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No. 95-650L (Judge Margolis)
IN THE UNITED STATES COURT OF FEDERAL CLAIMS
ALFRED ALOISI, et al., Plaintiffs, v. UNITED STATES OF AMERICA, Defendant.
PLAINTIFFS' REPLY BRIEF IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT (AND REPLY TO DEFENDANT'S OPPOSITION BRIEF)
Lawrence G. McBride FOLEY & LARDNER LLP 3000 K St., N. W., Suite 500 Washington, D.C. 20007-5143 Telephone: (202) 672-5300 Facsimile: (202) 672-5399 Dated: March 21, 2008 Attorney for Plaintiffs
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TABLE OF CONTENTS Page I. II. SUMMARY OF PLAINTIFFS' REPLY.............................................................................1 ARGUMENT.......................................................................................................................1 A. Plaintiffs' Rights under the Mining Law. ................................................................1 1. 2. B. The case for and against discovery ..............................................................1 Property rights in an unpatented mining claim, irrespective of discovery..................................................................................................6
Defendant's arguments about "implementation" of the biological opinion. ....................................................................................................................8 1. 2. 3. Defendant's Misuse of the Granillo Transcript ...........................................8 The Second Blessing Declaration, and the Evening Star Timber Sale..................................................................................................9 What "mitigation requirements," or "mandatory conditions"? ...............................................................................................13
C.
Extraordinary Delay, Temporary Takings, and the Penn Central Factors....................................................................................................................16 1. 2. 3. 4. 5. 6. Ripeness and finality..................................................................................16 APA remedies? ..........................................................................................16 Non-existent standards of proof.................................................................18 Submitting a "meaningful application." ....................................................18 Reasonable Investment-backed Expectations ............................................19 Economic Impact of the Temporary Taking..............................................19
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TABLE OF AUTHORITIES Page FEDERAL CASES Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234 (Fed. Cir. 2002)................................................................................................18 Bass Enterprises Prod. Co v. United States, 54 Fed. Cl. 400 (Fed. Cl. 2002) ...............................................................................................19 Boise Cascade v. United States, 296 F.3d 1339 (Fed. Cir. 2002)..........................................................................................16, 18 Brace v. United States, 72 Fed. Cl. 337 (2006) .............................................................................................................19 CCA Associates v. United States, 75 Fed. Cl. 170 (2007) .............................................................................................................19 Chrisman v. Miller, 197 U.S. 313 (1905)...............................................................................................................3, 6 First English Evangelical Lutheran Church v. Los Angeles County, 482 U.S. 304 (1987)............................................................................................................... 6-7 Greenbrier v. United States, 40 Fed. Cl. 689 (1998) .............................................................................................................18 MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340 ............................................................................................................................18 United States v. Coleman, 390 U.S. 599 (1968)...............................................................................................................3, 6 United States v. Weiss, 642 F.2d 296 (9th Cir. 1981) ......................................................................................................7 Walcek v. United States, 49 Fed. Cl. 248 (2001) .............................................................................................................19 FEDERAL STATUTES 5 U.S.C. § 706(1) ...........................................................................................................................17
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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ALFRED ALOISI, et al., Plaintiffs, v. UNITED STATES OF AMERICA, Defendant. ) ) ) ) ) ) ) ) ) )
No. 95-650L Hon. Lawrence S. Margolis
PLAINTIFFS' REPLY IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT (AND REPLY TO DEFENDANT'S OPPOSITION BRIEF) I. SUMMARY OF PLAINTIFFS' REPLY. Plaintiffs submit reply argument and evidence on three broad subjects: A) Plaintiffs' demonstration of its compensable property right; B) the facts demolishing Defendant's claim that it supposedly "implemented" the 1990 Biological Opinion (its basis for claiming there was no unwarranted or extraordinary delay here); and C) how Plaintiffs satisfy the ripeness doctrine and the Penn Central factors on this record. Plaintiffs submit that Defendant's Opposition filing, including its exhibits, do not defeat the granting of Plaintiffs' summary judgment motion. II. ARGUMENT. A. 1. Plaintiffs' Rights under the Mining Law. The case for and against discovery. In their opening brief Plaintiffs set out, in
summary judgment form, the viability of the mining operation Defendant's actionable conduct aborted, and the "validity" of the unpatented mining claims on which the operations began and were to be conducted. This proof came chiefly through the Affidavit of Thomas P. Ferrero, Plaintiffs' Exhibit ("PE-") 2, but also through voluminous supporting documentation: sampling and assaying (e.g., JA-189, JA-192 and JA-193); metallurgy (e.g., JA-192, JA-193 and PE-18); and the assembly of those data for each target mineral deposit that established revenues and 1
