiff ex-
plicitly acknowledged those restrictions, and their poten-
tial to thwart development, in his contract for the pur-
chase of the property. Later, when plaintiff began to
invest in preparing the property for development in 1980,
the regulatory regime had been further strengthened.
Again, plaintiff acknowledged those restrictions, and their
potential to thwart development, in the contract making
his first major investment in that development.
Land development at both points in time was a highly
regulated business, and plaintiff's sought uses for his prop-
erty were subject to restriction or prohibition under this
19a
regulatory regime. While plaintiff was free to assume the
investment risks involved after considering that regime,
the Fifth Amendment does not require the federal govern-
ment to act as his surety should that investment prove to
be ill-taken. Accordingly, defendant’s motion for sum-
mary judgment is granted. Plaintiff’s motion for summary
judgment is denied.
FACTS
“Sugarloaf Shores,” the 40 acre property at issue in
this case, is located on Lower Sugarloaf Key, Monroe
County (“the county”), Florida. Approximately half of
the county hosts a portion of Everglades National Park,
established in 1947 to protect the marshes of the Ever-
glades. The remaining half of the county consists of the
Florida Keys, a string of islands off the southern tip of
Florida designated in 1979 as a state area of critical en-
vironmental concern. Lower Sugarloaf Key is located
approximately 15 miles northeast of Key West, the county
seat and the employment center of the Keys.
Sugarloaf Shores consists of a total of 32 acres of
wetlands, approximately 26 acres of which are locally rare
salt marsh fringed with mangrove trees and 6 acres of
which are freshwater sawgrass marsh.! These salt and
freshwater wetlands are separated by 8 acres of upland
located in the southwest corner of the property. Much
of the property is periodically submerged by the tide from
Upper Sugarloaf Sound. a navigable water of the United
States and an Outstanding Florida Water. The property
provides habitat for several endangered species, including
1“The term wetlands means those 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 sup-
port, a prevalence of vegetation typically adapted for life in satu-
rated soil conditions. Wetlands generally include swamps, marshes,
bogs, and similar areas.” 33 C.F.R. § 328.3(b) (1996).
20a
the Lower Keys marsh rabbit, the mud turtle and the
silver rice rat.
On April 18, 1973, plaintiff entered into a contract to
purchase Sugarloaf Shores and several other properties
on Lower Sugarloaf Key and nearby Saddlebunch Key.
In that contract, plaintiff acknowledged that:
The Buyers recognize that certain of the lands cov-
ered by this Contract may be below the mean high
tide line and that as of today there are certain prob-
lems in connection with the obtaining of State and
Federal permission for dredging and filling opera-
tions.
Pif. Summ. J. Ex. 1 at 7. On October 8, 1973, plaintiff
acquired Sugarloaf Shores and these other properties for
a total cost of $2 million.? Plaintiff estimates that his
basis in Sugarloaf Shores is $92,718.78, and alleges that
he has spent approximately this amount in his effort to
develop the property. The record reveals that the bulk
of this investment took place after 1980.3 Pif. Summ.
5, x: A.
2 Plaintiff and his mother acquired Sugarloaf Shores together
with a nearby motel area and marina known as Sugarloaf Lodge,
parcels adjacent to the motel, additional parcels on Lower Sugarloaf
Key, as well as property on Saddlebunch Key, which was subse-
quently developed as a recreational vehicle park. Plaintiff inherited
his mother’s 30°/ interest in Sugarloaf Shores, together with her
interest in these other properties, upon her death in 1975.
Photographs of Sugarloaf Shores presented at a hearing before
this court on November 20, 1996, revealed that none of the other
properties involved in the 1973 transaction were adjacent to Sugar-
loaf Shores. Defendant has not contended that these other prop-
erties should be considered in this takings claim.
3 Plaintiff claims $3,800.00 in expenditures for the purchase fill
and consulting services prior to 1974, but has only provided docu-
2la
In October 1980, plaintiff hired Keycology, a land
planning and development firm, to obtain the county,
State and federal permits necessary to proceed with the
development of Sugarloaf Shores. According to that agree-
ment, plaintiff sought to obtain the permits necessary to
prepare the property for development, and then sell the
property to another party for actual development.*
The agreement specifically provided that Keycology
would be paid a fixed fee of $24,000.00 for its good faith
effort to obtain those permits within two years, and an
additional fee should those permits issue. The agreement
further provided that the additional fee would be equal
to one-third of the value that Sugarloaf Shores was in-
creased above its undeveloped value. Plaintiff and Key-
cology set that undeveloped value at $350,000.00, and
acknowledged that the property would be worth much
more if the necessary permits for development could be
obtained. Although Sugarloaf Shores was zoned for single
family residential use and platted for a 76-lot development
with canals, plaintiff and Keycology acknowledged that
“obtaining said permits is at best difficult and by no
means assured... .” Def. Summ. J. Ex. 33.
mentation for $2,900.00 of these expenditures. Between 1982 and
1990, plaintiff claims $60,743.70 in expenditures for consulting serv-
ices and permits, but has only provided documentation for
$56,439.48. Plaintiff also claims $36,013.25 in legal fees, real estate
taxes and mortgage interest for the period from 1973 to 1994.
4In July 1989, plaintiff contracted to sell Sugarloaf Shores to
Patch Communications for $1,000,000.00. The deal was made ex-
pressly contingent upon plaintiff's ability to secure final major
development approval from the county for improvements to Sugar-
joaf Shores. This agreement was canceled by its own terms a
year later when plaintiff failed to obtain that approval within the
time limit provided for in the contract. Plf. Summ. J. Ex. 53.
22a
1. Early Federal Permits
Plaintiff, through Keycology, submitted his first permit
application to the Corps in March 1981, as required by
the Rivers and Harbors Act (“RHA”) of 1899, 33 U.S.C.
§ 403 (1994), and the Clean Water Act (“CWA”) of 1972,
33 U.S.C. § 1344 (1994), for the dredging and filling of
navigable waters of the United States.5 That permit was
granted by the Corps in May 1983, and authorized plain-
tiff to fill approximately 7.4 acres of salt marsh and exca-
vate another 5.4 acres of salt marsh.® In effect, the permit
provided plaintiff with the federal authorizations necessary
for his plan to prepare Sugarloaf Shores for a 54-lot resi-
dential subdivision, complete with a 48-slip marina pro-
viding deep water access to Upper Sugarioaf Sound. Based
upon the environmental concerns of the county, plaintiff
subsequently requested permission from the Corps to
modify this permit. The Corps processed this request as
a new permit, and issued that permit on January 6, 1984.7
Consistent with Corps regulations, both v. .acse permits
required that the work authorized by the permit be com-
pleted within five years. See 33 C.F.R. § 325.6 (1996).
As those deadlines approached, however, plaintiff con-
tinued to experience difficulty obtaining the required state
and county authorizations for his plan. In response to
plaintiff's request that it extend his federal permits based
upon these difficulties, the Corps gave the plaintiff two
limited extensions while it considered whether plaintiff's
1983 and 1984 permits should be extended without
change. The extensions maintained the validity of those
5 For work requiring a permit under both the RHA and the
CWA, Corps regulations provide for the filing of a single permit
application. 23 C.F.R. pt. 325, Appendix A.
