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

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

ROBERT BRACE, Plaintiff, v. UNITED STATES, Defendant.

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Civil Action No. 98-897 L Hon. Francis M. Allegra

PLAINTIFF'S POST-TRIAL BRIEF

Respectfully submitted,

Nancie G. Marzulla Roger J. Marzulla Defenders of Property Rights 1350 Connecticut Ave., N.W. Suite 410 Washington, D.C. 20036 202-822-6770 202-822-6774 (facsimile) Counsel for Plaintiff Dated: April 19, 2005

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TABLE OF CONTENTS TABLE OF AUTHORITIES QUESTION PRESENTED PROCEDURAL HISTORY FACTUAL BACKGROUND History of Family Farm Agriculture Soil Conservation Service's 1960's Drainage Plan Normal Farming Activities Exemption "Jurisdictional Wetlands" Underlying Enforcement Action Consent Decree ARGUMENT I. The Government's Action Resulted in the Physical Invasion of Mr. Brace's Property, Thus Requiring Just Compensation as a Taking Per Se A. Mr. Brace has Suffered a Physical Taking Analogous to the Takings in Lorreto and Hendler B. Mr. Brace has Suffered the Taking of a Flowage Easement C. Mr. Brace has Suffered the Uncompensated Taking of an Access Easement iii vi 1 3 3 4 11 14 16 19 22

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D. Mr. Brace has Suffered the Uncompensated Taking of a Conservation Easement 28 II. The Government's Action Deprived the Murphy Farm of All Economically Beneficial Use, Entitling Mr. Brace to Just Compensation Under the Fifth Amendment Alternatively, the Defendant's Actions in This Case Constitute a Regulatory Taking Under the Ad Hoc i

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III.

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Test in Penn Central A. This Court is not Precluded by "Law of the Case" from Examining All of the Relevant Facts in this Case B. In 1975, Mr. Brace Reasonably Expected That His Property Could be Drained and Planted and Was Free of Federal Clean Water Act Regulation C. The Character of Defendant's Action in This Case Supports a Regulatory Taking D. Defendant's Action, Resulting in the Loss of Property Valued at $455,000, Had a Severe Economic Impact on Mr. Brace IV. The Fair Market Value of the Property Taken from Mr. Brace Should Be Determined Based on a Highest and Best Use As a Residential Subdivision Development A. The Highest and Best Use of the Murphy Farm is Residential Development B. The Murphy Farm has a Value of $455,000 in the Before Condition C. The Murphy Farm has "Scant" Value in the After Condition D. The Court Should Not Adopt Mr. Silver's Appraisal V. The Farmer's Operating Loan Rate, Compounded, Is the Appropriate Interest Rate To Provide Just Compensation in This Case

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Table of Authorities Constitutional Provisions U.S. Const. amend. V.................................................................................................................... 22

Cases Ambase v. United States, 58 Fed. Cl. 32 (2003).....................................................44, 51 Appolo Fuels, Inc. v. United States, 381 F.3d 1338 (Fed. Cir 2004...................................48 Armstrong v. United States, 364 U.S. 40 (1960) .................................................................... 41, 51 Augustine v. Principi, 343 F.3d 1334 (Fed. Cir. 2003)................................................................. 41 Avoyelle's Sportsmen League, Inc. v. Alexander, 511 F. Supp. 278 (W.D. La. 1981)................. 44 Barnes v. United States, 538 F.2d 865 (Ct. F. Cl. 1976) .............................................................. 25 Bass Enterprises Production Co. v. United States, 54 Fed. Cl. 400 (2002) ........................... 37, 52 Big Meadows Grazing Ass'n v. United States, 344 F.3d 940 (9th Cir. 2003)............................... 31 Board of County Supervisors of Prince William County v. United States, 116 F.3d 454, (Fed. Cir. 1997) ......................................................................................................................................... 53 Borden Ranch Partnership v. U.S. Army Corps of Engineers, 537 U.S. 99 (2002) ............... 14, 46 Borden Ranch P'ship v. United States Army Corps of Eng'rs, 261 F.3d 810 (9th Cir. 2001) ...... 14 Bowles v. United States, 31 Fed. Cl. 37 (1994) ............................................................................ 65 Brown v. Legal Foundof Washingon, 538 U.S. 216 (2003).......................................................... 22 C.W. Over & Sons, Inc. v. United States, 48 Fed. Cl. 342 (2000) ................................................ 42 Carabell v. United States Army Corps of Eng'rs, 391 F.3d 704 (6th Cir. 2004) ................... 17, 46 Del-Rio Drilling Programs v. United States, 146 F.3d 1358 (Fed. Cir. 1998)............................ 50 Dolan v. City of Tigard, 512 U.S. 374 (1994) .............................................................................. 30 Fieldturf, Inc. v. Southwest Recreational Indus., Inc., 357 F.3d 1266 (Fed. Cir. 2004)............... 42 Florida Rock Indus., Inc. v. United States, 45 Fed. Cl. 21 (1999)........................................... 44,50 Florida Rock Industries, Inc. v. United States, 18 F.3d 1560 (Fed. Cir. 1994) ................ 34, 49, 51 Forest Properties, Inc. v. United States, 177 F.3d 1360 (Fed. Cir. 1999).................................... 38 Forest Properties, Inc. v. United States, 39 Fed. Cl. 56, 67 (1997). ............................................ 51 Hendler v. United States, 952 F.2d 1364 (Fed. Cir. 1991) ..................................................... 23, 28 Hudson v. Principi, 260 F.3d 1357 (Fed. Cir. 2001) .................................................................... 43 In re Needham, 354 F.3d 340 (5th Cir. 2003)......................................................................... 17, 46 Jamesbury Corp. v. Litton Indus. Products, Inc., 839 F.2d 1544 (Fed. Cir. 1998) ................ 42, 43 Kaiser Aetna v. United States, 444 U.S. 164, (1979).................................................................... 23 Lakewood Assoc. v. Comm'r, 109 T.C. 450 (1997)...................................................................... 15 Lakewood Assoc. v. United States, 45 Ct. Cl. 320 (1999) ............................................................ 15 Litton Systems, Inc. v. Honeywell, Inc., 238 F.3d 1376 (Fed. Cir. 2001) ..................................... 43 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)................................ 25, 51 Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1019 (1992)...................................... 34 Maritrans, Inc. v. United States, 342 F.3d 1344 (Fed. Cir. 2003) .............................. 34, 37, 41, 52 McCandless v. United States, 298 U.S. 342 (1936)...................................................................... 53 McLennan v. United States, 24 Cl. Ct. 102 (1991) ....................................................................... 53 Miller v. United States, 620 F.2d 812 (Fed. Cir. 1980) ................................................................ 64 Montana v. United States, 33 Fed. Cl. 82, 86 (1995) ................................................................... 42 Moore v. United States, 61 Fed.Cl. 73 (2004) .............................................................................. 33 iii