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mining costs for each target mineral deposit, as well as the hauling and milling / processing costs to realize the tested gold recoveries, all to a calculation of net profit or loss (e.g., JA-190 and JA191 (spreadsheets 1-9) and PE-2), resulting in a profit for each scenario studied. Defendant's Opposition Brief ("DOB") 1 demands proof of mining claim validity in this case for Plaintiffs to establish the property right predicate to a Tucker Act inverse condemnation claim. Plaintiffs, consistent with Mining Law standards, have made the required showing. Defendant's response is to complain this proof is speculation, DOB 7, but without explaining how this proof is any more speculative, or less reliable, than the proof of the validity of any mining claim, especially in the recurring circumstance where proof is sought while mining is not occurring. The administrative mineral contest Defendant pursued for seven years would have proceeded on proof comparable to that now before the Court. The Forest Service would have relied, as it has now done here, on its 1999 Mineral Report, parts of which are now Defendant's Opposition Exhibit ("DOEx.") 12, and DOEx. 9. In its Opening Brief, Defendant made no showing that the Plaintiffs' property was not a unified group of valid unpatented mining claims, containing also an anchor piece of private ground providing access to ore targets underlying a number of the adjacent lode claims. Defendant has now made its summary judgment case (so acknowledged, DOB at 2 n. 1), that the unpatented mining claims do not contain a "discovery" of a valuable mineral deposit under the
1
Plaintiffs are replying to a "response" brief under RCFC Rule 5.2(b)(2). A quarter of the argument in Defendant's Opposition Brief is on its pages 31-41. The Court need not review or consider any of the arguments there, as Defendant's Opposition was filed in violation of RCFC Rule 5.2(b)(2). That Rule fixes a 30-page limit for "reply briefs or memoranda ... where a response to a motion is included," "[e]xcept by leave of the court on motion." Plaintiffs were not served with any such motion, and filed a 30-page Response consistent with the Rule. Should Defendant ignore the Reply page limit of Rule 5.2(b)(2), Plaintiffs reserve the right to move to strike both filings, or to be allowed to submit additional argument of the same size as Defendant's violation of the Rule. It is potentially prejudicial for Plaintiffs to be bound by the Rule's page limit while the government ignores it.
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"prudent person/marketability" tests grounded in Castle v. Womble, 19 Land Dec. 455, 457 (1895), Chrisman v. Miller, 197 U.S. 313, 322 (1905), and United States v. Coleman, 390 U.S. 599 (1968). This showing consists of the Declaration of James DeMaagd (DOEx. 7), and his selected exhibits, including sections of the Forest Service's 1999 Mineral Report (DOEx. 12 and DOEx. 9). That Mineral Report was designed, in ways discussed further below, only to show a "prima facie" case of claim invalidity, the low burden the government bears in a contest, but which is inapplicable to their summary judgment burden here. To respond to Defendant's showings and opinions in the DeMaagd Declaration and its exhibits, Plaintiffs submit the Second Affidavit of Thomas P. Ferrero, PE-27. This Affidavit shows specific miscalculations and erroneous assumptions displayed in the DeMaagd Declaration or argued in Defendant's Opposition, that misread and misunderstand Plaintiffs' demonstration of claim validity. The Second Ferrero Affidavit undoes that misinformation and undermines Defendant's criticisms of Plaintiffs' summary judgment case, and helps render the offered portions of the 1999 Mineral Report useless to show the invalidity of the claims. The detail and cogency of the Second Ferrero Affidavit's correction of Mr. DeMaagd's criticisms establishes that Mr. DeMaagd has only a limited understanding of what Mr. Ferrero undertook and presented, through the maps, spreadsheets and narrative making up Plaintiffs' showing of claim validity (and project viability). Mr. DeMaagd stumbles over such basics as the fact that the gold recovery rate for underground ore here is different from the gold recovery rate for apex and dump surface deposits (PE-27 ¶¶ 7-12, and 33; DOEx. 7 ¶¶ 21-24, and 26), why that is true, and its significance in this property evaluation. Further, Plaintiffs respond to Mr. DeMaagd's objection that Mr. Ferrero failed to include in his evaluation a series of samples the Forest Service took and had assayed. The Second
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Ferrero Affidavit (PE-27 ¶¶ 18-19) explains why they were excluded they were taken from only the upper half of the Klamath apex vein, and Mr. Ferrero did not deem the results representative of the full width of that vein given Liberty Mining intended to mine the full width of the vein. Mr. DeMaagd, however, does not propose any alternative definition or professional opinion on what constitutes a representative sample of this vein, or generally. The basis for Mr. DeMaagd's concern about Mr. Ferrero's rejection of the Forest Service samples is revealed in the remarkable assertion that the Forest Service in its evaluation here, and generally, uses every sample that it takes, excluding none. DOEx. 7 ¶ 38, and see PE-27 ¶ 21. This admits that the agency exercises no judgment whether one or all of its samples is representative or not, and why, and whether they have been properly assayed or not, and why. The Forest Service will use its own samples no matter how useless or flawed they may be. The Second Ferrero Affidavit discloses the remarkable obverse of Mr. DeMaagd's assertion the Forest Service's Mineral Report used no other sample results in evaluating the claims. In the contest proceeding, before the Mineral Report was completed, Mr. Ferrero provided the Forest Service all the reports, assays, metallurgy, production histories, and maps Liberty had, including JA-14, JA-50, JA-52, JA-183, JA-63, and JA-68 (see PE-27, ¶ 15). Some historical and regional geological information was used in the background of the Mineral Report, but no sampling or testing data other than the Forest Service's own 1998 sampling and testing was used to evaluate the entire property. Mr. DeMaagd did not even include results from Liberty's 2004 samples, even though they were taken under Forest Service observation in the contest proceeding (after Interior Department mediation necessary to get Forest Service approval to conduct the sampling). However one assesses the quantity or import of the Forest Service's 1998 samples, they are a very small fraction of the body of data pertaining to the gold deposits of
