Free Response to Supplemental Brief - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS RESOURCE INVESTMENTS, INC., and LAND RECOVERY, INC., ) ) ) Plaintiffs, ) ) v. ) ) UNITED STATES OF AMERICA, ) ) Defendant. ) __________________________________________)

No. 98-419 L Hon. Lawrence J. Block

DEFENDANT'S RESPONSE TO PLAINTIFFS' SECOND SUPPLEMENTAL MEMORANDUM ____________________________________________________

Respectfully submitted, SUE ELLEN WOOLDRIDGE Assistant Attorney General Environment & Natural Resources Division

SUSAN V. COOK, Senior Attorney MARK T. ROMLEY, 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: 202-305-0506 Email: [email protected] Attorneys for Defendant OF COUNSEL: Siri C. Nelson U.S. Army Corps of Engineers Seattle, WA

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TABLE OF CONTENTS TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii INDEX OF TO DEFENDANT'S EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 A. B. County Conditional Land Use Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Other Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 I. THE FACTUAL DISPUTES INHERENT IN THE APPLICATION OF THE PENN CENTRAL FACTORS TO THIS CASE PREVENT A GRANT OF SUMMARY JUDGMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 A. B. The Standard for Summary Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Character of the Government Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1. The Proper Inquiry Under This Penn Central Factor is to Review the Purposes and Effects of the Regulatory Action . . . . . . . . . . . 7 Plaintiffs' Interpretation of the Character of the Government Action Prong Conflict With the Supreme Court's Holding in Lingle v. Chevron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 The Purpose and Effect of Wetlands Regulation Weighs Against the Finding of a Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Plaintiffs' Argument that the Ninth Circuit's Holding is Determinative of the Character of the Government Action is Legally and Factually Erroneous . . . . . . . . . . . . . . . . . . . . . . . . . 11 The "Presumption of Validity" Prevents An Examinations Into the Reasonableness of the Corps' Assertion of Jurisdiction . . . . . . . 15 Disputed Issues of Fact Bearing on the Character of the Government Action Prong . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2.

3.

4.

5.

6.

C.

Genuine Issues of Disputed Material Fact Prevent Determination of the i

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Reasonable Investment Backed Expectations Factor . . . . . . . . . . . . . . . 19 D. Plaintiffs Apply Incorrect Legal Standards and Misuse or Misstate Evidence on the Economic Impact Factor . . . . . . . . . . . . . . . . . . . . . . . . 22 1. Evaluation of This Factor Requires A Comparison of the Fair Market Value of the Property as a Whole With and Without the Regulatory Restriction; Plaintiffs Offer No Such Evidence anc Accordingly Their Motion for Summary Judgment Must Be Denied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Plaintiffs' Demonstrations Based on Evidence from Dr. Mitchell Are Neither Legally Relevant Nor Factually Persuasive . . . . . . . 24 Deciding the "Causation" Issue on Summary Judgment Would Require the Resolution of Disputed Material Facts . . . . . . . . . . . 27 a. Many of Plaintiffs' contentions are supported by inadmissible hearsay . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Plaintiffs' Attempt to Blame the Corps for Delay Caused By Plaintiffs' Decision to Pursue an Appeal Should Be Rejected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 There Is No Evidence That Plaintiffs Were Told No Federal EIS Would Be Necessary . . . . . . . . . . . . . . . . . . 34 The Corps Did Not Require Plaintiffs to Reconfigure Their Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Plaintiffs Permit Process Was Not Delayed By the Auburn Racetrack Application . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

2.

3.

b.

c.

d.

e.

II.

PLAINTIFFS' CANNOT ESTABLISH A TAKING BASED UPON A THEORY OF EXTRAORDINARY DELAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 PLAINTIFFS CANNOT ESTABLISH A CATEGORICAL TAKING AS A MATTER OF LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

III.

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

ii

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TABLE OF AUTHORITIES CASES Agins v. Tiburon, 447 U.S. 255 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Bass Enterprises Prod. Co. v. United States, 381 F.3d 1360 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 8, 36 Brace v. United States, 72 Fed. Cl. 337 (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Boise Cascade Corps. v. United States, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16, 39 296 F.3d 1339 (Fed. Cir. 2002) Celotex Corp. v Catrett, 477 U.S. 317 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cermetek, Inc. v. Butler Avpak, Inc., 573 F.2d 1320 (9th Cir. 1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Chevron U.S.A. Inc. v. Cayetano, 57 F.Supp.2d 1003 (D.Haw. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Cienega Gardens v. United States, 331 F.3d 1319 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20, 22 Cienega Gardens v. United States, 67 Fed. Cl. 434 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Evans v. Technologies Applications & Services, 80 F.3d 954 (4th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Friends of the Earth v. Hall, 693 F. Supp. 904 (W.D.Wa. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Goldblatt v. Hempstead, 369 U.S. 590 (1962) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Golden Pacific Bancorp v. United States, 15 F.3d 1066 (Fed. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Heydt v. United States, iii

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38 Fed. Cl. 286 (1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Lingle v. Chevron, 544 U.S. 528 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 9, 10 Louisiana Wildlife Fed'n v. York, 761 F.2d 1044 (5th Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Maritrans Inc. v. United States, 342 F.3d 1344 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Montana v. United States, 440 U.S. 147 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Mosca v. United States, 417 F.2d 1382 (Ct. Cl. 1966 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Mother's Restaurant, Inc. v. Mama's Pizza, Inc., 723 F.2d 1566 (Fed. Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Ms. McNeill, Sylvester v. United States Army Corps of Engineers, 888 F.2d 407 (9th Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Nectow v. Cambridge, 277 U.S. 183 (1928) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Norman v. United States, 429 F.3d 1081 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20, 22 Palazzolo v. Rhode Island, 533 U.S. 606 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 11, 23 Penn Cent. Transp. Co. v. City of New York, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim 438 U.S. 104 (1978) Pettro v. United States, 47 Fed. Cl. 136 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Resource Investments, Inc. v. U. S. Army Corps of Engineers, 151 F.3d 1162 (9th Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Scosche Indus., Inc. v. Visor Gear Inc., 121 F.3d 675 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 iv

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Seiber v. United States, 364 F.3d 1356 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 26, 39 Sierra Club v. Alexander, 484 F. Supp. 455 (N.D.N.Y. 1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Tabb Lakes v. United States, 10 F.3d 796 (Fed. Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Tahoe-Sierra Preserv. Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 United States v. Gen. Motors Corp., 323 U.S. 373 (1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 United States v. 15.00 Acres of Land, 468 F. Supp. 310 (E.D. Ark. 1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 United States v. Mendoza, 464 U.S. 154 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 United States ex rel. Tennessee Valley Auth. v. Powelson, 319 U.S. 266 (1943 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Weyerhaeuser v. Pierce County, 873 P.2d 496 (Wash. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim Weyerhaeuser v. Pierce County, 976 P.2d 1279 (Wash. App. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim Wyatt v. United States, 271 F.3d 1090 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Yuba Natural Resources, Inc. v. United States, 904 F.2d 1577 (Fed. Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 STATUTES 42 U.S.C. § 4321 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 42 U.S.C. §§ 6941-6949a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 42 U.S.C. § 6905(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 REGULATIONS v

