ELR Citation: ELR 21072
No(s). 91-5050 (Fed. Cir. Jun 15, 1994)

The court affirms a Court of Federal Claims decision that the U.S. Army Corps of Engineers' denial of a residential development company's request for a Federal Water Pollution Control Act (FWPCA) §404 permit to fill wetlands was a complete regulatory taking of the property for which the permit was sought. The court also upheld the trial court's award of $2,658,000 in just compensation. The company purchased a 250-acre tract in 1958 for development into single-family homes. The company developed 199 acres of the parcel before the FWPCA's passage in 1972, after which the company sought permission from both the New Jersey Department of Environmental Protection (NJDEP) and the Corps to fill the remaining unfilled acres. After lengthy negotiation with the NJDEP, the company entered into a settlement agreement allowing it to fill 11.5 acres and develop that parcel and the one acre it had already filled, leaving 38.5 acres untouched. The company then sought a permit from the Corps. When the Corps consulted the NJDEP, the state agency denied that the permit approval complied with state requirements, and the Corps denied the permit.

The court first holds that a regulatory taking has occurred if: (1) there was a denial of economically viable use of the property as a result of the regulatory imposition; (2) the property owner had distinct investment-backed expectations; and (3) the interest taken was vested in the owner, as a matter of state property law, and not within the power of the state to regulate under common-law nuisance doctrine. The court holds that the company had a distinct investment-backed expectation because it purchased the land with the reasonable expectation and intention of developing it for sale, and denial of the permit constituted interference with that expectation. Noting that the question of whether there was a partial or total loss of economic use depends on what specific property the permit denial affected, the court holds that the 199 acres that the company developed or sold before the FWPCA was enacted and the 38.5 acres that the company essentially exchanged for the NJDEP permit were not affected. The court next holds that the permit denial deprived the company of all economically feasible use of the remaining 12.5 acres. Finally, the court holds that the denial of the permit goes beyond the state's powers under common-law nuisance doctrine, and thus constitutes a taking. Nuisance doctrine is equitable in nature, and it would be inequitable to allow the state to prevent the fill through the federal permit process when it already acknowledged that it either did not have or was unwilling to exercise that power. Further, the trial court determined that nuisance law could not have been invoked to prevent the fill.

[Prior decisions in this litigation are published at 19 ELR 20092, 21 ELR 21207, and 24 ELR 20928. Briefs are digested at ELR PEND. LIT. 66143, 66148, 66203, and 66317.]

Counsel for Plaintiffs
Kevin J. Coakley
Connell, Foley & Geiser
85 Livingston Ave., Roseland NJ 07068
(201) 535-0500

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

Before Clevenger and Rader, JJ.