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Eddy Gulch. The Forest Service has never explained (in its Mineral Report or now) why all of the other data pertaining to the gold deposits of Eddy Gulch are irrelevant and wholly to be disregarded. The agency's unexplained and arbitrary standard to use all of its own samples, no matter how unreliable, and use none of anyone else's samples, no matter how reliable impeaches its approach in this Court. There is only one conclusion fairly drawn if the Forest Service had to consider the vast majority of all information pertaining to the Eddy Gulch gold deposits that was not used in the Mineral Report, the information contradicts and undermines the conclusion sought by the agency. The exclamation point on this statement is provided in Paragraph 29 of the Second Ferrero Affidavit by a Forest Service contractor, who essentially apologized to Mr. Ferrero because his contribution to the Mineral Report, the mining cost work-up, had to analyze absurd and inappropriate mining scenarios the Forest Service directed him to use. Regarding claim validity and project viability, the Court has Defendant's "proof" on the one hand a fragmentary Mineral Report and a Declaration failing to explain that Report but instead sniping at Plaintiffs' showing, which snipings the Second Ferrero Affidavit shows to be a cascade of misunderstandings, errors or misinformation. The Court has Plaintiffs' showing on the other the First Ferrero Affidavit (PE-2) and its supporting documentation (including JA188 through JA-193, and PE-18), with the amassed data, experience on the property, analysis, displayed assumptions, and calculations (displaying a profitable operation under each of several scenarios), along with the Second Ferrero Affidavit refuting Mr. DeMaagd's criticisms of that showing. Defendant has not presented a credible case that the mining claims are invalid, and this Court can find that Plaintiffs have met their burden of proof and shown the mining claims to be valid on this summary judgment record.
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2.
Property rights in an unpatented mining claim, irrespective of discovery.
Defendant submits that Plaintiffs' alternative argument (Part V.A.(3.) of Plaintiffs' Opening Brief, Dkt. No. 118-31 to 118-36) "ignores over 100 years of precedent and may be rejected out of hand." DOB 2. The Supreme Court did not cleanly confirm that the Fifth Amendment's Just Compensation Clause applied to temporary as well as permanent takings of private property for public use until 1987, in First English Evangelical Lutheran Church v. Los Angeles County, 482 U.S. 304 (1987). The first "over 80" years of Defendant's "over 100 years of precedent" cannot be directly applicable, because the cause of action at issue in this case did not clearly exist. The 20 years of precedent since 1987 are also not controlling. Defendant in two briefs has not cited any case evaluating a temporary taking the cause of action ratified by First English in 1987 in the Mining Law context presented by this case. Defendant has not yet acknowledged or discussed First English. In the context of actionable interference with a mining claimants' rights on "open ground" (land that remains open to the operation of the Mining Law), Plaintiffs' argument in their opening brief (at 24-29, Dkt. No. 118-31 to 118-36) is not controlled by the cases Defendant has cited. Every case reciting that a holder of unpatented mining claims litigating a takings claim must demonstrate the validity of the mining claims 2 to have a compensable property interest deals with land that has been withdrawn from or permanently closed to the operation of the Mining Law by legislative or executive action (the latter including where the land management or other permitting agency has effectively withdrawn the land by prohibiting mining under its permit mandates).
By this Plaintiffs mean that they are supported by a "discovery" under the prudent person/marketability tests of Castle v. Womble, 19 Land Dec. 455, 457 (1895), Chrisman v. Miller, 197 U.S. 313, 322 (1905), and United States v. Coleman, 390 U.S. 599 (1968), with the claimant having a "reasonable prospect of success, in developing a valuable mine."
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No case involves governmental interference with the exercise of the rights of the holder of mining claims on open ground, under the circumstances that are actionable under the temporary takings case law that has developed under and since First English extraordinary and unwarranted delay interfering with the exercise of the claimant's Mining Law rights, all out of proportion to time and issues needed for permitting the lawful property use, and infused with evidence of bad faith in manipulation or mishandling of the permit process. In its argument that without proof of a "discovery" on its claims, Plaintiffs have nothing, Defendant (DOB at 10) relies on statements made in Chapter 7 of the 1992 Rocky Mountain Mineral Law Institute's proceedings, "Inverse Condemnation Issues in Revising the Mining Law." However, Chapter 7 of the 1992 Rocky Mountain Mineral Law Institute is like the group of cases Defendant has cited, authority that speaks only to withdrawn lands, and to permanent takings, rather than to temporary takings on "open ground." Chapter 7 is squarely within the body of authority characterized in Plaintiffs' Opening Brief (Dkt. No. 118, at 31-36 of 47), discussing permanent takings where, by formal action or legislated prohibition against mining, the federal land is no longer subject to the operation of the Mining Law. Plaintiffs do not argue that body of law is wrong, rather that it is not controlling and should not be applied. 3 Defendant misunderstands plaintiffs' position and attacks its own straw horse when it argues that Plaintiffs' "Property Right is [not] Established by Federal Regulation [nor] Established by the Forest Service Manual." DOB at ii, and 18-19. Plaintiffs do not argue that
Plaintiffs appreciate that Defendant regards a published article by their counsel as authoritative in its analysis of these issues arising under the Mining Law, and that Defendant does not dispute a fundamental premise of Chapter 7 regarding mining on open ground "the plan of operations rules make clear that the Forest Service does not ultimately have the authority to say no to the plan of an operator who does seek approval." DOEx 1, at 15, citing one of the first cases interpreting what is now 36 CFR Subpart 228, United States v. Weiss, 642 F.2d 296, 299 (9th Cir. 1981). See DOEx. 1, at 14-18.