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33 C.F.R. Part 323 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 33 C.F.R. § 323.2(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 40 C.F.R. § 1501.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 40 C.F.R. Part 232 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

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Index to Defendant's Exhibits for Defendant's Motion for Summary Judgment and Memorandum in Support Thereof (dated November 29, 2005) VOLUME I ­ Exhibit Nos. 1 - 25 Pages DSJ0001 - DSJ000388 VOLUME II ­ Exhibit Nos. 26 - 65 Pages - DSJ000389 - DSJ000712

DSJ Exhibit No. 1

Description Department of Army Record of Decision for Resource Investments, Inc. (OYB 4-013996), dated September 30, 1996 Appendix A to Department of Army Record of Decision for Resource Investments, Inc. (OYB 4-013996), dated September 30, 1996 Appendix B to Department of Army Record of Decision for Resource Investments, Inc. (OYB 4-013996), dated September 30, 1996 Transcript of Proceedings before The Honorable Robert J. Bryan, United States District Judge, Resource Investments, Inc. V. U.S. Corps of Engineers, C96-5920RJB, dated September 16, 1997 Resource Investments, Inc. v. U.S. Army Corps of Engineers, 151 F.3d 1162 (9th Cir. 1998) Weyerhaeuser v. Pierce County, 873 P.2d 498 (Wash. 1994)

Beginning Page Number in Appendix DSJ0001

GE No.1/ 14

1A

DSJ00090

N/A

1B

DSJ000127

24 & 67

2

DSJ000240

17

3

DSJ000280

N/A

4

DSJ000288

N/A

1/

The "GE" -- or "Government Exhibit" -- numbers represent exhibits that were filed in support of Defendant's first summary judgment motion. These exhibits have been renumbered under the "DSJ" prefix for Defendant's latest summary judgment motion.

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5 6 7

Weyerhaeuser v. Pierce County, 976 P.2d 1279 (Wash. Ct. App. 1999) Weyerhaeuser v. Pierce County, 96 P.3d 460 (Wash. Ct. App. 2004) Site Access Agreement between Land Recovery, Inc. and Resource Investments, Inc., dated January 1, 1987 Letter from Polly A. Lord of Heller, Ehrman, White & McAuliffe to Patrick T. Cagney and James R. Hartley, Army Corps of Engineers, dated August 15, 1990 Application for Department of Army Permit from Resource Recovery, Inc., dated August 15, 1990 Letter from Don Nauer, Habitat Biologist, to Janine Redmond, Senior Planner for Pierce County Planning and Natural Resource Management, dated October 1, 1990 Letter from Polly A. Lord of Heller, Ehrman, White & McAuliffe to All Interested Agencies, dated November 15, 1990 Letter from Ann R. Uhrich, Chief, Environmental and Processing Section, to Harold LeMay, Resource Recovery, Inc., dated October 1, 1991 Public Notice of Application for Permit for Resource Investments, Inc., dated March 13, 1992 Letters from Community to the Corps in Protest of Resource Investments, Inc.'s Landfill Proposal, dated April 9, 1992 Letter from Stephen M. Keller, Regional Supervisor, Freshwater Permits Habitat Management Division, to Rick Vining, Department of Ecology, State of Washington, dated April 22, 1992

DSJ000305 DSJ000313 DSJ000321

N/A N/A 33

8

DSJ000322

65

9

DSJ000324

39

10

DSJ000326

46

11

DSJ000327

63

12

DSJ000328

81

13

DSJ000330

N/A

14

DSJ000347

N/A

15

DSJ000357

48

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16

Letter from M.F. Palko, Supervisor, Environmental Review, Department of Ecology for the State of Washington, to District Engineer, Department of the Army, Seattle District, dated July 8, 1992 Letter from Polly Lord McNeill of Heller, Ehrman, White & McAuliffe to Jim Green, Project Manager, Army Corps of Engineers, dated August 20, 1992 Letter to Polly Lord McNeill of Heller, Ehrman, White & McAuliffe, from Walter J. Cunningham, Corps of Engineers, dated December 18, 1992 Memorandum for Record from Jim Green, Project Manager, dated February 11, 1993 Memorandum for Record from Jim Green, Project Manager, dated March 9, 1993 Memorandum for Record from Jim Green, Project Manager, dated October 20, 1993 Letter from Thomas F. Mueller, Chief, Regulatory Branch, to Polly L. McNeill of Heller, Ehrman, White & McAuliffe, dated January 28, 1994 Letter to Thomas Mueller, Corps of Engineers, from Polly L. McNeill of Heller, Ehrman, White & McAuliffe, dated February 25, 1994 Memorandum from Brian R. Applebury, P.E., Acting Chief, Operations Division, Corps of Engineers, to Walter J. Cunningham, Colonel, Corps of Engineers, Inc., dated March 4, 1994 Letter (with attachment) to Jody Snyder, Director of Regulatory Services for Land Recovery, Inc., from Andy Comstock, R.S., Tacoma-Pierce County Health Department, dated June 15, 1994

DSJ000359

49

17

DSJ000363

64

18

DSJ000364

11

19 20 21 22

DSJ000369 DSJ000370 DSJ000374 DSJ000376

69 70 71 72

23

DSJ000377

30

24

DSJ000381

23

25

DSJ000385

5

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26

Letter to Debora Hyde, Director, Pierce County Permits and Land Services, from Polly L. McNeill of Heller, Ehrman, White & McAuliffe, dated January 10, 1995 Letter (with attachments) to Polly L. McNeill of Heller, Ehrman, White & McAuliffe from Candace Ledford, Tacoma-Pierce County Health Department, dated April 10, 1995 Notes of Jim Green from meeting with Pierce County Solid Waste personnel, dated June 30, 1995 Letter from Donald T. Wynn, Colonel, Corps of Engineers, to The Honorable Doug Sutherland, Pierce County Executive, dated July 13, 1995 Consent in Lieu of Special Meeting of Board of Directors of Land Recovery, Inc., dated August 1, 1995 Public Notice of Application for Permit for Resource Investments, Inc., dated December 8, 1995 Letters from Community to the Corps in Protest of Resource Investments, Inc.'s Landfill Proposal, dated January 16, 1996 Letter from Donald T. Wynn, Colonel, Corps of Engineers, to Jody Snyder, Resource Investments, Inc., dated January 26, 1996 Letter (with attachment) to Harvey Doman, General Manager, Land Recovery, Inc. from Federico Cruz-Uribe, MD, MPH, TacomaPierce County Health Department, regarding Issuance of the 304th Street Landfill Solid Waste Handling Permit, dated February 7, 1996

