Opposition Brief — Cris Realms, Inc. v. United States

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No. 00-704 FEB

Sn the Supreme Court of the Gnited States —

CRIS REALMS, INC., ET AL., PETITIONERS

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

BARBARA D. UNDERWOOD

Acting Solicitor General

Counsel of Record

JOHN CRUDEN

Deputy Assistant Attorney

General

DONALD ROSENDORF

JOHN A. BRYSON

JOHN L. SMELTZER

Attorneys

Department of Justice

Washington, DC 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

The United States filed complaints in condemnation

against three parcels of land in Louisiana, for inclusion

in the Jean, Lafitte National Historical Park and Pre-

serve. The questions presented are:

1, Whether the court of appeals correctly applied

the scope-of-the-project rule in determining the proper

market value of the lands for purposes of calculating

just compensation.

2. Whether the court of appeals erred in ruling that

the landowners could not use the present condemnation

action brought by the United States as a vehicle for

reviving a time-barred takings claim against the United

States based on an Army Corps of Engineers wetland

permitting decision made years earlier.

(I)

TABLE OF CONTENTS

Opinions below

Jurisdiction

Statement

TABLE OF AUTHORITIES

- Cases:

Almota Farmers Elevator & Warehouse Co. v.

United States, 409 U.S. 470 (1973)

Bayou Des Familles Dev. Corp. v. United States,

130 F.3d 1034 (Fed. Cir. 1997)

Bayou Des Familles Dev. Corp. v. United States

Corps of Eng’rs, 541 F. Supp. 1025 (E.D. La.

1982)

~ Block v. North Dakota, 461 U.S. 273 (1983) .........

Cristina Inv. Corp. v. United States, 40 Fed. Cl.

571, appeal dismissed, 155 F.3d 570 (Fed. Cir. 1998) ......

Georgia-Pac. Corp. v. United States, 568 F.2d

1316 (Ct. Cl.), cert. denied, 439 U.S. 820 (1978) ...

Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709

(1986)

Irwin v. Department of Veterans Affairs, 498 U.S.

89 (1990)

Kerr v. South Park Comm’rs, 117 U.S. 379 (1886) ..........

Kirby Forest Indus., Inc. v. United States,

467 U.S. 1 (1984)

Narramore v. United States, 960 F 2d 1048 (Fed.

Cir. 1992)

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

Plaut v. Spendthrift Farms, Inc., 514 US. 211

(1995)

Shoemaker v. United States, 147 U.S. 282 (1893)

(IIT)

Cases—Continued: Page

Stephenson v. United States, 33 Fed. Cl. 63

(1994) 22, 23

United States v. Dalm, 494 U.S. 596 (1990) 23

United States v. Dow, 357 U.S. 17 (1958)... 21, 22, 23

United States v. 564.54 Acres of Land, 441 US.

506 (1979) 13

United States v. 422,978 Square Feet of Land,

445 F.2d 1180 (9th Cir. 1971) 25

United States v. Meadow Brook Club, 259 F.2d

41 (2d Cir.), cert. denied, 358 U.S. 921 (1958) .........-.-us00 10, 14

United States v. Miller, 317 U.S. 369 (1949) ............. 13, 14, 16

United States v. Mitchell, 445 U.S. 535 (1980) ...........0000+ 23, 24

United States v. Oppenheimer, 242 U.S. 85 (1916) .......... 21

United States v. Reynolds, 397 U.S. 14 (1970) ........cesecse0e 13, 14

United States v. Shaw, 309 U.S. 495 (1940) 23

United States v. 62.50 Acres of Land, 953 F.2d

886 (5th Cir. 1992) 20

United States v. 320.0 Acres of Land, 605 F.2d 762

(5th Cir. 1979) 13, 14

United States v. United States Fid. & Guar. Co., 309

U.S. 506 (1940) 23

United States v. Virginia Elec. & Power Co.,

365 U.S. 624 (1961) 14

Constitution, statutes and rule:

U.S. Const. Amend. V ' 7,20

Clean Water Act of 1977, 33 U.S.C. 1251 et seg.:

§ 404, 33 U.S.C. 1344 3

§ 404(b), 33 U.S.C. 1344(b) 19

Flood Control Act of 1971, 33 U.S.C. 701 4

Rivers and Harbors Appropriations Act of 1899 § 10,

33 U.S.C. 403 3

Tucker Act:

28 U.S.C. 1491 7,22

28 U.S.C. 2501 : 8

Statutes and rule: Page

SD CEI G. TD crciinssitaitncnanstiasiuniaicnnsstiisianiisiconatinanginninianichoiiidanins

16 U.S.C. 230a(a) ; : 5

OD Eas NE cisarcerscsscctninetnicciii 5

16 U.S.C. 230a(c) ....... me ‘

rs MD saccntitecicinnatsctnasbatitniscnins

Fed. R. Civ. P.:

IN TAI iniheisnhcsicihiestbacihiecdi thiamin tilt aiis 2

I CIID chenitsisinectssiteciinidinnicieinieantientabinnsiueiusiinkibaniniieniididie 22

Miscellaneous:

40 Fed. Reg. (1975):

p. 31,320 sihcscieictebiomiiaaia a cate T cari 19

Te SORES PES ES SE rlaeae ee EEN EL TEES 19

Jn the Supreme Court of the United States

No. 00-704

CRIS REALMS, INC., ET AL., PETITIONERS

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES EN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1-23) is

reported at 213 F.3d 830. The opinion of the district

court (Pet. App. 27-45) is unreported.