6 Permit No. 81J-1101.
7 Permit No. 83G-2076.
23a
permits, but prohibited plaintiff from commencing work
until the Corps finished its evaluation.®
In the interval between the issuance of plaintiff's
original permits and his request to modify those permits
as the five year deadline approached, the Corps had re-
vised its regulations to clarify environmental review stand-
ards and explicitly recognize the value of rare wetland
types. See, e.g., Final Regulations for Controlling Certain
Activities in Waters of the United States, 49 Fed. Reg.
39,478 (1984) (clarifying import of environmental permit
review standards); Final Rule for Regulatory Programs
of the Corps of Engineers, 51 Fed. Reg. 41,206 (1986)
(impacts to rare local wetland types should be avoided).
Based upon these changes, the Corps exercised its author-
ity to deny plaintiff's request to reissue his existing permits
without change,® and instead processed his request as a
new permit application.
The Corps granted plaintiff a new permit on October
17, 1988.1° While authorizing plaintiff to prepare Sugar-
8 Although plaintiff repeatedly characterizes the Corps treat-
ment of his extension and modification requests as unreasonable,
the record does not support this characterization. In his own corre-
spondence with the Corps, plaintiff notes that these requests were
based upon his inability to obtain the necessary state and county
authorizations during the five year life of the federal permits. PIf.
Summ. J. Ex. 46. Although the Corps had no legal obligation to
grant those requests, see 33 C.F.R. § 325.6(d), it timely granted
two extensions to plaintiff while it conducted the review required
of it by law.
® The regulations provide the Corps with the authority to modify,
revoke or suspend any permit based upon, among other things, a
change in circumstances, any objections to the activity authorized
by the permit which were not considered previously, any changes
in the statutory or regulatory authorities and the extent of in-
vestment the permittee has taken in reliance upon the permit. 33
C.F.R. § 325.7(a).
10 Permit No. 87IPV-20805.
24a
loaf Shores for substantially the same development plan
called for in his original proposal, it limited the fill for
residences built in the salt marsh to 40 by 40 foot build-
ing pads. This modification reduced the overall wetland
losses of plaintiff's proposal from 12.8 acres to 10.53
acres. The permit was set to expire on October 17, 1993.
II]. State and County Permits
At the same time that Keycology initiated the applica-
tion process with the Corps, it began to pursue the state
and county authorizations necessary to effect plaintiff's
plan. This effort resulted in the issuance of a state dredge
and fill permit on February 10, 1983. The commence-
ment of work authorized by that state permit, however,
was conditioned upon plaintiff obtaining the necessary
county approvals.
On May 10, 1983, plaintiff sought county approval of
the dredge and fill proposal approved by the federal and
state permits. Upon reviewing plaintiffs plan, the county
determined the plan was a “major development” under the
county land use statute then in effect, and accordingly
ordered that it be evaluated pursuant to that statute’s
“major development review” process. See Monroe County
Code, Fla. (“MCC”) ch. 6, art. VII (1985) (superseded
1986). This process required, among other things, a
more regirous environmental review than that required by
the standard development approval procedure. See, e.g.,
MCC § 6-223(c)(1) (purpose of major development
review to ensure development proceeds in harmony with
natural ecology and environmental resources of county).
§ 6-225 (requiring the submission of an environmental
designation survey of property proposed for development),
§ 6-229 (requiring the submission of a community impact
statement detailing the impact of development on public
services and environmental quality ).
25a
At the time that plaintiff sought county development
approval, however, a moratorium on the issuance of major
development approvals was in effect.1! Although plaintiff’s
proposal was a “major development,” !* he appealed this
determination to the Monroe County Board of Adjust-
ment. After the Board of Adjustment refused plaintiff's
request to have his proposal processed pursuant to stand-
ard development review, plaintiff appealed to the Monroe
County Commission. Without providing a rationale, the
County Commission reversed the decision of the Board
of Adjustment, and ordered the county to process plain-
tiff's dredge and fill application according to the standard
review procedures.
Processing plaintiff's proposal according to these stand-
ard procedures, the county granted plaintiff a dredge and
fill permit on July 13, 1984. On September 7, 1984, the
county also granted plaintiff's application to amend the
plat of Sugarloaf Shores to comport with the federal and
State permits that had already been issued.
On September 10, 1984, the Florida Department of
Community Affairs (“DCA”) appealed both of these ap-
provals to the Florida Land and Water Adjudicatory
11 Moratoria were instituted by the county beginning at least
az early as February 1982, and were intended to ensure that county
review of development plans not already in the major development
review pipeline would be adjudged pursuant to the new county land
use and public facilities plans then in preparation. Monroe County
Ordinance No. 025-1988 (prohibiting the issuance of major devel-
opment approvals except in limited circumstances and referencing
prior moratoria). See also Monroe County Ordinance No. 015-1983.
12“A major development project shall be any existing and/or
activity or use which reflects one or more of the following identified
characteristics . . . (1) A subdivision as identified in the county
plat filing ordinance and which contains five (5) acres or more
land and/or water area.” MCC § 622.
26a
Commission (“FLAWAC”).! Rejecting plaintiff's claim
that he had a vested right under Florida law to pursue his
development plan notwithstanding the requirements of the
major review process, FLAWAC found that:
In 1973, Lloyd Good was familiar with regulatory
restrictions on the use of wetland areas. As a Phila-
delphia attorney, he had practiced in wetland areas
in New Jersey . .. and. . . knew that the concept
of deadend canals at that time was not feasible. He
had decided to amend the original plat (and change
the development plan) even before he purchased
Sugarloaf Shores . . . because he believed that under
existing environmental laws the platted deadend
canals would not be permitted.
Def. Summ. J. Ex. 2. FLAWAC went on to hold that
the county had erred when it failed to subject plaintiff's
proposals to major development review, and ordered the
county to evaluate plaintiff's proposals pursuant to that
review process.t That order was entered on May 29,
1986.
13 The DCA is Florida’s land use planning agency. Among other
things, the DCA recommends geographic areas for designation as
Areas of Critical State Concern, reviews local development orders
in those areas, and may appeal those development orders. See
Florida Environmental Land and Water Management Act of 1972,
Fla. Stat. §§ 186.001-.911, 380.012-.12 (1983 & Supp. 1984).
14 DCA appeals are first reviewed by a hearing officer of the Divi-
sion of Administrative Hearings of the Florida Department of
Administration, Fla. Stat. § 120.57(1) (1983), who is empowered
to make recommended findings of fact and concluusions of law.
FLAWAC, which consists of the Governor and the Cabinet of the
State of Florida, considers those findings and conclusions in arriv-
ing at a final order. Fla. Stat. §§ 120.57(1), 380.07. FLAWAC’s
final order specifically adopted the hearing officer’s findings of fact
and conclusions of law. Def. Summ. J. Ex. 3.
27a
While the DCA appeal was pending before FLAWAC,
the county adopted a new comprehensive land use plan
and new development regulations. Both the plan and
regulations became effective July 29, 1986, two months
after FLAWAC entered its order in the DCA appeal.
While the major development statute established a pro-
cedurally rigorous environmental review, the new develop-
ment authorities replaced procedure with substantive en-
vironmental standards of proscriptive import. The new
authorities not only prohibited dredging to provide access
for docking facilities, Monroe County 1986 Compre-
hensive Plan, Volume II at 205, but also prohibited the
filling of salt marsh except where necessary to provide
access to a parcel. Even fill for that purpose was limited
to 10 percent of the overall salt marsh on a parcel. Mon-
roe County Code, Fla. art. IT § 9.5-345 (1986) (“land
development regulations” or “LDRs”).