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their property right is created by the Part 228 regulations and the Forest Service's 228 Manual. Plaintiffs argue that the Forest Service designed the regulations and manual to recognize and be consistent with the property rights that Congress, exercising its Property Clause authority in the Mining Law, grants to claim holders when they stake, maintain and develop their claims consistent with the Mining Law. And, in recognizing those rights, neither rules nor manual in their design and operation distinguish between mining claims on which a "discovery" is established and mining claims on which no "discovery" is established. In recognition of claimants' rights created under federal law by their claim location and development work on open ground (federal land open to the operation of the Mining Law), the rules and manual contain the same deadlines for the agency to respond to plans, and the same limitations on the right of Forest Service officials to disapprove of mining operations irrespective of "discovery" or "lack of discovery" on the claim. B. 1. Defendant's arguments about "implementation" of the biological opinion. Defendant's Misuse of the Granillo Transcript. Defendant makes extraordinarily
misleading and unsupported use of the 1997 deposition testimony of Kathleen Granillo. This is apparently the government's best "evidence" that any Forest Service employee ever told Liberty there was a July 1990 Biological Opinion prior to the District Ranger's letter in March 1992. The first misuse is the unsupported claim that "Aloisi and Liberty Mining were made aware of mitigation requirements imposed by the Biological Opinion." DOB at 25. The Granillo testimony does not support that claim. Defendant's first citation contains no content regarding the meeting; Ms. Granillo simply says she met Mr. Aloisi at a meeting "probably a few months after [the July 1990 Biological Opinion] came out. I don't recall when." DOEx. 3, at 24-25, Tr. at 25:5-7. Defendant's next citation is to her testimony about that meeting. This wildlife biologist remembers that the featured discussion was about the Arch Study and 8
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environmental assessment issues. Id., Tr. at 34:22 to 35:2. She also testified, "I know we talked about what was going on with the opinion." Tr. at 35:4-5. 4 "[W]hat was going on" is not making Liberty "aware of mitigation requirements." Ms. Granillo does not make any assertion about the content of any communication, and does not testify that Liberty was made "aware of any mitigation requirements." This meeting in the Klamath National Forest Supervisor's Office was not otherwise documented in the record in any way. This transcript does not support Defendant's claims on page 25 of its Response. This is Defendant's strongest "evidence" that Liberty knew about the July 1990 biological opinion before March 1992, but it supports no such conclusion. There is no disputed issue of fact here; Mr. Aloisi's Affidavit (PE-1, ¶¶ 31, 36) stands. 5 2. The Second Blessing Declaration, and the Evening Star Timber Sale. During
discovery, Plaintiffs sought documentation on Klamath National Forest's 1990 projects affected by the designation of the northern spotted owl as threatened in June 1990, and how the agency proceeded upon receipt of the July 1990 biological opinions on Klamath National Forest
Ms. Granillo's testimony does disclose a significant Forest Service disconnect. Assume this meeting occurred in the fall of 1990. At that time, an August letter (JA-82) was the most recent correspondence from the Forest Service to Liberty. JA-82 does not disclose to Liberty the existence of the one-month old July 1990 Biological Opinion. Instead it says the Forest Service is still awaiting "a determination ... from the Fish and Wildlife Service" regarding "findings on the affect [sic] of the ... Owl on your operations." JA-82, at 777. In deposition Ms. Granillo had no idea what FWS determination this letter was referring to Tr. at 36:22 to 37:10, and acknowledged never having seen "document 71" (JA-82). Tr. at 35:17 to 36:15. The record discloses no other role for the FWS than formal section 7 consultations. Either the District Office lied that it was awaiting an FWS determination, or it incompetently "forgot" it had just received the July 1990 Biological Opinion, which District Biologist Williams called "landmark."
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It is inconceivable in light of Mr. Aloisi's Affidavit (PE-1, ¶ 32-36), that the Forest Service would have disclosed the existence of the July 1990 FWS biological opinion determining that the Liberty plan of operations would not cause jeopardy to the owl, and that Mr. Aloisi would have left that meeting without a copy of it in his hand. Events would have proceeded entirely differently than they did.
