Free 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. PLAINTIFFS' SECOND SUPPLEMENTAL MEMORANDUM IN RESPONSE TO OCTOBER 4, 2006 ORAL ARGUMENT No. 98-419L Judge Lawrence J. Block

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TABLE OF CONTENTS Page I. II. INTRODUCTION ...............................................................................................................1 ARGUMENT.......................................................................................................................2 A. Defendant's Arguments Rest on Misstatements of the Applicable Summary Judgment and Evidentiary Standards.......................................................................2 1. Neither Celotex nor Other Authority Supports Defendant's Contentions That the Court May Disregard Declarations Based on Counsel's Contention That the Affiant Is "Biased" or the Declaration Is "Self-Serving.".........................................................................................2 The Corps Statements Are Admissible As Non-Hearsay Admissions. .......4

2. B.

Taking Based on Penn Central: The Undisputed Facts Demonstrate That Each of the Penn Central Factors Favor Plaintiffs As a Matter of Law..................4 1. First Penn Central Factor: The Character of the Government Action........4 a. Legal Issues on the First Penn Central Factor:................................4 i. Defendant Is Bound Here by the Ninth Circuit Determination That the Corps' Exercise of Jurisdiction Was Unlawful, Unreasonable, and Resulted in Unnecessary Duplication. ....................................................5 The Ninth Circuit Evaluated the Reasonableness and Necessity of the Corps' Actions at the Regulatory Level, a Determination Which Is at the Core of the "Character" Inquiry..............................................................6 There Is No "Presumption of Validity" As to Agency Actions Held Unlawful in a Binding Judgment.................11

ii.

iii. b.

Plaintiffs Have Presented Undisputed (and Binding) Facts Showing That the Character of the Government Action Favors Liability..........................................................................................12 Defendant's Only Response Is Unsupported Argument by Counsel. .........................................................................................13

c. 2. 3.

Second Penn Central Factor: Reasonable Investment-Backed Expectations...............................................................................................14 Third Penn Central Factor: Significant Economic Impact .......................16 a. b. Legal Issues on the Third Penn Central Factor. ............................16 Plaintiffs Presented Record Evidence Demonstrating That They Suffered Significant Economic Impact Because the Corps' Actions Delayed the Opening of Their Facility for Years. .............................................................................................17 i

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i.

The Corps' "Regulatory Prohibition" Caused Three Years of Delay in Plaintiffs' Ability to Permit, Construct, and Open the Facility Because the Corps' Assertion of Jurisdiction and Subsequent Permit Denial Was a Legal and Practical Bar to Plaintiffs' Ability to Obtain the Necessary Ministerial Permits. ........19 The Corps' Assertion of Jurisdiction Caused Three Years of Additional Delay Because the Corps' Pressure to Reconfigure the Facility Forced Plaintiffs to Start the State and Local Permit Process over Again. ...21 Plaintiffs Likewise Demonstrated That the Corps' Actions Were an Independent Cause of Delay. .................24

ii.

iii. c.

Defendant Responded With Unsupported Arguments by Counsel and Misstatements of the Record Evidence.....................25 i. ii. iii. iv. Defendant's Attacks on Plaintiffs' Evidence Lack Merit...................................................................................26 Defendant Relies on Irrelevant Legal Argument. ..............28 Defendant Relies on Irrelevant Factual Arguments...........28 Defendant Misstates and Mischaracterizes the Record Evidence to Which It Does Cite.........................................30

C.

Taking Based on the Corps' Extraordinary Delay: The Undisputed Facts Demonstrate That the Corps' Unlawful, Unreasonable, Unnecessary, and Duplicative Assertion of Jurisdiction Caused Years of Delay That Was "Extraordinary" As a Matter of Law. ....................................................................35 1. 2. 3. Legal Issues................................................................................................35 Plaintiffs Have Presented Evidence of Extraordinary Delay in the Corps' Permitting Process..........................................................................36 Defendant Offers No Counter Evidence That the Delays Described Were Ordinary, Rather Than Extraordinary. .............................................37

D.

Lucas Temporary Categorical Taking: The Undisputed Facts Demonstrate That Plaintiffs Were Deprived of All Economically Viable Use of Their Property Until the Corps' "Regulatory Prohibition" Was Cut Short by the Ninth Circuit's Issuance of Its Mandate. ...............................................................38

III.

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

ii

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TABLE OF AUTHORITIES Federal Cases Page Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ....................................................................2 Appolo Fuels, Inc. v. United States, 381 F.3d. 1338 (Fed. Cir. 2004)...............................11, 12, 15 Bass Enters. Prod. Co. v. United States, 381 F.3d 1360 (Fed. Cir. 2004).................................9, 10 Branch v. United States, 69 F.3d 1571 (Fed. Cir. 1995)......................................................9, 10, 11 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ................................................................................2 Chem. Eng'g Corp. v. Essef Indus., Inc., 795 F.2d 1565 (Fed. Cir. 1986) ......................................3 Christopher Vill., L.P. v. United States, 360 F.3d 1319 (Fed. Cir. 2004)........................................5 Cienega Gardens v. United States, 331 F.3d 1319 (Fed. Cir. 2003) .............................................16 Crown Operations Int'l, Ltd. v. Solutia Inc., 289 F.3d 1367 (Fed. Cir. 2002) ................................3 Evans v. Techs. Applications & Servs., 80 F.3d 954 (4th Cir. 1996)...........................................2, 3 First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304 (1987).......................................................................................................................12 Florida Rock Indus. v. United States, 791 F.2d 893 (Fed. Cir. 1986) ...........................................11 Florida Rock Indus., Inc. v. United States, 18 F.3d 1560 (Fed. Cir. 1994) ...................................11 Globe Sav. v. United States, 61 Fed. Cl. 91 (2004) .........................................................................4 Long Island Sav. Bank v. United States, 63 Fed. Cl. 157 (2004).....................................................4 Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992).................................................38 Maritrans Inc. v. United States, 342 F.3d 1344 (Fed. Cir. 2003) ..............................................9, 10 Montana v. United States, 440 U.S. 147 (1978) ..............................................................................5 Myers Investigative & Sec. Servs. v. United States, 47 Fed. Cl. 288 (2000) ...................................4 Nat'l Union Fire Ins. Co. v. Argonaut Ins. Co., 701 F.2d 95 (9th Cir. 1983) .................................3 Palazzolo v. Rhode Island, 533 U.S. 606 (2001) .................................................................9, 10, 15 Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978) ....................................... passim iii