All of plaintiffs different development proposals in-
volved dredging to provide access to Upper Sugarloaf
Sound, and the filling of salt marsh for the purpose of
providing residential housing. Accordingly, because of the
impact these new authorities would have on his develop-
ment plans, it became critical for plaintiff to secure county
review under the repealed major development. statute.
Claiming that he could not secure that review per
FLAWAC’s order, plaintiff filed suit in state court. In
that suit, plaintiff alleged that the state had taken his
Property entitling him to just compensation, and that
FLAWAC’s order was an unreasonable exercise of police
power which violated his due process rights.
Plaintiff settled the case by stipulation on October 22.
1987. The stipulation provided that plaintiff was entitled
to have his applications for dredge and fill and plat amend-
ments adjudged according to the repealed major develop-
28a
ment review statute. The stipulation also provided, how-
ever, that plaintiff's “future development relative to Sugar-
loaf Shores . . . shall be governed by those provisions in
effect as of the date of application for such future develop-
ment.” Plf. Summ. J. Ex. 41.
On June 23, 1989, plaintiff submitted his major devel-
opment review application to the county, and received
preliminary approval of his application on November 9,
1989. The major development review statute provided that
this preliminary approval would lapse unless a proper
final development review application were submitted
within one year of the preliminary approval.” The pre-
liminary approval notified plaintiff of several conditions he
would be required to satisfy in order to secure final
major development approval.’"® Among those conditions
was the requirement that plaintiff obtain a surface water
management permit from South Florida Water Manage-
ment District (“SFWMD").
Plaintiff filed an application with SFWMD on Novem-
ber 13, 1989. On May 31, 1990, SFWMD notified
plaintiff that its staff recommended denial of his applica-
15 The statute defined a final development plan as a development
plan that “conforms substantially to an approved preliminary de-
velopment plan including all special conditions attached to the
preliminary development plan approval.” MCC © 6-222 (1985). The
county resolution providing plaintif! with preliminary development
approval similarly notes that the county “will consider an aryplion
tion for final approval upon submission of a proper application and
evidence that the conditions listed above have been met.” Pif
Summ. J. Ex. 56.
16 Most of the conditions prescribed measures that would lessen
the environmental impact of plaintiff's plan. The conditions ad-
dressed, for example, the preservation of wetlands not directly af-
fected by development, the protection of endangered wildlife, and
the maintenance of existing mangrove trees. Monroe County Plan-
ning Commission Zoning Board, Resolution 18 ( Nov. 9, 1989).
ey
29a
tion. SFWMD staff noted that plaintiff had declined to
alter his plans to mitigate impacts to wetlands, and had
declined to place deed restrictions and conservation ease-
ments on those wetlands that would not be directly im-
pacted by development. The staff also noted that the
property provided habitat for the Lower Keys marsh rabbit
and the mud turtle, two state-listed endangered species.
Based upon these considerations, the staff concluded that
they could not:
provide a favorable environmental review for this
project due to the unmitigated loss of wetlands, the
loss of habitat for the endangered species within them
and the lack of reasonable assurance that future un-
mitigated wetlands destruction will not occur due to
the lack of the above-requested dedication.
Def. Summ. J. Ex. 8A.
In the face of this negative review, plaintiff requested
that his application be removed from SFWMD’s agenda.
On September 17, 1991, plaintiff requested that SFWMD
indefinitely table his application while he pursued a new
permit from the Corps. After that time, plaintiff never
reactivated his application. He did not otherwise obtain
SFWMD approval for any development plan for Sugar-
loaf Shores.
Although plaintiffs preliminary development plan ap-
proval expressly required him to obtain the SFWMD
permit in order to secure final development approval,
plaintiff filed for final development approval without the
SFWMD permit on March 7. 1990. PIf. Summ. J. Ex. 58.
In its review of his final development submission, the
county planning staff noted that plaintiff had not met the
SFWMD condition and several of the other conditions
set forth in the preliminary development approval. Based
30a
upon these inadequacies, the staff found that plaintiff's
application was not a satisfactory final development sub-
mission, and did not therefore toll the one-year time limit
plaintiff was required to meet in order to prevent his
preliminary approval from becoming invalid. Pif. Summ.
J. Ex. 65. Plaintiff filed for an extension of this time limit
to maintain the validity of that preliminary approval.
While the county extended that time limit to May 9,
1991, plaintiff did not make any further application for
final development approval. This failure caused plaintiff's
preliminary development approval to lapse.!7 Accordingly,
under the terms of his October 22, 1987 stipulation, plain-
tifl’s future applications for development were subject to
the law in effect at the time of application. The law at
the time included the Monroe County 1986 Compre-
hensive Plan and its restriction on dredging, and the LDR
restrictions on the filling of salt marsh.
III. The 1990 Federal Permit Application
On June 14. 1990, plaintiff informed the Corps that
because of state and county concerns with his develonment
plan he was exploring a new plan for Sugarloaf Shores,
and requested a conference with Corps personnel. Plaintiff
subsequently submitted a new application to the Corps
that reflected plaintiffs new plan to build 16 single family
residences all within wetlands, along with a boat canal
and tennis court. Although plaintiff's 1990 plan reduced
the density of residential development compared to his
1988 proposal. overall wetland losses were only reduced
from 10.53 to 10.17 acres. And, although the marina was
17 Although plaintiff implies throughout his filines with this
court that he had obtained the necessary county approvals for his
project, the record nonetheless clearly indicates that plaintiff did
not obtain such approvals.
3la
eliminated in the 1990 plan, plaintiff proposed to dredge
a canal which would provide the residential lots with pro-
tected mooring and water access to Upper Sugarloaf
Sound. The 1988 Corps permit was still valid at the time
of plaintiff's 1990 application.
In the interval between the issuance of plaintiff's 1988
Corps permit and his application for the new permit in
1990, the Lower Keys marsh rabbit was listed as an en-
dangered species under the ESA. 16 U.S.C. § 1533; En-
dangered and Threatened Wildlife and Plants; Endangered
Status for the Lower Keys Rabbit, 55 Fed. Reg. 25,588
(June 21, 1990) (codified at 50 C.F.R. pt. 17)28 The
marsh rabbit was known to inhabit Sugarloaf Shores, and
its listing as an endangered species placed obligations upon
the Corps and the FWS in the 1990 permit review that
they did not have when the earlier Corps permits were
considered. In particular, the FWS took on a more sig-
nificant role in the Corps permitting decision.
During the consideration of the early permit applica-
tions, the FWS played a limited role in the Corps
permitting decision pursuant to the Fish and Wildlife
Coordination Act (““FWCA”) of 1934. 16 U.S.C. §§ 662-
666 (1994). FWCA requires federal agencies proposing
to alter any body of water to first consult with the FWS
concerning the fish and wildlife impacts of the proposed
action. 16 U.S.C. § 662(a). Although the agency en-
gaged in the permitting action should give serious con-
sideration to FWS recommendations, the agency is not
required to follow those recommendations. See, e.¢.,
Sierra Club v. Alexander, 484 F. Supp. 455 (N.D.N-Y.
1980) (Corps may issue wetlands permit in face of FWS
18 “The term ‘endangered species’ means anv species which is in
danger of extinction throughout all or a significant portion of its
range....” 16 U.S.C. § 1532(6).
