The Taking Defense to Wetlands Regulation

William L. Want

Editors' Summary: The Fifth Amendment taking issue is emerging as a significant concern in wetlands regulation. In a recent case, 1902 Atlantic, Ltd. v. Hudson, a district court for the first time declared that the Corps of Engineers' denial of a permit to develop a wetlands would amount to a taking of property. Mr. Want examines land use taking law and surveys cases applying it to wetlands. He concludes that while courts may continue to apply taking law to wetlands, actual declarations of taking will be rare.

Mr. Want is a Visiting Scholar at the ENVIRONMENTAL LAW REPORTER. He recently completed a year as a visiting professor at the University of Maryland School of Law where he taught environmental law and civil procedure. From 1973 to 1982 he was a trial attorney in the Pollution Control Section of the Land and Natural Resources Division of the Department of Justice. He has litigated many wetland cases and recently published a survey of federal wetlands law in the HARVARD ENVIRONMENTAL LAW REVIEW.

[14 ELR 10169]

In 1902 Atlantic, Ltd. v. Hudson,¹ a federal district court for the first time ruled that the Corps of Engineers' denial of a permit to develop an area containing some wetlands would constitute a taking if allowed to stand. Before 1902 Atlantic, landowners in Corps permit cases repeatedly, though unsuccessfully, raised the takings issue, starting in Zabel v. Tabb,² the first case to recognize the Corps' authority to consider ecological factors in its permit decisions. Now that one plaintiff has succeeded with the taking defense, more are sure to try. How courts in future cases treat the taking defense will substantially affect the Corps' ability to regulate wetlands.

Wetlands takings issues can be particularly complex, involving both limitations on governmental power under the Fifth Amendment and limitations on private property rights under the navigable servitude. In addition, they may raise a jurisdictional issue: whether exclusive power to hear such claims rests with the Court of Claims. This article examines the general law of taking and how the 1902 Atlantic court and others have applied that law to wetlands cases.³

General Taking Theory

The Fifth Amendment bars the taking of property without just compensation and also without due process of law. The two protections may be present in the same case and courts' general failure to distinguish between them has led to some confusion in the doctrines.⁴ In its classic application, the takings clause requires the government to pay compensation when it physically takes possession of property under its eminent domain power.⁵ In the wetlands regulatory context, the government does not take physical possession of property, but rather restricts profitable use of property to such a degree that the owner argues his property has been effectively taken away. The Supreme Court has accepted this theory of a regulatory taking, at least for land use,⁶ but has infrequently applied [14 ELR 10170] it. When it does, the remedy has typically been injunction or declaratory relief rather than damages,⁷ but this reversal of the usual priority of remedies appears to be changing.⁸

Modern taking theory is based on Pennsylvania Coal Co. v. Mahon.⁹ Prior to that decision, the Court concentrated on the due process protections of the Fifth Amendment and seemingly would not invalidate a land use regulation as a taking, no matter how much financial loss it caused the landowner, provided the regulation had a proper purpose and employed means that were rationally related to the achievement of that purpose.¹⁰ In Pennsylvania Coal Justice Holmes, writing for the majority, stated that when diminution in "values incident to property … reaches a certain magnitude, in most if not all cases there must be an exercise of eminent domain and compensation to sustain the [government] act,"¹¹ and "if regulation goes too far, it will be recognized as a taking."¹²

In recent years, with the growth of land use and environmental regulation, the Supreme Court has had several opportunities to rule on regulatory taking issues. In four major cases discussed below,¹³ the Court reaffirmed and elaborated on the approach it took in Pennsylvania Coal. In the first three, the Court explored takings in the ordinary context of private property. In the fourth, Kaiser Aetna v. United States, the Court made a key ruling on the role of the navigable servitude in taking cases.

In Penn Central Transportation Co. v. New York City,¹⁵ plaintiff had sought to build a multi-story office building above Grand Central Terminal in New York City. A Landmark Preservation Committee disapproved the plans, ruling that the proposal was incompatible with the historic character and design of the terminal. The Court held that the landmark designation did not constitute a taking, relying heavily on the beneficial use of the property left to the owners and compensation given in the form of transferable development rights.

The decision sets forth much general guidance on the taking question. The Court stated that the purpose of the constitutional taking guarantee is to prevent the "Government from forcing some people alone to bear public burdens, which, in all fairness and justice, should be borne by the public as a whole."¹⁶ As to actually employing the guarantee, the Court noted that it had not been able to "develop any 'set formula'" but rather had based its decisions on ad hoc factual inquiries. These inquiries were guided by two principal factors: the economic impact on the claimant and the character of the government action.¹⁷ Under the first factor, the Court stated that for a taking to occur, the interest interfered with must be sufficiently bound up with reasonable expectations and cited U.S. v. Chandler-Dunbar Water Power Co.¹⁸ as an example of the proposition that no expectation of property rights can exist in navigable waters.¹⁹ As to the degree of interference necessary, the Court stated it is clearly sufficient, as in Pennsylvania Coal Co. v. Mahon, that there be practically a complete destruction of claimant's property rights,²⁰ but not sufficient where the claimant only shows it is denied the ability to exploit a property interest that heretofore it believed was available.²¹ The Court stated that in judging the economic effects, the parcel should be considered as a whole.²² Further, it cited cates where dimunition in value of 75 percent and 87 1/2 percent respectively were held not enough to constitute a taking.²³

A more recent case, Agins v. City of Tiburon,²⁴ involved a dispute over a zoning ordinance that limited plaintiff to building between one and five single-family residences on its five-acre tract. The California Supreme Court had held this to be a taking, requiring for relief the payment of money damages rather than an injunction invalidating the ordinance.The United States Supreme Court sidestepped the remedy issue by holding that the zoning ordinance did not constitute a taking. The Court's takings analysis focused on the two principal factors set forth in Penn Central: the nature of the government action and the degree of economic interference. The Court declared that a taking exists if the regulation does not substantially advance a legitimate state interest or denies an owner economically viable use of his land. Further, the Court stated the taking question necessarily requires a weighing of private and public interests.²⁵ In concluding that the zoning ordinance at issue was not a taking, the Court found that the ordinance would benefit the plaintiff developers as well as the public and noted that it did not extinguish a fundamental attribute of ownership.²⁶

