ELR Citation: ELR 20866
No(s). 440-87L (Cl. Ct. Jan 17, 1991)

The court holds that the Army Corps of Engineers' denial of a Federal Water Pollution Control Act (FWPCA) §404 permit to fill wetlands on plaintiff developer's property did not constitute a compensable taking in violation of the Fifth Amendment to the U.S. Constitution. Plaintiff purchased several lots, including known wetlands and uplands, for the purpose of developing them for residential resale. Plaintiff had previously avoided purchasing potential wetland lots until it was discovered during a title search that a broad riparian grant, purporting to give grantees the right to dredge and fill riparian lands on the lots, existed in the chain of title. The court first holds that the Corps' denial of the §404 permit did not cause plaintiff to lose all economically viable uses of the property. In this case, the plaintiff bought both wetlands and adjacent uplands and it would be unrealistic to focus exclusively on the wetlands in assessing whether a taking has occurred. Thus, even if the plaintiff justifiably believed that the wetland lots could be developed residentially, the evidence reveals that he viewed both types of lots as a single parcel. Moreover, the evidence shows that the plaintiff was forced to buy the wetland lots in order to purchase the upland lots and that he treated the purchase of the lots as a single event for financing purposes. It would now be inappropriate to allow the plaintiff to sever the connection he forged between the lots when it assists in making a legal argument. Thus, the court holds that for purposes of determining whether there has been a taking, the parcel as a whole must include those uplands purchased along with the wetlands. Because the residual value of these lots together is $14 million, a finding that there was a taking of all economically viable uses of the property is precluded.

The court next holds that plaintiff failed to demonstrate that the permit denials interfered with his "distinct investment-backed expectations" sufficient to amount to a compensable taking. The Supreme Court has held that the degree to which the claimant has advance notice of the government action is relevant to whether a compensable taking has occurred, and the evidence in this case reveals that plaintiff had prior knowledge of the difficulty involved in developing wetlands and of the possibility that the wetland lots at issue were subject to federal regulation. Moreover, plaintiff unreasonably relied on the riparian grant in the chain of title in asserting that federal wetland regulations would not apply to the lots he purchased. To find that the federal government has taken plaintiff's reasonable investment-backed expectation in this instance would turn the government into an involuntary guarantor of plaintiff's gamble.

[A prior decision in this litigation is published at 20 ELR 20726.]

Counsel for Plaintiffs
Alfred A. Porro
Porro & Porro
10 Stuyvesant Ave., Lyndhurst NJ 07071
(201) 438-1923

Counsel for Defendant
Dorothy R. Burakreis
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000