32a
objection raised in the context of FWCA consultation),
aff'd, 633 F.2d 206 (2d Cir. 1980).
By contrast with its FWCA role, the ESA guarantees
the FWS greater influence over the ultimate permitting
decision where an endangered species may be affected by
the federal action, and guarantees that species much
grcater protection.” First, pursuant to section 9 of the
ESA, the marsh rabbit’s endangered status made it illegal
to “take” (e.g., kill, harm, harass) an individual marsh
rabbit. 16 U.S.C. $$ 1532(19), 1538(a)(1)(B). This
take prohibition applies to any person and any act that
kills or injures endangered wildlife, including significant
habitat modification which has this effect. 50 C.F.R.
~ 17.3 (1996): see also Babbitt v. Sweet Home, 515
U.S. 687 (1995). A person found to have knowingly
violated this prohibition faces both civil and criminal
penalties. 16 U.S.C. § 1540(a)-(b).”°
Second, pursuant to section 7 of the ESA, the marsh
rabbit's endangered status also obliged the Corps, after
consulting with the FWS, to insure that the issuance of
the wetlands permit would not place the continued exist-
ence of the species in jeopardy. The ESA consultation
section specifically provides:
19 See qenerally Michael J. Bean, The Evolution of National Wild-
life Law (1997).
29 Ry permit, however, the FWS may allow an otherwise pro-
hibited take to oceur so long as “such taking is incidental to. and
not the purpose of, the carrying out of an otherwise lawful ac-
tivity.” 16 U.S.C 15239(a)(1)(B). An applicant for a so-called
“incidental take permit” must submit a conservation plan to the
FWS delineating the steps that will be taken to minimize and
mitigate impacts toe the species. The permit application and eon-
servation plan are subject to public comment, and may he re-
voked if the terms are not complied with by the applicant. See 16
U.S.C. § 1539(a)(2)
a,
33a
Each federal agency shall, in consultation with and
with the assistance of the. . . [FWS], insure that any
action authorized, funded, or carried out by such
agency . .. is not likely to jeopardize the continued
existence of any endangered species or threatened
species or result in the destruction or adverse modi-
fication of [critical] habitat of such species
16 U.S.C. § 1536(a)(2). In the context of a section 7
consultation, the FWS will Prepare a biological opmion to
determine whether the federal action will cause jeopardy.
The FWS will reach a jeopardy finding if it determines
that the federal action “reasonably would be expected,
| directly or indirectly, to reduce appreciably the likelihood
| of both the survival and recovery of a listed species in
the wild by reducing the reproduction, numbers, or distrj-
bution of that species.” 50 C.E.R. § 402.02 (1996).
If the FWS reaches a jeopardy finding, it will attempt
to develop reasonable and prudent alternatives (“RPAs”
or “development alternatives”) to the proposed plan that
weuld avoid causing jeopardy. 16 U.S.C. § 1536(b) (3)
(A).?! If the FWS identifies development alternatives that
would avoid jeopardy, but would nonetheless result in
the take of one or more individuals of the species, the
FWS may permit that take. effectively exempting the ac-
21 F WS regulations define RPAs as:
alternative actions identified during formal consultation that
can be implemented in a manner consistent with the intended
purpose of the action, that can he implemented consistent with
the scope of the Federal agency’s leyal authority and jurisdic-
tion, that is economically and technologically feasible, and that
the Director fof the FWS] believes would avoid the likelihood
of jeopardizing the continued existence of listed species or
resulting in the destruction or adverse modification of critical
habitat.
50 C.F.R. 8 402.09
34a
tion from section 9. 16 U.S.C. § 1536(b)(4), (0); 50
C.F.R. § 402.14(i)(5). Although the Corps retains the
ultimate authority under the ESA to decide whether to
require the applicant to modify his plans to comport with
FWS RPAs, 50 C.F.R. § 402.15(a), the Corps must gen-
erally rely upon convincing evidence to reject those FWS
determinations if it is to fulfill its ESA duty to insure that
its permitting action will not cause jeopardy. See Bennett
v. Spear, US. . 117 S. Ct. 1154, 1165 (1997).
On September 7, 1990, in its initial response to the
Corps public notice of plaintiff's 1990 application, the
FWS advised the Corps that plaintiff's property was in-
habited by an endangered species, and proposed several
conservation recommendations designed to protect the en-
dangered rabbit. On October 9, 1990, in the face of the
Corps determination that plaintiff's project would have no
effect on the endangered rabbit and conflicting state in-
formation documenting the decline of the species, the
FWS notified the Corps that it was initiating consulta-
tion under the ESA.
The FWS issued its biological opinion on February 19,
1991. In it. the FWS found that although the endangered
rabbit had been in decline since the early 1980s, plain-
tiff’s individual project would not be likely to jeopardize
the continued existence of the species. The FWS did
advise the Corps. however, that further species decline
could trigger future restrictions on the issuance of wet-
lands permits. The FWS also advised the Corps that
modifications to plaintiff's proposal or new information
regarding endangered species could result in the reinitia-
tion of ESA consultation.
Because the FWS reached a no jeopardy finding, it did
not propose RPAs to plaintiff's 1990 development plan.
ee
35a
The FWS did, however, recommend denial of the 1990
application pursuant to its distinct responsibilities under
FWCA. This FWCA recommendation was based upon
the impact plaintiff's plan would have upon the fish and
wildlife that utilized the salt marsh for habitat, and the
effect that pollution from plaintiff's development would
have upon the near shore waters of Upper Sugarloaf
Sound. The Corps was not legally required to follow
this recommendation.
The FWS biological opinion also instructed the Corps
to notify the plaintiff that he should not commence work
under his 1988 permit. Since the plaintiff's 1988 permit
had been issued before the rabbit had been listed as an
endangered species, and reflected a different development
plan from plaintiff's 1990 proposal, the FWS reasoned
that its no jeopardy finding would not necessarily be
applicable to the 1988 permit. Accordingly, the com-
mencement of work under the 1988 permit could poten-
tially violate the ESA.
On May 14, 1991, the Corps notified the FWS that
plaintiff intended to pursue the plan reflected in the 1988
Corps permit. The Corps also expressed its opinion
that the 54-lot residential development with marina author-
ized by the 1988 permit would not jeopardize the con-
tinued existence of the endangered rabbit. The Corps did
note, however, that the silver rice rat had been listed as
an endangered species after the FWS biological opinion
was issued. Endangered and Theatened Wildlife and
Plants: Endangered Status for the Lower Keys Population
of the Rice Rat (Silver Rice Rat). 56 Fed. Reg. 19.809
(April 30, 1991) (codified at 50 C.F.R. pt. 17). Be-
22 Plaintiff still had not secured the required state and county
approvals to proceed with the plan reflected in the Corps 1988
permit.
Bee eee
36a
cause it did not have enough information about the silver
rice rate, the Corps indicated that it did not know whether
plaintiff's plan would have an effect on the species.
In response to this notification, the FWS initiated ESA
consultation, and informed the Corps that it would pre-
pare a new biological opinion evaluating the impact that
plaintiff's 1988 plan would have on the endangered rabbit
and rat. On December 18, 1991, the FWS released its
new biological opinion. The new opinion evaluated the
effect that both the 1988 and 1990 proposals would have
upon the continued existence of both species.