Andrus v. Allard,²⁷ a 1979 Supreme Court taking case [14 ELR 10171] decided a year and a half after Penn Central, shows that the Court is willing to apply the takings criteria liberally to uphold environmental regulation. The federal action at issue was the Department of the Interior's regulations prohibiting commercial trade in parts of certain federally protected birds²⁸ and including parts of birds killed before they came under protection. Plaintiffs were commercial traders of Indian artifacts and possessed a number of artifacts made of feathers from protected birds. These artifacts existed before the statutory protections.²⁹

The Court held that the regulation of the artifacts was not a taking even though alternative commercial uses of the artifacts were slim or nonexistent. The only alternative commercial use the Court mentioned was the possibility that plaintiffs "might exhibit the artifacts for admissions charge."³⁰ The Court also seemed to consider as an alternative use the "rights to possess and transport their property, and to donate or devise the protected birds."³¹ The Court's principal answer to the lack of commercial alternatives, however, was this: "It is true that appellee must bear the costs of these regulations. But, within limits, that is a burden borne to secure the advantage of living and doing business in a civilized community."³²

Kaiser Aetna and the Demise of the Navigable Servitude

In Kaiser Aetna v. United States³³ the principal legal issue was whether the navigable servitude negated any private property interest in navigable waters. Plaintiff Kaiser Aetna was the owner of Kaupa Pond, which had been developed into a marina and connected to a bay by bredging consented to by the Corps of Engineers. The government sued to require public access to the pond, claiming that it had become part of navigable waters through the connection to the bay. The Ninth Circuit held that this connection invoked the navigable servitude, which in its view allowed uncompensated public access to the once private pond. The Supreme Court reversed, disagreeing that the navigable servitude was always a bar to the application of the taking requirement.

The Court's ruling in Kaiser Aetna on navigable servitude represents an abrupt reversal of previous precedent. In numerous cases over the years, the Supreme Court had held that the navigable servitude established a preeminent power in the federal government over navigable waters such that private parties had no rights in covered areas vis-a-vis the federal government. The awesome authority of the servitude was principally a judicial creation. The Constitution does not require it: the authority over navigable waters derives from the Interstate Commerce Clause which in other instances has not been thought to create a preeminent power immune from the Taking Clause. There was a servitude in English common law, but among other differences, it applied only to areas subject to tidal ebb and flow and not to navigable inland waters.³⁴ Although seemingly not required by the Constitution, statute, or common law, until Kaiser Aetna, the Supreme Court nonetheless consistently endorsed the concept in the strongest of language, stating for example in United States v. Twin City Power Co.,³⁵ "[T]he power [the servitude] is a dominant one which can be asserted to the exclusion of any competing or conflicting ones;" in United States v. Chandler-Dunbar Co.,³⁶ "[T]he flow of the steam [is] in no sense private property …;" and in United States v. Kansas City Inc. Co.,³⁷ "When the Government exercises the navigational servitude, it is exercising its paramount power in the interest of navigation, rather than taking the private property of anyone." Thus it came as no surprise that in Zabel v. Tabb,³⁸ the first case holding ecological as well as navigational factors could be considered by the Corps in its permit decisions, the Fifth Circuit could so summarily dismiss the taking claim with the statement: "Our discussion of this contention begins and ends with the idea that there is no taking. The waters and underlying land are subject to the paramount servitude in the Federal government…." Similarly, a Georgia district court in United States v. Lewis held that:

The flow of a navigable stream is in no sense private property and the exercise of federal regulatory authority over lands below ordinary high water mark is not an invasion of compensable property rights. There is "no taking" in such a case.³⁹

Kaiser Aetna demolished the absoluteness of the navigable servitude without even acknowledging its previous omnipotence.⁴⁰ The Court even failed to mention its statement from Penn Central of one year before that there was no expectation of a property right in navigable waters. Instead, the Court glossed over the previous precedent on navigable servitude by stating that "all of this Court's cases dealing with the authority of Congress to regulate navigation and the so called 'navigable servitude' cannot simply be lumped into one basket."⁴¹ The Court then departed from precedent by separating the government's right to regulate under the navigable servitude from the question of the duty to pay compensation. The Court characterized the navigable servitude as a part of the government's Commerce Clause power, rather than a separate, preeminent interest of the government in certain waters. Congress could exercise this power to require public access to the marina if it chose, but that action, [14 ELR 10172] like other governmental regulation, may constitute a taking.⁴²

The Court also supported the use of normal taking criteria by turning to its long line of condemnation cases in which the government acquired fast lands. According to the Court, none of these cases "ever doubted that when the Government wished to acquire fast lands, it was required by the Eminent Domain Clause of the Fifth Amendment to condemn and pay fair value for that interest."⁴³ Thus, while location on the water might not contribute to the compensable value of the condemned land,⁴⁴ neither would it eliminate the requirement of compensation. The Court thus held that normal taking criteria applied in deciding whether compensation must be paid for regulation under the navigable servitude.