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PR Contractors v. United States, 69 Fed. Cl. 468 (2006)................................................................4 Res. Invs., Inc. v. U.S. Army Corps of Engineers, 151 F.3d 1162 (9th Cir. 1998) ................ passim Robinson v. Cheney, 876 F.2d 152 (D.C. Cir. 1989) .......................................................................3 Schiavone Constr. Co. v. Time, Inc., 847 F.2d 1069 (3d Cir. 1988)................................................3 Seiber v. United States, 364 F.3d 1356 (Fed. Cir. 2004) ...............................................................35 Sweats Fashions, Inc. v. Pannill Knitting Co., 833 F.2d 1560 (Fed. Cir. 1987) .............................3 United States v. Mendoza, 464 U.S. 154 (1984)..............................................................................5 United States v. Real Prop. Located At Incline Vill., 47 F.3d 1511 (9th Cir. 1995)........................3 United States v. Stauffer Chem. Co., 464 U.S. 165 (1984)..............................................................5 Vivid Techs., Inc. v. Am. Sci. & Eng'g, 200 F.3d 795 (Fed. Cir. 1999)...........................................3 Federal Statutes 5 U.S.C. § 702..................................................................................................................................6 5 U.S.C. § 706(2)(A)........................................................................................................................6 Federal Rules Federal Rule of Evidence 701..........................................................................................................3 Federal Rule of Evidence 801(d)(2) ............................................................................................1, 4 Miscellaneous 5 Jack B. Weinstein & Margaret A. Berger, Weinstein's Fed. Evid. § 801.11[1] (2d ed. 2006) ...........................................................................4

iv

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EXHIBITS IN SUPPORT OF PLAINTIFFS' SECOND SUPPLEMENTAL MEMORANDUM IN RESPONSE TO OCTOBER 4, 2006 ORAL ARGUMENT Resource Investments, Inc., et al. v. United States of America United States Court of Federal Claims No. 98-419L Exhibit # PE 176 Description 08/1998 Motion for Extension of Time for Filing a Petition for Rehearing filed by Defendant-Appellee United States Army Corps of Engineers in Resource Investments, Inc. et al. v. U.S. Army Corps of Engineers, et al., Ninth Circuit Court of Appeals No. 97-35934. (Excerpt) 04/1999 Application for an Extension of Time to File a Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit filed by Applicants United States Army Corps of Engineers in U.S. Army Corps of Engineers, et al. v. Resource Investments, Inc. et al., Supreme Court of the United States. (Excerpt) 05/1999 Application for a Further Extension of Time to File a Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit filed by Applicants United States Army Corps of Engineers in U.S. Army Corps of Engineers, et al. v. Resource Investments, Inc. et al., Supreme Court of the United States. (Excerpt) 10/25/1999 Deposition of Bill Leonard. (Excerpt) 10/04/2006 Transcription of Tape Recording of Oral Argument. (Excerpt) 07/10/1993 Appendix C, Environmental Assessment and Finding of No Significant Impact for Work Reviewed in Accordance with Section 404 of the Clean Water Act Described in Permit Application No. OYB-4-013812 of the Weyerhaeuser Company. (Excerpt) Page Numbers 002359-002361

PE 177

002362-002363

PE 178

002364-002365

PE 179 PE 180 PE 181

002366-002369 002370-002371 002372-002373

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I.

INTRODUCTION One fundamental point emerges from the parties' supplemental briefing and argument:

once the numerous legal errors and factual misstatements imbedded in Defendant's position are stripped away, the undisputed facts demonstrate that the Corps' unlawful and unreasonable assertion of jurisdiction (not the state and local permit process) was the but for cause of years of delay in the opening of Plaintiffs' facility and the loss of millions of dollars in revenues. Indeed, Defendant's argument is founded on significant errors regarding basic principles of summary judgment procedure and substantive takings law. For example, a court may not simply disregard summary judgment declarations based on opposing counsel's claim that they are "self-serving" or "biased." See Def.'s Supp.1 at 16-17. Instead, when a party files a properly supported summary judgment motion that would establish a right to judgment if unopposed, the opposing party has an affirmative obligation to present specific evidence showing the material facts are disputed. Defendant's unsworn attorney argument does not satisfy this burden. Nor can statements of Corps officials recounted in Plaintiffs' declarations be disregarded as "hearsay." They are party admissions under the clear language of Federal Rule of Evidence 801(d)(2). Even more conspicuously lacking in any legitimate basis is Defendant's collateral attack on the Ninth Circuit's decision in Resource Investments, Inc. v. U.S. Army Corps of Engineers, 151 F.3d 1162 (9th Cir. 1998) ("RII v. Corps"), which Defendant chose not to appeal seven years ago. Defendant's related argument that takings law mandates a "presumption of validity" for its invalid and unreasonable actions is spurious: it is bound by the Ninth Circuit's judgment. Defendant's misconceived arguments infect its opposition to each of Plaintiffs' liability theories--the three-part test articulated in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978), "extraordinary delay," and a categorical permanent taking "cut short" by

"Def.'s Supp." refers to Defendant's Supplemental Brief Pursuant to This Court's Order of May 3, 2006 and "Pls.' Supp." refers to Plaintiffs' Supplemental Memorandum in Response to Court's May 3, 2006 Order. Plaintiffs otherwise use abbreviations used in prior briefing. 1

1

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the Ninth Circuit's decision. Defendant's "but for causation" arguments directly relate to the economic injury component of all three theories; the Ninth Circuit's decision supports liability both as to the Penn Central "character of the government action" prong and because the delay was "extraordinary"; and the challenged declarations support all three liability theories. Accordingly, this brief is organized based on Plaintiffs' three theories, with cross-references to the arguments from prior briefs that were not addressed in the supplemental briefing. Once the fog is cleared, liability turns on pure issues of law this Court should resolve at this time. II. ARGUMENT A. Defendant's Arguments Rest on Misstatements of the Applicable Summary Judgment and Evidentiary Standards. 1. Neither Celotex nor Other Authority Supports Defendant's Contentions That the Court May Disregard Declarations Based on Counsel's Contention That the Affiant Is "Biased" or the Declaration Is "Self-Serving."

Celotex Corp. v. Catrett, 477 U.S. 317 (1986), has been a cornerstone of summary judgment practice for three decades. Yet Defendant cites Celotex for the proposition that "[a] party may not rely on self-serving affidavits or declarations, unsupported by specific facts in the record" in summary judgment proceedings. Def.'s Supp. at 16, 17 (citing Celotex, 477 U.S. at 322-23).2 The Celotex Court said nothing of the sort, and did not even mention so-called "selfserving" or "biased" declarations. Instead, in the companion case decided the same day, Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986), the Court held that, to avoid a properly supported summary judgment motion, a party "must set forth specific facts showing that there is a genuine issue for trial" in the form of "affirmative evidence." Id. at 256-57. Argument by counsel that an affiant is "biased" or a declaration "self-serving" does not satisfy this obligation.3 Defendant argues that its purported rule also applies to Plaintiffs' opposition to Defendant's summary judgment motion, id., but neglects to remind the Court that it abandoned its motion with respect to the three-part Penn Central test. See Def.'s Reply at 2 n.1. The only other case Defendant cites, Evans v. Technologies Applications & Services, 80 F.3d 954 (4th Cir. 1996), Def.'s Supp. at 16, 17, does not support exclusion of the declarations. In Evans, the Fourth Circuit upheld exclusion of declaration testimony because it was lay
(Footnote continued)
3 2