JURISDICTION

The judgment of the court of appeals was entered on

May 31, 2000. A petition for rehearing was denied on

July 31, 2000. Pet. App. 46. The petition for a writ of

certiorari was filed on October 30, 2000 (a Monday).

The jurisdiction of this Court is invoked under 28

U.S.C. 1254(1).

(1)

STATEMENT

The United States brought this condemnation action

to acquire three parcels of land in Jefferson Parish,

Louisiana, for an expansion of the Jean Lafitte National

Historical Park (Jean Lafitte Park). The only dispute in

this case concerns the just compensation to be paid for

each parcel. Although petitioners conceded that the

market value of their lands at the time they were

condemned was limited to their use as non-permitted

wetlands, petitioners argued that the lands should be

appraised as ready for development because, years

earlier, the U.S. Army Corps of Engineers had denied

permits that, if granted, would have made development

feasible. The district court agreed. The court of ap-

peals reversed, finding that the district court had mis-

applied established doctrines of valuation.

1. This case began with complaints in condemnation

filed in October and November 1994 against three

parcels of land, including 2.61 acres of land owned by

petitioner Cris Realms, Inc.; 56.32 acres of land owned

by petitioners Ronald J. and Betty Perrin Isaac; and

69.04 acres of land owned by petitioner Cristina Invest-

ment Corporation. The United States has not taken

physical possession of those lands. Rather, the United

States filed complaints under Federal Rule of Civil

Procedure 71A to establish the amount of compensation

that the United States would have to pay to acquire

title. See Kirby Forest Indus., Inc. v. United States,

467 U.S. 1, 4 (1984). The lands are all wetlands lying in

the Barataria Marsh, on the unprotected side of a flood

control levee. Gov’t C.A. Br. 3-4. There is no dispute

that the lands are not suitable for development in their

present condition. |

In nevertheless seeking to have those lands valued as

suitable and ready for development, petitioners asked

the district court to look back to the history of a failed

private development project that began more than 20

years before the complaints in condemnation were filed.

All three parcels subject to condemnation were once

part of a larger parcel (more than 2000 acres in size)

owned by the Bayou Des Familles Development Cor-

poration (BDF). Pet. App. 3. BDF acquired the prop-

erty in August 1972 for a residential development

project. In accordance with its development plan, BDF

subdivided and sold portions of the property to peti-

tioners Mr. & Mrs. Isaac in 1972, to petitioner Cristina

Development Corporation in 1977 and 1978, and to peti-

tioner Cris Realms, Inc., in 1987. Ibid.

As part of the development plan, BDF began con-

struction of a levee to allow the wetlands to be drained

and to protect the property from storm surges. Pet.

App. 3. BDF began that construction—which involved

the discharge of fill material into wetlands and the

obstruction of navigable canals—without obtaining a

permit from the Army Corps of Engineers under Sec-

tion 10 of the Rivers and Harbors Appropriations Act

of 1899, 33 U.S.C. 403, or Section 404 of the Clean

Water Act of 1977, 33 U.S.C. 13844. Gov’t C.A. Br. 8-9;

Pet. App. 3. In October 1973, the Corps advised BDF

to cease work on the levee, pending a determination as

to whether permits were required. BDF refused to halt

construction, insisting that permits were not necessary.

In January 1974, the Corps issued a cease and desist

order. Ultimately, BDF was fined $25,000 and ordered

to obtain permits from the Corps before continuing the

work. Pet. App. 3.

BDF submitted an application in April 1975, and a

draft environmental impact statement (EIS) in June

1975. Pet. App. 3. The draft EIS revealed significant

environmental concerns. Among other things, it noted

that draining the land for development would “result in

the total and complete alteration of the presently pro-

ductive natural marsh and swamp habitats,” would

eliminate habitat for many wildlife species, including a

rare and endangered species (the American Alligator),

and would adversely affect “surrounding wetland pro-

ductivity” by reducing the “normal flow of nutrients

and minerals” to adjacent areas. Gov’t C.A. Br. 10. The

draft EIS also reported that the project would decrease

water quality in surrounding wetlands through the

introduction of “oils, trash, chemical fertilizers, insecti-

cides, and other deleterious substances” in storm-water

runoff. Jd. at 10-11; see Pet. App. 4. In December 1975,

Charles Decker, Chief of the Regulatory Functions

Branch of the New Orleans District of the Corps of

Engineers, wrote a memorandum to his supervisors

stating that “all comments on the * * * application

and draft EIS have been received,” and that “strong

opposition has been expressed by EPA, NMFS [the

National Marine Fisheries Service], USFWS [the

United States Fish and Wildlife Service], the State

Parks and Recreation Commission, and the State Plan-

ning Office.” Gov’t C.A. Br. 10; see Pet. App. 3. Decker

concluded that “in our opinion, there is sufficient

information available now to support a recommendation

for denial without preparing the final EIS.” Gov’t C.A.

Br. 10.

For several reasons, however, the Corps delayed

its decision on BDF’s permit application. A separate

branch of the Corps was studying proposals for the

construction of a larger, hurricane-protection levee,

under the Flood Control Act of 1917, 33 U.S.C. 701, to

protect existing developments on the west bank of

Jefferson Parish. One of the proposals under considera-

tion included construction along the alignment of the

unfinished BDF levee. Also, in August 1972, Congress

had appropriated funds to study the feasibility of

creating the Jean Lafitte Park in the Barataria Marsh.

Uncertainty over the location and boundaries of the

Park caused delays in the Corps’ study of possible

alignments for the hurricane-protection levee. Gov't

C.A. Br. 11-12.

Congress authorized creation of the Jean Lafitte

Park on November 10, 1978. See 16 U.S.C. 230; Pet.