For those criteria the Court turned particularly to Penn Central, repeating that the Court had been unable to develop any set formula for takings decisions, but that particularly significant factors are "the economic impact of the regulation, its interference with reasonable investment backed expectations, and the character of the government action."⁴⁵ In applying these factors, the Court considered a number of circumstances in the case, but three seemed to be critical. First, the pond was not a waterway traditionally subject to the navigable servitude, as it was originally a privately owned, isolated, non-navigable fish pond.⁴⁶ The owners could reasonably have expected to exercise all normal property rights when dredging began, and the Court saw no reason that the dredging should alter that expectation.⁴⁷ Second, requiring public access interfered with a basic element of traditional property rights, the right to exclude others.⁴⁸ Moreover, public entry is in the nature of a physical invasion for which the Court has been more inclined to find a taking than for just regulatory action.⁴⁹ Third, the Court gave significance to the Corps of Engineers' consent to the connection of the marina to navigable waters.While noting that the government could not be estopped by the consent of individual officials, the Court stated that consent "can lead to the fruition of a number of expectancies embodied in the concept of property."⁵⁰

Wetlands Decisions on the Taking Defense

Before 1902 Atlantic, no case had held that wetlands regulation amounted to a taking. In Zabel v. Tabb,⁵¹ the claim was summarily dismissed as contrary to the navigable servitude. This approach was followed, particularly in cases involving § 10 of the Rivers and Harbors Act, until in recent years the courts began even prior to Kaiser Aetna to apply general taking criteria with little or no explanation.⁵² Still until 1902 Atlantic, no court actually had found a taking. The discussion below surveys the cases under § 404 of the Clean Water Act that have decided taking claims.

In American Dredging Co. v. Dutchyshy,⁵³ the court refused to decide the taking question on jurisdictional grounds. It nonetheless proceeded to express the view that regulation of wetlands under the Clean Water Act was not a taking. The court cited Supreme Court zoning cases that establish "a strong tendency to uphold land use restrictions, if based on some sound public good, even where individually affected landowners suffer substantial financial disadvantage."⁵⁴

Smithwick v. Alexander⁵⁵ was decided after Penn Central and Kaiser Aetna but did not cite either case. Instead it relied on the older authority of Pennsylvania Coal and Goldblatt v. Town of Hempstead⁵⁶ to arrive at the dual factors of the nature of the government action and the degree of damage to the beneficial use of the property. Basing its decision on the second factor, the court concluded, without a factual discussion, that the plaintiff's property had not been rendered valueless for all reasonable uses. The court found these uses include natural ones.⁵⁷

The most extensive analysis of the taking defense in a wetlands case was conducted by the Court of Claims in Deltona Corp. v. United States.⁵⁸ The court went into detail not because the issue was close, but because it was the first Court of Claims consideration of the question, valuable properties were involved, and the permit denial represented a reversal of previous Corps policies on this particular development.The second Court of Claims case on the taking issue did not receive the same detailed consideration.⁵⁹

The plaintiff in Deltona planned to develop a $7.5 million, 10,000-acre coastal parcel into a water oriented residential community. Deltona had divided the parcel into five construction areas, on which it intended to build consecutively, and had received permits from the Corps for two construction areas. When Deltona applied for permits [14 ELR 10173] for the other three, however, the Corps granted only one.⁶⁰

The Court of Claims held that the permit denials did not constitute a taking, basing its analysis on general taking criteria developed by the Supreme Court in zoning and environmental cases, rather than wetlands or navigable waters cases. The court cited all of the Supreme Court's recent major taking cases and relied extensively on Penn Central. It summarized the Supreme Court's thinking on the taking issue as follows: "The application of a general zoning law to a particular property effects a taking if the ordinance does not substantially advance legitimate state interests … or denies a[n] owner economically viable use of his land ….⁶¹ The court quoted Penn Central for the proposition that the taking analysis must focus "on the nature and extent of the interference with rights in the parcel as a whole."⁶²

Applying those tests to the Deltona facts, the court found first that the regulations expanding the Corps' § 404 jurisdiction "substantially advance legitimate and important federal interests."⁶³ As to the extent of the interference with Deltona's rights, the court stated that the expanded Corps jurisdiction had "substantially frustrated Deltona's reasonable investment backed expectation," but that it did not "prevent Deltona from deriving many other economically viable uses from its parcel."⁶⁴ The Court noted that the Corps had granted a permit for one area and that the two areas for which permits were denied contained upland portions not subject to Corps jurisdiction.⁶⁵ Thus, the permit denial was not a taking.

The Court of Claims also rejected the taking defense in Jentgen v. United States,⁶⁶ decided the same day as Deltona. The court found that the facts of the case were "exceedingly weak, far weaker than those presented to the court in the comparable Deltona case."⁶⁷ Defendant had purchased a 102 acre tract in 1971 for $150,000, eighty acres of which were subject to Corps jurisdiction. The Corps denied a permit to develop sixty acres of wetlands and preserve twenty. In rejecting the taking claim, the court found it significant that Jentgen had declined the Corps' offer of modified permits allowing development of over twenty of the eighty acres.⁶⁸ The court also noted that the tract included twenty acres of developable uplands and that the market value of the property after the permit denial was still between $30,000 and $150,000.⁶⁹

Another Court of Claims case decided the same day as Deltona and Jentgen left the taking claim open for additional proceedings. In Laney v. United States,⁷⁰ the Corps had denied a permit application for constructing a pier on an island owned by the plaintiff. The court remanded the case to the Corps for further factual development, expressing concern that the Corps' permit denial might deny the plaintiff any use of the island, having "the purpose and effect of preventing all economic use and holding it as a scenic preserve without paying for it."⁷¹ The question on remand was whether the Corps' permit denial prevents "any remunerative use."⁷² Such restriction the court indicated would constitute a taking.

In Lachney v. U.S.,⁷³ the court refused to dismiss on summary judgment plaintiff's claim that the three years it took to obtain his permit amounted to a temporary taking. The court noted the Penn Central precedent that the taking question is dependent on the particular facts of each case which it found should be explored at trial rather than on summary judgment. The court also noted defendant's reliance on Deltona, but found it distinguishable because of the finding there that the permit denial did not deprive Deltona totally of economically viable use of its lands, a fact yet to be determined in the instant case.⁷⁴

1902 Atlantic v. Hudson

1902 Atlantic v. Hudson⁷⁵ was the first case involving wetlands to actually uphold the taking defense.⁷⁶ In that case, the Corps had denied the plaintiff permission to fill a partially inundated borrow pit, connected by ditch to a tributary of a navigable river. The pit consisted of approximately eleven acres of sand and mudflat bottom and slightly less than three-fourths acre of vegetated wetlands. It was surrounded by highways and until approximately 1954 had been entirely highland not subject to regulation by the Corps. Then pursuant to an agreement between the owner and the United States, the site was excavated to provide fill material for the construction of a highway overpass. Subsequently, unknown persons constructed a ditch connecting the pit to a tributary of navigable waters. The plaintiff's proposal would have destroyed one-third acre of vegetated wetlands. Plaintiff agreed in its proposal, however, to mitigate this loss by replanting wetlands vegetation within the project site.