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Federal cases specifically contradicting Defendant's purported "bias" arguments are legion. As the D.C. Circuit stated in Robinson v. Cheney, 876 F.2d 152 (D.C. Cir. 1989): "[I]t is well settled that a party may not defeat a properly supported motion for summary judgment merely by raising generalized questions as to the credibility of the movant's affidavits. [A] generalized allegation of [an affiant's] self-interest does not suffice to raise a genuine question of material fact."4 The Federal Circuit also pointedly rejects Defendant's arguments: Where a movant has supported its motion with affidavits or other evidence which, unopposed, would establish its right to judgment, the non-movant may not rest on general denials in its pleadings or otherwise, but must proffer countering evidence sufficient to create a genuine factual dispute. . . . In countering a motion for summary judgment, more is required than mere assertions of counsel. The non-movant . . . , under Rule 56, must set out, usually in an affidavit by one with knowledge of specific facts, what specific evidence could be offered at trial. Sweats Fashions, Inc. v. Pannill Knitting Co., 833 F.2d 1560, 1562-63 (Fed. Cir. 1987) (internal quotations and citations omitted; emphasis added).5 And, of course, it is the factually unsupported contentions of Defendant's counsel in its brief, not the sworn witness declarations, that are "self-serving." See Vivid Techs., Inc. v. Am. Sci. & Eng'g, 200 F.3d 795, 812 (Fed. Cir. 1999). On this record, the McNeill, Snyder, and Barrows declarations are undisputed.6 opinion testimony lacking a foundation of personal knowledge and thus inadmissible under Federal Rule of Evidence 701. 80 F.3d at 959-61. That rule has no application here. Id. at 162 (internal quotations and citation omitted) (citing Schiavone Constr. Co. v. Time, Inc., 847 F.2d 1069, 1084 (3d Cir. 1988); Nat'l Union Fire Ins. Co. v. Argonaut Ins. Co., 701 F.2d 95, 97 (9th Cir. 1983)); see also United States v. Real Prop. Located At Incline Vill., 47 F.3d 1511, 1521 n.4 (9th Cir. 1995) (holding claims of witness bias "irrelevant" because court "would not have considered the credibility of the declarants supporting and opposing the motion"), rev'd on other grounds sub nom. Degen v. United States, 517 U.S. 820 (1996). See also Crown Operations Int'l, Ltd. v. Solutia Inc., 289 F.3d 1367, 1375 (Fed. Cir. 2002) ("Once the moving party has satisfied its initial burden, the opposing party must establish a genuine issue of material fact and cannot rest on mere allegations, but must present actual evidence." (citing Anderson, 477 U.S. at 248)) (emphasis added). Not only has Defendant presented no contrary evidence on the material issues, but the testimony of its expert, Dr. Mitchell, corroborates that Plaintiffs lost millions of dollars of landfill revenue each year the opening was delayed. See Chem. Eng'g Corp. v. Essef Indus., Inc., 795 F.2d 1565, 1571 (Fed. Cir. 1986) (noting the significance on summary judgment that the opposing expert "corroborated the results reported" of the moving party) (emphasis added). 3
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2.

The Corps Statements Are Admissible As Non-Hearsay Admissions.

Defendant objects on hearsay grounds to statements of Corps officials. Def.'s Supp. at 18, 24. The Barrows, McNeill, and Snyder declarations each recount such Corps statements. But Federal Rule of Evidence 801(d)(2) defines non-hearsay statements to include an "admission by party-opponent." An "admission" exists when the statement is offered against a party, here the United States, and is "a statement by a person authorized by the party to make a statement concerning the subject," or by an agent "concerning a matter within the scope of the agency or employment." Each of the quoted statements meet these criteria and are admissions. See, e.g., PR Contractors v. United States, 69 Fed. Cl. 468, 473-74 (2006); Long Island Sav. Bank v. United States, 63 Fed. Cl. 157, 164-65 (2004); Globe Sav. v. United States, 61 Fed. Cl. 91, 94-97 (2004); Myers Investigative & Sec. Servs. v. United States, 47 Fed. Cl. 288, 295 (2000). Each statement is therefore admissible for its truth, but each is admissible for other nonhearsay purposes as well. See generally, 5 Jack B. Weinstein & Margaret A. Berger, Weinstein's Fed. Evid. § 801.11[1] (2d ed. 2006) (collecting examples of non-hearsay uses of out-of-court statements). For example, statements giving rise to legal consequences, such as that no federal EIS was required, are not hearsay. Statements showing state of mind, such as "my first priority is the Auburn racetrack," are not hearsay. Other Corps statements are admissible, not for their truth, but rather to show the impact on the permit process, such as that Plaintiffs needed to reconfigure their project to address Corps "concerns." Plaintiffs next turn to their three bases for liability, first identifying the legal issues to be resolved on summary judgment, and second demonstrating that the undisputed "factual underpinnings" establish liability on all three grounds. B. Taking Based on Penn Central: The Undisputed Facts Demonstrate That Each of the Penn Central Factors Favor Plaintiffs As a Matter of Law. 1. First Penn Central Factor: The Character of the Government Action a. Legal Issues on the First Penn Central Factor:

The parties' disagreements about the Ninth Circuit ruling and its significance for "the character of the government action" prong of Penn Central are pure issues of law that can and 4

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should be resolved on summary judgment. i. Defendant Is Bound Here by the Ninth Circuit Determination That the Corps' Exercise of Jurisdiction Was Unlawful, Unreasonable, and Resulted in Unnecessary Duplication.

Defendant again argues that the Corps was "reasonable in believing that it had jurisdiction," Def.'s Supp. at 31, despite the Ninth Circuit's holding that the Corps' exercise of jurisdiction was "unreasonable," RII v. Corps, 151 F.3d at 1169. It asserts that the Ninth Circuit decision was "flatly and legally incorrect," Def.'s Supp. at 36, despite Defendant's calculated decision not to appeal that judgment, which waived all such arguments. In this as in any other federal court, the United States, just like any party, is bound by a judgment it does not appeal in subsequent litigation with the same party. E.g., Montana v. United States, 440 U.S. 147, 153-54 (1978); United States v. Stauffer Chem. Co., 464 U.S. 165, 174 (1984); Christopher Vill., L.P. v. United States, 360 F.3d 1319, 1321 (Fed. Cir. 2004), cert. denied, 543 U.S. 1146 (2005).7 Indeed, Defendant already conceded these points: 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. Def.'s Opp'n at 22. Defendant's collateral attack on the Ninth Circuit's decision is not warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law. It is all the more egregious because Defendant's choice not to appeal was made at the highest levels of the Department of Justice, by the Solicitor General, after consulting with the Corps and EPA, and with knowledge of the legal impact of the Ninth Circuit decision on this case, which had already been filed. In the Ninth Circuit, Defendant sought an extension of time to seek rehearing, acknowledged that Plaintiffs had already filed this case, and The exception for cases involving different parties, see United States v. Mendoza, 464 U.S. 154, 158 (1984), is inapplicable here. 5
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argued that this Court was "the appropriate forum for addressing any potential impacts [of additional delay] on [Plaintiffs'] prosecution of their taking claim." PE 176 at 2360. After rehearing was denied, the Solicitor General sought and received two extensions of time to file a Petition for Certiorari, PE 177, 178, and represented to the Supreme Court that he needed additional time to "consult further within the government regarding the legal and practical consequences of the court of appeals' decision," PE 177 at 2363; PE 178 at 2365 (emphasis added). High on the list of such "legal and practical consequences" is the collateral estoppel effect of the Ninth Circuit ruling on this takings case. In the end, Defendant elected not to appeal. Defendant cannot ask this Court, in 2006, to hear the challenge Defendant so deliberately abandoned in 1999. ii. The Ninth Circuit Evaluated the Reasonableness and Necessity of the Corps' Actions at the Regulatory Level, a Determination Which Is at the Core of the "Character" Inquiry.

