Free Post Trial Brief - District Court of Federal Claims - federal

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 1 of 54

IN THE UNITED STATES COURT OF FEDERAL CLAIMS ROBERT BRACE, ) ) Plaintiff, ) ) v. ) ) THE UNITED STATES, ) ) Defendant. ) _________________________________________)

Case No. 98-897 L Hon. Francis M. Allegra

DEFENDANT'S OPENING POST-TRIAL MEMORANDUM

KELLY A. JOHNSON Acting Assistant Attorney General Environment & Natural Resources Division SUSAN V. COOK (FLORENTINE), Sr. Atty SYDNEY F. COOK, Trial Attorney Natural Resources Section Environment & Natural Resource Division United States Department of Justice Post Office Box 663 Washington, D.C. 20044-0663 202-305-0470; FAX: 202-514-8164 Email: [email protected] Attorneys for Defendant April 21, 2005.

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 2 of 54

TABLE OF CONTENTS INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FACTUAL BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 I. PLAINTIFF'S SUIT FOR A TAKING BASED ON THE APPLICATION OF CLEAN WATER ACT RESTRICTIONS TO HIS PROPERTY IS NOT TIMELY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 PLAINTIFF HAS NOT ESTABLISHED A PHYSICAL TAKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 A. B. The Consent Decree Regulates Use and Does Not Constitute A Physical Occupation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Lewis Steckler's Entry to Observe Plaintiff's Compliance with the Restoration Plan was a Transitory Presence That Does Not Rise to the Level of a Physical Taking . . . . . . . . . . . . . . 10 The Reservation of a Right Of Entry To Monitor Compliance With The Consent Decree Did Not Constitute A Physical Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

II.

C.

III.

THE RELEVANT PARCEL IS THE 134 ACRES CONVEYED BY A SINGLE DEED AND USED AS PART OF A COMMON PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 PLAINTIFF CANNOT ESTABLISH A CATEGORICAL TAKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 A. B. Compared Against the 134-Acre Relevant Parcel, Plaintiff Cannot Establish a Categorical Taking . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Even If There Relevant Parcel is Considered to be only the 65 Acre Murphy Farm Tract, There Has Been No Categorical Taking Because there Exists Other Economic Uses . . . . . . . . . . . . . . . . 16

IV.

V.

PLAINTIFF CANNOT ESTABLISH A REGULATORY TAKING . . . . . . . . 18

i

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 3 of 54

A.

Plaintiff Cannot Establish That He Possessed Reasonable Expectations That He Could Drain the Murphy Farm Tract Without Complying with the Clean Water Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 1. Plaintiff Cannot Establish That He Had Reasonable Investment-Backed Expectations In Draining the Wetlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 It Is That The Enactment of The Clean Water Act, And Not Subsequent Agency Regulations, Which Informs A Plaintiff's Reasonable Investment-Backed Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 The Wetland Character of the Property Was Clear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Agricultural Assistance Provided by Government Agencies Cannot, As A Matter of Law, Create Reasonable Investment-Backed Expectations That Protected Wetlands Could Be Drained . . . . . . . . . . . . . . . . . . . . 25

2.

3. 4.

B. C.

The Character Of The Government Action Weighs In Favor Of The United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Weighing The Economic Impact Of The Regulatory Restriction On The Plaintiff Also Compels A Finding That There Has Been No Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 1. In Order to Establish a Taking, a Plaintiff Must Show More Than Just a Loss of Some Value in the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 The Value Lost Must Be Measured In Reference To Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Here, Defendant's Evidence Establish There Was Insufficient Economic Impact to Establish a Taking . . . . . . . . . 32 Plaintiff's Own Evidence Established that the Murphy Farm Tract Retained Significant Value in Its "After" Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Plaintiff's Determination of Highest and Best Use Was Not Supported by Evidence That Such a Use ii

2. 3. 4.

5.

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 4 of 54

was Legally Permissible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 VI. INTEREST ON ANY JUST COMPENSATION AWARD SHOULD BE CALCULATED AT THE RATE PROVIDED IN THE DECLARATION OF TAKING ACT . . . . . . . . . . . . . . . . . . . . . . . . . . 39

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

iii

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 5 of 54

TABLE OF AUTHORITIES

Appolo Fuels, Inc. v. United States, 381 F.3d 1338 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 14, 24 Avenal v. United States, 100 F.3d 933 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Bass Enterprises Production Co. v. United States, 381 F.3d 1360 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28, 29 Board of County Sup'rs of Prince William County, Va. v. United States, 116 F.3d 454 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Boise Cascade v. United States, 296 F.3d 1339 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 10, 11 Brace v. United States, 48 Fed. Cl. 272 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Catawba Indian Tribe v. United States, 982 F.2d 1564 (Fed. Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Century Wrecker Corp. v. E.R. Buske Mfg. Co., 913 F. Supp. 1256 (N.D. Iowa 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Ciampitti v. United States, 22 Cl. Ct. 310 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 15, 20 City National Bank of Miami v. United States, 33 Fed. Cl. 224 (1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 City of Oakland v. Oakland Raiders, 646 P.2d 835 (Cal. 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Cloverport Sand & Gravel Co., Inc. v. United States, 6 Cl. Ct. 178 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Concrete Pipe & Prods. of California, Inc. v. Construction Laborers Pension Trust for So. Calif., 508 U.S. 602 (1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20, 30

iv

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 6 of 54

Creppel v. United States, 41 F.3d 627 (Fed. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Datascope Corp. v. SMEC, Inc., 879 F.2d 820 (Fed. Cir. 1989), cert. denied, 493 U.S. 1024 (1990) . . . . . . . . . . . . . . . . 43 Deltona Corp. v. United States, 657 F.2d 1184 (Ct. Cl. 1981), cert. denied, 455 U.S. 1712 (1982) . . . . . . . . 15, 24, 29, 31 Dufau v. United States, 22 Cl. Ct. 156 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Federal Crop Ins. Corp. v. Merrill, 332 U.S. 384 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Florida Rock Indus., Inc. v. United States, 791 F.2d 893 (Fed, Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28, 31 Forest Properties, Inc. v. United States, 39 Fed. Cl. 56 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Forest Properties, Inc. v. United States, 177 F.3d 1360 (Fed. Cir.), cert. denied, 528 U.S. 951 (1999) . . . . . . . . . . . . . . . . . 12, 13 General Motors Corp. v. Devex Corp., 461 U.S. 648 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Good v. United States, 39 Fed. Cl. 81 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Good v. United States, 189 F.3d 1355 (Fed. Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Flowers Mill Assocs. v. United States, 23 Cl. Ct. 182 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Hanson v. Office of Personnel Management, 833 F.2d 1568 (Fed. Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Hendler v. United States, 175 F.3d 1379 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Hendler v. United States, 952 F.2d 1364 (Fed. Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 v