In its earlier biological opinion on the endangered
rabbit, the FWS no jeopardy determination noted that
further species decline could trigger restrictions on devel-
opment that would impact the endangered rabbit. In the
interval between the issuance of this earlier biological
opinion and the December 1991 opinion, new information
showed that the species had declined in number. Further,
other Lower Sugarloaf Key property owned by plaintiff,
which he operated as a private airport, was burned. This
fire may have destroyed occupied marsh rabbit habitat.
Although the FWS sought permission to evaluate both
Sugarloaf Shores and plaintiffs airport property to deter-
mine the status of the species on those sites, plaintiff re-
fused permission. The FWS ultimately concluded that
plaintiff's 1988 and 1990 plans would cause jeopardy to
the endangered rabbit based upon the new information
showing species decline, and presuming that the fire on
plaintiff's airport property would have exacerbated this
decline. Further, the FWS found that both of those plans
would place the continued existence of the silver rice rat
in jeopardy. Based upon these findings, the FWS recom-
mended that the Corps deny the 1990 permit application,
37a
and modify the 1988 permit to reflect FWS RPAs.** These
RPAs included restricting development to the upland por-
tion of Sugarloaf Shores, limiting water access, and pre-
venting the attraction of predators through deed and prop-
erty maintenance restrictions.
Although FWS regulations exhibit a clear preference for
receiving applicant input during the development of RPAs,
50 C.F.R. § 402.11(a)-(b), and provide the applicant
with the right to review a draft of the biological opinion
so that he may comment upon both the jeopardy deter-
mination and the proposed RPAs before they are finalized,
50 C.F.R. § 402.14(g)(5), plaintiff did not cooperate in
this process.** See also Interagency Cooperation; Endan-
23 Plaintiff goes to some length to characterize the first FWS
biological opinion recommending no development alternatives to his
plan with its second biological opinion that did recommend develop-
ment alternatives as inherently contradictory and suspect. Plaintiff,
however, has failed to recognize that the first determination was
made pursuant to FWCA, and that the second determination was
made pursuant to the ESA.
As noted earlier, while the first FWS biological opinion found
that plaintiff’s plan would not jeopardize the existence of the en-
dangered rabbit under the ESA, it did contain the FWCA recom-
mendation to the Corps that plaintiff’s application nonetheless be
denied based upon broad fish and wildlife concerns. It was pur-
suant to FWCA and its mandate to consider all fish and wildlife
resources that the FWS found that no development alternative to
plaintiff’s plan could mitigate those broad impacts,
The second FWS biological opinion finding jeopardy to both the
endangered rabbit and rat due to new information, and suggesting
development alternatives that would mitigate the impact of plain-
tiff’s development plan solely upon these species, was made pur-
suant to the ESA. This ESA determination recommending develop-
ment alternatives based upon particular species concerns was not
inconsistent with the FWCA finding that no development alterna-
tives could avoid the broader impacts on all fish and wildlife re-
sources.
*4 It is not disputed that plaintiff made no such request, nor is it
disputed that plaintiff refused to provide information and access
38a
gered Species Act of 1973, as Amended; Final Rule, 51
Fed. Reg. 19,926, 19,952 (June 3, 1986) (“Paragraph
(g) provides for . . . applicant review of the basis for
any finding contained in draft biological opinions, includ-
ing the availability of reasonable and prudent alter-
natives.” ).
Rather, by March 13, 1992 letter, plaintiff indicated
his opposition to implementing the RPAs, and submitted
the report of his environmental consultant and mam-
malogist, Dr. Larry Brown, contesting the FWS jeopardy
finding. In his two page report, Dr. Brown found that
Sugarloaf Shores was not suitable habitat for the marsh
rabbit, that march rabbits were flourishing on plaintiffs
airport property, and that the silver rice rat was not found
on Lower Sugarloaf Key. Dr. Brown took a position di-
rectly contrary to the FWS by concluding “[i]t is my pro-
fessional opinion that development of the 40 acre project
site will not jeopardize the continued existence of the
Lower Keys marsh rabbit or silver rice rat in any way.” *
to his property to conduct site evaluations during the agency con-
sultation process that culminated in the December 1991 opinion
and the RPAs.
251t should be noted that, notwithstanding this finding, defend-
ant’s deposition of Dr. Brown revealed that he was not familiar
with the meaning of the term “jeopardy” under the ESA:
Q. Are you familiar with Section Seven regulation promul-
gated by the Fish and Wildlife Service?
A. No.
Q. Then I take it you’re not aware of the defined terms, then,
set forth in those regulations?
A. I’m not sure. What are the defining terms?
Q. Well, in terms of ‘jeopardy’ or adverse effect. Are you
familiar with the definitions in the regulations ?
A. Not the legal definitions. I have heard of those terms.
[ Continued }
En Eee
F
39a
After receiving Dr. Brown’s report, the Corps asked the
FWS to reinitiate consultation to consider his findings. See
50 C.F.R. § 402.16(b). The FWSs declined this request,
restating its opinion that Sugarloaf Shores provided suit-
able habitat for the marsh rabbit and silver rice rat. Fur-
: ther, the FWS reasoned that, even assuming that the en-
dangered rabbit was in fact flourishing on plaintiff's air-
port property, its jeopardy finding was still valid in light
of new data showing further species population decline.
On March 17, 1994, the Corps denied plaintiff's 1990
application on endangered Species grounds. The Corps
also notified plaintiff that his 1988 permit had expired.
In the denial letter, the Corps found that the RPAs were
consistent with the project Purpose in light of plaintiff's
earlier plan to utilize upland to construct residential hous-
ing, that implementation of the RPAs would reduce wet-
land impacts generally, and that those RPAs would avoid
causing jeopardy to the endangered rabbit and rat. Con-
curring in the FWS judgment, the Corps found that plain-
tiff’s plan as Proposed would jeopardize the continued
existence of the endangered rabbit and rat. and therefore
could not be authorized by the Corps under the ESA.
Plaintiff responded to the Corps denial by letter on May
27, 1994. In that letter. plaintiff newly asserted that any
development of Sugarloaf Shores would violate the ESA.
To support his position, plaintiff submitted a new report
from Dr. Brown. In that two Page report, Dr. Brown gave
his opinion that the upland on Sugarloaf Shores “cannot
be developed without violating the Endangered Species
25 [Continued]
Q. Do you understand there’s a difference in meaning be-
tween ‘jeopardy,’ and ‘adverse effect’ under Section 7?
A. I wasn’t aware of that.
Def. Summ. J. Ex. 117 at 55.
40a
Act.” Dr. Brown based this legal conclusion upon his
view that all of Sugarloaf Shores was a “unit of natural
habitat which is a functioning ecosystem, necessary for the
continued survival of the Key’s marsh rabbits which live
on the site.” 78
On July 11, 1994, plaintiff filed this takings claim alleg-
ing, among other things, that the ESA required Sugarloaf
Shores to be maintained in its natural state, thereby de-
priving the property of all economic value.
After plaintiff filed his takings claim, the Regional
Solicitor for the U.S. Department of Interior asked the
FWS to review the December 1991 biological opinion to
determine whether development of Sugarloaf Shores con-
sistent with the RPAs would still avoid jeopa dy to the
endangered rabbit and rat. The FWS responded that those
RPAs were still viable, and that new information gathered
since the December 1991 opinion indicated that additional
RPAs might also be available.