DSJ000389

34

27

DSJ000392

6

28

DSJ000401

83

29

DSJ000402

84

30

DSJ000404

32

31

DSJ000423

15 & 74

32

DSJ000441

N/A

33

DSJ000458

61

34

DSJ000466

7

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35

Letter from Chuck Clarke, Regional Administrator, United States Environmental Protection Agency, Region 10, to Colonel Donald T. Wynn, District Engineer, Seattle District, Corps of Engineers, dated February 8, 1996 Memorandum for Record from Jim Green, Project Manager, regarding Resource Recovery, Inc., dated May 15, 1996 Letter to Pierce County Planning and Land Services from Polly L. McNeill of Heller, Ehrman, White & McAuliffe, dated May 23, 1996 Letter (with attachments) from Daniel D. Syrdal of Heller, Ehrman, White & McAuliffe to Colonel Donald T. Wynn, District Engineer, Seattle District, Army Corps of Engineers, dated June 7, 1996 Certified Letter to Jody Snyder, Resource Investments, Inc. from David Bradley, Department of Ecology, State of Washington, dated June 18, 1996 Staff Report to Pierce County Hearing Examiner regarding General Wetland Reasonable Use Exception for Land Recovery, Inc., 304th Street Landfill Project, Case No. WRU5-96, dated July 8, 1996 Letter from Bartholomew B. Bohn II, Colonel, Corps of Engineers, to Daniel D. Syrdal of Heller, Ehrman, White & McAuliffe, dated August 28, 1996 Report and Decision of the Pierce County Hearing Examiner (along with accompanying letter) regarding the General Wetland Reasonable Use Exception: Land Recovery, Inc., 304th Street Landfill Project, Case No. WRU5-96, dated November 27, 1996

DSJ000492

77

36

DSJ000509

75

37

DSJ000510

8

38

DSJ000512

76

39

DSJ000528

10

40

DSJ000539

9

41

DSJ000541

78

42

DSJ000543

1

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43 44

Resource Investments, Inc.'s Invoice for Access Fee, dated July 1, 1998 Letter to Stephen K. Causseaux, Jr., Pierce County Hearing Examiner, from Thomas R. Bjorgen, Meeks Morgan Bauer, P.L.L.C., dated August 11, 1998 Excerpts from Plaintiffs' Response to Defendant's First Set of Interrogatories and Requests for Production of Documents, dated December 10, 1998 Hydraulic Project Approval for Resource Investments, Inc., dated February 25, 1999 Permit for Dam Construction for Land Recovery, Inc. (Permit No. PI 11-1771), dated March 31, 1999, and Letter from Martin D. Walther, P.E., Dam Safety Engineer, Water Resources Program, Department of Ecology, State of Washington, to Jody Snyder, Land Recovery, Inc., dated March 31, 1999 Forest Practice Permit, Resource Investments, Inc., dated April 9, 1999 Memorandum of Agreement involving Land Recovery, Inc., Resource Investments, Inc., and Pierce County, dated April 14, 1999 Registered Letter from Gordon White, Program Manager, Shorelands and Environmental Assistance Program, Department of Ecology, State of Washington, to Jody Snyder, Resource Investments, Inc., dated June 8, 1999, including Department of Ecology Administrative Order No. DE-B-401396, dated May 28, 1999 Letter to Jody Snyder, Resource Investments, Inc., from Dale C. Severson, P.E., Washington State Department of Transportation, dated July 20, 1999, including Access Connection Permit xii

DSJ000548 DSJ000549

31 2

45

DSJ000550

13

46 47

DSJ000561 DSJ000565

N/A N/A

48 49

DSJ000570 DSJ000578

N/A N/A

50

DSJ000587

16

51

DSJ000597

N/A

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52

Excerpts from "Respondents LRI and RII's Memorandum in Opposition to Motions for Summary Judgment and Memorandum in Support of Cross Motion for Summary Judgment Re SSB 5729," Weyerhaeuser v. Tacoma-Pierce County Health Department, Pollution Control Hearings Board, State of Washington, dated August 16, 1999 Excerpts of Deposition of Jody Snyder, dated September 16, 1999 Building Permit Issued by Pierce County to Resource Investments, Inc. (Permit No. 286017), dated October 21, 1999 Notice of Construction and Approval/Air Permit Issued by the Puget Sound Clean Air Agency to Land Recovery, Inc., dated December 10, 1999 Summary Judgment and Dismissal, Weyerhaeuser v. Tacoma-Pierce County Health Department, PCHB 99-067, 99-069, 99-097, Pollution Control Hearings Board, State of Washington, dated January 4, 2000 Dissent, Weyerhaeuser v. Tacoma-Pierce County Health Department, PCHB 99-067, 99-069, 99-097, Pollution Control Hearings Board, State of Washington, dated January 4, 2000 Excerpts from Plaintiffs' Responses to Defendant's Second Set of Requests for Admission, dated January 19, 2000 Final Findings of Fact and Conclusions of Law, Order, Concerned Residents on Waste Disposal v. Tacoma-Pierce County Health Department, PCHB 00-045 & 047, Pollution Control Hearings Board, State of Washington, dated August 20, 2001 Site Description: Centralia Municipal Landfill, dated October 2005 xiii

DSJ000606

18

53 54

DSJ000615 DSJ000620

38 N/A

55

DSJ000625

N/A

56

DSJ000630

N/A

57

DSJ000641

N/A

58

DSJ000647

40

59

DSJ000653

N/A

60A

DSJ000677

N/A

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60B 60C 60D 60E 60F 61

Site Description: Colbert Landfill, dated April 2002 Site Description: Fort Lewis (Landfill No. 5), dated April 2002 Site Description: Greenacres Landfill, dated October 2005 Site Description: Hamilton Island Landfill (USA/COE), dated October 2005 Site Description: Hidden Valley Landfill (Thun Field), dated October 2005 Ground Water Protection Description from Land Recovery, Inc.'s Web Site, dated November 27, 2005 Letter to Bob Mowrey, Army Corps of Engineers, from Polly L. McNeill, dated November 1, 1991 Memorandum of Record regarding Wetland Determination for RII's 304th Street Landfill Site, dated March 2, 1992 Letter (including attachment) to Jody Snyder, Resource Investments, Inc., from Colonel Donald T. Wynn, Corps of Engineers, dated May 13, 1996

DSJ000679 DSJ000682 DSJ000684 DSJ000686 DSJ000688 DSJ000691

N/A N/A N/A N/A N/A N/A

62

DSJ000692

N/A

63

DSJ000694

N/A

64

DSJ000696

3

65

Registered letter to Daniel D. Syrdal of Heller, Ehrman, White & McAuliffe from Keli McKay, Department of Ecology, State of Washington, dated April 24, 2000, including a Recision of Order and several Agreed Orders from the State of Washington's Department of Ecology

DSJ000701

N/A

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Supplemental Index to Defendant's Exhibits for Memorandum of United States in Opposition To Plaintiffs' Renewed Motion for Summary Judgment (dated February 3, 2006) VOLUME III ­ Exhibit Nos. 66- 69 Pages DSJ000713 - DSJ000729 DSJ Exhibit No. 66 67 Description Beginning Page Number in Appendix DSJ000713

GE No. N/A

Declaration of Bruce C. Allen Letter to Ann D. Navaro from Jonathan M. Palmer dated January 14, 2000

DSJ000718 68 Memorandum of Record from Robert Mowery, Project Manager, dated February 24, 1992 Tacoma-Pierce County Solid Waste Management Plan - Volume I - Including: An Annotated Summary, Chapters 1 - 11 and Appendix I ­ WUTC Cost Assessment dated December 15, 1992 DSJ000725

N/A

DSJ000723

N/A

69

N/A

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Supplemental Index to Defendant's Exhibits for Memorandum of United States in Opposition To Plaintiffs' Renewed Motion for Summary Judgment (dated February 3, 2006) VOLUME IV ­ Exhibit Nos. 70 - 7 Pages DSJ000730 - DSJ000741

DSJ Ex. No.