App. 4. The enabling legislation identified a block of

approximately 20,000 acres of Barataria Marsh as the

site for the Park itself and a surrounding “park pro-

tection zone.” Ibid. The legislation authorized the Park

Service to acquire up to 8600 acres of designated land

for the Park. See 16 U.S.C. 230a(a). The legislation

directed the Park Service to protect the remaining

area, the “park protection zone,” by establishing land-

use guidelines to be adopted and enforced by state and

local governments. 16 U.S.C. 230a(b). The purpose of

the guidelines was to preserve and protect (a) fresh

water drainage from the protection zone into the Park,

(b) vegetative cover, (c) the “integrity of ecological and

biological systems,” and (d) water and air quality. 16

U.S.C. 230a(c). The legislation authorized the Park

Service to acquire land in the protection or buffer zone

only for those enumerated purposes and only if state

and local governments failed to adopt protective land-

use guidelines. 16 U.S.C. 230a(e). Approximately 1000

acres of the land in the BDF development project, in-

cluding all three properties subject to condemnation in

this case, fell within the park protection zone. Pet.-

App. 4.

nee en ee ee

The Corps denied the BDF permit application by

letter dated September 21, 1979. In the accompanying

findings of. fact, the Corps of Engineers concluded

that: (1) the project (residential development) was not

“water or wetland dependent”; (2) there were nearby

“nonwetland” alternative sites for such development;

(3) the project would have “major adverse environ-

mental impacts” (including the destruction of 2300 acres

of valuable fish and wildlife habitat); (4) the project

would have “major adverse impacts on Jean Lafitte

National Park” (including the degradation of water

quality in the Park); (5) “approval of the project would

not be in concert with national policies on development

of floodplains and preservation of wetlands”; and (6) the

adverse impacts were sufficiently significant to justify

permit denial without preparation of a final environ-

mental impact statement. Gov’t C.A. Br. 14-15. The

Corps also found that there was significant public op-

position to the project, and that although some local

government agencies, including the Jefferson Parish

Council and the Jefferson Parish Planning Commission,

expressed support, the Louisiana State Planning Office

and the State Parks and Recreation Commission sub-

mitted letters in opposition. Jd. at 14-15; Pet. App. 3-4.

2. On November 2, 1979, BDF filed suit in federal

district court challenging the Corps’ denial of its permit

application. See Bayou Des Familles Dev. Corp. v.

United States Corps of Eng’rs, 541 F. Supp. 1025 (E.D.

La. 1982). The district court sustained the Corps’ deci-

sion. The court concluded that “comments from the

public and from other federal agencies relating to the

env ronmental effects of the proposed work” were “(olf

key concern” to the Corps, and the court explained that,

under applicable regulations, the Corps was required to

consider the “ecological consequences” of the project

and could “properly deny a permit on ecological

grounds.” Jd. at 1038. BDF argued that the permit

denial resulted in an uncompensated taking of its

property in violation of the Fifth Amendment to the

Constitution. The court dismissed that claim for lack of

jurisdiction, because the exclusive remedy for such an

uncompensated taking is an action for compensation in

the Court of Claims (now the Court of Federal Claims).

Id. at 1042 (citing the Tucker Act, 28 U.S.C. 1491).

Following dismissal of that suit, BDF did not immedi-

ately file suit in the Court of Claims. Instead, BDF

turned to Jefferson Parish. Under the federal Flood

Control Act, municipalities are responsible for obtain-

ing rights-of-way for federally funded flood control

projects. BDF offered to donate land to Jefferson

Parish for the federal hurricane-protection levee, if the

Parish would pursue construction along BDF’s original

levee alignment (designated “alignment D” in previous

studies). Following the public review process, the

Corps denied the Parish’s permit application for con-

struction along alignment D. However, it offered the

Parish a permit for construction along “modified align-

ment E,” an alignment that followed the wetlands/

uplands interface and that—unlike alignment D—

minimized adverse impacts on the wetlands. Gov't C.A.

Br. 20. The Corps found, among other things, that the

wetlands of the Barataria estuary were “very impor-

tant to fisheries production” and “one of the best such

areas in the world.” Ibid. Although the Corps noted

impacts on the Jean Lafitte Park, it did not mention the

Park in its official findings or conclusion. Jd: at 20-21.

The Parish Council did not seek review of the Corps’

decision, and instead decided to proceed with construc-

tion along alignment E. Jd. at 21. The Parish then con-

demned some of the land owned by petitioners to build

aaa iT

the levee. After considerable litigation in state court,

petitioners were awarded compensation based on the

value of the land as undevelopable wetlands. Pet. App.

6. The three parcels at issue in this case lie outside of

the constructed levee, and were not subject to the state

condemnation action.

- BDF then, in 1991, filed a takings case in the Court of

Federal Claims, joined by the Isaacs petitioners. See

Bayou Des Familles Dev. Corp. v. United States, 130

F.3d 1034 (Fed. Cir. 1997). The court dismissed the suit

as time-barred under the applicable six-year statute of

limitations (28 U.S.C. 2501), and the court of appeals

affirmed. 130 F.3d at 1037. BDF and the Isaacs argued

that the alleged taking was not final until 1986, when

the Corps granted Jefferson Parish a permit to build a

federal hurricane-protection levee on a location that

left their land unprotected. Jd. at 1039. The Federal

Circuit disagreed, holding that the takings claim

ripened in 1979, when the Corps denied BDF’s permit

application. Jd. at 1040. Petitioners Cristina Invest-

ment and Cris Realms filed an even later takings case,

with the same result. Cristina Inv. Corp. v. United

States, 40 Fed. Cl. 571, 579-580, appeal dismissed, 155

F.3d 570 (Fed. Cir. 1998) (Table).