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 7 of 54

Hurley v. Kincaid, 285 U.S. 95 (1932) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Jentgen v. United States, 657 F.2d 1210 (Ct. Cl. 1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 31 Kirby Forest Indus. v. United States, 467 U.S. 1 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Leonard v. Commissioner, 94 F.3d 523 (9th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Liriano v. Hobart Corp., 960 F. Supp. 43 (S.D.N.Y. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Loveladies Harbor, Inc. v. United States, 21 Cl. Ct. 153 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Loveladies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 15 MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 McLennan v. United States, 24 Cl. Ct. 102 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35, 36 Maritrans Inc. v. United States, 342 F.3d 1344 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28, 33 Marshall v. Department of Water & Power, 219 Cal. App. 3d 1124 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Mitchell v. United States, 267 U.S. 341 (1925) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Natural Resources Defense Council v. Callaway, vi

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 8 of 54

392 F. Supp. 685 (D.D.C. 1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 23 NRG Co. v. United States, 31 Fed. Cl. 659 (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Omnia Commercial Co. v. United States, 261 U.S. 502 (1923) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Palazzolo v. Rhode Island, 533 U.S. 606 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 27, 29, 34 Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 20, 29, 31 Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 30 Rith Energy, Inc. v. United States, 270 F.3d 1347 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33, 34 Rose Acre Farms, Inc. v. United States, 373 F.3d 1177 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 20, 23 Schultz v. United States, 5 Cl. Ct. 412 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Seaboard Air Line Ry. Co. v. United States, 261 U.S. 299 (1923) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39, 40 Snowbank Enterprises, Inc. v. United States, 6 Cl. Ct. 476 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 35 Stephenson v. United States, 33 Fed. Cl. 63 (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Sun Enterprises, Ltd. v. Train, 394 F. Supp. 211 (S.D.N.Y. 1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 23 Tabb Lakes, Ltd. v. United States, 10 F.3d 796 (Fed. Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 8 vii

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 9 of 54

Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim Tefel v. Reno, 180 F.3d 1286 (11th Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Walcek v. United States, 303 F.3d 1349 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 32 Westchester County Park Commission v. United States, 143 F.2d 688 (2d Cir. 1944), cert. denied, 323 U.S. 726 (1944) . . . . . . . . . . . . . . . . . . 36 United States v. 50.8 Acres of Land, 149 F. Supp. 749 (E.D.N.Y. 1957), aff'd, 259 F.2d 41 (2nd Cir. 1958) . . . . . . . . . . . . . 36 United States v. 564.54 Acres of Land, 441 U.S. 506 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 United States v. Ashland Oil & Transp. Co., 364 F. Supp. 349 (W.D. Ky. 1973), aff'd, 504 F.2d 1317 (6th Cir. 1974) . . . . . . . . 22, 23 United States v. Brace, 41 F.3d 117 (3d Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 24 United States v. Brace, No. 90-229 (W.D. Pa. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 United States v. Certain Land in Baltimore County, State of Md., 209 F. Supp. 50 (D. Md. 1962) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 United States v. Delano Park Homes, 146 F.2d 473 (2d Cir. 1944) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 United States v. Griffin, 782 F.2d 1393 (7th Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 United States v. Miller, 317 U.S. 369 (1943) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 United States v. New River Collieries Co., 262 U.S. 341 (1923) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 United States v. Reynolds, 397 U.S. 14 (1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 viii

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 10 of 54

United States v. Virginia Electric & Power Co., 365 U.S. 624 (1961) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Yuba Goldfields, Inc. v. United States, 723 F.2d 884 (Fed. Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Zacharin v. United States, 213 F.3d 1366 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 STATUTES Clean Water Act, 33 U.S.C. § 1311 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 33 U.S.C. § 1344 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 33 U.S.C. § 1362(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Declaration of Taking Act, 40 U.S.C. § 258a et seq., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 40 U.S.C. § 258e-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Rivers and Harbors Appropriation Act of 1899, 33 U.S.C. §§ 401-403 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

REGULATIONS 39 Fed. Reg. 12,115 (1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 LEGISLATIVE MATERIALS S. Rep. No. 1236 (1972), reprinted in 1972 U.S. Code Cong. & Ad. News 3822 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ix

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 11 of 54

IN THE UNITED STATES COURT OF FEDERAL CLAIMS ROBERT BRACE, ) ) Plaintiff, ) ) v. ) ) THE UNITED STATES, ) ) Defendant. ) _________________________________________)

Case No. 98-897 L Hon. Francis M. Allegra

DEFENDANT'S OPENING POST-TRIAL MEMORANDUM INTRODUCTION Plaintiff Robert Brace is a farmer who owns approximately 600 acres of real property being farmed as part of a single unified operation. Plaintiff alleges that because of the entry of a Consent Decree, which prohibited the dredging and filling of 30 acres of wetlands on the Murphy Farm tract, he has been denied all economically viable use of that property located in Waterford Township, Erie County, Pennsylvania. This tract1/ is part of a larger parcel acquired by plaintiff on December 30, 1975 in a single deed. The remaining acreage of the Murphy Farm tract, as well as the Homestead Farm tract, acquired by plaintiff in the same deed, were unaffected by the Consent Decree and can be used by plaintiff for any purpose consistent with applicable state or local restrictions. Indeed, a portion of the Murphy tract consists of uplands not within the jurisdiction of the U.S. Army

The 65 acre tract which contains the regulated 30 acres is referred to herein as the Murphy Farm tract. The Murphy Farm tract and the Homestead Farm tract together make up the Deeded Property, which is approximately 134 acres, and was acquired by plaintiff in December, 1975 by purchase from his parents. 1