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silviculture projects (included the Liberty Mining plan of operations). In response, on December 3, 2007, Defendant stated to Plaintiffs, The Forest Service does not have data on when the sales that went forward were approved, whether or not any mitigation measures were implemented with respect to the Northern Spotted Owl, whether and, if so, when any applicants were contacted subsequent to the July 23, 1990 opinion, or regarding the surface area in acres disturbed by the timber sale or removal. 6 See Declaration [dated November 29, 2007] of Dan Blessing. We now receive a second "Declaration of Dan Blessing," bearing no reference to his first Declaration. The second Blessing Declaration discloses that he found certain information on the Evening Star timber sale in Eddy Gulch, one part of which surrounded an active owl nest and another part of which overlaps Liberty's property. DRExs. 13-16. This new information on the Evening Star timber sale area is fragmentary and unclear at best. The location of the Evening Star sale area, in relationship to Liberty Mining's property, is not disclosed by anything in Defendant's Opposition, but is found in JA-66, at 598. What the second Blessing Declaration does disclose, however, supports Plaintiffs' Motion in three respects. First, it further supports the only conclusion to be drawn from the record the Forest Service implemented the July 1990 biological opinions for its silviculture projects, except with respect to the Liberty Mining project. The record is clear here that the Forest Service treated the Liberty Mining plan of operations as a silviculture project. Given the analysis of the Liberty Mining project in the June 1990 Biological Evaluation (JA-76, at 750) and based on the only explanation Defendant offers (DOB 24, citing sketchy Granillo testimony), the Forest Service did so because the impacts of a mining plan of operations relevant to owl conservation are the
6
This discovery Response repudiates Defendant's unsupported assertion (DOB 26) that "the delay experienced by Liberty Mining was similar to what others working in the area experienced." Those records do not exist.
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same impacts a timber sale has, namely the acreage and pattern of timber cutting, and proximity of noise and activity to the nest site or pair activity center. Id.; JA-118, at 1147; JA-141, at 1248-49. The second Blessing Declaration simply corroborates the conclusion FWS's biological opinions of July 1990 (JA-80) were implemented for timber sales, but never for the Liberty Mining plan of operations. Second, this supplemental "evidence" demonstrates that the key consideration in implementing the FWS's no-jeopardy opinions was avoiding timber harvest within the 0.5 mile radius of a nest or owl pair activity center. Plaintiffs submit they never proposed any "timber harvest" within the 0.5 radius of the KL-1034 owl pair nest site. This position is confirmed by the District Biologist. 7 Defendant's aerial photo at DOEx. 16, lacks any identification of the Liberty area, but JA-118, at 1146, shows the Liberty area wholly outside the 0.7 mile circle. Liberty's proposed apex cut and related tree-cutting at the extreme west end of its claim group touched and possibly slightly crossed the 0.7 mile radius of the "KL-1034" nest site, but never crossed into the 0.5 mile circle. Those and other operations were mitigated out of Liberty's plan in mid-1989 based on informal on-site discussions with District Biologist Williams, and thereafter nothing in Liberty's all-phase plan (October 1989 / April 1992) was within the 0.7 mile radius. This 1989 mitigation is described by Aloisi (PE-1, ¶s 20-21) and Ferrero (PE-2, ¶ 20), and is consistent with the description given in 1996 by District Biologist Williams regarding keeping Liberty's operations outside the 0.7 mile radius by moving a "mill site" (actually a pond) from "Yankee Flat" (Williams, DOEx. 4, Tr. at 63) or "Live Yankee flat" Plaintiffs acknowledge they submitted JSOF-44 (Dkt. 112 at 14). Plaintiffs' Response No. 49 to Defendant's Proposed Finding of Uncontroverted Fact No. 49 (Dkt. No. 128, at 20-22), explains why JSOF-44 is wrong. District Biologist Mark Williams' 1996 deposition testimony confirms this "I believe Fred [Aloisi] asked or I may have volunteered that there is a limited operating period for activities within half a mile and that it would not affect his operation because everything was further than a half a mile." DOEx. 4, Tr. 66:17-21.