Meanwhile, pursuant to the directive in Section

230a(b) of the enabling legislation for the Jean Lafitte

Park, the National Park Service developed proposed

land-use guidelines for property in the park protection

zone and submitted the guidelines to Jefferson Parish.

Gov’t C.A. Br. 22. The Parish rejected the proposal in

1984, primarily because the Park Service would not

indemnify the Parish for any liability arising out of the

guidelines’ enforcement. After negotiations failed to

produce an agreement, the Park Service initiated plans

in 1986 to acquire land in the protection zone, under the

authority of 16 U.S.C. 230a(c), which authorizes acquisi-

tion upon the failure of local government to promulgate

land-use guidelines. See Gov't C.A. Br. 22-23.

3. In 1994, the United States filed complaints in con-

demnation to acquire the properties at issue in this

case. At trial, the primary disagreement between the

United States and petitioners was over the methodol-

ogy for appraising the properties. The government’s

_ appraiser looked to sales of comparable wetlands prop-

erties that had not been (and were unlikely to be)

permitted for residential development. He testified

that the subject properties were worth approximately

$300 per acre. Gov’t C.A. Br. 23; Pet. App. 6. Peti-

tioners’ appraiser, in contrast, looked to the value of

non-wetlands properties that were ready for develop-

ment. He thus based his valuation on the market price

that the subject properties would have had if: (1) the

Corps had granted BDF’s permit application; (2) BDF

had completed its levee and other infrastructure im-

provements; and (3) the federal hurricane-protection

levee had been built over the BDF levee. Gov't C.A.

Br. 23-24. Petitioners’ appraiser opined that the sub-

ject properties were worth approximately $16,000 per

acre. Pet. App. 7.

The district court accepted the landowners’ appraisal,

Pet. App. 42, and awarded compensation accordingly,

id. at 24-25. The court found that establishment of the

Park had indirectly affected the value of the land

through the regulatory actions of the Corps of En-

gineers. In particular, the court found that the Park

was the “primary motivating factor” in the Corps’

denial of permits for the BDF levee alignment, and that

there was a “reasonable possibility” that petitioners

could have obtained necessary development permits

“but for” the Park. Id. at 42. Based on those findings,

the court held that petitioners were entitled to have

their land valued as though the highest and best use

were for “commercial and residential” development.

Ibid.

4, The court of appeals reversed. Pet. App. 1-23.

The court first considered the application to this case of

the “scope of the project” rule, which provides that if

the land that is subject to condemnation was within the

scope of the project for which it is being condemned at

the time the government became committed to the

project, any increase or decrease in the value of the

condemned land attributable to the project should not

be taken into account in valuing the land. See id. at 9.

In previous cases, the court of appeals explained, it had

considered three factors when determining whether

later acquisitions fell within the scope of the original

project: (1) whether enlargement of the project was

foreseeable; (2) the length of time between initiation of

the project and its enlargement; and (3) the nature of

governmental representations about the final borders

of the project. Jd. at 10. The court of appeals further

explained that, in United States v. Meadow Brook Club,

259 F.2d 41, cert. denied, 358 U.S. 921 (1958), the

Second Circuit had “articulated a further consideration

that is instructive” in this context, which is whether the

government’s motive for pre-acquisition regulatory

efforts was “to depress the market value of the prop-

erty which it then intended to condemn.” Pet. App. 11.

Applying those factors to this case, the court of

appeals found that the scope-of-the-project rule did not

justify valuing petitioners’ land as if it were ready for

development. The pertinent project, the court ex-

plained, was the acquisition of land for Jean Lafitte

Park. Although the Park was created in 1978, there

was no evidence that the government contemplated

buying—or that Congress had authorized the Park

Service to buy—petitioners’ land until much later. Pet.

App. 12. In fact, when the Corps denied BDF’s permit

application in 1979, “there were no concrete plans to

purchase any land in the park protection zone. Those

plans to acquire lands did not begin until 1986, and

the Government did not file condemnation complaints

against [petitioners’] property until 1994.” Ibid. Thus,

the court of appeals concluded:

[TJhere was a sixteen-year lapse between the initia-

tion of the project [Jean Lafitte Park] and the

acquisition of [petitioners’] property; the Govern-

ment action that reduced the value of [petitioners’]

property (the denial of the permit application) pre-

dated any concrete plans to purchase that property;

and, as in Meadow Brook, there is no evidence

that the Government’s motive in denying the permit

application was to drive down the value of [peti-

tioners’] property. Rather, the record clearly indi-

cates that the Corps’ primary purpose in denying

the permit was to protect the Park’s ecosystem. On

these facts, compensation should be based on the

value of the land at the time of the condemnation,

regardless of prior Government actions that ren-

dered the land less valuable than it might have been

in the absence of prior Government activities.

Id. at 13 (footnote omitted).

The court of appeals also rejected an additional

theory presented by petitioners. Although the United

States has not yet sought or taken physical possession

of petitioners’ properties, petitioners argued: (a) that

the filing of this action vested the district court with

jurisdiction to determine the date of taking, (b) that the

district court could invoke that authority to find that

the taking in this case actually occurred in 1979, when

the Corps denied the BDF permit application, and

from that date. The court of appeals rejected that

theory. Pet. App. 13-21. While recognizing the possi-

bility that a district court might in some situations have

jurisdiction in a direct condemnation action to award

compensation based on a taking date prior to the date

of the declared taking, the court of appeals observed

that petitioners’ argument for allowing the court in the

condemnation action to go back in time was subject to

no “temporal limiting principle.” Jd. at 14. Without

deciding what the result might be in other circum-

stances, the court of appeals held that where, as here,

an inverse condemnation claim based on an alleged

prior regulatory taking has been brought in a court of

competent jurisdiction and dismissed as time-barred,

that dismissal is res judicata and the claim cannot be

“resuscitate[d]” in a later direct condemnation action.