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National Min. Ass'n v. U.S. Army Corps of Engineers, 145 F.3d 1399 (C.A.D.C. 1998) ............ 13 Natural Resources Defense Council v. Callaway, 392 F. Supp. 685 (D.D.C. 1975) ............. 10, 45 Nolan v. California Costal Commission, 483 U.S. 825 (1987) .................................................... 29 NRG Co. v. United States, 31 Fed. Cl. 659 (1994) ....................................................................... 64 Olson v. United States, 292 U.S. 246 (1934), ............................................................................... 54 Palazzolo v. Rhode Island, 533 U.S. 606 (2001) .................................................................... 41, 47 Palm Beach Isles Assocs. v. United States, 231 F.3d 1354 (Fed. Cir. 2000)................................ 34 Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978) .............................................. 41 Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922)............................................................... 49 Pettro v. United States, 47 Fed. Cl. 136, 154 (2000).................................................................... 64 Pitcairn v. United States, 212 Ct. Cl. 168 (1976) ......................................................................... 65 Pumpelly v. Green Bay Co., 80 U.S. 166, 181 (1871) .................................................................. 25 Ridgeline, Inc. v United States, 346 F.3d 1346 (2003) ........................................................... 23, 26 Rockefeller Center Properties v. United States, 32 Fed. Cl. 586 (1995)................................ 37, 52 Schapiro v. Commissioner, 61 T.C.M. (CCH) 2215 (1991) ......................................................... 33 Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers, 531 U.S. 159 (2001)................................................................................................................... 17, 46 Strasburg v. Commissioner, T.C. Memo. 2000-94 (2000) ........................................................... 33 Symington v. Commissioner, 87 T.C. 892, 895 & n.5 (1986)....................................................... 33 Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Planning Agency, 535 U.S. 302 (2002) .......... 29 Toro Co. v. White Consolidated Indus., Inc., 383 F.3d 1326, 1335 (Fed. Cir. 2004)................... 41 United States v. 47.3096 Acres of Land, 583 F.2d 270, 272 (6th Cir. 1978)................................ 56 United States v. Brace, 41 F.3d 117 (3d Cir. 1994)................................. 2, 6,13, 18, 19, 33, 39, 40 United States v. Brace, No. 90-229 (W.D. Pa. Dec. 16, 1993)........................................... 2, 12, 16 United States v. Cartwright, 411 U.S. 546, 551 (1973)................................................................ 57 United States v. Cumberland Farms of Connecticut, Inc., 647 F. Supp. 1166 (D. Mass. 1996).. 12 United States v. General Motors Corp., 323 U.S. 373 (1945).......................................... 22, 27, 51 United States v. Rapanos, 376 F.3d 629 (6th Cir. 2004) ....................................................... 17, 46 United States v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985)............................ 10, 17, 46 Walcek v. United States, 49 Fed. Cl. 248 (2001) .................................................................... 37, 47 Whitney Benefits, Inc. v. United States, 30 Fed. Cl. 411 (1994)............................................. 64, 66 Statutes 16 U.S.C. 3837, et seq.................................................................................................................. 30 26 U.S.C.A. § 170................................................................................................................... 30, 32 33 U.S.C. § 1311..................................................................................................................... 1, 8, 9 33 U.S.C. § 1344................................................................................................................... 1, 9, 11 33 U.S.C. § 1362............................................................................................................................. 9 Pub. L. 102-104, 105 Stat. 510 (1991).......................................................................................... 15 Pub. L. 95-217, § 67, 91 Stat. 1566 (Dec. 27, 1977) .................................................................... 11

Regulations 33 C.F.R. § 323.4(a)(1)(ii). ........................................................................................................... 12 33 C.F.R. § 328.3 ..................................................................................................................... 10,11 iv

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40 C.F.R. § 122.2. .............................................................................................................. 10,11, 18 7 C.F.R. § 1467.12 ........................................................................................................................ 31 7 C.F.R. § 1467.3 .................................................................................................................... 30, 31 7 C.F.R. §1647.1-18...................................................................................................................... 30 7 C.F.R. §1647.4 ........................................................................................................................... 31 Other Authorities 3 1977 Leg. History at 351 ........................................................................................................... 14 3 1977 Leg. History at 494 ........................................................................................................... 13 40 Fed. Reg. 31319 ....................................................................................................................... 45 40 Fed. Reg. 31320 ................................................................................................................. 10, 11 42 Fed. Reg. 37121 ....................................................................................................................... 45 42 Fed. Reg. 37122 ................................................................................................................... 9, 10 42 Fed. Reg. 37125 ....................................................................................................................... 11 42 Fed. Reg. 37127 ....................................................................................................................... 11 60 Fed. Reg. 28511 ....................................................................................................................... 30 Corps of Engineers Wetlands Delineation Manual at 1 (1987) .................................................... 15 Federal Manual for Identifying and Delineating Jurisdictional Wetlands at 1 (1989). ................ 15 Fee, UNEARTHING THE DENOMINATOR IN REGULATORY TAKING CLAIMS, 61 U. Chi. L. Rev. 1535........................................................................................................................................... 37 Flournoy, SECTION 404 AT THRITY-SOMETHING: A PROGRAM IN SEARCH OF A POLICY, 55 Ala. L. Rev. 607 (2004) ........................................................................................................................ 14 S. REP. NO. 102-80 ....................................................................................................................... 16 Uniform Appraisal Standards for Federal Land Acquisitions 44 (2000)...................................... 56

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QUESTION PRESENTED Is the Defendant liable for a physical, categorical or regulatory taking of the Murphy Farm or, alternatively, of the Murphy and Homestead farms?

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

ROBERT BRACE, Plaintiff, v. UNITED STATES, Defendant.

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Civil Action No. 98-897 L Hon. Francis M. Allegra