The court first ruled that despite being subject to the ebb and flow of the tides, the pit was not navigable water subject to Rivers and Harbors Act jurisdiction.⁷⁷ Next, the court held the Corps may not deny a permit solely because the proposed use is not water dependent and the [14 ELR 10174] Corps' denial of a § 404 permit on that basis here was arbitrary and capricious.⁷⁸ Finally, the court ruled that denial of a permit would work a taking of plaintiff's property.⁷⁹

The court's ruling on taking may to a certain extent be married by its faulty rulings on Corps' Rivers and Harbors Act jurisdiction under the ebb and flow test⁸⁰ and application of the regulatory "water dependency test" to wetlands permit applications.⁸¹ However, the taking ruling is grounded in analysis — principally on a consideration of Supreme Court taking precedent — that is largely independent of the other two rulings.

In its taking analysis, the court employed the two-prong test of whether the regulation "substantially advance[s] legitimate interests . . ; or denies an owner economically viable use of his land."⁸² The court went off on the second test, stating variously that the permit denial "rendered the pit commercially worthless," that it "precluded any reasonable beneficial use of the borrow pit," and that it denied plaintiff "all viable economic use of the property."⁸³

1902 Atlantic is distinguishable from most wetlands regulation cases in several important respects.The court itself noted in its taking analysis: "The factual situation in this case is so different from typical wetlands cases as to make it distinguishable on its facts from those cases."⁸⁴ This factual situation included the court's finding that the project would not result in a net loss of vegetated wetlands and that, contrary to the Corps finding, the eliminated mudflats were of insubstantial environmental value.⁸⁵ The latter conclusion, the court found, was supported by the lack of objection to the project from any private citizen or environmental organization.⁸⁶ Also, the property previously had not been subject to Corps regulatory authority at all and became so only pursuant to agreement with the United States. Similar factors were given weight toward the finding of taking in Kaiser Aetna.

Another interesting aspect of 1902 Atlantic is the detailed consideration the court gave to determining that [14 ELR 10175] there was no jurisdiction under Section 10 of the Rivers and Harbors Act, even though jurisdiction under § 404 of the Clean Water Act was admitted and clear.⁸⁷ There seems to be an implicit though unstated recognition that the taking claim has more validity when applied to the more expansive, recently developed jurisdiction under § 404.

Court of Claims Jurisdiction over the Taking Defense

1902 Atlantic was not only the first case to uphold a developer's taking defense in a case involving wetlands, but also the first to squarely reject the government's counter that only the Court of Claims may hear a taking claim.⁸⁸ In earlier wetlands cases federal courts had decided the taking issue on the merits without discussing the jurisdictional question.⁸⁹ In recent years, however, the government has consistently raised the jurisdictional argument, and the courts have had to address it.

The Tucker Act vests the Court of Claims with exclusive jurisdiction to hear all claims in the nature of contract seeking judgment against the United States in excess of $10,000.⁹⁰ Thus it is critical to Court of Claims jurisdiction that damage, not injunction, be the remedy to the cause of action at issue. There is some question what the proper remedy is in regulatory taking cases.⁹¹ The Supreme Court has never explicitly held that damages is the appropriate remedy for regulatory taking⁹² and in some of its regulatory takings cases, Kaiser Aetna for example, has awarded only an injunction without discussing the question of money damages. Parties raised the issue in Agins v. City of Tiburon⁹³ but the Supreme Court sidestepped it and decided the case on other grounds. The Court edged closer to ruling on the issue in San Diego Gas & Electric Co. v. City of San Diego.⁹⁴ There, the Court dismissed the action on jurisdictional grounds, but five Justices, four in a dissent and one in a concurrence, stated that money was appropriate relief for a finding of a regulatory taking. The dissent expressed the view that whenever a court found that a government action had worked a taking, some form of damages would be in order. Subsequently, the Fifth Circuit in Hernandez v. City of Lafeyette⁹⁵ relied upon San Diego to hold that a regulatory taking required the payment of damages.

The two wetlands cases that squarely addressed the Court of Claims' question before 1902 Atlantic decided that the Tucker Act deprived district courts of jurisdiction. In one of those cases, American Dredging Co. v. Dutchyshyn, the court held that although the plaintiff only sought injunctive relief, the thrust of its case was the taking claim for which the court stated plaintiff was limited in relief to monetary damages.⁹⁶ In the other case, United States v. Mt. Vernon Memorial Estates, Inc.,⁹⁷ defendant had filed a counterclaim in which it alleged that application of the Clean Water Act to its property constituted a taking of property for which it was entitled to damages in excess of $8,000,000. Although the court agreed with the defendant that its counterclaim was compulsory, it rejected ancillary jurisdiction on the basis that the government's consent to be sued for damages in excess of $10,000 was in the Court of Claims, not federal district court.⁹⁸ Neither American Dredging Co. nor Mt. Vernon Memorial Estates mentioned the controversy about the award of monetary damages for regulatory takings.

In ruling against Court of Claims jurisdiction, the court in 1902 Atlantic focused on the question of damages for regulatory takings. It stated that the appropriate relief for a regulatory taking has been injunction or declaratory relief, not compensation, and the injunction was all that it was granting.⁹⁹ The court mentioned the San Diego Electric case, but failed to acknowledge that in it five Justices decided that monetary damages are appropriate in regulatory taking cases.