Id. at 15-20.

ARGUMENT

The court of appeals correctly concluded that peti-

tioners are entitled to compensation based on the

current value of their land, rather than on the hypo-

thetical value the land would have had if it had not been

subject to the legitimate permit denial more than 20

years ago that petitioners had unsuccessfully chal-

lenged in two different lawsuits. The court of appeals’

fact-specific decision, moreover, does not conflict with

any decision of this Court or of any other court of

appeals. Accordingly, further review is not warranted.

1. Under established principles of eminent domain,

the “just compensation” for land acquired by condemna-

tion is generally the “fair market value of the property

United States v. 564.54 Acres of Land, 441 U.S. 506,

511-513 (1979)). In other words, the government is

required to pay the owner “what a willing buyer would

pay in cash toa willing seller at the time of the taking.”

Ibid. (quoting United States v. Miller, 317 U.S. 369, 374

(1943) (citation and internal quotation marks omitted)).

Because markets generally value land in terms of both

current and potential use, courts ordinarily must deter-

mine fair market value in light of the “highest and most

profitable use,” or most economically profitable use,

that the land will support. Olson v. United States, 292

U.S. 246, 255 (1934). In so doing, however, courts must

take into account any “inherent physical characteris-

tics” limiting use of the land, and any “regulatory

restrictions applicable to the property and the proposed

use.” United States v. 320.0 Acres of Land, 605 F.2d

762, 818 (5th Cir. 1979), A court may not, for example,

consider a use prohibited by zoning rules or other regu-

lations, unless the landowner can establish a “reason-

able possibility” that the prohibition will be lifted and

the use allowed. Jd. at 819. Further, courts must also

consider value attributable to neighboring land uses,

including uses related to public improvements. As a

general rule, such influences are to be considered when

the government condemns land, just as they would be

considered by willing buyers and sellers in a market

transaction. See United States v. Reynolds, 397 U.S.

14, 16 (1970); see also Miller, 317 U.S. at 376.

This Court, however, has recognized that the effect

of government activities in some instances should not

be considered when determining market value. For

example, if a parcel’s fair market value on the date of

acquisition has been increased by the acquisition itself

or in anticipation of the acquisition, the evidence of such

value must be excluded. See Miller, 317 U.S. at 377.

That rule originated in two earlier opinions, Shoemaker

v. United States, 147 U.S. 282 (1893), and Kerr v.

South Park Commissioners, 117 U.S. 379 (1886), both

of which involved condemnation of land for parks. In

those cases, the Court upheld instructions directing the

finder of fact to disregard the value of land sold in the

immediate vicinity of the proposed parks after the

projects were announced. See Shoemaker, 147 U.S. at

303-305; Kerr, 117 U.S. at 385-387. The Court reasoned

that those sales did not reflect fair market value, but

instead included “conjectural or speculative values,

based upon the anticipated effect of the proceedings

under which the condemnation is had.” See Shoemaker,

147 U.S. at 305 (citing Kerr, 117 U.S. at 380). Likewise,

this Court has more recently held that a reduction in

property value caused by the “threat” of condemnation

must not be considered in setting just compensation.

See United States v. Virginia Elec. & Power Co., 365

U.S. 624, 636 (1961); see also Almota Farmers Elevator

& Warehouse Co. v. United States, 409 U.S. 470, 477

(1973).

The principle just described has come to be known as

the “scope of the project” rule. See Miller, 317 U.S. at

377; 320.0 Acres, 605 F.2d at 785. Under that rule, the

measure of just compensation in a condemnation pro-

ceeding must not be “reduced or increased” because of

an “alteration in market value” attributable to the

“public project that makes the condemnation neces-

sary.” Reynolds, 397 U.S. at 16. In United States v.

Meadow Brook Club, 259 F.2d 41, cert. denied, 358 U.S.

921 (1958), the Second Circuit considered the appli-

cation of that principle where the pre-condemnation

action that affected the value of the land was not earlier

acquisition of property for the project but rather land-

use regulation. Meadow Brook involved action by the

Air Force to condemn land to enlarge an airfield. Jd. at

43. Before condemnation, a representative of the Air

Force had appeared before a local zoning board to

oppose the landowner’s request to change the prop-

erty’s zoning from residential to industrial. Jd. at 44.

The issue before the Second Circuit was whether the

district court could consider that opposition when

determining the “probability of rezoning (as a factor

entering into the ultimate calculation of value).” Jd. at

45. The Second Circuit held that the Air Force’s

opposition could be considered, in light of evidence that

the Air Force’s position was “based in large part on the

fear of flight hazards,” a concern independent of any

interest in acquiring the land. The court stated that if

the Air Force had acted in “bad faith” —.e., if its “sole

motive” in opposing the zoning change had been to

“depress the market value of the property which it

then intended to condemn”—then the impact of its

opposition on land value would have been excluded. Jd.

at 45-46.

a. Petitioners first argue that the court of appeals

erred in making “bad faith” an indispensable element

that must be shown before the scope-of-the-project rule

can apply. Pet. 14-18. The difficulty with that con-

tention is that the court of appeals did not hold that bad

faith is an indispensable element or that a party seeking

application of the scope-of-the-project rule always must

show bad faith. To the contrary, in this case, the

court of appeals recited three other factors previously

identified as relevant by the Fifth Circuit, Pet. App. 10,

and then identified what petitioners label “bad faith” as

“a further consideration that is instructive” in cases,

like this one, in which land-use regulation (here, the

Corps’ permit denial) allegedly affected land values

before the government moved to acquire it, id. at 11.