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(Aloisi, PE-1, ¶ 20; Ferrero, PE-2, ¶ 20). This mitigation occurred with changes in Liberty's October 1989 supplemental all-phase plan that was partially approved in November 1989. 8 See also confirmation in the Forest Service's JA-141, at 1248, which appears to use and rely on the map and data in JA-118, "The mine ... removes approximately 3 acres of suitable habitat within the outer zone (.7-1.3 miles)." Third, the second Blessing Declaration, in its paragraph 7, suggests that "Stand No. 132" of the Evening Star timber sale was not clear-cut, but was cut using "single tree selection cutting." 9 DOEx. 14, at 3. Defendant's Opposition suggests justification for indefinite periods of delay by noting that the Evening Star timber sale was still being worked on in 1993. 10 DOB 30-31. However, the Forest Service cannot say what if anything Mr. Blessing describes would
Defendant's Opposition uses this testimony of Mr. Williams in trying to find someone who might have discussed the 1990 biological opinion with Liberty. DOB at 25. Both cited sections of Williams' testimony, however, are dated by the record of the plans and the Aloisi and Ferrero Affidavits as having occurred in 1989, not 1990, when Liberty voluntarily mitigated its plan of operations. Mr. Williams and Mr. Aloisi did have a conversation in late 1990, after the 1990 biological opinion was out, but it was not the conversation in the two cited deposition sections regarding the 1989 plan of operations mitigation. The 1990 Williams-Aloisi conversation is reflected in JA-90, the peculiar letter in which the District Ranger directed Mr. Aloisi to stop talking to Mr. Williams or any biologist. JA-90, at 829. Mr. Aloisi did not learn of the July 1990 biological opinion in that conversation with Mr. Williams. He certainly did not learn of it in the JA-90 letter, which throws a bank of fog around the status of the owl and the Liberty plan of operations. While plaintiffs cannot prove it, it appears Mr. Lee ordered Mr. Aloisi not to talk to biologists because Liberty might learn about the opinion if continued to do so. Liberty's operation never involved any "clear-cutting" on the scale of a real timber sale (its harvest impact was small relative to the average timber sale, as JA-76, at 750 displays. Also, by the time Liberty was stopped it had already completed a significant share of its timber "harvest," including most of the access and haul road construction and improvement, the additional clearing of the historically clear Usher Flat mill site, and the initial clearing of several important apex mining areas. In that work, Liberty only cut trees the Forest Service had marked to cut. The new Blessing production does not give the duration of the Evening Star harvest. As it was a "sold" sale (JA-77, at 754), it also predated 1990, and could have had a 5-year harvest schedule independent of the owl. It is undisputed on this record that there was timber harvest in the Evening Star sale area in the second half of 1990 while Liberty was neither advised of nor provided the Biological Opinion. 12
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have applied to Liberty because it never happened the very steps undertaken with respect to the Evening Star timber sale were never undertaken with Liberty Mining's October 1989 all-phase plan of operations. 3. What "mitigation requirements," or "mandatory conditions"? Defendant's
argument declares as fact an assumption not demonstrated that Liberty was "aware of mitigation requirements imposed by the Biological Opinion." DOB at 25, and throughout. The record, however, starting with Mr. Aloisi's Affidavit (PE-1, ¶¶ 32-60), contradicts this assertion that Liberty was ever provided "mitigation requirements" any time after the July 1990 Biological Opinion. On her 1991 site visit, Ms. Granillo did not have, provide or implement any "mitigation requirements." Without the July 1990 Opinion in hand, Liberty through this whole stall period was given no idea whether its operation would or would not cause jeopardy to the owl, and whether it would have to modify its plans to address standards or biological opinion conditions no one provided to it. More importantly, Defendant has never identified any mitigation requirements required for Liberty Mining's October 1989/April 1992 all-phase plan of operations to protect the owl since July 1990. In March 1992, the District Ranger told Liberty the FWS concluded that Liberty's "project could proceed as submitted." JA-111, at 1084. What mitigation requirements? Was this, too, a false representation from the agency? There is no document from the Forest Service to Liberty identifying any mitigation requirements, or requiring any revisions to the October 1989/April 1992 all-phase plan of operations for owl protection. The three agency Owl Clearances of the plan identified in the February 1994 second biological opinion identify no mitigation requirements. JA-163, at 1342. The most detailed analysis in the record of Liberty's plan under any owl protection standards (JA-141, at 1248-49) concludes:
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Spotted owls must be considered when developing the [mining] plan [of] operations, just as all other resources are, but nothing in the [Interagency Scientific Committee conservation] strategy precludes operation of otherwise legitimate and sensitively planned mining activities. We also considered that the proposed activity affects a very small portion of the HCA and further, apparently does not result in a "taking" with regard to affected owl territories. Id. at 1249. What mitigation requirements are there in these four Owl Clearances? What mitigation requirements was Liberty supposedly aware of, not having the 1990 biological opinion until the second half of 1992, and never seeing the JA-141 memorandum clearing its plan of operations for processing on its merits until discovery in this case. Defendant's representation Liberty was aware of requirements that do not appear to exist is unsupported and empty. Plaintiffs' recounting of the Forest Service's actionable handling of Liberty's situation from July 1990 on (in the ripeness, unreasonable delay and related portions of Plaintiffs' briefing), demonstrates the Forest Service never engaged Liberty to disclose what the requirements were, and what if any alterations to the plan of operations might be required. No one in the agency took this responsibility. No one even provided Liberty the biological opinion until the second half of 1992. Aloisi Affidavit PE-1, ¶¶ 32, 36, 47, 55; JA-127. The Forest Service made no determination until 1992 of any kind to apply any owl protection standards to Liberty's October 1989 / April 1992 all-phase plan of operations. The only people in the Forest Service who acted were those who wrote the four Owl Clearances, unknown to Liberty until 1994 or in discovery in this case. The only thing Liberty was ever advised was the March 1992 representation "the [Liberty Mining] project could proceed as submitted." JA-111; JA-163; and JA-141, at 1248-49.