In addition to arguing, as this Court humorously put it, that the Ninth Circuit just "blew this whole thing," PE 180 at 2371 (85:9-12), Defendant claims that the Ninth Circuit ruling is not binding because it involves a different issue--"the legal question of statutory interpretation--an analysis of whether the agency's construction of a statute was a reasonable interpretation and within the agency's statutory authority." Def.'s Supp. at 30. This is wrong as described below. (1) The Ninth Circuit Rulings for Which Preclusion Is Sought Are Identical Because Plaintiffs Claim Only That the Rulings, As Articulated by That Court, Are Binding Here.

The APA challenge the Ninth Circuit decided clearly involved a different claim than this one, but the issue for which estoppel exists is the same because Plaintiffs ask this Court simply to give collateral estoppel effect to the rulings exactly as they were decided by the Ninth Circuit. The APA provides a right of review for those "suffering legal wrong because of agency action," and the district courts must "hold unlawful . . . agency action" that is "arbitrary, capricious, [or] an abuse of discretion." 5 U.S.C. §§ 702, 706(2)(A) (emphasis added). Plainly, as part of its

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APA review, the Ninth Circuit did address the factual and legal character of the Corps's "actions," and it addressed specifically the "quality" of these actions in terms of their reasonableness and necessity, all appropriate inquiries under the APA but also key to the Penn Central inquiry. The fact that the claim was different means only that re-litigation is barred as a matter of "collateral estoppel" not "res judicata."8 The key Ninth Circuit holding that must be given effect here is that the Corps' unlawful assertion of "unnecessary duplicative" jurisdiction over Plaintiffs' landfill was "unreasonable." RII v. Corps, 151 F.3d at 1168-69. The Ninth Circuit offered nine related supporting reasons for this conclusion, all binding here: · "[T]he municipal solid waste that would be disposed of in the proposed landfill does not fall within the [Corps' regulatory] definition of either `dredged material' or `fill material'"; and the landfill structures (which are obviously not "dredged materials") also "do not constitute fill material." Id. at 1168. The Corps' exercise of jurisdiction caused duplicative "regulatory overlap" because "it creates a situation in which the Corps on the one hand, and an RCRA-approved state regulatory program on the other, would make the same wetlands-impact determinations, using the same criteria, with potentially inconsistent results." Id. at 1169. The Corps' action in this case caused actual duplication because (i) RCRA regulations had adopted wetland protections which "mirror the EPA's section 404 guidelines concerning wetlands under the CWA"; (ii) Washington had adopted those regulations so that the owner of a proposed landfill "must make the exact demonstrations required by EPA in the Subtitle D regulations"; and (iii) in granting RII's permit application, the Tacoma-Pierce County Health Department ("TPCHD") (which had been delegated solid waste permit authority by the State) "certified that RII successfully made the appropriate demonstrations concerning wetlands" under the same regulations. Id. at 1168 (emphasis added). "This regulatory overlap is inconsistent with the Corps' own regulations, which provide that `[t]he Corps believes that state and federal regulatory programs should complement rather than duplicate one another.'" Id. at 1169. Before the Corps asserted jurisdiction here, it had already proclaimed to EPA that it was not the appropriate agency to regulate solid waste disposal on sites with wetlands, because (i) it had "limited expertise" in garbage disposal and would have to develop "duplicative expertise"; (ii) it was not in the best interest of the United States for EPA to work with the states under RCRA and have the "Army to operate a 404 permit program for garbage disposal on a different basis"; and (iii) "[i]t strains reason

·

·

· ·

Indeed, Defendant conceded this issue. Def.'s Opp'n at 22 (stating that when a court reaches a decision in a prior case, "the decision . . . is conclusive in a subsequent suit based on a different cause of action involving a party or its privy to the prior litigation") (emphasis added). 7

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·

·

· ·

to have the Army Corps of Engineers, with its primary military and navigation missions, to lead this garbage disposal regulation." Id. EPA and the Corps entered into a 1986 Memorandum of Agreement, which "provides that when the EPA promulgates its final rules, which it did on October 9, 1991, the responsibility for the [solid waste] program becomes the sole purview of the EPA and the affected states." Id. (emphasis added). Based on the agreed cession of Corps jurisdiction in the MOA, "section 404 of the CWA and the applicable provisions of the RCRA can be harmonized to give effect to each `while preserving their sense and purpose,'" and this harmonization was consistent with the historical sense of the CWA that "discharges of solid waste materials are beyond the scope of section 404." Id. (citing 1977 Federal Register). The MOA's "harmonization" of RCRA and the CWA "avoids unnecessary duplication of federal and state efforts in the area of wetlands protection." Id. Corps' jurisdiction was unlawful "when a proposed project affecting a wetlands area is a solid waste landfill," but "[i]f the project . . . is not a solid waste landfill and the project involves the discharge of dredged or fill material, the Corps will have permit authority under Section 404 of the CWA." Id.9

It is beyond dispute that these APA determinations about the nature of the Corps' "actions" bear directly on the "character of the government actions" under Penn Central. (2) The Ninth Circuit's Holding Focused Not on "Statutory Construction" but on the Unreasonable Nature of the Corps' Actions at the Administrative and Regulatory Level.