Moreover, i in concluding that the Corps’ permit denial

in 1979 did not bring the condemnation actions

-commenced in 1994 within the scope of the original

project, the court of appeals considered all of the factors

it had previously identified as relevant, including

the foreseeability of the later condemnation when the

government first regulated the land in a manner that

reduced its value, the length of time between the regu-

lation and the later condemnation, and governmental

representations regarding the scope of the project. See

id. at 12-13. The court merely concluded that, under

the circumstances of this case, in which consideration of

those other factors did not bring this condemnation

action within the scope-of-the-project rule, that rule

would not apply unless the record showed “that when

the Corps denied BDF’s permit application in 1979, it

anticipated that the denial would drive down the price

of [petitioners’] property and that this would facilitate

the * * * eventual acquisition of the land.” Jd. at 12.

That holding is fully consistent with this Court’s

decisions. As we have explained, the Court developed

the scope-of-the-project rule in a case involving direct

effects on market value caused by a series of condem-

nations of adjacent lands. See Miller, 317 U.S. at 377.

The Court held that if the later-acquired lands were

part of the initial commitment to acquire lands for the

project, any increase in value in the interim could be

attributed to “speculating * * * due to the Govern-

ment’s activities.” Jbid. In contrast, if the lands were

“merely adjacent lands” that the government later de-

cided to acquire as part of a subsequent commitment to

enlarge the original improvement, any value added in

the interim by virtue of the adjacent lands’ proximity to

the existing improvement would be an element of

market value for which the landowner was entitled to

compensation. bid.

Similarly, under Meadow Brook and the Fifth Cir-

cuit’s decision here, if the government previously in-

voked a regulatory process as part of its acquisition

process (in order to depress land values to facilitate

acquisition), the effects of those actions on land values

are to be excluded from the determination of just

compensation. 259 F.2d at 45. On the other hand, if the

government invoked a regulatory process to further

legitimate government interests independent of the

later acquisition, the regulatory actions are properly

considered part of the existing landscape against which

fair market value is to be determined. Jd. at 46. Here,

as in Meadow Brook, the court found that the prior

regulation was undertaken for reasons independent of

the land acquisition and that the effect of that valid

prior regulation on the value of the land therefore

should be taken into account in determining just

compensation in the condemnation action. That fact-

bound application of the general scope-of-the-project

principle of Miller to the circumstances of this case

presents no issue warranting review by this Court.

b. Alternatively, petitioners argue that the court of

appeals engaged in improper de novo fact-finding in

conflict with Icicle Seafoods, Inc. v. Worthington, 475

U.S. 709 (1986), by declining to remand the “bad faith”

issue to the district court. Pet. 18-21. But petitioners’

brief on the merits in the court of appeals never asked

for a remand, and the claim of error they now assert is

wholly fact-bound. The court of appeals merely deter-

mined that there was insufficient evidence to show that

the denial of BDF’s permit application was undertaken

for the purpose of depressing land values to facilitate

acquisition. Especially in light of the presumption of

regularity that accompanies agency action—and the

fact that petitioners had already challenged the

agency’s decision under the Administrative Procedure

Act and lost—the court of appeals’ decision was correct

and presents no issue warranting review by this Court.’

The Corps of Engineers denied BDF’s permit appli-

cation upon written findings of fact supported by

an administrative record. In its findings, the Corps

determined that completion of the BDF levee would

result in the destruction of a large area of important

wetlands, thereby causing major adverse environ-

mental impacts that could not be justified, given the

availability of alternative sites for development. See

p. 6, supra. The Corps also determined that the BDF

levee would have adverse impacts on Jean Lafitte Park,

1 Petitioners assert (Pet. 6) that the Park Service had an

ulterior motive for the position it took before the Corps of Engi-

neers. The Park Service’s memorandum, however, does not say

what petitioners claim it says. It merely notes that some land-

owners might be demanding the right to develop their lands in

order to force the government to exercise its power of eminent

domain, and that the government should not allow its hand to be so

forced. Gov’t C.A. Br. 47-48. Far from evidencing a desire to

acquire the land, the memorandum thus exhibits a desire to avoid _

that result. Moreover, the Park Service’s comments to the Corps

do not even hint at a secret plan or desire to acquire the lands later

on, and nothing in the record suggests that the Corps’ decision to

deny the permit application was influenced by anything but

legitimate regulatory concerns. Indeed, when petitioners chal-

lenged the Corps’ permit denial in district court under the APA,

the district court held that the Corps had properly analyzed

the environmental concerns and correctly denied the permit on

ecological grounds. See Bayou Des Familles Dev. Corp., 541

F. Supp. at 1038. Petitioners cannot now collaterally attack that

determination in the context of a new action brought decades later.

because the draining and polluting of wetlands outside

the Park would damage water quality and water flows

into the Park. Ibid. Whether the Corps would have

denied the permit for ecological reasons, absent the

concern for protecting the Park, was disputed at trial,

as petitioners point out.? But that is not the relevant

question in this context. The relevant question is

whether the permit was denied for the purpose of

devaluing the lands to facilitate their acquisition, 1.¢.,

whether, but for plans to acquire the lands later on, the

permits would have been granted. In this case, the

need to preserve wetlands in the area of the BDF

development project, and the need to protect water

flows into Jean Lafitte Park, were both legitimate

grounds for denying BDF’s permit application, and

both of those reasons were independent of whether the

government might later acquire the land being

regulated. Petitioner never proved nor offered to

prove at trial in this case, or in their prior APA action,

that the Corps’ statement of reasons was a pretext for

devaluing the land so as to facilitate its later acquisi-

tion. See Pet. App. 13 n. 1.3

2 The district court found that the Park was the “primary moti-

vating factor” in the Corps’ denial of the BDF permit. Pet. App.