1

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 12 of 54

Corps of Engineers ("Corps") which have been actively and productively farmed in the past. A gas well located on the Murphy Farm tract also produces income, and the wetland portion of the tract can continued to be used for pasture, its historical use. In 1985-87, plaintiff began dredge and fill operations in the 30 acres of wetlands located on the Murphy Farm tract in an effort to convert the wetlands to land suitable for growing row crops. When these activities, which occurred without benefit of a Clean Water Act Section 404 permit, came to the attention of the United States in 1987, plaintiff was issued cease and desist orders issued by the Environmental Protection Agency ("EPA") and the Corps. Plaintiff was ordered to cease maintenance and operation of the drainage system on the 30 acres of wetlands and to restore the wetlands to their prior condition. In this action, plaintiff first asserts a claim of a physical taking. However, the nature of the governmental action at issue here clearly involves a restriction on use, not a physical occupation. Further, to the extent government agents entered the property to oversee the restoration, he was specifically invited to do so by the plaintiff himself. Finally, even if the agent's presence had not been consensual, the transitory nature of the presence does not under relevant caselaw rise to the level of a physical taking. Plaintiff also asserts a claim for a categorical regulatory taking of his property. To the contrary, the 30 acres of regulated wetlands remain available for their historical use as pasture. The non-wetland acreage of the Murphy Farm tract is in no way regulated by the Consent Decree at issue. Indeed, the evidence was undisputed that the upland areas of the Murphy tract have been farmed as recently as 2003. Were the areas not being farmed, plaintiff's appraiser testified that the property had significant post-Decree economic value as a single homesite. In addition, a

2

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 13 of 54

gas well on the tract also continues to provide economic value. Regardless of the size of the relevant parcel, which plaintiff claims is only the Murphy tract and which defendant asserts also includes the Homestead Farm tract, the existence of these other economic uses prevents plaintiff from being able to successfully assert a categorical takings claim. Plaintiff also cannot establish a regulatory taking of the restricted 30 acres. Because he purchased the property well after the enactment of the Clean Water Act in 1972, plaintiff cannot establish that he possesses a reasonable investment-backed expectation in being able to drain his wetland acreage. The estoppel-like arguments advanced by plaintiff are factually incorrect and legally irrelevant. Mr. Brace has never been provided either technical or financial assistance for the purpose of draining the Murphy Farm tract. More importantly, plaintiff's argument is legally defective; the relevant time period for determining whether plaintiff's investmentbacked expectations were reasonable is when plaintiff acquired the property, not at some later point in time. Similarly, the character of the government action here weighs in favor of the defendant. Plaintiff's argument incorrectly limits the "character of the government action" to an analysis of whether the government's regulation was designed to proscribe a nuisance, which conflicts with recent Federal Circuit jurisprudence. Finally, plaintiff's claim of a taking also fails because the application of the Consent Decree to this property did not result in sufficient economic impact to establish a taking. For the same factual reasons that doom plaintiff's categorical takings claim, plaintiff's claim of the denial of all meaningful economic use must be rejected.

3

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 14 of 54

FACTUAL BACKGROUND Robert Brace and his wife, in varying capacities, are the owners of a number of tracts of land totaling approximately 600 acres located in Erie County, Pennsylvania. Among these 600 acres is an approximately 134 acre parcel of land which Robert Brace purchased from Mr. Brace's parents, Charles and Mary Brace, in December 1975. D11(A); hereinafter, the "Deeded Property." The Deeded Property lies along Greenley Road, and is bisected into northern and southern tracts by South Hill Road. The portion of the Deeded Property located to the north of South Hill Road, approximately 69 acres, has been referred to as the "Homestead Farm tract." The portion of the Deeded Property located to the south of South Hill Road, which includes the thirty-acre wetland area at issue in this litigation, has been referred to as the "Murphy Farm tract," comprised of approximately 65 acres.2/ See P1 at 7. In 1961, the Soil Conservation Service ("SCS"), part of the U.S. Department of Agriculture, developed a "Soil and Water Conservation Plan" for plaintiff's father, Charles Brace. P1; Trial Transcript [hereinafter "Tr."] 704-06. This plan covered the entire farm, and identified which crops were appropriate for particular fields within the farm as well as which fields could be improved by the installation of drainage. P1 at 6, 8. After purchasing the property in 1975, in 1977-79, Robert Brace obtained certain technical and financial assistance from agencies within the U.S. Department of Agriculture (U.S.D.A.). However, at no time did

According to the Tax Assessor records, the size of the Murphy Farm tract is 65 acres. See D12 at Vol. I, A-8. Mr. Brace testified that the Murphy Farm tract was 58 acres but offered no written document in support. However, even if the Murphy Farm tract is considered to be only 58 acres, plaintiff cannot establish that the regulatory restriction on the wetland site denied all or substantially all economically viable use of its property. See Section V.C infra. The Consent Decree at issue here affected only 30 acres. P22 at ¶ 3. 4

2

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 15 of 54

any government representative ever provide plaintiff with technical or financial assistance for the purpose of draining any portion of the Murphy Farm tract. Tr. 706. Between 1985 and 1987, Brace, without obtaining a Clean Water Act permit, discharged dredged and fill material onto the 30 acre wetland site. United States v. Brace, 41 F.3d 117, 121 (3d Cir. 1994). In 1987, the United States became aware of plaintiff's activities, and in 1987 and 1988 issued three orders directing plaintiff to cease maintenance and operation of the drainage system on the property and to restore portions of the property to its prior wetland condition. P9, P13, P16. During the summer 1988, after receiving the Cease and Desist Orders, plaintiff contacted the Agricultural Stabilization and Conservation Service ("ASCS") and requested that his property be granted the status of "commenced conversion from wetlands" prior to December 23, 1985. P15; Brace, 41 F.3d at 121. Eventually, the ASCS granted "commenced conversion" status as to a number of plaintiff's fields, including fields on the Homestead Farm tract, but not including any fields located within the wetland area of the Murphy Farm tract. P15. In 1990, the United States filed an enforcement action against plaintiff in the U.S. District Court for the Western District of Pennsylvania. Brace, 41 F.3d at 119, 121. In 1993, the district court entered judgment in favor of Brace on the ground that plaintiff's activities were exempt from the permitting requirements of Section 404 of the Clean Water Act. Id. at 120, 122. On appeal, the United States Court of Appeals for the Third Circuit reversed the district court and held that the court incorrectly applied the requirements of the Clean Water Act permit exemption provisions. Id. at 120. The case was remanded to the district court and the parties entered into a Consent Decree which permanently enjoined the plaintiff from further violations