Given the nine grounds offered, Defendant is wrong in asserting that the focus of the Ninth Circuit was on statutory construction and not "the factual nature of the Corps' actions."10 Def.'s Supp. at 30. To be sure, at the beginning of its opinion (before its "Analysis" section) the Ninth Circuit did recite various rules of construction, including deference to a reasonable agency interpretation of a statute (although the Court tellingly emphasized that such deference did not extend to "agency litigating positions that are wholly unsupported by regulations, rulings, or administrative practice") (internal quotations omitted). RII v. Corps, 151 F.3d at 1165. But, the

Despite this explicit statement to the contrary, Defendant represents that under the Ninth Circuit ruling "there is nothing magical about the fact that a particular permit application has as its purpose the construction of a landfill." Def.'s Supp. at 25. Clearly, the statutes did not cause "duplication." Without the Corps' violation of the MOA's jurisdiction transfer provision, there would have been no duplication--the "unnecessary" "regulatory overlap" the Ninth Circuit found "unreasonable." RII v. Corps, 151 F.3d at 1169. 8
10

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only other mention of the Corps' interpretation of the CWA and RCRA is that the 1986 MOA achieved an acceptable "harmonization" of the two programs. Id. at 1169. Instead, the Court ruled that the actions of the Corps in asserting duplicative jurisdiction over Plaintiffs' facility were inconsistent with the Corps' own regulations, its MOA, and with the Corps' own prior acknowledgement of its "limited expertise" in solid waste issues and regulation as the nine bulleted points indicate clearly. Id. at 1168-69.11 (3) The Rulings for Which Preclusion Is Claimed Are Directly Relevant to the "Character" Inquiry.

Defendant next argues that the Ninth Circuit's holding has "limited relevance" here. Def.'s Supp. at 24-25. It claims that whether the Corps' actions were "unreasonable" and "unnecessary" "is not part of the character of the government action inquiry" as defined by the Supreme Court, id. at 30, which it asserts focuses instead on "[t]he purposes served, as well as the effects produced, by a particular regulation," not whether the Corps was "mistaken." Id. at 27-31 (citing Bass Enters. Prod. Co. v. United States, 381 F.3d 1360, 1369-70 (Fed. Cir. 2004); Palazzolo v. Rhode Island, 533 U.S. 606, 633 (2001) (O'Connor, J., concurring); Maritrans Inc. v. United States, 342 F.3d 1344, 1356 (Fed. Cir. 2003); Branch v. United States, 69 F.3d 1571, 1578 (Fed. Cir. 1995); Penn Central, 438 U.S. at 134-35). To the contrary, the five cited authorities support Plaintiffs' position in two important respects. First, all make it clear that the Court's inquiry must focus on the legislative or administrative action that constituted the taking. Thus, in cases in which the courts emphasized "the overall purpose of the regulatory scheme" (which Defendant contends must be the focus here), the takings claim stemmed from the enactment of a statute or regulation. For instance, in The irony of the situation seems entirely to have eluded Defendant. The Ninth Circuit implicitly held that EPA and the Corps had been correct in their interpretation of RCRA and the CWA in 1986 when they determined, in issuing the MOA, that they could appropriately avoid "unnecessary duplication" in the wetlands/solid waste arena by giving exclusive wetland responsibility to the states. What the Ninth Circuit found "unreasonable" was the Corps' flagrant disregard for its own agreement, thereby duplicating the function that had already been assigned to the state and local governments when the Corps issued its public notice in 1992. 9
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Maritrans, the plaintiff claimed that the statutory prohibition on single-hulled vessels constituted a taking. 342 F.3d at 1347. As the source of the taking, focus on the purpose of the statutory prohibition makes sense. In this case, however, Plaintiffs have never claimed the CWA's enactment (or that of any regulation) constituted the taking. It was the Corps' actions on Plaintiffs' application that constitutes the taking, so focus on the general purpose of the CWA has little bearing on the "character" issue. Second, all of its cited authorities demonstrate that, contrary to Defendant's central argument, whether agency action is "unreasonable" and "unnecessary" goes to the core of the character of the government's action. Defendant simply omitted reference to the relevant discussion. From Palazzolo, Defendant quotes Justice O'Connor's "purpose and effect" statement, but then omits the critical next explanatory sentence quoting Penn Central itself: "`[A] use restriction on real property may constitute a `taking' if not reasonably necessary to the effectuation of a substantial public purpose, or perhaps if it has an unduly harsh impact upon the owner's use of the property.'" 533 U.S. at 634 (quoting Penn Central, 438 U.S. at 127) (emphasis added). That puts the Ninth Circuit ruling that the Corps' actions were "unreasonable" and "unnecessary" front and center. Next, Defendant omits exactly the same language from Bass, again distorting the holding. 381 F.3d at 1370. Defendant also omits that the Federal Circuit noted that the "reasonably necessary" analysis was part of the "public purpose" inquiry and that the Tahoe-Sierra Court endorsed the O'Connor approach to Penn Central. Id. Defendant similarly argues that the "character" inquiry includes consideration of "the purpose and importance of the public interest underlying a regulatory imposition," citing Maritrans, 342 F.3d at 1356, which is again misleadingly incomplete. The Maritrans court explicitly analyzed whether the requirement at issue "was necessary," and whether the regulations were "reasonably related to a publicly beneficial policy." Id. at 1357, 1358 (emphasis added). Likewise, Defendant omits that the Federal Circuit in Branch, 69 F.3d at 1578, embarked on a two-page "character" prong analysis of the "reasonableness" of the 10

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legislative scheme--whether a similar statute established a "rational relationship" to liability, allocating responsibility in a "reasonable manner," and whether the statute at issue was "rational," "reasonable," and "justified" by legitimate goals. Id. at 1578-80. Most importantly, as Justice O'Connor emphasized, Penn Central itself established that the "character" inquiry must address "reasonableness" and "necessity" because "a use restriction on real property may constitute a `taking' if not reasonably necessary to the effectuation of a substantial public purpose." 438 U.S. at 127. Thus, the reasonableness and necessity of a government action has always been at the heart of the "character" inquiry just as "justice and fairness" demand. The Ninth Circuit holding goes to the heart of the issue here. iii. There Is No "Presumption of Validity" As to Agency Actions Held Unlawful in a Binding Judgment.

Defendant next claims that it is entitled here to a "presumption that its actions were lawful and authorized." Def.'s Supp. at 29 (citing Florida Rock Indus. v. United States, 791 F.2d 893, 905 (Fed. Cir. 1986); Appolo Fuels, Inc. v. United States, 381 F.3d. 1338, 1351 n.7 (Fed. Cir. 2004), cert. denied, 543 U.S. 1188 (2005)). Neither authority cited supports Defendant. In Florida Rock, the Federal Circuit did state that the Corps' actions in that case were presumptively "valid and correct," but Defendant omits that the court accepted the argument the government itself advanced that it was "indisputable[] that the proper way to challenge the [permit] decision . . . would be under the . . . APA." 791 F.2d at 905, 898. As the court later elaborated, Florida Rock, "conceding the validity of the Corps' actions," brought suit directly in the Court of Federal Claims after the Corps' permit denial. Florida Rock Indus., Inc. v. United States, 18 F.3d 1560, 1563 & n.5 (Fed. Cir. 1994). It thereby "chose not to avail itself of the mechanism provided by the [APA] . . . for challenging in District Court the validity of the Corps [actions]." Id. at 1563 n.5. Here Plaintiffs directly challenged the permit denial "in the proper way" under the APA and ultimately prevailed. No "presumption" of validity applies here. Similarly, Defendant misquotes Appolo Fuels by deleting the court's explanation that the underlying governmental action was presumed lawful only because the plaintiff "had chosen not 11