42. On appeal, the United States argued that that finding was

clearly erroneous, in light of the regulations governing permit

applications under Section 404(b) of the Clean Water Act of 1977

(33 U.S.C. 1344(b)), which emphasized wetlands impacts and re-

quired BDF to prove that there was “no practicable” alternative

site for development, other than the wetlands in question. See

Gov't C.A. Br. 51-57 (addressing 40 Fed. Reg. 31,320 (1975) (Corps’

regulations), and 40 Fed. Reg. at 41,292 (EPA regulations)). The

court of appeals did not reach that question. _

® As noted by the court of appeals (Pet. App. 13 n.1), petitioners

had every incentive to present such evidence at trial. Although

the precise question in Meadow Brook was not presented to the

For the foregoing reasons, this case is not at all like

Icicle Seafoods. That case involved the standard of

review applicable to trial court decisions under the Fair

Labor Standards Act of 1988. 475 U.S. at 710-712.

Although some courts of appeals had read this Court’s

decisions to allow de novo appellate review of certain

factual questions, the Court held that de novo review

was not appropriate. This case, by contrast, does not

involve a question of de novo review of factual issues.

The court of appeals simply determined that the record

did not contain sufficient evidence to support a judg-

ment for one of the parties. That is the sort of decision

that courts of appeals regularly and properly make.

2. Finally, petitioners argue (Pet. 21-27) that the

court of appeals erred in rejecting their attempt to

resuscitate their time-barred taking claims. As noted

above (see p. 8, supra), petitioners previously filed suits

under the Tucker Act in which they asserted that the

1979 permit denial resulted in a taking of their property

for which compensation was due under the Fifth

Amendment. The Federal Circuit and the Court of

Federal Claims held that those suits were time-barred.

Bayou Des Familles Dev. Corp. v. United States, 130

F.3d 1034 (1997); Cristina Inv. Corp. v. United States,

40 Fed. Cl. 571 (1998). Because the judgments in those

actions operate as adjudications on the merits, see

district court in this case, petitioners did present evidence and

argument regarding the motives of the Corps and the Park

Service. Petitioners have failed to identify any material deficiency

in the factual record that could be corrected on remand. Further,

contrary to petitioners’ assertion (Pet. 20-21), it was not the

United States’ obligation to identify and advance a theory sup-

porting petitioners’ claim of highest and best use. That burden

rested with them. See United States v. 62.50 Acres of Land, 953

F.2d 886, 890 (5th Cir. 1992).

Plaut v. Spendthrift Farms, Inc., 514 U.S. 211, 228

(1995); United States v. Oppenheimer, 242 U.S. 85, 87-

88 (1916), petitioners are now foreclosed from seeking

compensation for the 1979 permit denials in later

lawsuits, including this one. Thus, quite aside from the

limitations imposed by the scope-of-the-project rule

discussed above, the doctrine of res judicata now limits

petitioners to seeking compensation only for those

events that took place after they filed their time-barred

taking claims.

Petitioners argue that res judicata does not apply

here. In particular, they argue that this Court’s de-

cision in United States v. Dow, 357 U.S. 17 (1958),

stands for the proposition that district courts always

have jurisdiction in direct condemnation actions to

award compensation for prior takings, notwithstanding

otherwise applicable jurisdictional limits, statutes of

limitations, or prior litigation involving an inverse con-

demnation claim. Pet. 21-27. Dow, however, does not

support that contention. In Dow, the United States

filed a complaint in condemnation for an easement, took

possession of the easement under a court order, and

then filed a formal declaration of taking for the

easement. 357 U.S. at 18-19. Between the date on

which the United States took possession and the date

on which it filed the declaration of taking, the under-

lying tract was conveyed. Id. at 19. Because claims

- against the United States cannot be assigned, this

Court had to determine on which of the two dates the

taking occurred, in order to determine which private

party (the seller or purchaser) was entitled to com-

pensation. Jd. at 20. The Court held that the taking

occurred when the United States entered into posses-

sion under the court order. Jd. at 22-27. That ruling

recognized that when the United States files a com-

plaint in condemnation, the district court has authority

to grant possession on the complaint and to order

compensation for the possession, even though a formal

declaration of taking has yet to be filed. See also Fed.

R. Civ. P. 71A(i)(3) (authorizing district court to award

compensation for interests taken by United States after

filing complaint).

Dow did not address the effect that an earlier

judgment has in later litigation. And it certainly does

not hold that an earlier judgment that a claim for just

compensation based on certain events is time-barred

loses its preclusive effect in later litigation over the

amount of compensation due for a subsequent taking.

The two trial court rulings relying on Dow cited by

petitioners—Georgia-Pacific Corp. v. United States,

568 F.2d 1316 (Ct. Cl.), cert. denied, 439 U.S. 820

(1978), and Stephenson v. United States, 33 Fed. Cl. 63

(1994)—are inapposite for the same reason.‘

4 Georgia-Pacific involved parallel condemnation actions: an

inverse condemnation action filed in the Court of Claims and a

later direct condemnation action filed by the United States in dis-

trict court. See 568 F.2d at 1318. Under the Tucker Act, the Court

of Claims had exclusive jurisdiction over the inverse condemnation

claim. See 28 U.S.C. 1491. Nevertheless, for reasons of judicial

economy, the Court of Claims declined to entertain the claim, in

deference to the later-filed proceedings in district court. See

Georgia-Pac., 568 F.2d at 1319. The Court of Claims reasoned that

the district court could resolve all compensation issues—.e., those

related to both the direct condemnation and the alleged inverse

condemnation—because, under Dow, the district court had

jurisdiction to determine the date of taking and award com-

pensation from that date. Jd. at 1322. In Stephenson, the Court of

Federal Claims followed Georgia-Pacific on similar facts. See 33

Fed. Cl. at 63.