PLAINTIFF'S POST-TRIAL BRIEF This is an action to recover damages for the taking of 58 acres of farmland, known as the Murphy Farm, in Erie, Pennsylvania. Trial of the matter took place in Washington, D.C. from January 11, 2005 to January 14, 2005, and a view of the subject property occurred on April 8, 2005. Final argument has been set for May 31, 2005, following the submission of the parties' post-trial briefs. Procedural History This action has its roots in an environmental enforcement suit brought by the Environmental Protection Agency against Robert Brace (Plaintiff here) for the discharge of a pollutant (topsoil) into navigable waters (the Murphy Farm) without a federal permit in violation of the federal Clean Water Act1 (CWA). 33 U.S.C. § 1311(a); 33 U.S.C. § 1344(a). (See Pl.'s Ex. P21 (civil complaint alleging violation of the CWA).) The district court, after making findings of fact, entered judgment in favor of Mr. Brace, finding that Mr. Brace's activities were
"The CWA prohibits the unpermitted discharge of any pollutant, such as dredge or fill material, by any person from any point source into waters of the United States. 33 U.S.C. §§ 1311(a) & 1344(a)."(Pl.'s Ex. P21 ¶8.) Specifically, section 301 of the CWA states, "Except as in compliance with this section and sections 302, 306, 307, 318, 402, and 404 of this Act, the discharge of any pollutant by any person shall be unlawful." Section 404 authorizes the Secretary of the Army, acting through the Chief of Engineers, to "issue permits, after notice and opportunity for public hearings for the discharge of dredged or fill material into the navigable waters at specified disposal sites."
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exempt from the Clean Water Act's permit requirement "because they constitute: (a) normal farming activities; (b) upland soil and water conservation practices; and (c) maintenance of drainage ditches." (United States v. Brace, No. 90-229 (W.D. Pa. Dec. 16, 1993), Def.'s Ex. D5 (hereinafter "District Court Op.").) Without disturbing the District Court's findings of fact, the Third Circuit reversed, finding that Mr. Brace's "drainage activities on the thirty-acre wetland site were not exempt under the `normal farming activities'" exception from the CWA permit requirement. United States v. Brace, 41 F.3d 117, 138 (3rd Cir. 1994). On remand the case was concluded by entry of a consent decree which permanently enjoined Mr. Brace from "discharging any pollutants (including dredged or fill material) into the approximately 30 acre wetland site," required the removal of the miles of drain and tons of topsoil which Mr. Brace had installed to make the land productive and mandated that "within thirty days after the entry of this Consent Decree, Defendants will record this Consent Decree in the applicable land records office." (Pl.'s Ex. P22 ¶¶ 3, 4, 6.) On November 25, 1998, Plaintiff, Mr. Robert Brace, filed this action for the taking of his property without just compensation, in violation of the Fifth Amendment to the United States Constitution. A pre-trial conference was held on December 20, 2004. This Court conducted a trial on liability and damages from January 11-14, 2005, taking testimony from witnesses and accepting exhibits into evidence. On April 8, 2005 the court conducted a site visit to the Murphy Farm, the Homestead Farm, and the surrounding area. This Court has ordered the simultaneous filing of post trial briefs on April 19, 2005 and the filing of reply briefs on May 19, 2005.2 Closing argument is set for May 31, 2005 at 10:00 a.m. in Washington, D.C.

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These dates were established by an order of April 12, 2005 extending the original filing dates of April 12, 2005 and May 12, 2005, respectively.

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Factual Background History of Family Farm "Since at least the 1930's, Mr. Robert Brace's family has owned and farmed land located in Waterford Township, Erie County, Pennsylvania." (Jt. Stip. of Fact ¶ 1.) Mr. Brace's grandfather owned the Homestead Farm until it was lost during the depression because he was unable to work the property after suffering a stroke. (Tr. at 114, 117.) Mr. Brace's father bought the Homestead farm back two years later on production credit. (Id.) Mr. Brace's father bought the Murphy Farm, which was a working farm in its own right, in 1943. (Tr. at 115) ("The Murphy farm was a working farm in its entirety in the early 1900s, but it went by the wayside like so many other farms because it wasn't feasible to farm there anymore."); see also (Tr. at 120-21) ("that farm was a working farm in itself in the early 1900s. There was all kinds of tile lines that I tried to show the government when they came in there in '87...but when I did the blasting in there in '77, we opened up a lot of those tile lines.") "Mr. Brace grew up on this land and has been a farmer his entire life." (Jt. Stip. of Fact ¶ 1.) The Murphy Farm, the subject property of this suit, is typical of other farms in Erie County. (Tr. at 66-72.) (Mr. Burawa identifying Mr. Brace's farms and discussing the county wide need for drainage tile.) "The soil in Erie County, Pennsylvania "requires continuous draining in order to be suitable for cultivation," "[e]xtensive underground drainage systems are typical and necessary aspects of farming in Erie County," and `installation of such systems is a normal farming activity in order to make land suitable for farming."3 (Adjudication, FOF ¶¶ 13,
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In accordance with the Court's oral order on January 11, 2005, Mr. Brace cites findings of fact recited by the Third Circuit opinion in the prior enforcement action, which the Court has deemed as established under the doctrine of collateral estoppel. Also, in accord with the Court's ruling, Mr. Brace also sets forth specific factual findings from the district court's opinion in the enforcement action that are critical to the case and should be adopted as collateral estoppel. At the beginning of trial, Mr. Brace filed a motion to deem as established certain facts previously determined in the prior environmental enforcement action which Defendant brought against Plaintiff, and which resulted in a final judgment and consent decree following an extensive trial and appeal. See United States v. Brace,

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Def.'s Ex. D5.) As Mr. Joseph Burawa, former County Executive Director for the United States Department of Agriculture's Agricultural Stabilization and Conservation Service in Erie County, testified at trial, it was a common practice for the USDA to assist farmers in installing drainage or "tile underdrain" systems on farms in Erie County from the late 1960s to the 1980s: "[A]t that time, tile underdrain was probably the most popular and the most money that was put out into underground drainage systems." (Tr. at 66.) Mr. Joseph Burawa further testified that during his tenure at the ASCS, he worked with as many as 100 Erie County farmers in just one year who had applied for cost-sharing assistance to install such underdrain systems. (Tr. at 67.) ("There's tile put near on every farm in Erie County.") Agriculture Soil Conservation Service's 1960's Drainage Plan In the 1960's the United States Department of Agriculture Soil Conservation Service developed a drainage plan for Mr. Brace's father. (District Court Op. FOF ¶ 23; see also Tr. at 71-73; Pl.'s Ex. P1.) Like the drainage plans on numerous farms in Erie Country, the plan prepared by SCS for Mr. Brace's father was designed to drain fields in order to make them suitable for farming. (Def.'s Ex. D5; Tr. at 101.) (Mr. Burawa testifying, "During that era, I was aware of the fact that the government, through entitlements for tiling and diversions and conservation plans, there was money available for farmers to tile, to enhance their property, lower the water table if you will so they could actively farm that. Production agriculture.") Specifically, the Soil Conservation Service's plan was designed to drain fields on the Homestead farm labeled 3, 4, 6, 7, 8, 9, 10, and 11 in a southeasterly direction under South Hill Road and

41 F.3d 117 (3d Cir. 1994); (Pl.'s Ex. P22.) On January 11, 2004, the Court orally granted Mr. Brace's motion, stating: "I am going to take this [Third Circuit] opinion and treat the basic findings that are in here as ones which provide[] essentially a starting point for purposes of this litigation . . . ." (Tr. at 21.) The Court further held that it would view the opinion from the district court in the enforcement action as "having historical value," but not something it would "focus on for collateral estoppel," unless Mr. Brace identified specific findings from the district court opinion that should be "adopted via collateral estoppel." (Tr. at 24-25.) Because these district court findings were not reversed by the Third Circuit on appeal they should via collateral estoppel.