Description

Beginning Page Number in Appendix DSJ000730 DSJ000731 DSJ000736

GE No. N/A N/A N/A

70 71 72

Sales History for the Parcels Composing the Landfill Site at 304th and Meridian Declaration of Mark W. Wolken Letter to William D. Ruckelshaus from William R. Gianelli dated March 19, 1984

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Supplemental Index to Defendant's Exhibits for Defendant's Supplemental Brief Pursuant to This Court's Order of May 3, 2006 (dated July 10, 2006) VOLUME V ­ Exhibit Nos. 73 - 92 Pages DSJ000740 - DSJ000809 DSJ Ex. No. Description Beginning Page Number in Appendix GE No.

73 74 75

Joint Supplemental Brief in Response to Court's Order of May 3, 2006 (Chronology of Relevant Permitting Processes) Permit Chronology Excerpt from Bill Leonard Deposition - Vol. 1 dated October 25, 1999

DSJ000740 DSJ000746

DSJ000747 76 Excerpt from Kathleen M. Larrabee Deposition Vol. 1 - dated August 18, 1999 DSJ000754 77 Excerpt from Maria V. Peeler Deposition dated October 26, 1999 Excerpts from Carla Vincent Deposition - Vol. 1 dated August 19, 1999 DSJ000762 79 Excerpts from James Christopher Matthews Deposition - Vol. 1 - dated October 25, 1999 DSJ000766 80 Letter from Daniel Syrdal to Stephen K. Causseaux, Jr. DSJ000769 DSJ000770

DSJ000756

78

81 Reconsideration of Decision of Case form dated January 11, 1996

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82 83 84 85 86 87 88

Letter from Don Nauer to Janine Redmond dated October 1, 1990 Letter from M.F. Palko to Joseph A. Scorcio

DSJ000771 DSJ000772

Letter from Steven M. Keller to Rick Vining dated April 22, 1992 Letter from M.F. Palko to Tom Mueller dated July 8, 1992 Excerpt of Rodney Erdahl - Vol. 1 - dated October 19, 1999 Excerpts of John A. Comstock - Vol. 1- dated October 21, 1999 (Second) Excerpt of Kathleen M. Larrabee Deposition- Vol. 1 - dated August 1999

DSJ000778 DSJ000780 DSJ000783 DSJ000785

DSJ000788 89 90 (Second) Excerpt of Carla Vincent Deposition Vol. 1 - dated August 19, 1999 (Second) Excerpt of James Chistopher Matthews Vol. 1 - dated October 25, 1999 DSJ000792 91 Excerpt of William S. Stoner dated February 1, 2000 Excerpt of Polly L. McNeill-Vol. 1- dated September 14, 1999 Letter from Kirk Cook to Howard Steeley and Tom Eaton Transcribed Voice Mail Message from Jody Snyder to David B. Barrows Letter from Daniel D. Syrdal to Debora Hyde DSJ000794 DSJ000796 DSJ000810 DSJ000813 DSJ000814 DSJ000821 DSJ000823 DSJ000790

92 93 94 95

96 Letter from Cathleen and Andrea to LRI SEPA EIS Team 97 Letter from William T. Lynn to Fredrico CruzUribe xviii

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98 99 100 101 102 103 104 105 106

Letter from Gordon White to Jody Synder Letter from Daniel D. Syrdal to John Simonson Deposition of Colonel Donald T. Wynn, dated June 8, 1999 Deposition Upon Oral Examination of James David Green Vol. 1, dated June 17, 1999 Deposition Upon Oral Examination of Ann Roberta Uhrich, dated September 20, 1999 Deposition Upon Oral Examination of Stephen Martin, PH.D., dated November 8, 1999 Deposition Upon Oral Examination of Bill Leonard, dated October 25, 1999 Deposition Upon Oral Examination of Pat Cagney, dated July 13, 1999 Letter from M. F. Palko to Joseph A. Scorcio

DSJ000826 DSJ000841 DSJ000847 DSJ000856 DSJ000863 DSJ000885 DSJ000892 DSJ000927 DSJ000933 DSJ000939 DSJ000941

107 Letter from Daniel D. Syrdal to Stephen K. Causseaux, Jr. 108 Declaration of Daniel D. Syrdal in Support of Respondents Reply Memorandum in Support of Motion to Dismiss Deposition Upon Oral Examination of Polly L. McNeill, Vol. 1, dated September 14, 1999 Response to Appellants' Motion for Reconsideration Respondents Land Recovery Inc. Resource Investments, Inc., and Norman Lemay's Reply in Support of Motion to Dismiss

109 110 111

DSJ000946 DSJ000960

DSJ000963

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS RESOURCE INVESTMENTS, INC., and LAND RECOVERY, INC., ) ) ) Plaintiffs, ) ) v. ) ) UNITED STATES OF AMERICA, ) ) Defendant. ) __________________________________________)

No. 98-419 L Hon. Lawrence J. Block

DEFENDANT'S RESPONSE TO PLAINTIFFS' SECOND SUPPLEMENTAL MEMORANDUM ____________________________________________________ Pursuant to the Court's order of October 12, 2006, Defendant hereby responds to Plaintiffs' Second Supplemental Memorandum In Response to October 4, 2006 Oral Argument, filed November 17, 2006. BACKGROUND The permitting of Plaintiffs' landfill required the work of various local, state and federal agencies and involved obtaining more than 15 permits for the landfill project. DSJ Ex. 73 at 0740-0743. These permits required a complex and often protracted review process which, regardless of the Corps' regulatory presence, took a substantial amount of time to complete because of the sensitivity of many of the issues. A. County Conditional Land Use Permit

On December 29, 1989, Plaintiffs applied to Pierce County for a Conditional Land Use Permit ("Conditional Use Permit") to allow construction of a municipal solid waste landfill site on 149 acres of the property. The Pierce County Department of Planning and Land Services