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to challenge the validity of [the agency's] enforcement actions by way of a district court action." 381 F.3d at 1351 n.7. In that context, "[n]either the Court of Federal Claims nor this court may entertain a collateral challenge to the validity of [the agency's] actions." Id. (emphasis added). In both cited cases the landowner waived its right to bring a direct APA challenge, but here the shoe is on the other foot. Plaintiffs prevailed on their APA claims, the Corps was held to have acted unreasonably, and it is Defendant that waived its challenge to that ruling. Defendant is thus estopped from bringing a "collateral challenge" here, and in this fashion, the rules prohibiting collateral attacks apply equally to both parties as "justice and fairness" compel. Finally, Defendant's "presumption of validity" argument is inconsistent with the holding of First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 304 (1987), that temporary takings include "those regulatory takings which are ultimately invalidated by the courts." Obviously, in such cases, the government is not entitled to a nonsensical presumption that what was "invalidated" is presumed "valid." Such a rule, by automatically tilting the "character" prong of Penn Central in favor of the government, would undermine the very existence of the takings the First English Court confirmed existed. b. Plaintiffs Have Presented Undisputed (and Binding) Facts Showing That the Character of the Government Action Favors Liability.

The undisputed "factual underpinnings" for the "character of the government action" thereby come into clear focus. The Ninth Circuit holding of unreasonable, unnecessary, and duplicative "action" is binding here, and as a matter of law, the Corps' actions were not "reasonably necessary to the effectuation of a substantial public purpose," under the Penn Central test, 438 U.S. at 127, but instead merely caused delay. The Corps also violated its own regulations and the MOA's jurisdiction transfer agreement. RII v. Corps, 151 F.3d at 1169. These facts are sufficient for summary judgment, but they are not the only undisputed facts weighing in favor of liability. The Snyder, McNeill, and Barrows declarations--PE 78, 79, and 80 (to which Defendant offers no evidentiary response)--not only chronicle the Corps' delays, but also establish that the Corps actively singled out Plaintiffs for discriminatory 12

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treatment compared to other similarly situated Section 404 applicants for solid waste facilities. Mr. Barrows, Plaintiffs' wetland and Corps permitting expert, testified he was a consultant for Weyerhaeuser, which was successful in obtaining a Section 404 permit to build a landfill in Western Washington based on the Corps' conclusion that longhaul was not a "practicable alternative" because it was too expensive compared to local disposal. PE 80 at 1105-07 (¶¶ 2-3, 5-7). That standard, applied to Plaintiffs, would have supported a grant of Plaintiffs' permit by the Corps. Id. at 1108-09 (¶¶ 9, 13). Instead, the Seattle District of the Corps applied a different standard to Plaintiffs, ruling that despite a much greater cost, longhaul was a "practicable alternative" because neighboring counties (who had insufficient local disposal capacity) were longhauling their waste. See id. at 1109-11 (¶¶ 14-18, 20). In a similar vein, Ms. McNeill testified that the Corps forced Plaintiffs to change their project purpose to incorporate alternatives in competition with Plaintiffs' project. PE 79 at 100507 (¶¶ 21-22, 27). The Corps neither applied this standard to other applicants, nor was it consistent with settled law. Id. at 1005 (¶¶ 21-22), 1007 (¶¶ 28-29), 1009 (¶ 35), 1089-90; Pls.' Reply at 29-30. Ms. Snyder's declaration describes similar unequal treatment, PE 78 at 949-53 (¶¶ 5-6, 10-16), as do Plaintiffs' prior briefs, see Pls.' Reply at 29-32 (discussing average Corps permit denial time of 285 days compared to six years for Plaintiffs, application to Plaintiffs of groundwater standard 100,000 times more stringent than RCRA requires, and processing preference given to a later-filed Auburn racetrack application). c. Defendant's Only Response Is Unsupported Argument by Counsel.

Defendant's untenable legal arguments are the totality of its discussion of the "character" prong in its Supplemental Brief. Def.'s Supp. at 27-29. In prior briefs, Defendant's argument consisted solely of its counsel's unsupported assertion that the purpose of the Corps' actions was to "protect wetlands" and "protect the aquifer." Def.'s Opp'n at 20; Def.'s Reply at 19-20. But both functions had already been performed by state and local agencies applying federal standards and were thus "duplicative" and "unnecessary." RII v. Corps, 151 F.3d at 1168-69. 13

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The rest of Defendant's argument (apart from its impermissible collateral attack on the Ninth Circuit's decision) is a detailed explanation of how the Corps, in 2002, amended its regulatory definitions of "dredged and fill materials" to try to get around the Ninth Circuit decision, even within the Ninth Circuit. Def.'s Supp. at 31-32. But, this odd argument does not help Defendant. It is a tacit admission that the Corps' exercise of jurisdiction was inconsistent with its own regulations, and shows the falsity of Defendant's argument of convenience that the Ninth Circuit focused on statutory construction. Moreover, rather than casting the Corps' actions in a favorable light, this argument confirms that the true "purpose and effect" of the Corps' actions was and continues to be unreasonable exercise of an unnecessary and duplicative function, contrary to its own regulatory command to avoid duplication and defer to state and local land use and water quality decisions. See Pls.' Reply at 31 (citing Corps' regulations). 2. Second Penn Central Factor: Reasonable Investment-Backed Expectations