26 Although Dr. Brown concluded in his earlier March 1992 re-
port that the development of Sugarloaf Shores would not cause
jeopardy to the species, plaintiff also argued that the 1992 report
nonethelesss supported his new contention that development would
cause jeopardy. In particular, plaintiff extrapolated from Dr.
Brown’s 1992 finding that preserving the uplands would increase
the survival prospects of the 2-3 individual marsh rabbits he esti-
mated might occupy Sugarloaf Shores, that development of the
uplands as suggested by the FWS would jeopardize the continued
existence of the species. Plaintiff here confuses the commands of
section 9 and section 7 of the ESA.
In particular, a finding that one or more individuals of the
species would be taken within the meaning of section 9 does not
require a jeopardy finding under section 7. Where an action com-
plies with section 7 because it would not jeopardize the continued
existence of the species, but would take individuals of the species,
the FWS may effectively exempt that take from section 9 by per-
mitting the take with mitigation. 16 U.S.C. § 1536(b)(4), (0);
50 C.F.R. § 402(14) (i) (5).
4la
On January 19, 1995, the FWS released a draft of
additional RPAs that would be available for Sugarloaf
Shores. The additional RPAs included permitting the con-
struction of 8 waterfront homes in salt marsh with per-
manent boat moorings. According to the FWS, the impact
of this additional development would be offset by new
performance measures that had recently been successfully
employed by the FWS on other projects involving the con-
servation of small mammals in the context of residential
development.
Defendant filed a motion to stay plaintiff's takings claim
on February 17, 1995, because the Corps had vacated
its 1990 permit denial based upon the FWS draft. The
Corps notified plaintiff of this action, and solicited his
participation in the evaluation of the RPAs. On March 2,
1995, plaintiff filed his opposition to defendant’s motion
for stay, arguing that he considered the reevaluation
process to be beyond the authority of the Corps and the
FWS. Plaintiff again took the position that any develop-
ment of Sugarloaf Shores would violate the ESA. On
May 10, 1995, the FWS formally released a new bio-
logical opinion containing the additional RPAs.
SUMMARY AND JUDGMENT STANDARD
Both plaintiff and defendant have moved for summary
judgment arguing that no genuine issues of material fact
surround the resolution of this claim, and that judgment
may therefore be entered as a matter of law. RCFC
56(c). Material facts are those which will significantly
affect the outcome of a suit under the substantive law that
governs the case. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). In this case, since defendant's
motion is granted, defendant is considered the moving
party and plaintiff is considered the non-moving party.
42a
The moving party bears the initial burden of demon-
strating the absence of all genuine issues of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
In the case where the non-moving party bears the burden
of proof at trial, the moving party can meet its initial bur-
den by showing that there is an absence of evidence in
the record necessary to prove an element of the non-
moving party’s case. See id. at 323. Once the moving
party has made a sufficient showing, the burden shifts to
the non-moving party to present facts evidencing a reason-
able dispute to any material factual issue. Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986). While a material factual dispute must be
viewed in a light most favorable to the non-moving party,
that party must nonetheless “do more than simply show
that there is some metaphysical doubt as to the material
facts” in order to defeat a motion for summary judg-
ment. /d.
ANALYSIS
The takings clause of the Fifth Amendment to the
U.S. Constitution provides “f{nlor shall private property
be taken for public use without just compensation.” U.S.
Const. amend. V. Early interpretations of the takings
clause limited its application to actual government sciz-
ures of private property, and claims that the clause applied
to government regulation of the use of private property,
even where a regulation caused a total or near total de-
cline in economic value, were rejected on the theory that
the right to use property is not absolute. See, ¢.¢.,
Hadacheck v. Sebastian, 239 U.S. 394 (1915) (ban on
existing brickmaking operation to protect encroaching resi-
dential property owners causing substantial diminution in
value not a taking): Mugler v. Kansas, 123 U.S. 1 (1896)
(prohibition on sale of alcoho! which rendered brewery
worthless not a taking).
43a
The Supreme Court first advanced the proposition that
the takings clause might be invoked to require the award
of compensation where a government regulation had such
a severe impact on property as to approximate an actual
government seizure in Pennsylvania Coal v. Mahon, 260
U.S. 393 (1922). The Court did not set out an analytical
framework for determining when a regulation in fact went
so far as to require compensation, however, until its 1978
decision in Penn Central. There the Court identified three
factors to consider in analyzing a regulatory takings claim:
the character of the government action, the economic im-
pact of the regulation, and the extent to which the regula-
tion interferes with reasonable investment-backed expec-
tations. Penn Central, 438 U.S. at 124; see also Concrete
Pipe & Products, Inc. v. Construction Laborers Pension
Trust, 508 U.S. 602, 641-7 (1993). The Court added
that these factors should be evaluated by “focusing on the
uses the regulations permit,” Penn Central, 438 U.S. at
131, and rejected as fallacious the “contention that a
‘taking’ must be found to have occurred whenever the
land-use restriction may be characterized as imposing a
‘servitude’ on the claimant’s parcel.” Jd. at 130 n.27.
Although the Court in Penn Central did not elevate the
importance of any one factor above another, it would later
explicitly carve out two circumstances under which a single
factor alone might determine the outcome of a takings
case, and would implicitly recognize a third. The Court
announced the first “per se rule” in Loretto v. Tele-
prompter Manhattan CATV Corp., 458 U.S. 419, 441
(1982), finding that a New York law requiring landlords
to permit the permanent installation of cable TV appa-
ratus gave rise to a taking. According to the Court. be-
cause the character of a government regulation that au-
thorizes a permanent physical occupation of property so
44a
closely resembles an exercise of eminent domain, a taking
should be found without reference to the other Penn
Central factors.** See also Preseault v. United States, 100
F.3d 1525 (Fed. Cir. 1996); Hendler v. United States,
952 F.2d 1364 (Fed. Cir. 1991).
The Court announced the second per se rule in Lucas
v. South Carolina Coastal Council, finding that a regula-
tion depriving property of all economic value would give
rise to a taking without considering the other Penn Central
factors. 505 U.S. at 1029. The Court qualified this rule,
however, with the exception that a total loss of value
would not trigger a taking if “the nature of the owner's
estate shows that the proscribed use interests were not part
of this title to begin with... .” 7d. at 1027. This “ante-
cedent inquiry” into limitations that inhere in the owner’s
title is made by reference to state property or nuisance
law, id. at 1029, and federal law. See id. (federal navi-
gational servitude).
Finally, although not characterized as a per se rule,
in Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005
(1984), the Supreme Court resolved a regulatory takings
claim solely under the reasonable-investment backed ex-
pectation factor of the Penn Central test, this time to find
no takings liability. In that case, Monsanto argued that
amendments to federal law providing for the disclosure of
trade secrets submitted in government pesticide registra-
tion was a taking of those secrets. The federal law in
effect at the time Monsanto submitted the trade informa-
tion was silent on the issue of disclosure. /d. at 1008.
27 The Court qualified this per se rule in Nollen v. California
Coastal Commission, 483 U.S. 825, 831 (1987), finding that a regu-
lation which authorizes a permanent physical occupation of prop-
erty as a valid condition to obtaining a development permit would
not fall within the Loretto per se rule.
45a
Relying upon the highly regulated nature of the pesticide
industry, the Court found that Monsanto did not have a
reasonable investment-backed expectation that their prop-
erty would be protected, and rejected the claim. Id. at
1013.