The question of deferral to the Court of Claims on the taking claim in wetlands cases is largely dependent on whether money damages is the appropriate remedy for it. It is an evolving concept that to date has not been explored deeply in the wetlands taking cases.

Conclusion: The Role of Taking Law in Wetland Regulation

It is highly unlikely that the taking defense will frequently succeed against wetlands regulation under the Rivers and Harbors and Clean Water Acts. 1902 Atlantic is not precedent in isolation, but must be viewed along with the wetlands taking cases that have rejected the defense. Together, they stand for the proposition that, despite the navigable servitude, takings law is applicable to wetlands regulation,¹⁰⁰ but because of the navigable servitude and [14 ELR 10176] the presumption in favor of public regulation in takings cases generally, the defense will rarely succeed in wetlands cases.

The greatest support for this conclusion lies in the general taking criteria developed by the Supreme Court. The Court has given great weight to the public interest in the balancing of public and private interests that taking analysis frequently employs. In Andrus v. Allard,¹⁰¹ the Court gave particularly short shrift to private interest, upholding regulations that deprived property owners of practically every economic use of their property. The Court wrote this deprivation off as a price the owner pays for doing business in a civilized community and noted the owners still had the right to possess and donate their property. Owners of undevelopable wetlands pay a similar price and are left with similar rights and property uses. For example, in Smithwick v. Alexander,¹⁰² the court found that natural users were appropriate alternatives in rejecting the taking defense and in Jentgen v. United States¹⁰³ the court indicated that a reasonable market value for the property is also enough of an alternative use.

Additionally, Kaiser Aetna¹⁰⁴ notwithstanding, wetlands regulation has the added obstacle for a taking finding of the navigable servitude. It is no longer an absolute barrier as before Kaiser Aetna, but it reappears in current taking analysis as a limitation on the reasonable expectation of private property use. 1902 Atlantic is probably correct in indicating that there is less expecting of property rights in areas subject to the traditional Rivers and Harbors Act navigable waters jurisdiction.¹⁰⁵ But even with wetlands subject only to Clean Water Act jurisdiction, there would seem to be less of an expectation of property rights than with uplands never linked to the former preeminent federal power in waters.

As in Laney v. United States¹⁰⁶ and 1902 Atlantic, the holding of takings in wetlands cases will require a finding of no other use. However, unless there are peculiar equities in favor of the landowner, the court is likely to gloss over a detailed factual examination of alternative uses and be willing to presume them on a very slim evidentiary basis as did the Supreme Court in Andrus v. Allard. Thus, while 1902 Atlantic is a reminder that lower courts have been applying general taking law to wetlands regulation, it is unlikely to dictate similar results in future cases.

[Editors' Note: For further developments in wetlands taking litigation, see Key Late Developments, 14 ELR 10168, discussing the Sixth Circuit's decision in United States v. Riverside Bayview Homes, Inc. The court held that the Corps' wetlands jurisdiction should be construed narrowly to avoid raising the taking question.]

1. 574 F. Supp. 1381, 14 ELR 20023 (E.D. Va. 1983).

2. 430 F.2d 199, 1 ELR 20023 (5th Cir. 1970).

3. There is a substantial question whether general takings law should apply at all to wetlands regulation. The argument that it should not is based on the special federal interest in and power over waters and water resources, and the lack of any private property right to pollute in violation of federal statute or regulation. This argument is considered in detail, infra note 100. The few written opinions on the takings question in cases under § 404 of the Clean Water Act have mostly applied general takings criteria. Some of those were, however, decided by the Court of Claims, which might be said to have an institutional bias or inclination to apply takings law since the takings claim is that court's jurisdictional basis and it typically applies takings criteria in its decisions.

4. Note, San Diego Gas & Electric Co. v. City of San Diego: Blueprint for a New Terminable Inverse Condemnation?, 8 COLUM J. ENVTL. L. 211, 214 (1982) [hereinafter cited as Blueprint]. See also Note, Monetary Damages for Regulatory "Takings," 23 NAT. RESOURCES J. 711, 713 (1983) [hereinafter cited as Monetary Damages].

5. Monetary Damages, supra note 4, at 715. Due process is violated if the regulation at issue does not advance legitimate state goals. The argument is often formulated in terms of the unreasonableness or arbitrariness of the regulation under challenge. See, e.g., Fred F. French Investing Co. v. City of New York, 39 N.Y.2d 587, 596, 350 N.E.2d 381, 387, 385 N.Y.S.2d 5, 10, 6 ELR 20810, 20812, cert. denied, 429 U.S. 990 (1976). In due process cases, the courts have typically limited the remedy to invalidation of the regulation or statute through injunction or declaratory judgment. See infra note 7. By contrast, the classic remedy for taking cases involving eminent domain proceedings or physical invasion of property is monetary compensation.

6. See, e.g., United States v. Dickinson, 331 U.S. 745 (1947). See also Blueprint, supra note 4, at 214; Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 127, 8 ELR 20528, 20534 (1978).

7. E.g., Kaiser Aetna v. United States, 444 U.S. 164, 10 ELR 20042 (1979); Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922). See also Blueprint, supra note 4, at 219, 220; 1 NICHOLS, EMINENT DOMAIN § 1.42(1), at 116-21 (3d rev. ed. 1975); Monetary Damages, supra note 4, at 716; Damich, Does 14 = 5? Overregulation and Compensable Taking, 10 MEM. ST. U.L. REV. 701, 702 (1980).

8. In San Diego Gas & Electric Co. v. City of San Diego, 450 U.S. 621, 11 ELR 20345 (1981), a majority of five Justices dismissed the action on jurisdictional grounds, but four Justices in a dissent and one in a concurrence expressed the view that monetary damages should be awarded for regulatory takings. Subsequently, the Fifth Circuit in Hernandez v. City of Lafayette, 643 F.2d 1188 (5th Cir. 1981), cert. denied, 455 U.S. 907 (1982), relied upon San Diego to hold that a regulatory taking required the payment of damages.