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("County Planning") was given the task of completing the state environmental impact statement ("SEIS") process pursuant to the Washington State Environmental Policy Act, RCW 43.21C.010 et seq. DSJ Ex. 27. On November 20, 1990, the county issued a final SEIS "favorable" to the project. Weyerhaeuser v. Pierce County, 873 P.2d 496, 500 (Wash. 1994) (Weyerhaeuser I); DSJ Ex. 4. After holding the longest public land use hearing in Pierce County history, the Hearing Examiner approved the issuance of a Conditional Use Permit and dismissed the appeal of the sufficiency of the SEIS. See Weyerhaeuser v. Pierce County, 976 P.2d 1279, 1281 (Wash. App. 1999) ("Weyerhaeuser II"); DSJ Ex. 58 at 0649. On appeal, the decision of the Hearing Examiner was reversed and remanded to the Hearing Examiner for additional findings and conclusions. See Weyerhaeuser II, 976 P.2d at 1281. On January 31, 1992, the Hearing Examiner issued a second decision again approving the permit. Additional public hearings were held, after which the Council approved the Hearing Examiner's decision and dismissed the SEIS appeal in May 1992. See id. After unsuccessfully seeking reconsideration on the grant of the permit, community members petitioned for a writ of review in Superior Court for the State of Washington. See id. On February 12, 1993, the Superior Court reversed the issuance of the Conditional Use Permit and the dismissal of the SEIS appeal. The Superior Court's reversal was based in part on the fact that project opponents were not allowed to orally cross examine Pierce County employees which the Superior Court found to be a violation of local ordinances and due process. Weyerhaeuser I, 873 P.2d at 501. Contrary to Plaintiffs' statements, however, that was not the only grounds for reversal. The Superior Court also found that the Hearing Examiner's decision was deficient because it

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"did not set forth findings of fact, but instead recited conclusory statements and conclusions of law which [did] not establish the bases for the decision or the process by which the examiner resolved disputed facts." Id. at 503. Following the reversal of the Conditional Use Permit's issuance, LRI and Pierce County then sought direct review by the Supreme Court of Washington. Weyerhaeuser I, 873 P.2d at 501. On October 19, 1994, the Washington Supreme Court affirmed the Superior Court's reversal. Id. at 500. The Washington Supreme Court agreed that cross examination of County employees had been improperly denied. Id. at 503. In addition, the court also found the findings of the Hearing Examiner to be insufficient and conclusory. ("While a finding recites that he project is a private project, there is no clue as to the basis for that conclusion," id. at 504.) The appellate court also found the SEIS' alternatives analysis to be legally insufficient. Id. at 505. The sufficiency of the alternatives analysis turned on the question of whether the project was considered a public or private endeavor. Id. Noting the "longstanding relationship" between LRI and Pierce County and the fact that the "handling and disposal of waste is a governmental function," the court held that "that as a matter of law, the proposed landfill is a public project" which necessitated an evaluation of offfsite alternatives. Id. Because the SEIS did not contain such an analysis, it was found to be inadequate as a matter of law. Id. Following the reversal, Pierce County advised Plaintiffs that they would need to file a new Conditional Use permit application. Plaintiffs appealed this decision, and on January 13, 1995, the Superior Court directed the County to complete the processing of Plaintiffs' original application. DSJ Ex. 58 at 648; DSJ Ex. 26 at 389-91. A supplemental final SEIS was published in August 1995, Am. Comp., Para. 34, and the Hearing Examiner held additional hearings in

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September 1995. On January 2, 1996, the Hearing Examiner issued his third decision, approving Plaintiffs' Conditional Use Permit. See Weyerhaeuser II, 976 P.2d at 1282. Among the conditions to the permit, Plaintiffs were required to obtain a Wetlands' Exception under Pierce County Wetland Management Regulations ("Wetlands Regulations"). See id. On March 19, 1996, the Hearing Examiner denied motions for reconsideration of the Conditional Use Permit, and both Plaintiffs and members of the community appealed. On appeal, the issuance of the Conditional Use Permit was upheld and Plaintiffs again appealed. See Weyerhaeuser II, 976 P.2d at 1281. Finally, on May 29, 1999, the litigation was resolved with a reversal by the Washington Court of Appeals, holding that under Washington's vested rights doctrine Plaintiffs' Conditional Use Permit application should not be subject to the subsequently enacted Wetlands Regulations. See id. at 1283. B. Other Permits

There were numerous other local permits and approvals which Plaintiffs had not acquired before 1996 and which were necessary before landfill operations could begin. Plaintiffs had not, as of the beginning of 1996, received the necessary Access Conditional Permit, Dam Safety Construction Permit, Forest Practices Permit, Hydraulic Project Approval, Industrial Wastewater Discharge Permit, Solid Waste Handling Permit ("Waste Permit"), approval of a final Stormwater Site Plan, or a Wetlands Permit.2/ DSJ Ex. 45 at 0557-0558; DSJ Ex. 50 at 05890592. Among the most important of these permits or approvals which plaintiffs did not receive

2/

The Wetlands Permit, granted by County Planning, is distinct from the Wetlands Exception issued by the Hearing Examiner. 4

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until 1996 or thereafter ­ described by plaintiffs as the "other permit of significance" ­ was the Solid Waste Permit. Plaintiffs applied for the Waste Permit from County Health on December 29, 1989. On December 4, 1990, County Health informed plaintiffs of the additional information plaintiffs needed to supply in order for their application to be considered complete, specifically, the SEIS. With the SEIS held legally insufficient, as discussed above, County Health alerted Plaintiffs, on June 17, 1994, that their Solid Waste Permit application could not be considered complete. DSJ Ex. 25 at 0385-0386. On April 10, 1995, after another round of notice and comment on a supplemental SEIS, County Health informed plaintiffs that their application still did not show compliance with various state laws and therefore could not yet be considered complete. DSJ Ex. 27 at 0392. On February 7, 1996, after Plaintiffs completed their application, after review by the State Ecology, County Health issued the Solid Waste Permit. The landfill opened for operation on December 13, 1999. ARGUMENT I. THE FACTUAL DISPUTES INHERENT IN THE APPLICATION OF THE PENN CENTRAL FACTORS TO THIS CASE PREVENT A GRANT OF SUMMARY JUDGMENT In their latest filing Plaintiffs make significant errors of law in their explication of the Penn Central factors and continue to misrepresent the quality and content of certain evidence in the record. First, despite Plaintiffs repeated assertions, the decision of the Ninth Circuit Court of Appeals in Resource Investments, Inc. v. United States is not determinative of the character of the government action prong of the Penn Central test. Pltfs' 2d Supp. Mem. at 6-9. Rather, Plaintiffs' construction of that factor is fundamentally flawed for its ignorance of the Supreme

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Court's holding in Lingle v. Chevron. Further, disputed issues of material fact prevent this factor from "tipping" in favor of Plaintiffs. Second, Plaintiffs' application of the reasonable investment backed expectation prong of the Penn Central test relies on post hoc assertions and questionable evidentiary support. Pltfs' 2d Supp. Mem. at 14-16. Third, Plaintiffs' evaluation of the economic impact prong of the Penn Central test is at worst based on the incorrect application of the facts, and at best based on facts that are in dispute. Pltfs' 2d Supp. Mem. at 17-32. A. The Standard for Summary Judgment