I. Plaintiff's Property Interest
As noted above, where a plaintiff is able to demonstrate
that a government regulation totally deprives property of
all economic value, a taking will be found unless the pro-
scribed use interests inhere in the landowner’s title. Lucas,
SOS U.S. at 1027; M & J Coal Co. v. United States, 47
F.3d 1148, 1154 (Fed. Cir. 1995). Defendant maintains
that, even assuming plaintiff could show that the govern-
ment limitations here caused such a_ total deprivation,
those limitations inhere in plaintiff's title. In particular,
defendant argues that plaintiff could not derive any eco-
nomically viable use of his property without obtaining
access to navigable waters of the United States. Defendant
concludes that since the federal navigational servitude re-
serves that right to the federal government. all economi-
cally relevant limitations on plaintiff's use of Sugarloaf
Shores inhere in his title, and are therefore not the proper
subject of a takings claim. In the alternative. defendant
asserts that limitations on the development of Sugarloaf
Shores inhere in plaintiff's title because he failed to acquire
a vested right in his development plans under Florida law.
a. The Navigational Servitude
The Commerce Clause, U.S. Const. art. 1, $8. el. 3,
grants the federal government power and duty to regulate
the navigable waters of the United States. This power
has been interpreted as bestowing upon the federal govern-
ment a dominant estate in navigable waters below the
46a
mean high water mark (“MHWM”) and the lands under-
lying them, United States v. Chicago, Milwaukee, St. Paul
& Pac. R.R.. 312 US. 592, 596 (1941); Seranton v.
Wheeler. 179 US. 141, 163 (1900); Confederated Tribes
of Colville Reservation v. United States, 964 F.2d 1102,
1108 (Fed. Cir. 1992), and may be asserted by the gov-
ernment to protect the public interest in navigable waters.
See. e.e., United States v. Ashland Oil and Transp. Co.,
S04 F.2d 1317 (6th Cir. 1974) (interests protected by
servitude include protecting quality of navigable water).
This federal “navigable servitude” inheres in a private
landowner’s title, and subordinates his interests to those of
the federal government. See Lucas, 505 U.S. at 1029;
MW & J Coal, 47 F.3d at 1153; Owen v. United States, 851
F.2d 1404, 1407 (Fed. Cir. 1988). This limitation im-
posed by the servitude has been applied to deny a regula-
tory takings claim where the federal government proscribes
the dredging and filling of submerged lands below the
MHWM. Marks v. United States, 34 Fed. Cl. 387, 403
(1995), appeal docketed, No. 96-5055 (Fed. Cir. 1996) ,*8
28 Although plaintiff ecloims that he did not propose to conduct
activities below the MITWM, his 1990 Corps application clearly in-
dieates that he proposed dredging below the MHWM. This activity
wonld fall within the navigational servitude held by the United
States. and could Likely be prohibited without compensation dne to
that predominant federal interest. Plaintiff attempts to avoid this
conclusion by arguing that dredging to provide boating: access is a
“passive” use which does not fall within the interests protected by
the servitude, relying upon Kaiser Aetna v. United States, 444 U.S.
164 (1979).
In Kaiser, the Supreme Court found that the servitude would
not defeat a takings claim where the government required public
aceess to a private pond made navigable through private invest-
ment. The case tumed upon the fact that the government sought
to provide public arcess to a formerly private area, and the im-
portance of the rigit to exclude others from private property. /d.
at 179. It did not turn upon a determination that public access
47a
and deprives a private landowner of land values derived
from access to navigable waters. U.S. v. Rands, 389 U.S.
121, 123-7 (1967); Owen, 851 F.2d at 1410. Accord-
ingly, defendant contends here that any value Sugarloaf
Shores derives from access to Upper Sugarloaf Sound may
not be attributed to plaintiff for the purposes of establish-
ing takings liability.
Plaintiff responds with the argument that section 111
of the Rivers and Harbors Act abrogates the servitude
and the Rands rule, and requires that such values be
attributed to plaintiff. Section 111 provides:
In all cases where real prov -rty shall be taken by the
United States for the public use in connection with
any improvement of rivers, harbors, canals, or water-
ways of the United States and in all condemnation
proceedings by the United States to acquire lands or
easements for such improvements, the compensation
to be paid for real property taken by the United
States above the normal high water mark of navi-
gable waters of the United States shall be the fair
market value of such real property based upon all
uses to which such real property may reasonably be
put, including its highest and best use, any of which
uses may be dependent upon access to or utilization
of such navigable waters.
33 U.S.C. § 595a (1994).
While section 111 modifics the Rands rule in some
condemnation cases, the provision does not abrogate the
navigational servitude generally, or provide compensation
was a passive use of the navigable waters not within interests pro-
tected by the servitude. The Court acknowledged that the servitude
could be applied to prohibit dredging without raising takings con-
cerns. /d. at 180.
48a
for economic impacts attributable to the regulation of
navigable waters. See United States v. 30.54 Acres of
Land, 90 F.3d 790, 796 (3d Cir. 1996) (dismissing
regulatory taking counterclaim in condemnation case on
ground that prohibition on existing use below the MHWM
falls within navigational servitude). The legislative his-
tory of section 111 provides that it “makes no change in
existing law” concerning the application of the naviga-
tional servitude. H.R. Rep. No. 1665, 91st Cong. 2d
Sess. 31 (1970). Further, even if it were appropriate to
apply section 111 in a regulatory context, the section
would be inapplicable here because the federal limitations
do not totally restrict plaintiff's use of Sugarloaf Shores.
Section 111 provides that in cases of partial takings. no
depreciation in the value of remaining real property shall
be paid the landowner. See 33 U.S.C. § 595a.
Although defendant is correct that the navigational
servitude reserves land values derived from proximity to
navigable waters to the federal government. defendant has
nonetheless failed to demonstrate that the servitude de-
feats plaintiff's takings claim. Defendant relies entirely
upon plaintiff's deposition testimony, and the affidavit of
his real estate agent stating that residential lots lacking
water access would not be marketable. to support its ar-
gument that the servitude defeats this claim. More nar-
ticularly. defendant extrapolates from this testimony that
plaintiff has conceded that lack of water access would
deprive Sugarloaf Shores of all economic value. It cannot
be said that plaintiff's statements relate strictly to values
reserved to the federal government pursuant to the naviga-
tional servitude. Accordingly. taking the facts most favor-
ably for plaintiff. defendant has not shown that all eco-
nomically relevant limitations on plaintiff's use of Sugar-
loaf Shores inhered in his title.
49a
b. Plaintiff's Property Interest under F lorida Law
Defendant argues in the alternative that even if plaintiff
could demonstrate that the federal limitations caused a
total loss of value, his taking claim would fail because he
did not have a property right under Florida law to develop
Sugarloaf Shores. For support, defendant points to the
fact that plaintiff did not secure a vested right under state
law in his development plan for Sugarloaf Shores. In the
alternative, defendant argues that plaintiff had no property
right in development because his property interest in
Sugarloaf Shores was conditioned by state legislation regu-
lating land use and dredge and fill activities.