9. 260 U.S. 393 (1922).

10. See Mugler v. Kansas, 123 U.S. 623 (1887).

11. 260 U.S. at 413.

12. Id. at 415. It can be argued that the taking decision in Pennsylvania Coal is dicta. The implication in the Court's opinion that the statute lacked a rational relationship to the fulfillment of the state interest in safety, id. at 414, is a commonplace due process standard.

13. Agins v. City of Tiburon, 447 U.S. 255, 10 ELR 20361 (1979); Kaiser Aetna v. United States, 444 U.S. 164, 10 ELR 20042 (1979); Andrus v. Allard, 444 U.S. 51, 9 ELR 20791 (1979); Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 8 ELR 20528 (1978).

14. 444 U.S. 164, 10 ELR 20042 (1979).

15. 438 U.S. 104, 8 ELR 20528 (1978).

16. Id. at 123, 8 ELR at 20533.

17. Id. at 124, 8 ELR at 20533.

18. 229 U.S. 53 (1913).

19. Penn Central, 438 U.S. at 124-25, 8 ELR at 20533.

20. Id. at 127, 8 ELR at 20534.

21. Id. at 130, 8 ELR at 20534.

22. Id. at 131, 8 ELR at 20534.

23. Id. at 131, 8 ELR at 20535.

24. 447 U.S. 255, 10 ELR 20361 (1979).

25. Id. at 260, 10 ELR at 20362.

26. Id. at 262, 10 ELR at 20362-63.

27. 444 U.S. 51, 9 ELR 20791 (1979).

28. The birds are protected by the Bald and Golden Eagle Protection Act, 16 U.S.C. §§ 668-668d, ELR STAT. 41807-08, and the Migratory Bird Treaty Act, 16 U.S.C. §§ 703-712, ELR STAT. 41837-38.

29. 444 U.S. at 55, 10 ELR at 20791.

30. Id. at 66, 10 ELR at 20794.

31. Id.

32. Id. at 67, 10 ELR at 20795.

33. 444 U.S. 164, 10 ELR 20042 (1979).

34. Note, The Navigational Servitude and the Fifth Amendment, 26 WAYNE L. REV. 1505, 1509-10 (1980).

35. 350 U.S. 222, 224-25 (1956).

36. 229 U.S. 53, 66 (1913).

37. 339 U.S. 799, 808 (1950).

38. 430 F.2d 199, 1 ELR 20023 (5th Cir. 1970).

39. 355 F. Supp. 1132, 1141, 3 ELR 20500, 20503 (S.D. Ga. 1973) (citations omitted).

40. It is interesting to note that not even Justice Blackmun in his dissent, joined by three Justices, thought that the navigable servitude automatically excluded compensation, 444 U.S. at 186, 10 ELR at 20048, but rather he believed that a balancing of private and public interests was required to make the determination. Id. at 188, 10 ELR at 20048.

41. Id. at 170, 10 ELR at 20044.

42. Id. at 174, 10 ELR at 20045.

43. Id. at 177, 10 ELR at 20046.

44. Id. at 175-76, 10 ELR at 20045.

45. Id. at 175, 10 ELR at 20045.

46. Id. at 179-80, 10 ELR at 20046.

47. Id. at 170, 10 ELR at 20044.

48. Id. at 179-80, 10 ELR at 20046.

49. Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 124, 8 ELR 20528, 20533; see also Note, Constitutional Law. "Fifth Amendment" — Declaration of Property As a Historic Landmark under State Law Is not a Taking which Requires Just Compensation where the Landowner Is Guaranteed a Reasonable Return on His Investment (Penn Central Transportation Co. v. City of New York (U.S. 1978)), 24 VILL. L. REV. 611, 613-14 (1979). The Court in Kaiser Aetna specifically called attention to the fact that the regulation at issue there would "result in an actual physical invasion of the privately owned marine." 444 U.S. at 180, 10 ELR at 20046.

50. Kaiser Aetna, 444 U.S. at 179, 10 ELR at 20046. In Vaughn v. Vermillion, 444 U.S. 206, 10 ELR 20050 (1979), decided the same day as Kaiser Aetna, the Court held that in view of the principles established in Kaiser Aetna, summary judgment had been inappropriately granted to the government on the question of whether canals built on private property but connected to navigable waters are open to use by all citizens. Accordingly, the Court remanded the case for a trial on the merits.

51. 430 F.2d 199, 1 ELR 20023 (5th Cir. 1970).

52. E.g., Deltona Corp. v. United States, 657 F.2d 1184, 11 ELR 20905 (Ct. Cl. 1981); American Credging Co. v. Dutchyshyn, 480 F. Supp. 957 (E.D. Pa. 1979).

53. 480 F. Supp. 957 (E.D. Pa. 1979).

54. Id. at 961.

55. 12 ELR 20790 (E.D.N.C. Mar. 23, 1981).

56. 369 U.S. 590 (1962). In Goldblatt, the Court also based its decision in part on balancing of the public interest in the regulations at issue against the private interest in using property free of interference. Id. at 595.

57. Smithwick, 12 ELR at 20792.

58. 657 F.2d 1184, 11 ELR 20905 (Ct. Cl. 1981).

59. Jentgen v. United States, 657 F.2d 1210, 11 ELR 20910 (Ct. Cl. 1981).

60. Deltona, 657 F.2d at 1188-89, 11 ELR at 20907.

61. Id. at 1191, 11 ELR at 20908.

62. Id. at 1192, 11 ELR at 20908 (emphasis in original).

63. Id. at 1192, 11 ELR at 20909.

64. Id.

65. Id.

66. 657 F.2d 1210, 11 ELR 20910 [digest of opinion] (Ct. Cl. 1981).

67. Id. at 1213.

68. Id. at 1212.

69. Id. at 1213.

70. 661 F.2d 145, 11 ELR 20910 (Ct. Cl. 1981).

71. Id. at 140, 11 ELR at 20912.

72. Id. at 147, 11 ELR at 20911.

73. 2 Cl. Ct. 244, 13 ELR 20629 (1983).