By overstating and misconstruing language in Defendant's brief, Plaintiffs accuse Defendant of citing Celotex Corp. v Catrett, 477 U.S. 317 (1986) for the proposition that this Court should ignore certain affidavits filed by Plaintiffs. First, Defendant also cited, as Plaintiffs now concede, Evans v. Technologies Applications & Services, 80 F.3d 954 (4th Cir. 1996), which says "we generally consider self-serving opinions without objective corroboration not significantly probative." Read together, Celotex, which gives the background standard for summary judgment practice, and Evans, yield an inference that this Court can assess the weight it will give to Plaintiffs' self-serving declarations when deciding whether those documents actually raise a material issue of fact. This is applicable here because Plaintiffs declarations are unsupported by objective evidence at crucial points. Finally, Plaintiffs' declarations have, in any event, been rebutted by other evidence in the record. See infra Section I.E.3. As Defendant noted in its Reply Memorandum of February 3, 2006, it does not move for summary judgment on Plaintiffs' claim of a temporary regulatory taking under Penn Central at this time. Such an analysis is clearly intensely factual ­ by definition it must be one designed to consider all the relevant facts and circumstances. Tahoe-Sierra Preservation Council v. Tahoe

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Regional Planning Agency, 535 U.S. 302, 335 (2002). As the briefing on the parties' motions has developed it has become obvious that both Plaintiffs' and Defendant's respective motions based on Penn Central are supported by a number of material factual issues which remain in dispute. As discussed in this memo, Defendant has, in fact, rebutted Plaintiffs' factual "proof." Accordingly, Plaintiffs' motion for summary judgment on the Penn Central factors must be denied. B. Character of the Government Action 1. The Proper Inquiry Under This Penn Central Factor is to Review the Purposes and Effects of the Regulatory Action

An evaluation of the character of the government action involves an inquiry into "the public purposes served by the Government's regulatory actions ...." Bass Enterprises, 381 F.3d at 1369-70. Under this analysis, the court examines "[t]he purposes served, as well as the effects produced, by a particular regulation," Palazzolo v. Rhode Island, 533 U.S. 606, 633 (2001) (O'Connor, J., concurring), in other words, the "purpose and economic effect" of the government's actions. Tahoe-Sierra v. , 535 U.S. at 323. In Lingle v. Chevron, 544 U.S. 528 (2005), the Supreme Court explained that the character of the government action prong tests whether the challenged government restriction "amounts to a physical invasion or instead merely affects property interests through `some public program adjusting the benefits and burdens of economic life to promote the common good. . . ." Id. at 539. Certainly the Clean Water Act can properly be characterized as a program which adjusts benefits and burdens to promote a common good in a manner similar to the historical preservation statute at issue in Penn Central. See 438 U.S. at 124. There the Court recognized that: 7

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A taking may more readily be found when the interference with property can be characterized as a physical invasion by government . . . than when interference arises from some public program adjusting the benefits and burdens of economic life to promise the common good. Id. The Federal Circuit has clearly addressed the proper application of the character of the government action factor. Recently, the Circuit instructed that the trial court should examine the "purpose and economic effect" of the government's actions. Bass Enterprises Prod. Co. v. United States, 381 F.3d 1360, 1370 (Fed. Cir. 2004) (quoting Tahoe-Sierra, 535 U.S. at 323). This includes an examination of "the relative benefits and burdens associated with the regulatory action." Bass Enterprises, 381 F.3d 1360 at 1370. This court has also endorsed this analysis, holding that it "must be concerned with the purpose of the statute, the nature of the benefits to be derived from it, and the magnitude, character, and distribution of the burdens attendant to it." Cienega Gardens v. United States, 67 Fed. Cl. 434, 466 (2005). 2. Plaintiffs' Interpretation of the Character of the Government Action Prong Conflict With the Supreme Court's Holding in Lingle v. Chevron

In their discussion of the character of the government action prong, Plaintiffs argue that the relevant standard is whether the government action at issue was "`necessary to the effectuation of a substantial purpose.'" Pltfs' 2d Supp. Mem.3/ at 11 (quoting Penn Central, 438 U.S. at 127 (citing Nectow v. Cambridge, 277 U.S. 183 (1928))). Contrary to Plaintiffs' characterizations, Pltfs' 2d Supp. Mem. at 9-10, Defendant left nothing out of its discussion of Supreme Court and Federal Circuit precedent other than law which was rejected by the Supreme

3/

"Pltfs' 2d Supp. Mem." refers to Plaintiffs' Second Supplemental Memorandum in Response to October 4, 2006 Oral Argument, filed November 17, 2006. 8

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Court in Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 546 (2005). First, the Penn Central passage quoted by Plaintiffs does not concern itself with the character of the government action prong. See 438 U.S. at 127. Rather, the sentence quoted discusses what some courts previously viewed as a legal requirement that one way to establish a taking was to show that the challenged government action did not substantially advance a legitimate government interest. See, e.g., Goldblatt v. Hempstead, 369 U.S. 590 (1962); Nectow v. Cambridge, 277 U.S. 183 (1928). Second, in Lingle v. Chevron U.S.A., Inc. the Supreme Court firmly put to rest the use of the substantially advances formulation as a test of whether there has been a regulatory taking. 544 U.S. 546. In that case, the Ninth Circuit and the District Court for the District of Hawaii held that a Hawaiian law aimed at controlling gas prices failed to "substantially advance a legitimate state, interest, and as such effect[ed] an unconstitutional taking . . . ." Id. at 534-35 (quoting Chevron U.S.A. Inc. v. Cayetano, 57 F.Supp2d 1003, 1014 (D.Haw. 1998)). The lower courts drew this test from Agins v. Tiburon, 447 U.S. 255 (1980), a Supreme Court decision in which the "substantially advances" test was applied to determine whether a California ordinance effected a taking. On certiorari, the Supreme Court had to determine "whether the `substantially advances' formula announced in Agins is an appropriate test for determining whether a regulation effects a Fifth Amendment taking." Lingle, 544 U.S. at 532. The Court "concluded that it is not." Id. In rejected the substantially advances formulation as a test to determine whether there has been a taking, the Court noted that the test has "logic in the context of a due process challenge. . . [b]ut such a test is not a valid method of discerning whether property has been taken for purposes of the Fifth Amendment." Id. at 542. This is because "[a] test that tells

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u nothing about the actual burden imposed on property rights, or how that burden is allocated, cannot tell us when justice might require that the burden be spread among taxpayers through the payment of compensation." Id. Interestingly, Plaintiffs' misplaced reliance on the substantially advances formulation was further highlighted by the Lingle Court when it singled out Nectow v. Cambridge, as one of the due process cases which should no longer properly be consider part of takings jurisprudence. Lingle, 544 U.S. at 540. In fact, the exact language quoted by Plaintiffs was pointed out as an example of the "apparent commingling of due process and takings inquiries . . . ." Id. at 541. It is clear, therefore, that the "`substantially advances' formula . . . is not a valid method of identifying regulatory takings for which the Fifth Amendment requires just compensation." Id. at 545. 3. The Purpose and Effect of Wetlands Regulation Weighs Against the Finding of a Taking