Plaintiffs have also shown that they had reasonable, investment-backed expectations that they would be able to permit, construct, and operate their facility. Plaintiffs detailed their reasons for choosing the site and the characteristics that made it both suitable for a landfill and unsuitable for other uses. Pls.' Mem. at 6-7, 30-38. They then described how and why--based on this information--their expectations were investment-backed and reasonable. Id. at 60-61.12 Defendant's principal argument is that Plaintiffs' demonstrated ability to permit, construct, and operate their facility is irrelevant to whether their expectations were reasonable (despite that the pertinent state and local schemes they satisfied included the same CWA standards the Corps is supposed to apply when it has jurisdiction). Def.'s Opp'n at 25-27. Defendant also argued that Plaintiffs cannot demonstrate their expectations were reasonable Kevin Lakey's Expert Witness Report, PE 94, contains a detailed technical description of why the project design, and the site geology and hydrogeology, objectively shows that an environmentally sound project could be constructed, and should be permitted in conformity with state and federal standards, i.e., that Plaintiffs had an objectively reasonable expectation they would obtain all their permits (and spent more than $12 million doing so). Id. at 1180-86. 14
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because they bought their property after the CWA was enacted. Id. at 27-28; see also Def.'s Reply at 24 (same). Plaintiffs pointed out that Defendant's argument that enactment of the CWA is itself a bar was rejected by the Supreme Court in Palazzolo, 533 U.S. at 609, 626-27, 630. See also Appolo, 381 F.3d at 1348. Rather than having to demonstrate the absence of a regulatory scheme, Plaintiffs need only show they had a reasonable expectation of obtaining the necessary permits. Pls.' Reply at 33-35. The fact that they were able to permit, construct, and operate their facility serves as appropriate corroborating evidence that their initial expectations of being able to obtain those permits, when they studied and eventually purchased the property, were indeed reasonable. Thus, contrary to Defendant's contention, Plaintiffs' analysis was not based on hindsight. Pls.' Reply at 32-33. And notably, because Plaintiffs were able to permit the landfill by making, to the state and local agencies, the same demonstration required to obtain a Section 404 permit, RII v. Corps, 151 F.3d at 1168-69, this serves as corroborating evidence that Plaintiffs' evaluation of the site's ability to support a positive permitting decision was both reasonable and accurate. Importantly, the Barrows, McNeill, and Snyder declarations--the subject of Defendant's misplaced "bias" and "self-serving" objections--provide further undisputed factual support for the existence, content, and reasonableness of Plaintiffs' investment-backed expectations and, in particular, the basis for Plaintiffs' decision to continue to invest substantial sums of money in their ultimately successful permitting efforts. Mr. Barrows, Plaintiffs' wetland consultant and Corps permitting expert, testified that the Weyerhaeuser Company received a Section 404 permit for a solid waste landfill because the Corps determined that longhaul, because of its extra cost, was not a "practicable alternative." PE 80 at 1105-07 (¶¶ 2, 7). The extra cost involved to Weyerhaeuser was on the order of millions of dollars over the life of the landfill, Pls.' Resp. at 56, as compared to hundreds of millions of dollars of extra cost between Plaintiffs' facility and the longhaul "alternative," id. at 13, 21. Expecting equal treatment for Plaintiffs, Mr. Barrows advised Plaintiffs to continue to invest in their project (paying for a federal EIS, reconfiguring the project, and providing additional mitigation) because they had "a good chance of getting a 15

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permit from the Corps." PE 80 at 1105-08 (¶¶ 3, 5, 7, 9). This expectation was reinforced by statements from the Corps project manager and Branch Chief that the mitigation issue "could be resolved" and that reconfiguration could satisfy "agency concerns." Id. at 1106 (¶ 4). Ms. McNeill testified to her extensive efforts to get the Corps to comply with its own rules and deadlines (which would have supported timely issuance of a permit). See generally PE 79. She testified to her legal conclusion that the law "appeared very clear and settled" that the Corps had no legal basis to force consideration of longhaul as a "practicable alternative" based on Plaintiffs "project purpose," id. at 1005-09 (¶¶ 22, 27, 29, 33), and she "reserv[ed] [Plaintiffs'] rights" when the Corps ultimately forced them to change the project purpose in violation of that case law, id. at 1009 (¶¶ 34-35). Ms. Snyder, LRI's Director of Regulatory Services, similarly testified that Plaintiffs understood the project's environmental merits and thus believed they could satisfy all of the legal requirements, including those of the Corps under Section 404. PE 78 at 949 (¶¶ 4-5). When the Corps clarified that it would consider longhaul as a practicable alternative, Plaintiffs still believed they could successfully challenge that decision in court to compel issuance of a permit. Id. at 952-54 (¶¶ 15, 20). Ms. Snyder also describes how Plaintiffs methodically obtained their discretionary state and local permits by February 1996, and moved expeditiously (as soon as the Ninth Circuit removed the Corps as a barrier) to obtain their remaining ministerial permits to commence construction and open their facility only ten months after finalization of the Ninth Circuit decision. Id. at 955-59 (¶¶ 24-36). Thus, no genuine issues of material fact exist as to the second Penn Central prong either, and it weighs heavily in Plaintiffs' favor. 3. Third Penn Central Factor: Significant Economic Impact a. Legal Issues on the Third Penn Central Factor.

The third Penn Central prong, what the Federal Circuit also calls "serious financial loss," Cienega Gardens v. United States, 331 F.3d 1319, 1340 (Fed. Cir. 2003), turns on three basic legal issues discussed in prior briefs. Each should be resolved in Plaintiffs' favor. First, Defendant seeks to limit the Court's inquiry to a very narrow type of evidence--a comparison of 16

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the fair market value of Plaintiffs' property with and without the use restrictions the Corps imposed. Def.'s Opp'n at 30-31. Not only is it a given that the site is vastly more valuable permitted than not, but no such limitation on the appropriate evidence exists. Plaintiffs need only show that the Corps' actions caused them to suffer significant economic impact. Pls.' Reply at 43-45. Plaintiffs have met their burden by showing the Corps caused years of delay in their ability to permit, construct, and open the facility and that each year caused Plaintiffs to lose at least $3.4 million in landfill revenues (using Defendant's own expert's calculation). Second, Defendant similarly suggests that Plaintiffs may not rely on evidence of "interim value" to establish serious financial loss in a temporary takings case. Def.'s Opp'n at 31-33; Def.'s Reply at 26-27. This is a red herring: Dr. Mitchell's valuation encompassed the revenue stream for the entire life of the facility. Pls.' Reply at 39-42. Thus, Plaintiffs may appropriately rely on his calculation to show the undisputed minimum of lost income for the years in question (although his calculation understates the loss by many millions). Third, Defendant argued that proof of the exact duration of the taking is necessary to establish significant economic impact. Def.'s Opp'n at 28-30. But no case law supports such a requirement, and it would defeat the purpose of bifurcation if "exact" damages must be proved to establish liability. Pls.' Reply at 36-39. All that Plaintiffs must establish for this liability phase is that the Corps' delay--whatever its exact length--caused significant economic impact. b. Plaintiffs Presented Record Evidence Demonstrating That They Suffered Significant Economic Impact Because the Corps' Actions Delayed the Opening of Their Facility for Years.

In order to demonstrate that the Corps was the "but for" cause of serious financial loss, Plaintiffs demonstrated that (1) the land lacked any alternative economically viable use during the Corps' assertion of jurisdiction; (2) the Corps caused at least a six-year delay in landfill construction, so that but for the Corps, the facility would have opened at least six years earlier; and (3) Plaintiffs suffered economic loss of at least $3.4 million per year, about $20 million minimum during that six year period, as Defendant's own expert economist established. 17

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The parties' supplemental briefs and argument focused on the second point (discussed below), and Plaintiffs will simply summarize the undisputed factual basis for the first and the third points. What emerges is that Defendant, with no basis in fact, seeks to blame the state and local agencies for the six-year delay the Corps caused.13 Plaintiffs' prior briefing described in detail how and why the property lacked any viable economic use during the period of the Corps' regulatory prohibition. Pls.' Mem. at 30-38, 4447; Pls.' Resp. at 60-63. Plaintiffs described the site characteristics, physical properties, and practical restrictions on use with both fact testimony and expert opinion testimony (Pls.' Mem. at 30-38, 44-47; Pls.' Resp. at 60-63), and after receiving Defendant's briefs, provided a detailed demonstration as to why Defendant failed to offer any admissible evidence demonstrating any alternative viable economic use for the property. Pls.' Resp. at 32-38; Pls.' Reply at 16-20. Likewise, the minimum amount of financial loss Plaintiffs suffered on a per year basis is not disputed because the analysis of landfill revenues conducted by Defendant's own expert, Dr. Mitchell, proves Plaintiffs' point. Pls.' Mem. at 61-62; Pls.' Reply at 39-42. His analysis, sponsored by Defendant, establishes that Plaintiffs lost a minimum of $3.4 million for each year that the Corps delayed the opening of the landfill.14 Thus, the only remaining aspect of the
13