74. Id. at 20629-30.

75. 574 F. Supp. 1381, 14 ELR 20023 (E.D. Va. 1983).

76. A portion of the borrow pit was not wetlands, but rather waters. The court does not provide a breakdown as to the proportion of each. It does state that the amount of vegetated wetlands was three-quarters of an acre, id. at 1384, 1400-01, 14 ELR at 20023, 20031, and that the amount of intertidal area was approximately five acres, id. at 1401, 14 ELR at 20031. The Corps' regulatory definition of "wetlands" covers more than vegetated wetlands and can include mudflats that also were a part of the borrow pit. The court clearly thought that 1902 Atlantic was a wetlands cases, id. at 1394, 14 ELR at 20028; spoke of wetlands throughout (e.g., "The effectiveness of the borrow pit's wetland system in providing flood damage protection is negligible" (emphasis supplied), id. at 1400, 14 ELR at 20031); and, finally, applied the water dependency criteria of the Corps regulations that are applicable to wetlands, not waters, id. at 1397, 14 ELR at 20029.

77. Id. at 1396, 14 ELR at 20029.

78. Id. at 1397-98, 14 ELR at 20029-30.

79. Id. at 1405-06, 14 ELR at 20033.

80. The court held that there was no jurisdiction under § 10 of the Rivers and Harbors Act even though the area was directly connected to navigable waters and subject to the ebb and flow of the tides. This holding is a remarkable departure from precedent (see, for example, the Corps' regulatory definition of its jurisdiction, 33 C.F.R. § 329.4 (1982); United States v. DeFelice, 641 F.2d 1169, 1175, 11 ELR 20505, 20507 (5th Cir. 1981); United States v. Stoeco Homes, Inc., 498 F.2d 597, 611, 4 ELR 20390, 20396 (3d Cir. 1974)). Additionally, it is based on faulty and confused analysis. The court incorrectly ties Rivers and Harbors Act jurisdiction to whether the purpose of the regulation is navigation and to whether the waterbody is naturally occurring or artificially constructed. Id. at 1393-96, 14 ELR at 20028. The court seemed ultimately to rely more on policy than law, with arguments of "absurd results," appeals to "reason and good conscience" and the need to apply a "rule of reason" and a "flexible test." Id. at 1394-96, 14 ELR at 20028-29.

The court's legal arguments are simply wrong and its policy appeals lack substantive support. Since Zabel v. Tabb, 430 F.2d 199, 1 ELR 20023 (5th Cir. 1970), courts have uniformly held that the Corps can properly consider purposes other than navigation, including environment, in exercising its Rivers and Harbors Act authority. Kaiser Aetna v. United States, which the court cites for support of its artificial waterbody argument, clearly recognized the Corps' general regulatory authority over such waters, 444 U.S. at 172, 174, 179, 10 ELR at 20044-46. It simply held that its use in the particular factual circumstances of that case would constitute a taking.

United States v. Sexton Cove Estates, Inc., 526 F.2d 1293, 6 ELR 20216 (5th Cir. 1976) does not support the court's policy argument for the application of a "rule of reason" as the court states. The Fifth Circuit's holding there that landlocked canals are not subject to Rivers and Harbors Act jurisdiction is not contrary to the settled precedent that directly connected waterbodies subject to the ebb and flow of the tides are within the Act's jurisdiction. In fact, the Fifth Circuit in Sexton Cove specifically found jurisdiction for canals directly connected to navigable waters, 526 F.2d at 1298-99, 6 ELR at 20218, and approvingly interpreted the Corps regulations to always require a permit for a direct connection. Id. at 1299 n.15, 6 ELR at 20218 n.15. The issue on landlocked canals was whether Rivers and Harbors Act jurisdiction extended above the mean high-tide line where there was underground tidal connection. That the court in Sexton Cove held that there was no such jurisdiction does not support 1902 Atlantic's novel rule-of-reason test for ebb and flow jurisdiction.

81. The court also reversed the Corps' decision to deny the permit because in the court's view the Corps misconstrued its regulations to require that it deny a permit for a project not found to be water dependent. The court determined that water dependency was only one of a number of factors that the Corps must consider in determining whether to issue a permit to alter wetlands. In support of its holding, the court cited Hough v. Marsh, 557 F. Supp. 74, 83, 13 ELR 20610, 20614 (D. Mass. 1982). 574 F. Supp. at 1398, 14 ELR at 20030.

Although the water dependency issue is not a simple one, the court in 1902 Atlantic was clearly wrong in concluding that for evaluating permit applications to alter wetlands, water dependency is neither a high priority factor nor a prerequisite.The court's principal mistake was to confuse the separate decisionmaking processes set forth for permit applications dealing with wetlands and those that do not involve them. For the latter, the "general balancing process" of various factors — including economics — is required, which as the court states reflects the "national concern for the utilization of resources" as well as their protection. 574 F. Supp. at 1398, 14 ELR at 20030 (emphasis in original); see 33 C.F.R. § 320.4(a)(1). What the court fails to recognize is that special requirements apply when wetlands are involved. Those requirements are set forth in the very next subpart of the Corps' regulation, 33 C.F.R. § 320.4(b), which describes the special importance of wetlands; states that their destruction "should be discouraged as contrary to the public interest"; and requires that in making the balancing decision as to whether to grant a wetlands permit the Corps consider "whether the proposed activity is dependent on being located in, or in close proximity to the aquatic environment and whether practicable alternative sites are available. The applicant must provide sufficient information on the need to locate the proposed activity in the wetland and the availability of practicable alternative sites."