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into an unnamed tributary located on the Murphy Farm in what was labeled field 14. (Pl.'s Ex. P1.)(annotating slope boundaries with short dashed lines) From there the unnamed tributary channeled the water drained from the Homestead Farm and water from the Murphy Farm in a westerly direction across the Murphy Farm and into the Elk Creek located in what was labeled field 13. (Id.) Elk Creek then flows in a northwesterly direction, under South Hill Road and onto the Homestead Farm before proceeding on to Lake Erie. (Id.); see also (Pl.'s Ex. P18 at 20.)(indicating directions of flow) As designed, the flow of water across the Murphy Farm is an integral part of the Soil Conservation Service's plan because the Murphy Farm acts as the funnel through which the Homestead Farm drains. (Id.) After obtaining the drainage plan, Mr. Brace's father set about implementing its recommendations. (Tr. at 123-24.) Mr. Brace's father excavated ditches on both the Homestead and Murphy Farm because "he wanted to try to get more productive pasture and row crop even at the time that he was doing corn and oats and hay augmenting his basic crops." (Id.) Mr. Brace's father also installed a diversion ditch that interconnected the drainage plans on the Murphy and Homestead farms. (Tr. at 309-11.) In addition to ditching, Mr. Brace's father renovated pasture land and cleared brush in accordance with the SCS plan. (Tr. at 310.) In the spring of 1975, Mr. Brace purchased the subject 58 acre parcel, known as the Murphy Farm, from his parents, Charles and Mary Brace.4 (Tr. at 115, 118, 141-42.); see also (Jt. Stip. of Fact ¶ 2.) Mr. Brace purchased the farm to keep it from going outside the family. (Tr. at 118.) While Mr. Brace's parents had used the Murphy Farm for the pasturing of horses and cows, by the time Mr. Brace purchased the property it had gotten to "where they couldn't make a living with 50 or 60 head of dairy cows."(Tr. at 118.) Accordingly, it was Mr. Brace's

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Mr. Brace's father deeded the property to him on December, 30 1975. (Jt. Stip. of Fact ¶ 2.)

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intent to turn the farm into "effective and productive farming business." United States v. Brace, 41 F.3d 117, 120 (3rd Cir. 1994). "At the time he purchased the property from his father, [Mr.] Brace obtained and utilized the soil and conservation plans that had been prepared for his father by the ASCS.5" Id. "The existing drainage system was in poor condition and not yet complete at the time of [Mr.] Brace's acquisition." Id. (See also Tr. at 122-125; District Court Op. FOF ¶ 23; Tr. at 71-73; Pl.'s Ex. P1.) During the first two years Mr. Brace owned the Murphy Farm he began "preparing for row crops" in order to make it profitable. 6 (Tr. at 124.) This preparation was required because Mr. Brace's father had utilized the Murphy and Homestead farms for distinct farming operations. (Tr. at 118, 316-19)(Mr. Brace describing the distinct uses of the farms and testifying, "We had a separate farm. We didn't drive our dairy cows back and forth.") Specifically, Mr. Brace's father used the Homestead Farm for crop production and the Murphy Farm as a dairy operation. (Id.); see also (Pl.'s Ex. P1.)(detailing field uses) Describing his preparation Mr. Brace testified at trial, "I went in there and tore down fences and planned to make it more productive with better drainage, and that's where I got involved with the plan to go ahead and try to expand and make this ground very productive, as much as you could, because you cannot make a farmer unless you have good highly productive land. That's a necessity. It's a must...So, in 19 -- I believe it was 1975 is when I used three-and-a-half ton of dynamite to open those ditches up, and that's

"The drainage system impacts the ability to produce crops on all parts of Brace's property." United States v. Brace, 41 F.3d 117, 120 (3rd Cir. 1994). 6 "[Mr.] Brace utilized the existing drainage plan that had been implemented on the property that contains the site as part of his overall intention and design to establish a farming operation that would be interconnected and continuous throughout the property." (District Court Op. FOF ¶¶ 24.) "The drainage system included a design for channels and tiling to allow waters from adjoining croplands to be siphoned off and onto the site. In late 1976 and early 1977, [Mr.] Brace implemented the first stage of the interconnected plan that had been recommended by the [SCS] by reopening a channel to allow the water to flow in its natural direction. [Mr. Brace] also installed tiling material on the site consistent with the [SCS] recommendations." (District Court Op. FOF ¶ 26.)

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why I've always said it was a consistent plan and it was a plan that worked together.7" (Tr. at 119.) In 1975, Mr. Brace also engaged in "ditching and draining" of the Murphy Farm. (Tr. at 125.) "As of 1977, the essential portions of [Mr.] Brace's improvements to the existing drainage system were intact and operating." Brace, 41 F.3d at 121. In 1977, Mr. Brace contacted the United States Department of Agriculture's Agricultural Stabilization and Conservation Service (ASCS) for technical and financial assistance in further improving the drainage plan.8 (See Pl.'s Ex. P2, P3, P4, P5); see also (Tr. at 72-75, 85-90, 28129.) On March 7, 1977, Willie L. Ruffin, an ASCS District Conservationist, provided technical assistance in mapping out a drainage system entailing portions of both the Homestead and Murphy Farms. (Pl.'s Ex. P2; see also Tr. at 85.) When completed on July 14, 1977 that plan entailed the installation of 4920 feet of 4 inch underground drain tile, 50 units of 6 inch steel pipe and 880 feet of 6 inch underground drain tile. (Pl.'s Ex. P2 at 14 (R.R. Sheldon certifying installation on July 14, 1977).) In addition, some fill material was needed on the Murphy Farm to properly install the outlet. (Id. at 13, 16.)

"The drainage system impacts the ability to produce crops on all parts of [Mr.] Brace's property." Brace, 41 F.3d at 120-21; (Tr. at 359-360.) "[W]ithout such a system, the property is not suitable for farming because of soil conditions." (District Court Op. FOF ¶¶ 24.) 8 "In 1977, [Mr.] Brace decided to seek the advice and assistance of the [United States Department of Agriculture's] Agricultural Stabilization and Conservation Service (hereinafter `ASCS') as part of his plan to develop an integrated farming operation on the property that includes the site."8 (District Court Op. FOF ¶ 23) "Also, in 1977, [Mr.] Brace contacted the ASCS to inquire as to technical assistance and cost-sharing arrangements that might be available for the implementation of his plans. The ASCS visited the site prior to extending such assistance and thereafter provided such advice and assistance to [Mr.] Brace, continuing to do so up to 1985. The site and the farming activities conducted thereon were never concealed from the [United States Environmental Protection Agency], other departments of the federal government or state agencies." (District Court Op. FOF ¶ 27; see also Tr. at 72-75.) "In subsequent years, [Mr.] Brace maintained the system, consistent with his overall plans and as is necessary for typical farming activities in Erie County, as time, funds and equipment were available. (District Court Op. FOF ¶ 28.) "[Mr.] Brace's work in improving upon the interconnected drainage system progressed continuously from 1977 to 1987, as time, funds and equipment were available. If the necessary funds had been available to him in 1977, [Mr.] Brace would have expedited his farming plans and completed the project at that time. As a result of [Mr.] Brace's efforts, by the end of 1979 the site was dry, with the exception of times of excessive rainfall." Brace, 41 F.3d at 121.