5

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 16 of 54

of the Clean Water Act and ordered restoration of the affected 30 wetland acres. P22 at ¶¶ 3, 4. Plaintiff complied with the Consent Decree and this lawsuit followed. Trial in this matter was held January 11-14, 2005. ARGUMENT I. PLAINTIFF'S SUIT FOR A TAKING BASED ON THE APPLICATION OF CLEAN WATER ACT RESTRICTIONS TO HIS PROPERTY IS NOT TIMELY. Plaintiff has chosen to focus on the Consent Decree as the governmental act which caused the taking. See Complaint, ¶ 4, 17. The choice may have been motivated in part on the practical need to ensure compliance with the statute of limitations. Because plaintiff's complaint was not filed until November 25, 1998, plaintiff has to establish that his cause of action accrued no earlier than November 25, 1992. However, the Consent Decree at issue here imposed no new requirements over and above the Clean Water Act. The Clean Water Act was the source for the issuance of the Consent Decree, and accordingly could not substantively exceed the scope of its authorizing act. More significantly, the essential Clean Water Act restriction that was imposed here ­ that you cannot dredge and fill jurisdictional wetlands without a permit and that if you have done so, you can be required to restore them, were first imposed on the Murphy Farm tract in 1987 when the first administrative order was issued. P9. This is supported by plaintiff's allegation in the complaint that he "has been prevented from using at least thirty acres of the Subject Property for any economically viable use from July 15, 1987. . . ." Compare Complaint, ¶ 18, with D9. This allegation reflects plaintiff's correct legal understanding that his use of the 30 acres of wetlands on the Murphy Farm tract was first

6

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 17 of 54

restricted in 1987, and continued to be restricted throughout the enforcement of the District Court enforcement action. While a question might arise as to whether, despite the issuance of an administrative order, the possibility still existed that permission to fill the wetlands might be granted, see Tabb Lakes, Ltd. v. United States, 10 F.3d 796, 801 (Fed. Cir. 1993). Here, however, the possibility that Mr. Brace might ultimately obtain a permit was firmly removed in 1990, when the Corps declined to allow plaintiff to submit an after the fact permit application. P19, P20. Accordingly, plaintiff's cause of action to complain about the application of the requirements of the Clean Water Act to his property accrued no later than 1990, more than six years prior to the filing of the complaint herein. Here, plaintiff presented no evidence which establish that the Consent Decree imposed burdens different from those imposed by the Clean Water Act itself.3/ To the contrary, defendant's testimony established that the restrictions imposed upon the Murphy tract by the Consent Decree were co-extensive with those imposed by the Clean Water Act. Tr. 619, 871-72. Nor does the fact that, on appeal, the application of the Clean Water Act to plaintiff's property might have been ruled to be improper prevent the cause of action from accruing in the first place. Had the government's assertion been found to be improper, the governmental restriction would have been lifted, and Brace would have been free to continue his efforts to farm

Nor is the fact that the restoration requirements in the admin order are not identical to those in the Consent Decree determinative. While the details of how best to restore the property may have changed slightly, the legal prohibition against dredging and filling jurisdictional wetlands remained the same. It is that prohibition which constitutes the governmental action restricting plaintiff's use of his property. That prohibition has remained unchanged from when the right to restrict plaintiff's use of his property was first asserted in 1987. 7

3

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 18 of 54

the wetland tract. However, the fact that the litigation might have ultimately been resolved in his favor, leaving him free to drain the wetland tract, does not delay the accrual of the cause of action in the first instance. Instead, the resolution of the litigation in favor of Brace would have had the legal effect of changing an already-accrued claim for a permanent taking into one for a temporary taking. Cf. Tabb Lakes, 10 F.3d at 800. II. PLAINTIFF HAS NOT ESTABLISHED A PHYSICAL TAKING. Shortly prior to trial, plaintiff asserted for the first time a claim for a physical taking based on the imposition of the Cease and Desist Order and the government's non-exclusive, consensual entry onto plaintiff's land. See Plaintiff's Pre-Trial Brief filed on October 18, 2004 [hereinafter Pl. Pre-Trial Br.] at 15, 17. Plaintiff's physical taking claim should be rejected. As a matter of law, the Consent Decree, at best, is a restriction on use, not a physical occupation. Further, the physical entry made by Mr. Steckler, a government agent, to monitor the restoration was non-exclusive, consensual, and transitory. Accordingly, it cannot form the basis for a physical taking. Finally, the fact that the Consent Decree reserved a limited right to the United States to enter the property is constitutionally irrelevant if that right was not exercised. A. The Consent Decree Regulates Use and Does Not Constitute A Physical Occupation.

The Consent Decree and its requirement that plaintiff restore his property is a restriction on the use of property and thus does not constitute a physical occupation of private property. In Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002), the Supreme Court drew a sharp line between regulatory restrictions, generally subject to an ad hoc, multi-factor analysis, and permanent physical occupations, subject to a per se test. The Court explained that the per se test is reserved for "relatively rare" cases in which the physical 8

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 19 of 54

occupation can be "easily identified." Id. By way of examples, the Court said that a physical invasion occurs "when a leasehold is taken and the government occupies the property . . . when the government appropriates part of a rooftop in order to provide cable TV access for apartment tenants . . . or when its planes use private airspace to approach a government airport." Id. at 322. By contrast, a regulatory restriction is at issue when "a government regulation . . . merely prohibits landlords from evicting tenants unwilling to pay a higher rent . . . bans certain private uses of a portion of an owner's property . . . or that forbids the private use of certain airspace." Id. at 322-23. Thus, the mere fact that a regulatory restriction might have physical impacts does not by virtue of that alone become transformed into a physical taking. Prior to the Tahoe decision, the Court in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), explained that "[n]ot every physical invasion is a taking"; instead, it is the "permanence and exclusivity of a physical occupation that distinguish it from temporary limitations on the right to exclude." Id. at 435 n.12 (emphasis in original). The Federal Circuit has also carefully noted the distinction between physical and regulatory takings. In Boise Cascade v. United States, 296 F.3d 1339 (Fed. Cir. 2002), the Federal Circuit found that an injunction prohibiting logging without a permit did not constitute a per se taking by the government, reasoning that the injunction did not take whatever remained of this putative property interest; it merely prevented [plaintiff] from logging its land without a permit, which--as a regulation imposed upon [plaintiff's] use of the property--is a restriction on private use of the land and not a per se taking by the government. Id. at 1354. The court found that plaintiff's per se taking claim was "merely an attempt to convert a regulatory takings claim, governed by Penn Central . . . into a per se taking governed by the more generous rule of Loretto." Id. at 1354. 9