Plaintiffs' prior briefs have described the timing and detailed particulars of each and every one of the state and local permits. Even if the relevant facts as to these permits were in dispute (which, of course, they are not), this Court need not determine how the Corps' process affected each and every state and local permit standing alone. This is so because without a Corps permit (or judgment that the Corps lacked jurisdiction), Plaintiffs were precluded from getting certain local permits, and as long as the Corps made it impossible to obtain any one of them, Plaintiffs could not construct or open the facility. Thus, rather than exploring every detail of each individual permit, the "but for" causation question can be answered by looking to a few important (and undisputed) facts. As described below, there were key points at which the Corps' permit process intersected with the state and local permit process, and at these points of intersection the Corps' process indisputably caused significant delay in Plaintiffs' ability to permit, construct, and open the facility. Serious financial loss was a direct result. As Plaintiffs described in prior briefing, Plaintiffs intend to prove much higher damages in the damages phase of this case. Pls.' Mem. at 61-62. Both parties' experts agree with Dr. Mitchell's methodology, but as Dr. Mitchell himself conceded, if the relevant disposal rates and volumes in the record had been used (rather than the assumptions Dr. Mitchell used),
(Footnote continued)
14

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factual underpinnings of the economic impact prong is the minimum number of years of delay the Corps caused, and whether that establishes a significant economic impact. The delay caused by the Corps is best examined by looking at two time periods, which stem from critical points of intersection between the Corps' process and the state and local process. The first period began after Plaintiffs obtained their two discretionary state and local permits (January/February 1996) and lasted until the Ninth Circuit's mandate allowed Plaintiffs to commence construction in the wetlands (February 1999). The second period is the time consumed by facility reconfiguration, which required the state and local process to start over and occurred because of the Corps' pressure on Plaintiffs to reconfigure. i. The Corps' "Regulatory Prohibition" Caused Three Years of Delay in Plaintiffs' Ability to Permit, Construct, and Open the Facility Because the Corps' Assertion of Jurisdiction and Subsequent Permit Denial Was a Legal and Practical Bar to Plaintiffs' Ability to Obtain the Necessary Ministerial Permits.

As for the first period, Defendant concedes the Corps caused a "regulatory prohibition" on construction from September 1996 through October 1998. Def.'s Opp'n at 28. But Defendant has the dates wrong. Plaintiffs obtained the first of two discretionary permits in the state and local process (the CUP), on January 2, 1996, and obtained the second (the Solid Waste Permit), on February 7, 1996. Chronology at 1. These were the only required state and local discretionary permits. Pls.' Resp. at 16. Defendant does not dispute that once the Corps asserted jurisdiction, Plaintiffs could not disturb wetlands without a Section 404 permit (or a judgment that the Corps lacked jurisdiction). Thus, but for the Corps, Plaintiffs would have been free to obtain their ministerial permits in early February 1996 and then commence construction. However, the permit processes were interconnected in another way--both discretionary permits contained as conditions that Plaintiffs obtain a Section 404 permit to the extent that such a permit was required by law. PE 46 at 435 (Condition AM); PE 83 at 1124 (Finding 9R), 1125 his methodology would result in a roughly three-fold increase in Plaintiffs' loss. Id. at 62. 19

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(Conclusion 2); PE 44 at 395; PE 37; PE 67 at 759-60 (¶ 7). Moreover, it made no sense for either the agencies to process or Plaintiffs to pursue the remaining ministerial permits until the issues with the Corps were resolved. First, in early 1996 it was still unclear whether the Corps would grant Plaintiffs a permit. And in fact, the Corps did not. It denied the permit on September 30, 1996. Chronology at 4. This stood as an independent legal barrier as a matter of federal law. Second, had Plaintiffs nevertheless been able to obtain their ministerial permits immediately after the grant of the discretionary permits, they would have been required to pay interest and fees on a letter of credit agreement, PE 172, and on a bond, PE 173. Plaintiffs would have incurred these unnecessary expenses for the entire period of the Ninth Circuit appeal. Third, some of the ministerial permits contained time limitations requiring Plaintiffs to commence work promptly to avoid expiration of the permit.15 Obtaining them was futile. As a matter of law, the Corps' permit denial remained in effect until the Ninth Circuit decision became final; the Corps' petition for reconsideration prolonged the Corps' jurisdiction (and the conceded "regulatory prohibition") until the February 10, 1999 mandate. Defendant has presented no argument that the Ninth Circuit's decision was "final" or that Plaintiffs could lawfully have disturbed wetlands before then.16 It is likewise undisputed that Plaintiffs were able to obtain all the necessary ministerial permits and construct and open the facility by December 1999, only ten months after the mandate. This three year period (from February 1996 to February 1999) is sufficient to establish serious financial loss under Penn Central because Plaintiffs were deprived of all landfill revenues for the entire period. The Corps' "regulatory prohibition" is thus the undisputed "but See, e.g., DSJ 51 at 598 (Access Connection Permit providing that "[t]his permit shall be void unless the construction herein contemplated is started within 90 days of issuance and completed within 120 days of issuance, unless otherwise provided herein"). Instead, the October 1998 ending date for the "regulatory prohibition" Defendant uses relates to the four monitoring wells Plaintiffs installed. However, as Plaintiffs previously described (Pls.' Resp. at 18; Pls.' Reply at 39 n.19), it is undisputed that Plaintiffs did not disturb any wetlands with this activity or begin cell construction until after the mandate issued. 20
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for" cause of serious financial loss Dr. Mitchell calculated to be a minimum of $10.2 million in landfill revenues in this interval ($3.4 million per year for three years).17 ii. The Corps' Assertion of Jurisdiction Caused Three Years of Additional Delay Because the Corps' Pressure to Reconfigure the Facility Forced Plaintiffs to Start the State and Local Permit Process over Again.

Although this 1996-1999 period of delay is sufficient for liability and, for all intents and purposes, is conceded by Defendant, Plaintiffs demonstrated that the Corps was responsible for an additional three-year delay because of the Corps' decision to tell Plaintiffs that any chance they had of receiving a Section 404 permit depended on Plaintiffs reconfiguring the facility to address Corps "concerns." Pls.' Supp. at 18. Because Plaintiffs were forced to start the state and local process over again to reflect the new design that the Corps (falsely) indicated might lead to federal approval (so that all the permits related to one uniformly approved design), the Corps' unlawful and unnecessary assertion of jurisdiction was the "but for" cause of additional delay. Plaintiffs' initial facility design called for returning South Creek to its origin