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On April 13, 1978, Willie L. Ruffin provided technical assistance on a second drainage system. (Pl.'s Ex. P3.) When completed on May 2, 1978 that system entailed the installation of 5050 feet of 4 inch underground drain tile and 30, 4 inch, steel pipe outlets. (Id.) On March 20, 1979 the designated ASCS technician provided technical assistance mapping out a third drainage system. (Pl.'s Ex. P4.) When completed in July 1979 that system entailed the installation of 350 feet of 4 inch underground drain pipe and 650 feet of six inch under ground drain tile. (Id.) In addition, 825 feet of sod waterway had been constructed. (Id.) In July 1984, as part of the emergency conservation assistance program the ASCS requested and Mr. Brace conducted maintenance on a portion of the drainage system located on the Murphy Farm. (Pl.'s Ex. P5); see also (Tr. at 90, 342, 374-75.) As Mr. Brace testified at trial, "The Murphy farm had the drainage that, you know, they asked us to clean out there on the main ditch for $1,008 I believe it was, and the rest of that, there was some sod waterways we put in on the main farm, and again, that was their idea to having interconnecting for the two farms so they interconnected together for a natural flow of water off of both the Murphy and the Homestead farms." (Tr. at 129.) Mr. Burawa testified that the ASCS provided funding for this maintenance as well as earlier cost-sharing for the drainage projects. (Tr. at 84-90)(Mr. Burawa describing ASCS various projects on Mr. Brace's farms and testifying, "we like to start as many practice as we could on a lot of different farms which we did, and we only had so much money that Congress allocated under the Agriculture Conservation Program, so we would put a limit on it, usually about $5,000. So farmers would get so they would do some every year and we would spend some every year, and I'm sure part of this was to go ahead and put in for more assistance.")

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"In 1986 and 1987, [Mr.] Brace paid for excavation in the site and the burying of plastic tubing or `drainage tile' in an effort to drain the site. Throughout the 1980s, [Mr.] Brace used appropriate equipment to remove unconsolidated soil, pebbles, silt, and growth which were impeding water flow. Farmers in the area typically engaged in such practices." Brace, 41 F.3d at 121. His drainage and soil preparation completed, "[Mr.] Brace began growing crops on the site in 1986 and 1987." Brace, 41 F.3d at 121. Clean Water Act The Clean Water Act, which was passed in 1972, prohibited the "discharge of any pollutant by any person" into "navigable waters" without a permit. 33 U.S.C. §§ 1311(a), 1344(a). The "Secretary of the Army, acting through the Chief of Engineers," was delegated authority to issue permits for "fill," while the EPA retained permit authority for other pollutants. Id. The Clean Water Act defined "navigable waters" as "waters of the United States, including the territorial seas" and did not mention wetlands at all. 33 U.S.C. § 1362(7). On April 3,

1974 the Army Corps of Engineers published regulations implementing the Clean Water Act. See 42 Fed. Reg. 37122, 37122-33. These regulations limited the application of the Clean Water Act to "waters that are subject to the ebb and flow of the tide shoreward to their mean high water mark (mean higher water mark on the West Coast) and/or waters that are presently used, were used in the past, or are susceptible to use to transport interstate or foreign commerce." Id. at 37123. Those regulations did not purport to extend the Corps' jurisdiction to encompass wetlands. Id. Accordingly, in the spring of 1975 when Mr. Brace purchased the Murphy Farm from his parents, the Corps of Engineer's regulations did not extend the jurisdiction of the Clean Water Act over the Murphy Farm and did not prohibit Mr. Brace from implementing the Soil

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Conservation Service drainage plan. See 42 Fed. Reg. 37122, 37122-33 (discussing the progression of Clean Water Act and the regulatory expansion from the "high water mark" to jurisdictional wetlands.); see also United States v. Riverside Bayview Homes, Inc., 474 U.S. 121,123-24 (1985)(discussing the regulatory expansion of "navigable waters" under the Clean Water Act). As of 1975, the United States Department of Agriculture's Agricultural Stabilization and Conservation Service, like the Army Corps of Engineers, understood that the Murphy Farm was not subject to Clean Water Act permitting requirements. (Tr. at 66-7.) As Mr. Joseph Burawa testified at trial, as of 1975, the ASCS did not view the Clean Water Act as imposing any restrictions on the assistance provided to farmers in the practices under its agricultural conservation programs, such as the installation of underground drainage systems. (Tr. at 76.) ("Interpretation in our office was that farmers were exempt from the Act at that time, and so we just done things like we always done.") As a result of a court order, on July 25, 1975 the Army Corps of Engineers published interim final regulations extending the jurisdiction of the Clean Water Act "over discharges of dredge and fill material to many areas that [had] never before been subject to Federal permits or to this form of water quality protection. 9" 40 Fed. Reg. 31320 (July 25, 1975). Still, these regulations arguably did not apply to the Brace property because they narrowly defined "navigable waters" to include only those freshwater wetlands that were actually10 "periodically inundated and normally characterized by the prevalence of vegetation that requires saturated soil
The Army Corps of Engineers published this expansion in response to the United States District Court for the District of Columbia's ruling in NRDC v. Callaway, 392 F. Supp 685 (D.D.C. 1975). 40 Fed. Reg. 31320 (July 25, 1975). 10 The Corps would later remove the requirement that the wetlands actually have the required characteristics by changing the definition to include those areas that, under normal circumstances, possess the required characteristics. See 42 Fed. Reg. 37,122 (July 19, 1977); 33 CFR § 328.3; 40 C.F.R. § 122.2.(emphasis added.)
9

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conditions for growth and reproduction. 11" Moreover, the Corps' 1975 interim regulations were subject to change before they became final. 12 On July 19, 1977, the Corps adopted final regulations implementing a number of proposed changes. 42 Fed. Reg. 37125. These changes further expanded the jurisdiction of the Clean Water Act by replacing the term "navigable waters" with "waters of the United States" and modifying the underlying definition. 13 42 Fed. Reg. 37127. See also 42 Fed. Reg. 37,122 (July 19, 1977); also 33 C.F.R. § 328.3; 40 C.F.R..§ 122.2.14 Normal Farming Activities Exemption Simultaneous with the Corps' promulgation of its new regulations, in 1977 Congress also amended the Clean Water Act to exempt "normal farming activities" on "established farming operations" from the Section 404 permit requirement. Pub. L. 95-217, § 67, 91 Stat. 1566 (Dec. 27, 1977) (codified at 33 U.S.C. §§ 1344(f)(1)(A) ("normal farming, silviculture and ranching activities such as plowing, seeding, cultivating, minor drainage, harvesting for the production of food, fiber and forest products or upland soil and water conservation practices"); 1344(f)(2)