Under Florida statutory and common law, a developer
may obtain a vested right to pursue a particular develop-
ment plan. A vested right may be acquired where the
developer can show that he has: (1) substantially changed
position, (2) in good faith reliance. (3) upon some act
or omission of the government, such that it would be
highly inequitable to destroy the acquired right. Dade
County v. United Resources, 374 So. 2d 1046, 1050
(D.C.A. 3d Fla. 1979): Fla. Stat. Ann. $ 380.06(20)
(West 1988) (codifying vested rights procedure). Plain-
tiff did not acquire a vested right in his development plans
for Sugarloaf Shores.?9
29 Plaintiff’s vested rights claim was rejected by FLAWAC in
its May 29, 1986 order. Although plaintiff claims he filed a vested
rights application with the county on August &, 1985, the onlv
evidence offered by plaintiff that such an application was ever filed
is his affidavit and a vested rights application that does not bear
evidence that it was even received. In any case, plaintiff does not
produce any evidence that such application was approved, and thus
that a vested right was granted. Plaintiff's implicit claim that he
acquired a vested right by virtue of the zoning in place at the time
of purchase is also without merit. See City of Miami Beach ».
8701 Collins Ave., 77 So. 2d 428, 430 (Fla. 1954).
50a
Contrary to defendant’s contention, however, the pres-
ence or absence of a vested right in a given development
scheme is not determinative of a takings claim. The
failure of plaintiff to have secured such a vested right
simply demonstrates that he has not secured a right to
pursue a particular plan. It does not by itself mean that
plaintiff has no right to pursue development. Similarly,
even if plaintiff were able to demonstrate the existence of
such a vested right under state law, a federal restriction
on that state right would not demonstrate the federal
restriction to be a taking. See, e.g., Corn v. City of Laud-
erdale Lakes, 95 F.3d 1066, 1073 (11th Cir. 1996)
(denial of permission to build project to which developer
holds vested right does not by itself establish takings
liability).
Defendant argues in the alternative that state legislation
regulating land use and dredge and fill activities deprives
plaintiff of any property right in development. Defendant
has not demonstrated, however, that the limitations at
issue here and reflected in this state legislation have their
origin in the background principles of Florida’s nuisance
and property law. See Lucas, 505 U.S. at 1029 (regula-
tions that deprive property of all economic value cannot
be newly legislated without compensation but must orig-
inate in background principles of the state property or
nuisance law).*%°
~
30It should be noted, however. that the Florida Supreme Court
has held that a landowner has “ ‘no absolute and unlimited right
to change the essential natural character of his land so as to use
it for a purpose for which it was unsuited in its natural state and
which [injures] the rights of others.’” Graham v. Estuary Prop-
erties Inc.. 399 So. 2d 1374 (Fla. 1981) (quoting Just v. Marinette
County, 201 N.W.2d 761, 768 (1972)), cert. denied sub nom., Taylor
v. Graham, 454 U.S. 1083 (1981). While Graham establishes a
common law basis for limitations on wetland destruction, the scope
of those limitations under Florida common law are somewhat un-
Sla
II. Lucas Per Se Taking
Where a plaintiff can demonstrate that the restriction
at issue does not inhere in his title and totally deprives
property of all economic value, he is entitled to judgment
under the per se takings rule of Lucas. In support of his
Lucas claim, plaintiff argues that the ESA requires him to
maintain Sugarloaf Shores in its natural state, and that
this requirement deprives the property of all economic
value. In the alternative, plaintiff argues that even if the
development of Sugarloaf Shores pursuant to the FWS
RPAs would not violate the ESA, such development is not
economically viable, and therefore has the same effect as
an outright prohibition on use. Plaintiff has failed to
establish either proposition. The ESA does not require
plaintiff to maintain Sugarloaf Shores in its natural state,
and the FWS restrictions imposed on development pur-
suant to the ESA do not deprive the property of all eco-
nomic value.
a. Legal Requirements of the ESA
Plaintiff's Lucas per se takings claim that the ESA
requires Sugarloaf Shores to be maintained in its natural
State is based upon two erroneous legal conclusions drawn
from the FWS finding that Sugarloaf Shores provides
habitat for the marsh rabbit." and his consultant’s finding
clear. The reference in Lucas to state common law rules of property
and nuisance has provoked new scholarly interest in divining the
scope of those limitations. See generally Fred P. Bosselman, Limi-
tations Inherent in the Title to Wetlands at Common Law, 15 Stan.
Finvtl. L. J. 247 (1996) (describing the significant restrictions on
wetland destruction at English common law).
31 Plaintiff repeatedly refers to the FWS December 1991 bio-
logical oninion as “designating” Sugarloaf Shores as habitat for
the marsh rabbit. This characterization creates the false impres-
sion that Sugarloaf Shores had acquired special legal status under
§2a
that development would result in the take of individual
marsh rabbits. More particularly, plaintiff maintains that
these findings demonstrate that development would violate
the section 9 take prohibition, and cause jeopardy to the
species under section 7. Accordingly, plaintiff concludes,
he must maintain Sugarloaf Shores in its natural state in
order to avoid violating these provisions of the ESA.
Neither legal conclusion is correct. First, the take of
individual rabbits may be permitted under an exemption
to the section 9 take prohibition. Second, the take of
individual rabbits does not require a finding under section
7 that the species continued existence will be jeopardized.™
the ESA. Under the ESA, the FWS is generally required to desig-
nate critical habitat at the same time the species is listed. 16
U.S.C. § 1583(b)(6)(C). “Critical habitat” are those areas that
FWS determines possess the physical or biological features that are
essential to the listed species conservation, and which need special
management or protection to serve that function. 16 U.S.C.
§ 1532(5)(A). Where critical habitat has been designated, agency
consultations must consider not only actions that might affect the
listed species, but also actions that are likely to result in the de-
struction or adverse modification of this designated habitat. 16
U.S C. § 1536(a)(2).
The FWS did not designate critical habitat for either the en-
dangered rabbit or rat. 55 Fed. Reg. at 25,590 (endangered marsh
rabbit). 56 Fed. Reg. at 19,813 (endangered silver rice rat). Ac-
cordingly, plaintiff’s allusion to this designation is devoid of
substance. Sugarloaf Shores was not so designated, and did not
have this special] status.
32 In order to bring a takings claim. before this court, plaintiff
must concede the validity of the agency action that is the subject
of his claim. This jurisdictional requirement stems from the fact
that the “[t]he Tucker Act suit in the Claims Court is not...
available to recover damages for unauthorized acts of government
officials.” Florida Rock Indus., Inc. v. United States, 791 F.2d 893,
898 (Fed. Cir. 1986) (emphasis added), cert. denied, 479 U.S. 1053
(1987); see also Tabb Lakes, Ltd. v. United States, 10 F.3d 796,
802 (Fed. Cir. 1993). Defendant argues that this portion of
plaintiff’s Lucas claim is not within the court’s jurisdiction, see 28
53a
Plaintiff's first legal conclusion that the take of indi-
vidual rabbits would be prohibited under the ESA fails
to recognize the exemptions to that prohibition. Those
exemptions were added to the Act in 1982 to resolve
Precisely the tension between section 7 and section 9 that
plaintiff seizes upon to support his Lucas claim. As Con-
ress explained in the legislative history to those amend-
ments:
Another concern raised by industry was that of re-
solving conflicts between Section 7 and Section 9.
After complying with the rigorous demands of the
Section 7 consultation process, the applicant or Fed-
eral agency receives no assurance that any incidental
and unintentional takings contemplated under a Sec-
tion 7 consultation will not be prosecuted under Sec-
tion 9 which prohibits any taking. There are
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