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 20 of 54

Under this guidance, the government action at issue here plainly involves a restriction on the use of property, not a permanent physical occupation. Specifically, the Consent Decree requires that plaintiff "will perform restoration in accordance with the wetlands restoration plan . . . ." P22 ¶ 4. The Consent Decree also enjoins plaintiff from "from discharging any pollutants (including dredge and fill material) into the approximately 30 acre wetland site . . . unless such discharge is in compliance with the [Clean Water Act]." P22 ¶ 2. Accordingly, by requiring plaintiff to restore his property and enjoining him from future Clean Water Act violations, the government only restricted plaintiff's ability to use his property. Clearly, the Consent Decree did not constitute a permanent physical occupation under Loretto. Rather, the Consent Decree was a restriction on the use of property of the type the Supreme Court distinguished in Loretto. Tahoe and, more recently, Boise Cascade, compel the conclusion that the plaintiff's per se physical occupation theory has no application in this case. B. Lewis Steckler's Entry to Observe Plaintiff's Compliance with the Restoration Plan was a Transitory Presence That Does Not Rise to the Level of a Physical Taking.

Plaintiff also asserts a claim of a physical taking based on the two brief visits by Mr. Steckler to oversee compliance with the Consent Decree. Pl. Pre-Trial Br. at 15, 17. To the contrary, these brief visits cannot rise to the level of a physical taking. The court in Boise Cascade addressed a similar issue as raised here. In that case, the court held that the government's limited and transient intrusion onto plaintiff's property to conduct owl surveys did not constitute a physical taking. 296 F.3d at 1357 (holding that the "extremely limited and transient nature of the intrusion in this case, coupled with its purpose, which was to discover information necessary to the adjudication of a case that Boise itself

10

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 21 of 54

initiated, preclude a finding that a taking occurred as a matter of law."). In reaching this decision, the court reasoned that: Under a plain reading of Loretto, Boise cannot claim that the government's brief intrusions onto its land to conduct owl surveys constitute a per se taking. Transient, nonexclusive entries by the Service to conduct owl surveys do not permanently usurp Boise's exclusive right to possess, use, and dispose of its property. The government's incursion into Boise's property is more in the nature of a temporary trespass--though, obviously, sanctioned by the district court and therefore not unlawful--rather than a permanent physical occupation or an easement of some kind. Id. at 1355 (emphasis added) (stating that plaintiff "is incorrect to suppose that Hendler compels us to turn a transient invasion by owl surveyors into a per se taking under Loretto."). Plaintiff's reliance on Hendler v. United States, 952 F.2d 1364 (Fed. Cir. 1991), to support the proposition that temporary access by the government constitutes a taking is misplaced. There, the court found that the government's installation of nearly 20 groundwater monitoring wells constituted a physical taking. 952 F.2d at 1376. However, the Hendler court also noted that a physical taking is not established merely because a government action involves an "occupancy that is transient and relatively inconsequential . . . ." 952 F.2d 1364, 1377 (Fed. Cir. 1991). The visits to the property by Lewis Steckler on December 23 and 24, 1996, do not constituted a physical taking. Lewis Steckler visited plaintiff's property on December 23 and 24. See P23 and P24; Tr. 718, 719. These visits were conducted with express permission from plaintiff, and indeed, at plaintiff's request. See P23; Tr. 718. Mr. Steckler testified that he was called by plaintiff "to observe the excavator digging the trenches. . . kind of check and see if the plan was being completed the way it was designed. . . ." Tr. 718. Because these visits were transient, nonexclusive entries and did not permanently usurp plaintiff's right to posses, 11 Hendler v. United States,

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 22 of 54

use and dispose of the property, plaintiff cannot establish a physical taking under Loretto. C. The Reservation Of A Right Of Entry To Monitor Compliance With The Consent Decree Did Not Constitute A Physical Taking.

Nor did the government's reservation of a right of access to the property for a period of 18 months to verify restoration constitute a physical taking. Pl. Pre-Trial Br. at 15, 17. Here, there is no physical occupation of plaintiff's property. Instead, the government's access to the property for a period of 18 months was mandated by a court order for the limited purpose of verifying that plaintiff had restored the property's wetland character as required by the Consent Decree. P22 at ¶ 9. Indeed, following the two isolated visits by Mr. Steckler, there is no evidence that this right of entry as allowed by the Consent Decree, was ever exercised other than on December 23 and 24. Here, as in Hendler, what matters is not what the government reserved the right to do, but what the government actually did. See Hendler v. United States, 175 F.3d at 1379. III. THE RELEVANT PARCEL IS THE 134 ACRES CONVEYED BY A SINGLE DEED AND USED AS PART OF A COMMON PLAN. In evaluating whether a taking has occurred, it is necessary to first define the relevant parcel against which against which the impact of the government action will be measured. Forest Properties, Inc. v. United States, 177 F.3d 1360, 1365 (Fed. Cir.), cert. denied, 528 U.S. 951 (1999) ("This relevant parcel inquiry is critical because `our test for regulatory taking requires us to compare the value that has been taken from the property with the value that remains in the property.'") (quoting Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 497 (1987)). This requires an examination of the "parcel as a whole:"