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Defendant waves the "mandatory terms and conditions" in the July 1990 biological opinion at the Court and Plaintiffs (DOB 23-25), suggesting they had draconian impact on the possibility of mining. This argument is remarkable five ways. First, beyond not providing the biological opinion for more than two years, there is no evidence any official ever told Liberty what those mandatory conditions were not Granillo, not Lee, not Williams, certainly not the Mineral Officers, no one. Beyond the violation of FWS rules regarding applicants, this reeks of bad faith. Second, "[c]hief among these mandatory conditions was" the 0.5 mile radius activity prohition. DOB 24. District Biologist Williams (quoted in note 7 above) knew that Liberty either never had this problem or solved it in 1989, before the stall. Third, even if a mandatory condition were applicable, would it affect the entire operation? Liberty had already mitigated voluntarily. No official ever engaged Liberty to discuss whether the "mandatory conditions" did or did not require any alteration in Liberty's allphase plan of operations, as the second Blessing Declaration makes it clear the agency undertook with its timber sales. If the agency, left to itself, fails to act on a matter indefinitely, call it incompetence. But if the agency, regularly pressed by the applicant, fails indefinitely to act on a matter where agency rules specify response times, that is bad faith. Fourth, every official who did evaluate Liberty's all-phase plan of operations against the "mandatory conditions" said one thing go ahead and process the plan of operations. This is true of all four Owl Clearances (the three disclosed in the second biological opinion, JA-163, at 1342, and JA-141, at 1248-49). The District Ranger could not have been clearer in March 1992, "the Fish and Wildlife Service determined that the project could proceed as submitted." In other words, your plan causes no jeopardy and the mandatory terms and conditions do not require changes to your plan. Remarkably, Defendant now claims, "Plaintiffs' reliance upon District
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Ranger Lee's statement ... is misplaced." What is Defendant now claiming about the District Ranger? That he was misinformed then? That he was misleading Plaintiffs? If this statement was false when made in 1992 the Forest Service reeked even worse of bad faith. If this statement was true when made then the Opposition Brief is spraying smokescreens this Court can ignore. Fifth, the government defends by maintaining two inconsistent positions. To downplay its incompetence or bad faith, or both, in not providing the applicant the biological opinion on its project, Defendant argues that it simply did not matter that Liberty was not provided the 1990 Biological Opinion (DOB 22-23). But, then warning us Ranger Lee's "proceed as submitted" representation could not be relied on, Defendant intones, "The Biological Opinion is the best document to discern what the Fish and Wildlife Service determined." DOB 23. If this document is the clearest and strongest statement of the requirements for protection of the owl, it is indefensible for Defendant to say it was immaterial that they never provided it to Liberty as required by law. C. 1. Extraordinary Delay, Temporary Takings, and the Penn Central Factors. Ripeness and finality. The law is undisputed that a takings claim may ripen,
irrespective of finality, upon demonstration of extraordinary delay in the permitting process by the federal agency. Boise Cascade v. United States, 296 F.3d 1339, 1347 n.6 (Fed. Cir. 2002), citing Wyatt v. United States, 271 F.3d 1090, 1097-98 (Fed. Cir. 2001). The facts here define extraordinary, unreasonable and unwarranted delay, with episode after episode displaying bad faith in the agency's actual failure to implement its obligations, while hiding from Liberty the state of the facts and proclaiming it was working on it. This claim is ripe under the law. 2. APA remedies? Defendant asserts the wrongs that occurred in this case were
remediable under the Administrative Procedure Act, and are therefore outside this Court's 16
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jurisdiction. DOB 19-20. But Plaintiffs cannot be required to file a district court action to compel "agency action unlawfully withheld or unreasonably delayed" (5 U.S.C. § 706(1)) when the violation is being hidden from them, as was the case with the violation of the FWS's rule commanding prompt provision of a biological opinion to the "applicant." The very hiding of the existence of the opinion nullifies the remedy, and shows, instead, how this is a bad faith, extraordinary delay case. The same defect applies to the "second half" of the temporary taking here. As the unnecessary second consultation 11 dragged on, the four Owl Clearances for Liberty's plan of operations were kept unknown to Liberty until three of them were identified in the February 1994 second biological opinion, JA-163, at 1342, while the fourth (JA-144) appeared in discovery. "[A]n uncompensated taking and an unlawful government action constitute 'two separate wrongs [that] give rise to two separate causes of action,' and ... a property owner is free either to sue in district court for asserted improprieties committed in the course of the challenged action or to sue for an uncompensated taking in the Court of Federal Claims."..Rith Energy, Inc. v. U.S. 247 F.3d 1355, 1365 (Fed. Cir. 2001), quoting Del-Rio Drilling Programs, Inc. v. United States, 146 F.3d 1358, 1364 (Fed.Cir.1998). A plaintiff is not required to first litigate (and lose) in district court, nor is a plaintiff required to use the APA proceeding to establish the scope of the
Liberty was never provided the May 2002 memorandum with its materially misleading description why consultation was being reinitiatied. JA-118, at 1145 "This mine was previously covered in the Biological Opinion rendered on July 23, 1990, and given approval to begin operations." Nor did the Forest Service share with Liberty anything from which Liberty could have learned then that the Forest Service failed to prepare a biological evaluation or biological assessment before or in connection with reinitiating the consultation. On the contrary, the Forest Service, like the authorities in Kafka's Castle, made the "APA route" through administrative appeal a futile, Kafkaesque venture first with a "moot" appeal and then a decision the mooted appeal allowed that should not have been allowed. See PE-1, Aloisi Affidavit, at ¶s 54-59.