These interim final regulations administratively defined "navigable waters" to include: [C]oastal waters, wetlands, mudflats, swamps, and similar areas; freshwater lakes, rivers, and streams that re sued, were used in the past, or are susceptible to use to transport interstate commerce, including all tributaries to these waters; interstate waters, certain specified intrastate waters the pollution of which would affect interstate commerce; and freshwater wetlands, including marshes, shallows, swamps, and similar areas that are contiguous or adjacent to the above described lakes, rivers, and streams, and that are periodically inundated and normally characterized by the prevalence of vegetation that requires saturated soil conditions for growth and reproduction. Id. at 37124. (emphasis added). 12 "To further refine the program the Corps will again need the help of the public and of State and Federal agencies in identifying activities and bodies of water that can be excluded from Section 404 program without adverse impact...their will be an additional comment period of 90 days in order that the public can comment further on any of the provisions." 40 Fed. Reg. 31320 (1975). 13 These changes adopted the following definition of wetlands: Those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs, and similar areas. 42 Fed. Reg. 37,122 (July 19, 1977); 33 CFR § 328.3; 40 C.F.R. § 122.2.(emphasis added.)

11

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("Any discharge of dredged or fill material into the navigable waters incidental to any activity having as its purpose bringing an area of the navigable waters into a use to which it was not previously subject, where the flow or circulation of navigable waters may be impaired or the reach of such waters be reduced, shall be required to have a permit under this section.").) By this exception, "Congress sought to calm fear that the decision in N.R.D.C., Inc. v. Callaway would result in an unlimited expansion of the Corps' jurisdiction by providing for the specific exclusion of certain activities from regulation by permit." United States v. Cumberland Farms of Connecticut, Inc., 647 F. Supp. 1166, 1175 (D. Mass. 1996). Based on this "normal farming activities" exemption the ASCS and Mr. Brace continued to believe that Mr. Brace's activities were exempt from the permit requirements of the CWA. (Tr. at 77, 373-74.) As Mr. Joseph Burawa testified at trial, after the 1977 regulatory expansion of the Clean Water Act's jurisdiction, that also added an exemption for "normal farming activities," it continued to be ASCS's policy up until at least 1984 that the Clean Water Act imposed no restrictions on the drainage activities that ASCS assisted farmers in implementing on their properties. (Tr. at 77.) Specifically, Mr. Burawa testified, "Interpretation in our office was that farmers were exempt from the Act at that time, and so we just done things like we always done." (Id.) Debate over the breadth of the "normal farming activities" exemption, as implemented by 33 C.F.R. § 323.4(a)(1)(ii)15, existed until at least 1994. Compare United States v. Brace, No. 90229 (W.D. Pa. Dec. 16, 1993), holding that Mr. Brace's activities were "normal farming

Under Corps regulations "normal farming activity" "must be part of an established (i.e., on-going) farming . . . operation and must be in accordance with the definitions in § 323.4(a)(1)(iii) . . . . Activities which bring an area into farming . . . use are not part of an established operation. An operation ceases to be established when the area on which it was conducted has been converted to another use or has lain idle so long that modifications to the hydrological regime are necessary to resume operations." 33 C.F.R. § 323.4(a)(1)(ii).

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activities" and part of an "established farming operation" by considering the "activities" in light of local practice and the parcel as a whole to determine whether the activities were part of and "established farming operation", with United States v. Brace, 41 F.3d 117 (3d Cir. 1994), holding that Mr. Brace's activities were not "normal farming activities" or part of an "established farming operation" by focusing on the Corps' definition of "normal" rather than local practice and considering only the wetland site rather than the parcel as a whole when determining whether the activities were part of an "established farming operation." See also National Min. Ass'n v. U.S. Army Corps of Engineers, 145 F.3d 1399 (C.A.D.C. 1998)("Congress added the subsection in 1977, apparently in response to the broad construction of "discharge" in the 1977 regulations."). The legislative history of the 1977 amendment adding the "normal farming activities" exemption reveals not only the source of the debate but also a congressional intent for a broad interpretation of the exemption. As Senator Jennings Randolph explained:

One of the most controversial of [the issues in the 1977 Amendments to the Act] relates to the regulation of disposal of dredge and fill material, resulting from a judicial decision as to the authority and responsibility of the Army Corps of Engineers under section 404 of the 1972 act. That decision resulted in widespread concern that many activities usually considered routine would be prohibited or made extremely difficult because of the complex regulatory procedure set up by the corps unless there was a new statement of congressional intent. 3 1977 Leg. History at 494. Congressman Roberts explained that the 1977 Amendments were designed to obviate that concern by creating express exemptions for normal farming activities like plowing. Specifically, Congressman Roberts stated, "we will now have for the first time statutory recognition that normal farming, ranching and silviculture activities do not belong in this permit program. These exemptions 13

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reemphasize that Congress never intended these activities to be considered discharges of dredged or fill material." 3 1977 Leg. History at 351. Despite this clear legislative intent the debate continues because the Supreme Court was unable to resolve it. See Borden Ranch Partnership v. U.S. Army Corps of Engineers, 537 U.S. 99 (2002)(affirming, by an equally divided court, a Ninth Circuit decision turning on the disputed definitions of "normal farming activity" and "established farming operation"). In Borden Ranch P'ship v. United States Army Corps of Eng'rs, 261 F.3d 810(9th Cir. 2001), the appellant asserted that its deep ripping of a wetland was exempt as a "normal farming activity" occurring as part of an "established farming operation." The Ninth Circuit disagreed holding that while a farmer is free to switch from one wetland crop to another he may not convert ranch land to orchards and vineyards because even normal plowing can violate the CWA where it brings land into a use to which it was not previously subjected. Id. The Supreme Court affirmed because it was unable to reach an agreement on the definition of "normal farming activities" and "established farming operation." Borden Ranch Partnership v. U.S. Army Corps of Engineers, 537 U.S. 99 (2002). See also Flournoy, SECTION 404 AT THRITY-SOMETHING: A PROGRAM IN SEARCH OF A POLICY, 55 Ala. L. Rev. 607 (2004). "Jurisdictional Wetlands" Moreover, the ongoing debate regarding the definition of "jurisdictional wetland" continues to create significant turmoil. This debate is epitomized by Congress' appropriations rider prohibiting the use of the Federal Manual for Identifying and Delineating Jurisdictional Wetlands (1989). 16 See Pub. L. 102-104, 105 Stat. 510 (1991).