12

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 23 of 54

Taking jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated. In deciding whether a particular governmental action has effected a taking, this Court focuses rather both on the character of the action and on the nature and extent of the interference with rights in the parcel as a whole. . . . Tahoe-Sierra, 535 U.S. at 327 (emphasis added) (quoting Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 130-31 (1978)). Several factors are relevant to the inquiry of what is the relevant parcel: The degree of contiguity, the date of acquisition, the extent to which the parcel has been treated as a single unit, the extent to which the protected lands enhance the value of the remaining lands, and no doubt many others would enter the calculus. Ciampitti v. United States, 22 Cl. Ct. 310, 318 (1991); see also Forest Properties, Inc., 177 F.3d at 1365 ("[The relevant parcel inquiry] requires courts to focus on the economic expectations of the claimant with regard to the property . . . . Where the developer treats legally separate parcels as a single economic unit, together they may constitute the relevant parcel."). More recently, in Appolo Fuels, Inc. v. United States, 381 F.3d 1338 (Fed. Cir. 2004), the Federal Circuit addressed the "parcel as a whole" as it applied to mining leases, finding that the relevant parcel was two leases, one purchased in 1989 and the other six years later in 1995, because they were acquired by plaintiff as part of a single unified plan. In making this determination, the court noted that plaintiff purchased one of the leases "as the first step in fulfilling its `expect[ation] that [it] would ultimately acquire and mine all of the surface mineable coal within the Little Yellow Creek watershed." Id. at 1346 (citation omitted). Thus, the Circuit reasoned, "[u]nder our precedent, the purchase of these two leases as part of one unified mining plan is sufficient to include them in the relevant parcel." Id. Here, plaintiff's "parcel as a whole" properly encompasses, at a minimum, the 134-acre 13

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 24 of 54

"Deeded Property" purchased by Mr. Brace on December 30, 1975. See D11(A). It is undisputed that both the Homestead Farm tract and the Murphy Farm tract were acquired at the same time and are contiguous (except for South Hill Road which divides the tracts). D34; Tr. 116-117; see also Brace, 48 Fed. Cl. at 274. Both parcels were acquired for the same purpose and as part of a common plan for the purposes of farming. Tr. 119. IV. PLAINTIFF CANNOT ESTABLISH A CATEGORICAL TAKING. Plaintiff argues that the entry of the Consent Decree caused a categorical taking because he has been denied all economically viable use of the Murphy Farm tract. Pl. Pre-Trial Br. at 1920. The Court, however, should reject plaintiff's categorical taking claim because plaintiff has too narrowly defined the relevant parcel, conflicting with Supreme Court precedent in Penn Central and Tahoe-Sierra. Here, the relevant parcel consists of, at a minimum, the 134 acre Deeded Property, consisting of the Homestead Farm tract and the Murphy Farm tracts. Because plaintiff has incorrectly defined the relevant parcel, and plaintiff's arguments ignore economic uses of the property which remain in its "after" condition, the requirement that there have been a "complete elimination of value" has not bee met. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1019 n.8 (1992). A. Compared Against the 134 Acre Relevant Parcel, Plaintiff Cannot Establish a Categorical Taking.

Plaintiff cannot establish a categorical taking under Lucas because the Consent Decree did not prohibit all economic use of the relevant parcel. As the Supreme Court has recently explained, the "parcel as a whole rule," see Lucas, 505 U.S. at 1017, is reserved for `"the extraordinary circumstances when no productive or economically beneficial use of land is permitted.'" Tahoe-Sierra, 535 U.S. at 330 (quoting Lucas, 505 U.S. at 1017) (emphasis in 14

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 25 of 54

original). Thus, "[a]nything less than a `complete elimination of value,' or a `total loss,' . . . would require the kind of analysis applied in Penn Central [the parcel as a whole rule]." TahoeSierra, 535 U.S. at 330. Thus, even if there has been interference with plaintiff's use of a portion of his property, compensation is not required if economic value remains in the property as a whole. In Deltona Corp. v. United States, 657 F.2d 1184, 1192 (Ct. Cl. 1981), the court followed Penn Central and found the denial of Deltona's 404 permit application did not constitute a taking because plaintiff's remaining land uses were "plentiful and its residual economic position very great." See also Jentgen v. United States, 657 F. 2d 1210, 1213 (Ct. Cl. 1981) (plaintiff's claim denied because it is one for diminution in value of the property rather than complete destruction of all economically viable uses). Indeed, "[i]n the case of a landowner who owns both wetlands and adjacent uplands, it would clearly be unrealistic to focus exclusively on the wetlands, and ignore whatever rights might remain in the uplands." Ciampitti v. United States, 22 Cl. Ct. at 318. The logic of this approach is self-evident: a property owner who continues to have substantial value in the use of balance of its property is not deprived of fairness and justice simply because government action prevents optimum economic use of a small portion of the property. Here, the government action in question has restricted plaintiff's ability to drain 30 acres of wetlands on the Murphy Farm tract. However, the evidence is undisputed, see infra, that economic value remains in the Murphy Farm tract. In addition, the relevant parcel includes the Homestead Farm tract property. With respect that property, the evidence is undisputed that it continues to be productive. Given the economic value remaining in the relevant parcel,

15

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 26 of 54

plaintiff's claim for a categorical taking under Lucas must be rejected. B. Even If The Relevant Parcel is Considered to be only the 65 Acre Murphy Farm Tract, There Has Been No Categorical Taking Because there Exists Other Economic Uses.

Even were the Court to find that the relevant parcel is comprised of only the Murphy Farm tract, the existence of remaining viable economic uses precludes the finding of a categorical taking. The Consent Decree, upon which plaintiff bases his claim of a taking, only affects 30 acres of the acre Murphy Farm tract. P22 at ¶ 3. Even assuming the 30 wetland acres have no other economic use, a matter which defendant does not concede, the remaining acreage on the Murphy Farm tract has significant remaining economic uses. Plaintiff's own evidence established significant "after" value for the Murphy Farm tract. Plaintiff's appraiser, Mr. Lignelli, testified that the most profitable use for the Murphy Farm tract in the "after" ­ with the Consent Decree in place ­ would be to utilize the 28 non-wetland acres as a single homesite which would then overlook the wetland area. Tr. 396, 450, 465, 479. So utilized, the "after" value of the property would be $140,000. Tr. 474. In addition, the evidence at trial was clear that the upland areas of the Murphy Farm tract could clearly continue to be farmed in the "after" condition. Mr. Brace acknowledged that he had grown crops on the upland areas. Tr. 130-31, 356-57. He described one upland area as being 1112 acres and the second as being 6 acres. Tr. 158. The various crops that were grown in the larger upland area, see D9, and the years, P33, was evidenced and undisputed. Indeed, defendant's appraiser, George Silver, observed evidence that a crop had recently been grown in the larger upland area when he first inspected the Murphy Farm tract in the spring of 2004. Tr. 799.