Plaintiffs attempt to discredit the evidence that shows that the Corps' action was taken to protect wetlands. Pltfs' 2d Supp. Mem. at 13-14. Their challenge contains two flaws. First, it reveals Plaintiffs' mistaken notion that the character of the government action prong in this case should be evaluated in such an acute manner that the purposes behind the Section 404 permit program should not be taken into account. Pltfs' 2d Supp. Mem. at 9-10. To the contrary, Plaintiffs claim that only the Corps' "actions on Plaintiffs' application . . ." are relevant because they are not charging that the enactment of the Clean Water Act effected the taking. Plaintiffs' suggested distinction is not supported by the caselaw. For example, the basis of the takings claim in Palazzolo was that the petitioner's "development proposals were rejected . . . ." 533 U.S. at 611. Still, Justice O'Connor went on, in her concurrence, to note that evaluating the 10

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"character of the governmental action" in a takings claim arising out of the permitting action at issue there should involve an evaluation of "[t]he purposes served, as well as the effects produced, by [the] particular regulation." Id. at 634 (O'Connor, J., concurring). It is clear then that the purpose and effect test is to be applied, even when the takings claim arises out of the application of a regulatory scheme as opposed to a facial challenge to that scheme. Further, Plaintiffs' insinuation that Defendant's evidence regarding the Corps' mission to protect wetlands should be ignored because that function, and protection of the sole source aquifer underlying the site, had "already been performed by the state and local agencies . . ." is incomplete and based on an after-the-fact analysis. Pltfs' 2d Supp. Mem. at 13-14. The Corps had reason to be concerned about the protection wetlands would receive on Plaintiffs' site under state law because as late as 1993 Plaintiffs were still arguing that, for certain purposes, there were no wetlands on the landfill subject to the state's jurisdiction. Weyerhaeuser I, 873 P.2d at 509, DSJ Ex. 4 at 0299 ("LRI maintains that this finding establishes that although there are wetlands on this site under federal standards, there are no wetlands as defined by state law . . ."). In the face of this type of argument, it is foolhardy to suggest that the Corps could trust that the wetlands on Plaintiffs' site were going to be protected in the state process. 4. Plaintiffs' Argument that the Ninth Circuit's Holding is Determinative of the Character of the Government Action is Legally and Factually Erroneous

Plaintiffs contend that the decision of the Ninth Circuit, which found that the Corps lacked Clean Water Act jurisdiction over the landfill, conclusively established that the character of the government action factor supports the finding of a taking, and that Defendant is collaterally estopped to dispute this argument. Pltfs' 2d Supp. Mem. at 5-7, 16.

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As an initial matter, Defendant is not contending that it is not bound by Ninth Circuit's holding. Instead Defendant is arguing three things. First, as discussed above, Plaintiffs have misdefined the character of the government action factor. Second, as discussed infra at Section I.C.4, Plaintiffs' argument is directly contrary to the Federal Circuit's discussion of this precise issue in Tabb Lakes. Third, with respect to Plaintiffs' collateral estoppel argument, Defendant is arguing that a necessary element for the application of estoppel, identity of the issues, has not been met here. Under the judicially-developed doctrine of collateral estoppel, once a court has decided an issue of fact or law necessary to its judgment, the decision on that issue is conclusive in a subsequent suit based on a different cause of action involving a party or its privy to the prior litigation. United States v. Mendoza, 464 U.S. 154, 158 (1984); Montana v. United States, 440 U.S. 147, 153 (1979). For the court to apply the doctrine of issue preclusion, the party seeking its use must demonstrate four points: (1) the issues to be concluded are identical to those involved in the prior action; (2) in that action the issues were raised and "actually litigated;" (3) the determination of those issues in the prior action was necessary and essential to the resulting judgment; and (4) the party precluded was fully represented in the prior action. Mother's Restaurant, Inc. v. Mama's Pizza, Inc., 723 F.2d 1566, 1569 (Fed. Cir. 1983). Plaintiffs' invocation of the doctrine of issue preclusion does not satisfy the first factor of the test. The issues between the two cases are not identical. What the Ninth Circuit decided was an issue of law, not fact, as would be expected from the appellate posture of the case. See Resource Investments, Inc. v. United States Army Corps of Engineers, 151 F.3d at 1168 (9th Cir. 1998). What was being decided there was whether the Corps' interpretation of its regulatory

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authority under the Clean Water Act was a proper one ­ a question of statutory interpretation. Id. at 1165. As such, the issue of law there is not identical to the legal issues in this litigation. The question of whether the Corps' statutory interpretation was correct is not part of the character of the government action inquiry as the Supreme Court has defined it. See discussion supra at Section I.C.1-2. The Ninth Circuit made no examination, much less any findings with respect to the length of the permit process, the complexity of the permit process, or the purposes being served by the regulatory action, all necessary components of an examination of the character of the government action. Thus, contrary to Plaintiffs' arguments, the Ninth Circuit did not evaluate, in any fashion relevant to the court's inquiry here, the nature of the Corps' actions. Additionally, Plaintiffs mischaracterize and confuse the issues concerning the Corps' exercise of jurisdiction in this case. Pltfs' 2d Supp. Mem. at 14. Regardless of the clarity of the Corps' regulatory definition for "fill material" at the time of the Ninth Circuit decision, that definition has now been clarified. Following the adverse decision in Resource Investments, Inc., 151 F.3d 1162, 1168-69, EPA and the Corps together promulgated new regulations concerning the definition of "fill material" under the Clean Water Act. "Final Revision to the Clean Water Act Regulatory Definition of "Fill Material" and "Discharge of Fill Material," 67 Fed. Reg. 31129, 31137 (May 9, 2002), now 33 C.F.R. Part 323 (Corps) and 40 C.F.R. Part 232 (EPA). These regulations were jointly issued by both EPA and the Corps of Engineers, and adopted the EPA's previous definition of fill material, which was an "effects based" test. Id. at 31129. Under these regulations, "fill material" is defined as "any material which has the effect of: (i) Replacing any portion of a water of the United States with dry land; or (ii) Changing the bottom

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elevation of any portion of a water of the United States." 33 C.F.R. § 323.2. "Trash" and "garbage" are specifically excluded from the definition of "fill material." 33 C.F.R. § 323.2(3).

At the time of the Section 404 permit application at issue here, there was a difference between the Corps' and EPA definitions of "fill material." EPA utilized what was called an effects-based test, while the Corps' definition looked to the purpose of the discharge. 67 Fed. Reg. at 31131. To clarify these two regulatory definitions, in 1986 EPA and the Corps entered into a Memorandum of Agreement on Solid Waste (MOA). 51 Fed. Reg. 8871 (March 14, 1986). This MOA identifies the types of solid waste pollutants that would constitute fill material, thus requiring a CWA § 404 permit from the Corps, and those that would be regulated by EPA under the CWA § 402 permit program. As relevant here, the MOA explains that solid waste pollutants will be regulated as "fill material" by the Corps under Section 404 only if "[t]he discharge is heterogeneous in nature and of the type normally associated with sanitary landfill discharges." Id. at 8872, ¶ 4(d). Because Plaintiffs' project involved the placement of fill into wetlands, and plaintiffs' landfill fit the definition of sanitary landfill, EPA and the Corps both regarded the fill as subject to regulation under Section 404. There is no dispute in the record that both EPA and the Corps agreed that the Corps had Section 404 regulatory jurisdiction over Plaintiffs' landfill project. See DSJ Ex. 33 at 462. The 1986 MOA was set to "automatically expire[ ] at such time as EPA has . . . published a Notice of Proposed Revisions to the Subtitle D Criteria in the Federal Register, unless the agencies mutually agree that extension of this agreement is needed." (Subtitle D refers to EPA regulations under the Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. §§