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property right that was allegedly taken, before pursuing a takings action in the Court of Federal Claims. Rith, 247 F.3d at 265. 3. Non-existent standards of proof. Defendant tries to "raise the bar" against a
temporary taking claim by demanding that Plaintiffs show "malice" (DOB 31-32), and show bad faith by "clear and convincing evidence" (DOB 21-22, 31). These standards are inapposite to the case at hand, as Plaintiffs are engaged in an action for temporary takings, not a contract dispute or claim of fraudulent or criminal wrongdoing by specific agency officials. Defendants cite to Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1238-40 (Fed. Cir. 2002), which is clearly distinguishable as it involved a "situation where a government official was allegedly engaged in fraud or in some other quasi-criminal wrongdoing." See 281 F.3d at 1239 (contract action involving allegation by plaintiff that it executed a contract release while under duress by the Government). 4. Submitting a "meaningful application." Defendant erroneously cites Boise
Cascade v. United States, 296 F.3d 1339, 1351-1352 (Fed. Cir. 2002), to assert that extraordinary delay cannot exist without submission of a "meaningful" permit application. Defendant provides no authority defining what constitutes a meaningful application. Plaintiffs' all-phase plan of operations was certainly meaningful enough to owl purposes, both for consultation with the FWS, and for the committee and task force reviews that gave the four Owl Clearances. Moreover, whether a plaintiff has submitted a meaningful application arises in futility situations, not extraordinary delay cases, and does not govern ripeness here. See, e.g., MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340, 353 n.8 (at least one application must be submitted before the futility exception applies); Greenbrier v. United States, 40 Fed. Cl. 689, 702 n.12 (1998).
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5.
Reasonable Investment-backed Expectations. Defendant asserts that Plaintiffs
could only have unreasonable "unilateral expectations" in light of owl concerns and other regulatory requirements in existence as they invested in the mine. DOB 38-40. Walcek v. United States, 49 Fed. Cl. 248, 269 (2001), says that plaintiffs should be cognizant of applicable rules, but holds that Penn Central analysis "does not require a property owner to be clairvoyant." Cases such as Walcek and Brace v. United States, 72 Fed. Cl. 337, 354-55 (2006), which found reasonable investment-backed expectations even in circumstances of substantial regulatory flux when the property was acquired, provide ample room for Plaintiffs to qualify with reasonable investment-backed expectations. Plaintiffs addressed the changing regulatory issue, the owl, as soon as it was identified, and voluntarily mitigated all identified impacts. Aloisi Affidavit PE-1, ¶¶ 19-20; Ferrero Affidavit PE-2, ¶¶ 20-21; compare pre- and post-mitigation plans at JA-36 and JA-40/JA-141. Here, in fact, when the "changing" requirements were finally applied, the project was cleared in the very shape that it took after Plaintiffs' initial voluntary mitigation. This is the definition of reasonable expectations. What one cannot plan for is years of incompetence or bad faith, and one cannot plan for years in which the agency hides the supposedly-changed relevant requirements from the applicant after it has made its investment. 6. Economic Impact of the Temporary Taking. Plaintiffs' arguments in their
opening brief, relying on CCA Associates v. United States, 75 Fed. Cl. 170, 197-98 (2007), and Bass Enterprises Prod. Co v. United States, 54 Fed. Cl. 400, 404 (Fed. Cl. 2002), stand unrefuted. Defendant does not discuss Bass Enterprises, and its holding, clearly applicable in the temporary taking context, that the cash flow method of property valuation is used with mineral properties, applying an interest factor to the lost cash flow. As to the cash flow in question,
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Plaintiffs refer back to Part A. of this Reply, inviting comparison of Mr. Ferrero's evaluation of the property with Mr. DeMaagd's evaluation using only the few Forest Service samples. In conclusion, Plaintiffs submit that this record establishes: their compensable property rights; the Defendant's extraordinary delay, on unwarranted and baseless grounds, through conduct suffused with bad faith; and Plaintiffs' satisfaction of the three Penn Central factors (the extraordinary bad faith nature of the government action, the economic impact on Plaintiffs, and Plaintiffs' reasonable, investment-backed expectations in developing a mine). Plaintiffs request that their motion be granted and Defendant be found liable for a temporary taking of their property through the July 1990 through February 1994 period at issue here. The northern spotted owl did not abort Plaintiffs' mining operation; Liberty's plan was compatible with all known owl protection requirements. It was the Forest Service's baseless and unwarranted mishandling of the matter, with the extraordinary delays and bad faith demonstrated here, that prohibited beneficial economic use and development of their mining property over that period. Dated: March 21, 2008 Respectfully submitted, s/ Lawrence G. McBride Lawrence G. McBride FOLEY & LARDNER LLP 3000 K St., N. W., Suite 500 Washington, D.C. 20007-5143 Telephone: (202) 672-5300 Facsimile: (202) 672-5399 Attorney for Plaintiffs
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