16

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 27 of 54

Plaintiff's contention that he cannot grow crops on the upland tract "because of the expansion of the Clean Water Act," Tr. 160, is legally in error as well. As a matter of law, uplands are not within the enforcement jurisdiction of Section 404 of the Clean Water Act. Tr. 513. Furthermore, Mr. Lapp testified that it has always been the government's position that the uplands are not subject to Section 404 of the Clean Water Act. Tr. 646-47. Indeed, plaintiff acknowledged that neither the EPA nor the Corps ever told him he could not farm the upland areas. Tr. 160-61. There is also a producing gas well located on the Murphy Farm tract. Tr. 183, 184, 421422. Leased by plaintiff's predecessor in interest, the well provides a monthly royalty income. Tr. 140, 84. While the monthly income is not large, it is sufficient to forestall the finding of a categorical taking. See e.g., Palazzolo v. Rhode Island, 533 U.S. 606, 631-32 (2001) (finding that plaintiff "failed to establish a deprivation of all economic value, for it is undisputed that the parcel retains significant worth for construction of a residence."). Finally, the wetland area itself remains useful as pasture. Indeed, prior to plaintiff acquiring the property, the wetland acreage was also used by his father as pasture for a dairy operation. Tr. 118-20. The record is devoid of any evidence that the Clean Water Act or the Consent Decree would prohibit the use of the wetland acreage for pasture. See, for e.g., Tr. 618, 660. Given these remaining economic uses, plaintiff cannot establish a categorical taking. Tahoe-Sierra, 535 U.S. at 330 ("Anything less than a `complete elimination of value,' or a `total loss,' the [Lucas] Court acknowledged, would require the kind of analysis applied in Penn Central."); Walcek v. United States, 303 F.3d 1349, 1355 (Fed. Cir. 2002) (holding that since the

17

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 28 of 54

landowner was able to develop 2.2 acres of a 13.2 acre parcel, the landowners were "not totally deprived of all economically viable use of their land, and . . . no categorical taking occurred"). V. PLAINTIFF CANNOT ESTABLISH A REGULATORY TAKING. The Supreme Court has recognized that the Fifth Amendment requires compensation for regulations that go "too far" and have the effect of taking a landowner's property. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922). The Court has identified three factors of particular significance in the "ad hoc" takings inquiry: (1) the character of the governmental action; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the economic impact of the regulation on the claimant. See Penn Central Transportation Co., 438 U.S. at 124; Avenal v. United States, 100 F.3d 933, 937 (Fed. Cir. 1996). A. Plaintiff Cannot Establish That He Possessed Reasonable Expectations That He Could Drain the Murphy Farm Tract Without Complying with the Clean Water Act.

Plaintiff argues that the wetlands on his property were not regulated under the Clean Water Act at the time he purchased it, and therefore, it was reasonable for him to expect that he could drain the wetlands without a permit. Pl. Pre-Trial Br. at 22. Furthermore, plaintiff contends that because the government in 1961 assisted his father in developing a drainage plan for some of the fields in his farm, that therefore it was reasonable for plaintiff to expected that the Murphy Farm tract was not subject to the Clean Water Act. Pl. Pre-Trial Br. at 22. To the contrary, plaintiff was on constructive notice of the statutory scheme in place when he purchased his property and the possibility that such restrictions might apply to his property. Nor are plaintiff's estoppel-like arguments factually or legally correct. As a threshold matter, the relevant time period for determining whether plaintiff's investment-

18

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 29 of 54

backed expectations were reasonable is when plaintiff acquired the property, not later events. Furthermore, Mr. Brace has never been provided either technical or financial assistance for the purpose of constructing drainage systems on the Murphy Farm tract. Indeed, the District Court for the Western District of Pennsylvania in United States v. Brace, No. 90-229 (W.D. Pa. 1992), rejected the same estoppel-type argument that plaintiff presents here. 1. Plaintiff Cannot Establish That He Had Reasonable Investment-Backed Expectations In Draining the Wetlands.

In order to establish a taking, plaintiff must prove that the government action has interfered with the investment-backed expectations he had when he acquired the property. See Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1179 (Fed. Cir. 1994). Here, plaintiff cannot establish that any expectations he may have had in being able to drain the Murphy Farm tract free from legal constraints imposed by the Clean Water Act were reasonable. An investment-backed expectation "must be more than a `unilateral expectation or an abstract need,"and "it must be reasonable". Ruckelshaus v. Monsanto Co., 467 U.S. at 1005-06. In those instances where a regulation limits the owner's use of his land, by inquiring into the claimant's investment-backed expectations, a court "limits recovery to owners who can demonstrate that they bought their property in reliance on the nonexistence of the challenged regulation," Creppel, 41 F.3d at 632. See also Concrete Pipe & Prods. of California, Inc.v. Construction Laborers Pension Trust for So. Calif., 508 U.S. 602, 645-646 (1993); Ruckelshaus 467 U.S. at 1005-06. The rationale of these decisions is quite obvious, for to hold otherwise would turn the government into an involuntary guarantor of the property owner's gamble that he could develop the land as he wished despite the existing regulatory structure. Ciampitti v. United 19

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 30 of 54

States, 22 Cl. Ct. 310, 321 (1991). Thus, the Court has rejected as "quite simply untenable" the contention that property owners "may establish a `taking' simply by showing that they have been denied the ability to exploit a property interest that they heretofore believed was available for development. . . ." Penn Central, 438 U.S. at 130. When a claimant has constructive and actual knowledge of federal restrictions on the exercise of its property rights, its claim of reasonable expectations to the contrary fails. Good v. United States, 189 F.3d 1355, 1362-63 (Fed. Cir. 1999). There, the Circuit noted that: While Appellant's prolonged inaction does not bar his takings claim, it reduces his ability to fairly claim surprise when his permit application was denied. Id. at 1363. The Clean Water Act was enacted in 1972, more than three years prior to plaintiff's acquisition of the Deeded Property. The cornerstone of the Act's regulatory scheme is the prohibition against the discharge of pollutants into "waters of the United States" except when in compliance with the various sections of the Act, in particular Section 404, 33 U.S.C. § 1344. See 33 U.S.C. §§ 1311, 1362 (6). 2. It Is That The Enactment of The Clean Water Act, And Not Subsequent Agency Regulations, Which Informs A Plaintiff's Reasonable InvestmentBacked Expectations.