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6941-6949a, that provide criteria for solid waste landfills.) In 1991, after Plaintiffs had begun the Section 404 permit process, some, but not all, of the Subtitle D criteria were published in the Federal Register. See 56 Fed. Reg. 50978-01 (October 9, 1991). However, although published on October 9, 1991, they were not effective until October 1993. See 56 FR 50978, 50978. Accordingly, even under the Ninth Circuit's ruling that jurisdiction was "duplicative," there was no duplication until 1994 when the Washington State program was approved. See 59 Fed. Reg. 15203 (1994). In 1993, the 1986 MOA was extended indefinitely by mutual consent of both EPA and the Corps. DSJ Ex. 33 at 462. Congress appears to have anticipated overlap between the CWA and RCRA. RCRA specifically provides that it shall not be construed to apply to "any activity or substance which is subject to the [CWA] * * * except to the extent that such application (or regulation) is not inconsistent with the requirements of [the CWA]." 42 U.S.C. § 6905(a). Thus, RCRA itself recognizes that the CWA has predominance, and RCRA is to have effect only to the extent it does not interfere with the CWA. Thus, both before and after the submission of Plaintiffs' Section 404 permit application, it was the understanding of EPA and the Corps that a Section 404 permit was required for the construction of road, berms, liners, etc., all integral parts of a landfill development.

5.

The "Presumption of Validity" Prevents An Examination Into the Reasonableness of the Corps' Assertion of Jurisdiction

Plaintiffs have also misread Defendant's arguments on the "presumption of validity" issue. Pltfs' 2d Supp. Mem. at 11. The presumption is not in the form of an evidentiary presumption that must be rebutted. Rather, the presumption of validity in takings cases is an

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intellectual shorthand for the notion that while evaluating a takings claim, the Court must investigate whether a taking has occurred under the tests established in Penn Central and Lucas ­ not by saying that the government acted improperly. This is made clear by the Federal Circuit's decision in Tabb Lakes v. United States, 10 F.3d 796 (Fed. Cir. 1993). In Tabb Lakes, the Federal Circuit addressed an invocation of regulatory jurisdiction by the Corps that was later adjudged by a court to be erroneous, similar to this case.4/ Nevertheless, the Circuit noted that the "claimant must concede the validity of the government action which is the basis of the taking claim to bring suit under the Tucker Act . . . ." Id. at 802. Plaintiffs' brief, while attacking Defendant's citations to Appolo Fuels and Florida Rock, Pltfs' 2d Supp. Mem. at 11-12, does nothing to undermine the conclusion that, even in the presence of an overturned agency action, this Court does not examine the propriety of the government's actions under the APA in order to evaluate whether there has been a taking. See Tabb Lakes, 10 F.3d at 802. Further, as the Federal Circuit noted, "we recently reaffirmed the vitality of Tabb Lakes in Wyatt . . .." Boise Cascade, 296 F.3d at 1349, citing Wyatt v. United States, 271 F.3d 1090 (Fed. Cir. 2001). See also Golden Pacific Bancorp v. United States, 15 F.3d 1066, 1076 (Fed. Cir. 1994) ("a mistake may give rise to a due process claim, but not a taking claim"). Ultimately, the key to the concept of the presumption of validity is that Plaintiffs cannot establish a taking just by showing that the government action is arbitrary, capricious or an abuse of discretion (or unreasonable); that is the proper focus of an APA review. Rather, the Plaintiffs must prove their taking based on the Penn Central or Lucas test.

4/

However, unlike this case, there the Corps' assertion of jurisdiction was struck down in both the District Court and the Fourth Circuit Court of Appeals. Id. at 798-99. 16

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6.

Disputed Issues of Fact Bearing on the Character of the Government Action Prong

Despite Plaintiffs' assertions, there are several issues of fact still in dispute on this prong of the Penn Central test. The material disputes are discussed below. In discussing the character of the government action prong, Plaintiffs assert that they were "singled out . . . for discriminatory treatment compared to other similarly situated Section 404 applicants . . . ." Pltfs' 2d Supp. Mem. at 12-13. Specifically, Plaintiffs complain that because permits were granted in two other contemporaneous Section 404 permitting actions, the Auburn racetrack and the Weyerhaeuser landfill, this must mean that Plaintiffs were treated unfairly. Plaintiffs' assertion is flawed because it rests on their refusal to recognize the crucial differences between the project they proposed (and ultimately built) and the projects proposed by the successful Section 404 permitees. The chief difference between Plaintiffs' landfill project and the Weyerhaeuser or Auburn racetrack proposals is that Plaintiffs project was, and is, a public project. See Weyerhaeuser v. Pierce County, 873 P.2d at 505. This key distinction between Plaintiffs' project and the other applications the Corps was evaluating was recognized by project manager Jim Green and the Corps' staff, "long before" the Weyerhaeuser I decision. DSJ Ex. 101 at 0861. Moreover, this distinction had practical implications on the manner in which the Corps had to evaluate Plaintiffs' proposal, as opposed to its evaluation of the Auburn racetrack or Weyerhaeuser landfill. See id. at 0859-0859A. First, as explained in the ROD, where a project is aimed at accomplishing a public goal, "the determination of practicability requires a determination of reasonable costs to the public to have a service provided," DSJ Ex. 1 at 79, whereas evaluating the practicability of a private project investigates whether "project costs exceed reasonable 17

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project income." Id. Accordingly, Plaintiffs' are incorrect to assert that they were unnecessarily treated differently than the Weyerhaeuser and Auburn applicants where the issue of practicable alternatives and their cost were concerned. Because Plaintiffs' project was properly viewed as a public project that necessitated a different practicability and cost analysis, the Corps' evaluation of the costs associated with the long haul alternative for Plaintiffs' public project correctly used a "different standard" than the one applied to the private Weyerhaeuser and Auburn racetrack projects.5/ Pltfs' 2d Supp. Mem. at 13. This directly rebuts David Barrows opinion that Plaintiffs' were singled out for different treatment than his former client, Weyerhaeuser. Id. There were also further distinctions between Plaintiffs' proposed landfill and that proposed by Weyerhaeuser. The wetlands on the Weyerhaeuser site were nowhere near as complex or valuable as the wetlands on Plaintiffs' landfill site. DSJ Ex. 104 at 0926. In fact, unlike Plaintiffs' landfill site, the Weyerhaeuser site did not have a creek meandering through it. Id. In his visit to the Weyerhaeuser site, Bill Leonard of Ecology "kept waiting to see the real wetlands . . ." finding only dry earth without any obvious connection to a water source. Id. Given that "the functions of the wetlands [on the Weyerhaeuser site] that were being affected were greatly lower than what occurred on the 304th Street site" it is not surprising that the Corps took a closer, and different, look at Plaintiffs' project application. Id.

The Court should continue to be mindful