16

The Energy and Water Development Appropriations Act of 1992, Pub. L. 102-104, 105 Stat. 510 (1991) provides:

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In 1987, the Army Corps of Engineers published its Wetlands Delineation Manual which sets forth "a multi-parameter approach to identify[ing] and delineat[ing] wetlands for purposes of Section 404 of the Clean Water Act." Corps of Engineers Wetlands Delineation Manual at 1 (1987). According to the Corps, "[t]he purpose of this manual is to provide users with guidelines and methods to determine whether an area is a wetland for purposes of Section 404 of the Act." Id. at 5. Replacing the 1987 manual, in 1989, the Corps, together with the EPA and other federal agencies, adopted the "Federal Manual for Identifying and Delineating Jurisdictional Wetlands," the use of which was prohibited by PL 102-104. The 1989 Manual states: "The purpose of this manual is to provide users with mandatory technical criteria . . . to determine whether an area is jurisdictional wetland or not, and to delineate the upper boundary of these wetlands." Federal Manual for Identifying and Delineating Jurisdictional Wetlands at 1 (1989). Congress prohibited the use of the 1989 manual because it significantly expanded the Corps' wetland jurisdiction without appropriate notice and comment rulemaking. Indeed, as Judge Horn noted, "[t]he 1989 Manual, as compared to the 1987 Manual, expanded the definition of wetlands." Lakewood Assoc. v. United States, 45 Ct. Cl. 320, 323 (1999); see also Lakewood Assoc. v. Comm'r, 109 T.C. 450, 453 (1997) (stating that the adoption of the 1989 manual "substantially increas[ed] the area of land considered to be protected wetlands and over which the Corps asserted jurisdiction"), aff'd, 173 F.3d 850 (4th Cir. 1998). Further, in a Report submitted to the Senate by the Senate Committee on Appropriations regarding the Energy and Water Development Appropriations bill, the Committee stated:
None of the funds in this Act shall be used to identify or delineate any land as a `water of the united States' under the Federal Manual for Identifying and Delineating Jurisdictional Wetlands that was adopted in January 1989 (1989 Manual) or any subsequent manual not adopted in accordance with the requirements for notice and public comment of the rule-making process of the Administrative Procedure Act.

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Despite the importance and mandatory use of [the 1989 manual], it was not subjected to the rule making process of the Administrative Procedure Act, which would have given landowners and the public notice and opportunity to be heard on the changes made. Nor was it submitted to the Congress for consideration or debate. The Committee believes this was a serious mistake. . . . Because the Committee believes that landowners, at the minimum, were entitled to notice and opportunity to be heard before these mandatory changes were implemented, the Committee has included language prohibiting the Corps from using any funds made available in this act to delineate any land as a `water of the United States' under the 1989 delineation manual or any subsequent manual not adopted in accordance with the rulemaking process of the Administrative Procedure Act. S. REP. NO. 102-80, at 54-55 (1991). Underlying Enforcement Action The impact of this debate on wetlands delineations is evident in the varying acreages alleged throughout the enforcement action underlying this case. (Tr. at 77.) When "[t]he United States [through its Environmental Protection Agency and the U.S. Army Corps of Engineers] became aware of [Mr.] Brace's activities in 1987, Brace, 41 F.3d at 121, David Putnam, an Acting Field Supervisor with the U.S. Fish & Wildlife Service (FWS) initiated an enforcement campaign by alleging in a letter to Jim Peabody of the Army Corps of Engineers that Mr. Brace could be held responsible for affecting "over 200 acres of wetlands." (Pl.'s Ex. P6.) (emphasis added) In contrast, on July 17, 1987, Edward W. Perry, also an Acting Field Supervisor with the FWS, wrote a letter to Mr. Brace, stating that "[b]iologists from this and other offices observed filling activities in about 130 acres of wetlands on your property on several occasions since May 1987." (Pl.'s Ex. P10 (emphasis added).) The district court, however, found that only 30 acres were actually jurisdictional wetlands. United States v. Brace, No. 90-229 (W.D. Pa. Dec. 16, 1993). Indeed, the extent to which Congress intended CWA jurisdiction to reach remains the subject of extensive litigation. See, e.g., United States v. Riverside Bayview Homes, Inc., 474 16

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U.S. 121 (1985) (finding that because "neither the imposition of the permit requirement itself nor the denial of a permit necessarily constitutes a taking...the Court of Appeals erred in concluding that a narrow reading of the Corps' regulatory jurisdiction over wetlands was `necessary' to avoid `a serious taking problem'" and holding that Congress acquiesced to the Corps' administrative construction"); but see Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers, 531 U.S. 159 (2001) (concluding "that respondents have failed to make the necessary showing that the failure of the 1977 House bill demonstrates Congress' acquiescence to the Corps' regulations or the "Migratory Bird Rule," which, of course, did not first appear until 1986."); Compare In re Needham, 354 F.3d 340, 345-47 (5th Cir. 2003)(requiring a "significant nexus" to navigable waters for CWA jurisdiction to attach), with United States v. Rapanos, 376 F.3d 629 (6th Cir. 2004)(requiring only a "hydrologic connection" to navigable water for CWA jurisdiction to attach); see also Carabell v. United States Army Corps of Eng'rs, 391 F.3d 704 (6th 2004)(rejecting argument that definition of "adjacent waters" did not include water separated by a manmade berm). "During 1987 and 1988, the United States [through the EPA and the Corps] issued three orders to [Mr.] Brace, directing him, inter alia, to refrain from further disturbing the site" and to restore the wetlands on his property. . . . In October of 1988, [Mr.] Brace received an administrative complaint in connection with his farming activities on the site. [Mr.] Brace requested a hearing to contest the complaint, believing that his activities were exempt from any and all permit requirements. Prior to the hearing, the complaint was dismissed." Brace, 41 F.3d at 121; (see also Pl.'s Exs. P9, P12, P13, P16.) Those orders and related correspondence threatened a range of civil penalties and possible criminal prosecution. (Pl.'s Exs. P6, P9, P10, P12, P13, P16.)

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The tension between agencies regarding wetlands, in this example between the Department of Agriculture and the EPA, is demonstrated by the fact that, "In the summer of 1988, Brace approached the ASCS in order to gain the status of `commenced conversion from wetlands' prior to December 23, 1985 with respect to the site. . . . The ASCS granted the status to the site, finding that [Mr.] Brace's on-going farming activities had commenced prior to December of 1985, which would enable [Mr.] Brace to complete the conversion and produce an agricultural commodity without losing USDA benefits." Brace, 41 F.3d at 121; see also (Pl.'s Exs. P14, P15.) In 1990, the EPA filed an enforcement action against Mr. Brace in the United States District Court for the Western District of Pennsylvania, seeking civil penalties. (Pl.'s Ex. P21.) "In April 1990, as a cautionary measure, [Mr.] Brace approached the Army Corps of Engineers (`COE') in an effort to obtain an after-the-fact permit to conduct his farming activities on the site, despite his belief that the activities were and are exempt from permit requirements of the CWA. The United States Environmental Protection Agency (`EPA') requested that the COE not review an application from [Mr.] Brace for an after-the-fact permit. [Mr.] Brace was advised that because the matter was then in litigation, the government would not act on his request for a permit." Brace, 41 F.3d at 121. In 1993, the district court entered judgment in favor of Mr. Brace, finding that his activities were exempt from the permitting requirements of Section 404 of the Clean Water Act because they were normal farming activities on an established farming operation. (Dist. Ct. Op. at 13.) On appeal, the United States Court of Appeals for the Third Circuit reversed, holding that the district court incorrectly interpreted the exemption and that Mr. Brace's 18