Plaintiff contends that when he purchased his property, he relied on regulations, which he contends excluded his property from the permitting requirement. Pl. Pre-Trial Br. at 22. To the contrary, the July 1975 regulations did include plaintiff's property within their ambit. Regardless, it was the passage of the Clean Water Act, and not the promulgation of subsequently-issued regulations, which, as a matter of law, served to inform plaintiff's reasonable investment-backed expectations. A review of the statutory and regulatory framework 20

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 31 of 54

of the Clean Water Act provides context for defendant's argument. The Clean Water Act defines "navigable waters" as "waters of the United States, including the territorial seas," 33 U.S.C. § 1362(7), but does not expressly define "waters of the United States." The legislative history to the Act makes clear that Congress intended by this language to encompass the broadest possible constitutional interpretation. See S. Rep. No. 1236, at 99 (1972), reprinted in 1972 U.S. Code Cong. & Ad. News 3822. On April 4, 1974, the Corps had promulgated regulations to establish a procedure for the submission of applications under Section 404 of the Clean Water Act. The Corps initially approached its jurisdiction under the Clean Water Act in a similar manner to its jurisdiction under the Rivers and Harbors Act ("RHA"),4/ issuing regulations which implemented both RHA Section 10 and CWA Section 404 and limited the Corps' jurisdiction to navigable waters as that term had been previously defined under RHA Section 10. 39 Fed. Reg. 12,115, 12,119 (1974). This definition excluded from coverage most wetlands that are generally non-navigable, and also excluded other isolated or shallow waters from Section 404's jurisdiction. In response, environmental groups challenged these regulations, arguing that Clean Water Act jurisdiction extended beyond traditionally navigable waters. This legal issue was resolved in Natural Resources Defense Council v. Callaway, 392 F. Supp. 685 (D.D.C. 1975), where, relying on Congressional intent, the court invalidated the Corps' then-current regulations, finding their definition of "waters of the United States" to be too narrow. Id. at 686. In a terse, one-page opinion, the court invalidated the Corps' restrictive reading of the Act, declaring "Congress by defining the term `navigable waters' in [the CWA] to mean `the

4

Rivers and Harbors Appropriation Act of 1899, 33 U.S.C. §§ 401-403. 21

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 32 of 54

waters of the United States, including the territorial seas,' asserted federal jurisdiction over the nation's waters to the maximum extent permissible under the Commerce Clause of the Constitution. Accordingly, as used in the [CWA], the term is not limited to the traditional tests of navigability." Id. at 686. The court ordered the Corps to publish new proposed regulations within 15 days "clearly recognizing the full regulatory mandate" of the CWA. Id. The Callaway court was not the only court to find that Congress had intended the CWA's reference to "waters of the United States" to be interpreted broadly. See Sun Enterprises, Ltd. v. Train, 394 F. Supp. 211, 223 (S.D.N.Y. 1975); United States v. Ashland Oil & Transp. Co., 364 F. Supp. 349 (W.D. Ky. 1973), aff'd 504 F.2d 1317, 1323-25 (6th Cir. 1974). In response to Callaway, in July of 1975, the Corps issued new regulations which expanded the definition of navigable waters to include wetlands. 40 Fed. Reg. 31320 (July 25, 1975). Among the wetlands included within the definition were those like the ones at issue here that were contiguous or adjacent to other navigable waters. Id. at 31324. It was the passage of the CWA, and not the promulgation of subsequently-issued regulations, which served to inform, plaintiff's reasonable investment-backed expectations. Any argument to the contrary assumes that the adverse effect of the 1962 Act did not become operative against [Plaintiff] ­ [Plaintiff] was not `damaged' ­ until the Supreme Court some 25 years later so construed the Act. While the Supreme Court's pronouncement in 1986 might be relevant to fixing the time when the [Plaintiff] subjectively first knew what the Act meant, it is fundamental jurisprudence that the Act's objective meaning and effect were fixed when the Act was adopted. Any later judicial pronouncements simply explain, but do not create, the operative effect. Catawba Indian Tribe v. United States, 982 F.2d 1564, 1570 (Fed. Cir. 1993) (emphasis added) (citing Chevron U.S.A. Inc. v. United States, 923 F.2d 830, 834 (Fed. Cir. 1991)). See also Ruckelshaus, 467 U.S. at 1008-10 (measuring reasonable investment-backed expectation against 22

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 33 of 54

the date of passage of the Act). In addition to the enactment of the CWA and the issuance of regulations, several judicial decisions served to further inform plaintiff's expectations. As discussed, when plaintiff acquired the property in December, 1975, the term "waters of the United States" had already been judicially construed to reach all waters that could be regulated under the Commerce Clause. See Callaway, 392 F. Supp. at 686; Sun Enterprises, Ltd., 394 F. Supp. at 223; United States v. Ashland Oil & Transp. Co., 364 F. Supp. at 351, aff'd, 504 F.2d at 1323-25. Regardless of actual knowledge, plaintiff was on constructive knowledge of the Clean Water Act. See Dufau v. United States, 22 Cl. Ct. 156, 159 (1990) ("the rule of law is that "'everyone is charged with the knowledge of the United States Statues at Large'") (quoting C&L Construction Co. v. United States, 6 Cl. Ct. 797 (1984), aff'd, 790 F.2d 93 (Fed. Cir. 1986). Here, plaintiff testified that he was aware of the Clean Water Act when he purchased the

property in 1975, Tr. 353, but never contacted an attorney to determine the extent of his legal obligations under the Act. Tr. 355. Further, plaintiff took the risk that enforcement of the regulatory regime might become more stringent as time passed; that is, "that the standards and conditions governing the issuance of permits could change." Deltona v. United States, 657 F.2d at 1193. As the Federal Circuit noted in Good v. United States, [i]n light of the growing consciousness of and sensitivity toward environmental issues, [Plaintiff] must also have been aware that standards could change to his detriment, and that regulatory approval could become harder to get. Id., 189 F.3d at 1362. Indeed, the court in Appolo Fuels Inc. v. United States, 381 F.3d 1338 (Fed. Cir. 2004),

23

Case 1:98-cv-00897-FMA

Document 157

Filed 04/21/2005

Page 34 of 54

anticipated the argument plaintiff raises here. In that case, the court, quoting a previous decisi