Even if those two trial court decisions were correct (and we do

. not believe they were), neither addressed the preclusive effect of a

Finally, petitioners assert (Pet. 24-27) that res

judicata does not apply because the previous decisions

in the Tucker Act suits were not “on the merits.”

Although judgments on statute-of-limitations grounds

are generally considered to be on the merits for res

judicata purposes, petitioners contend that that rule

does not apply to judgments applying the Tucker Act’s

statute of limitations, because in that setting the

statute of limitations restricts the scope of the waiver

of sovereign immunity and thus is jurisdictional. Pet.

24, That contention is without merit. It is true that,

when conditions are placed on a waiver of sovereign

immunity, those conditions necessarily “define [a]

judgment regarding an alleged taking on later litigation regarding

a later taking. Moreover, in our view, those decisions mistakenly

relied on Dow for the proposition that a district court may exercise

jurisdiction over an inverse condemnation claim that is within the

exclusive jurisdiction of the Court of Federal Claims, if those

claims are alleged in response to a direct condemnation action

instituted by the United States. Dow did not address that juris-

dictional issue. In Dow, the “prior” taking was not an alleged in-

verse condemnation prior to the direct condemnation, but rather a

physical taking that occurred under court order in the direct

condemnation action itself. See 357 U.S. at 22-27. That distinction

is fundamental. As sovereign, the United States is immune from

suit, except as it consents to be sued. United States v. Dalm, 494

U.S. 596, 608 (1990); United States v. Mitchell, 445 U.S. 535, 538

(1980). Only Congress can waive the United States’ sovereign

immunity, Block v. North Dakota, 461 U.S. 273 (1983), and such

waivers “cannot be implied but must be unequivocally expressed.”

Irwin v. Department of Veterans Affairs, 498 U.S. 89, 95 (1990).

Consequently, the United States does not, simply by filing its own

action, waive sovereign immunity to a counterclaim that is subject

to the exclusive jurisdiction of another court. See United States v.

Shaw, 309 U.S. 495 (1940); United States v. United States Fid. &

Guar. Co., 309 U.S. 506, 512-515 (1940); Narramore v. United

States, 960 F.2d 1048, 1050 (Fed. Cir. 1992).

court’s jurisdiction to entertain the suit,” and thus are

in that important sense “jurisdictional.” United States

v. Mitchell, 445 U.S. 585, 538 (1980). But it does

not follow that a judgment on statute-of-limitations

grounds in a Tucker Act suit does not also have the

effect of judgments on such grounds generally, insofar

as the doctrine of res judicata is concerned. Indeed, it

would be an odd result if the special jurisdictional

nature of statutes of limitation in suits against the

United States, which affords the government added

protection not available to private parties against the

assertion of untimely claims, had the effect of depriving

the United States of even the usual preclusive effect of

a judgment on statute-of-limitations grounds.

- Petitioners also claim that the Tucker Act statute of

limitations is inapplicable to their request for compen-

sation based on the alleged 1979 regulatory taking, be-

cause that request is not in the nature of a counter-

claim, but simply part of the compensation due for the

proposed acquisition of title at issue in the present case.

Under that theory, however, petitioners’ regulatory

takings claim could never be time-barred, and could

always spring back to life if made in response to a direct

condemnation action. As the court of appeals observed,

that notion is at odds with this Court’s holdings that

waivers of sovereign immunity must be narrowly con-

strued. Pet. App. 16. Further, it is at odds with exist-

ing precedent that holds that a direct condemnation

action filed by the United States does not revive a

party’s right to compensation for an inverse condem-

nation that was lost under the statute of limitations.

See United States v. 422,978 Square Feet of Land, 445

F.2d 1180, 1188 (9th Cir. 1971). The court of appeals’

refusal to adopt petitioners’ novel legal theory there-

fore does not warrant review by this Court.

5 Petitioners’ attempts to distinguish 422,978 Square Feet (Pet.

23-24) are unpersuasive. In that case, the United States filed

a complaint in condemnation against submerged lands in San

Francisco Bay. The United States had taken physical possession

of those lands years earlier. 445 F.2d at 1181-1183. The United

States urged two distinct reasons why no compensation was owed

to the State of California: (1) the land was subject to a navigational

servitude; and (2) the State had failed to file a timely inverse con-

demnation action under the Tucker Act. Jd. at 1184-1188. Con-

trary to petitioners’ suggestion (Pet. 23- 24), the two issues were

not interdependent. On the latter issue, the court of appeals ruled

that the United States’ complaint in condemnation was not itself a

taking, but simply a method of adjudicating rights to compen-

sation. 445 U.S. at 1188. Because the property in question had

already been taken, and because the State had failed to file a

timely action seeking compensation for that taking under the

Tucker Act, the State’s right to compensation was lost. The court

of appeals held that the United States did not lose the ability to

raise the statute of limitations against the inverse condemnation

claim simply because it had filed a direct condemnation action.

Ibid. It follows a fortiori that petitioners’ regulatory takings claim

is barred, because here there is a prior judgment holding that the

inverse condemnation action is time-barred.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.