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activities did not constitute normal farming practices on an established farming operation. Specifically, the Third Circuit held that: In determining that Brace's activities fell within [normal farming activities], the district court relied on facts that are irrelevant to the inquiry required by the applicable law. The district court appears to have based its conclusion on a casual observation that what Brace did was "normal" activity for a farmer in Erie County, rather than on the application of the regulatory construction accorded the statutory term "normal farming activities" by the agencies charged with the implementation of the statute...The district court misinterpreted the meaning of the "established farming operation" requirement. The district court believed it was appropriate to examine the relationship of the site in question to the rest of the land owned by the same property-owner in determining whether land was being brought into farming use ... We cannot agree with this interpretation of the statute's requirement. The regulations provide that, "activities which bring an area into farming . . . use are not part of an established operation." The regulations do not specify the precise area to which we should look in determining whether there is an established farming operation. There are no minimum limits placed on the "area" being brought into farming use. Thus, we read the regulations to provide that an exemption is available only to activities that are part of an "established farming operation" at the site. A proper "contextual review of its total activities" only requires us to analyze whether such activities are "established and continuing" on the thirty-acre wetland site itself.

United States v. Brace, 41 F.3d 117 (3d Cir. 1994), cert. denied, 515 U.S. 1158 (1995)(internal citations omitted). Consent Decree After Mr. Brace's petition for writ of certiorari was denied by the United States Supreme Court, the case was remanded to the district court, and Mr. Brace, having no remaining remedy available to challenge the EPA's charges, was forced to involuntarily enter into a consent decree. (Tr. at 133.) ("Q Would you describe that decision to enter into a consent decree with the government as voluntary? A No, it was sure not. I mean, I tried and tried and tried to work the problem out, but, at this time, I was forced into doing something and trying to stay out of any more major problems than they already had me in.") The consent decree "enjoined 19

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permanently" Mr. Brace from undertaking any further activity on the 30 acres that might be considered "discharging any pollutants (including dredged or fill material)." (Pl.'s Ex. P22 ¶ 3.) The Consent Decree also ordered Mr. Brace to "perform restoration" in accordance with a Wetlands Restoration Plan, made part of the Consent Decree, and to pay a civil penalty of $10,000. (Pl.'s Ex. P22 ¶¶ 4, 5.) Mr. Brace was also required to record the Consent Decree in the land records office and provide a copy of the decree to any proposed buyer of his property; under the Consent Decree, "[a] transfer of interest in the said property will not relieve Defendants of any responsibility in this Consent Decree, unless the United States, Defendants, and the transferee agree to allow the transferee to assume such responsibility." (Pl.'s Ex. P22 ¶¶ 6, 7.) The Wetlands Restoration Plan required Mr. Brace to destroy 20 years of work. (Tr. at 134.) (Mr. Brace describing the physical alterations required by the Consent Decree and testifying that it was "the worst devastating situation that I ever had in my life to destroy something that I had worked for 20 years to work on and try to improve.") The "restoration plan" required Mr. Brace to excavate six trenches on the property and rip out drainage tile. (Id.) The "restoration plan" further required Mr. Brace to fill in two surface ditches on the property. (Id.) Under the "restoration plan," Mr. Brace was also required to install a "check dam" in "unnamed Tributary A," to be constructed of concrete, gabions or compacted rock. (Pl.'s Ex. P22 Ex. A.) ("In order to restore the hydrology to the area, the drainage tile system currently located in the wetlands is to be disabled, surface ditches filled in, and a check dam constructed.") All of this work was to be completed, if feasible, within 90 days, or in any event, no later than one year after entry of the Consent Decree. (Id.) The property was subject to inspection by government agents until the restoration was considered completed by the EPA. (Id.) ("The site will be

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inspected at the completion of the trench work and again at the completion of the restoration work.) Mr. Brace fully complied with the Consent Decree, in which he "had to tear out several miles . . . of tile line, took the excavator down to both sites and had to go four feet deep and intersect any tile lines that were in there, . . . and then . . . put riprap in and bring the water table up and excavate and fill that back over to make [the] tile lines all quit functioning and [the] drainage system quit." (Tr. at 133-34.) The property now floods regularly and is completely unusable for farming or pasturing of cows. (Tr. at 136, 358-360.) Under the authority of the Consent Decree, Mr. Lewis Steckler of the ASCS physically entered and inspected the property on December 23 and 24, 1996, and on December 24, 1996 concluded that the "overall project [was] completed according to the plan." (Pl.'s Exs. P23, P24.) Today, as the Court saw on its April 8, 2005 view of the property, the restoration plan has transformed the once productive farmland into a wetland. The site now provides habitat for a variety of species including beavers that have expanded the restoration of the wetlands by building dams. The check dam Mr. Brace was required to install under the consent decree is still functioning. Water flowing southeast from the Homestead Farm onto the Murphy Farm and then northwest back onto the Homestead farm completely fills the culverts placed under South Hill as part of the Soil Conservation Services drainage plan. On the north side of South Hill Road, where the water pools up waiting to flow through those culverts, the areas annotated on Defense Exhibit 36 as farmed wetlands are once again inundated with ground and surface water. ARGUMENT I. The Government's Action Resulted in the Physical Invasion of Mr. Brace's Property, Thus Requiring Just Compensation as a Taking Per Se

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The government's physical occupation of the Murphy Farm constitutes a taking for which just compensation is due under the Fifth Amendment. Specifically, under the authority of the Clean Water Act and backed by the contempt power of the district court, the government required that Mr. Brace: (1) "restore" his land by removing miles of drainage tile and excavating tons of topsoil; (2) install a "check dam" to cause the land to flood; (3) allow federal officials to come upon his property to inspect the restoration work; and, (4) execute and record an instrument creating a conservation easement over 30 acres of Mr. Brace's land. (Pl.'s Ex. P22.) The unambiguous language of the Fifth Amendment provides: "[N]or shall private property be taken for public use, without just compensation." U.S. Const. amend. V. When the government, exercising its supreme power of eminent domain, physically takes land, the Constitution guarantees payment of just compensation for the land taken. As the Supreme Court has unequivocally indicated: When the government physically takes possession of an interest in property for some public purpose, it has a categorical duty to compensate the former owner, United States v. Pewee Coal Co., 341 U.S. 114, 115 (1951), regardless of whether the interest that is taken constitutes an entire parcel or merely a part thereof. Thus, compensation is mandated when a leasehold is taken and the government occupies the property for its own purposes, even t