Two courts have held that these regulations make water dependency a requirement for granting a permit to alter wetlands. Buttrey v. United States, 690 F.2d 1170, 1180, 13 ELR 20085, 20089 (5th Cir. 1982); Shoreline Associates v. Marsh, 555 F. Supp. 169, 179, 13 ELR 20421, 20425 (D. Md. 1983), aff'd, 14 ELR 20269 (Jan. 10, 1984) (particularly in combination with similar EPA guidelines promulgated under 33 U.S.C. § 1344(b) by which the Corps is bound). Hough v. Marsh, the other decision on the issue, holds that water dependency is not a prerequisite, but does not, as stated by the court in 1902 Atlantic, support the view that "water dependency" is not a priority factor. The court in Hough v. Marsh found "the fact that the project, is not water-dependent should necessitate a more persuasive showing than otherwise concerning the lack of alternatives." It applied this presumption strictly to reverse the issuance of a permit, finding that the Corps should have considered as alternative sites for the applicant's planned housing project sites not owned by the applicant, including those outside the prime residential area and those allegedly exorbitantly costly, so long as the price was not unreasonably high. 557 F. Supp. at 84, 13 ELR at 20615.

Thus, the 1902 Atlantic ruling on water dependency is unprecedented and wrong.

82. 574 F. Supp. at 1405, 14 ELR at 20033.

83. Id.

84. Id. at 1405 n.19, 14 ELR at 20033 n.19.

85. Id. at 1400-04, 14 ELR at 20031-32.

86. Id. at 1399, 14 ELR at 20031.

87. Id. at 1384, 1392-96, 14 ELR at 20023, 20027-29.

88. Id. at 1406, 14 ELR at 20033. Parkview Corp. v. Department of the Army, 490 F. Supp. 1278 (E.D. Wis. 1980), is a wetlands action that lends some support to the 1902 Atlantic view that jurisdiction of the wetlands takings claim is in the district court rather than the Court of Claims. It is unclear from the opinion the Parkview whether the taking claim was specifically made. In any event, the plaintiff clearly made the related due process claim, seeking as relief for it both injunction and money damage. The court dismissed the claim for monetary relief on the basis that jurisdiction of it was in the Court of Claims. However, the court saw "no reason to dismiss any of the plaintiff's substantive allegations nor its claims for injunctive relief on this ground since Section 1331(a) provides this court with jurisdiction over such claims." 490 F. Supp. at 1281. Kaiser Aetna lends some support as well. Although the issue of the Court of Claims' jurisdiction did not come up, the court, in deciding the case that originated with a federal district court, could be presumed to have not thought jurisdiction was appropriate in the Court of Claims rather than federal district court. However, not too much should be made of the court's silence on the issue because there is no indication that the government ever raised the jurisdictional defense or that it came up. Further, the silence of the Court of Claims in all its wetlands takings decisions could be read as support for the proposition that it, not the district courts, has jurisdiction since it went ahead and decided the cases on the merits.

89. E.g., Zabel v. Tabb, 430 F.2d 199, 1 ELR 20034 (5th Cir. 1970).

90. 28 U.S.C. §§ 1346, 1491 (1976).

91. Commentators have noted that the typical remedy for regulatory takings cases has been injunction or declaratory judgment, not money damages. See supra note 7.

92. Monetary Damages, supra note 4, at 716.

93. See supra note 24.

94. See supra note 8.

95. 643 F.2d 1188 (5th Cir. 1981), cert. denied, 455 U.S. 907 (1982).

96. 480 F. Supp. 957, 961 (E.D. Pa. 1979).

97. 12 ELR 20950 (N.D. Ill. Nov. 13, 1981).

98. Id. at 20951.

99. 574 F. Supp. at 1406, 14 ELR at 20034.

100. There is an alternative approach to the analysis of the taking claim in wetlands cases that would not apply the general taking criteria used in those cases thus far. The general taking criteria have been developed by the Supreme Court mostly in the zoning context and have been applied in the wetlands area principally by the Court of Claims, which might be said to have an institutional bias or inclination to apply taking criteria since the taking claim is its jurisdictional basis for these cases and the Court of Claims typically applies taking criteria in its decisions. The Supreme Court might simply refuse to find a taking where the government is preventing a landowner from using his property to pollute waters or destroy natural resources of value to the public at large. The theory for this is based on the special federal interest in waters and the lack of any private property right to pollute in violation of law. As to the latter point, there is a line of Supreme Court cases holding that a property owner has no right to use his property in a manner that is noxious or a nuisance to the public. E.g., Muger v. Kansas, 123 U.S. 623 (1887) (shutting down a brewery without compensation); see also Penn Central, 438 U.S. at 125, 8 ELR at 20533. Polluting water or destroying valuable water resources could be considered to constitute a nuisance. Along these lines, the Supreme Court in EPA v. National Crushed Stone Ass'n, 449 U.S. 64, 76, 78, 80, 10 ELR 20924, 20927-28 (1980), refused to set aside Environmental Protection Agency water pollution regulations that the Court acknowledged would likely drive certain manufacturers out of business. The superior federal interest in waters is indicated by the navigable servitude, discussed supra text accompanying notes 33-42, and by common law. ("Under the common law, the running waters of the earth are neither lands, tenements, nor hereditaments, nor are they susceptible of absolute ownership." C. S. KINNEY, A TREATISE ON THE LAW OF IRRIGATION AND WATER RIGHTS 467 (2d ed. 1912)). Regarding this superior interest, the Supreme Court in Penn Central cited United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53 (1913), for the proposition that "no property interest can exist in navigable waters." 438 U.S. at 125, 8 ELR at 20533.

This alternative theory was adopted in the oft-cited state wetlands case, Just v. Marinette County, 56 Wis. 2d 7, 17-18, 201 N.W.2d 761, 768, 3 ELR 20167, 20168 (1972), where the court stated:

An owner of land has no absolute and unlimited right to change the essential natural character of his land so as to use it for a purpose for which it was unsuited in its natural state and which injures the rights of others …. The changing of wetlands and swamps to the damage of the general public by upsetting the natural environment and the natural relationship is not a reasonable use of that land which is protected from police power regulation.

The Supreme Court's decision in Kaiser Aetna applying general taking criteria to a situation involving water is not necessarily a rejection of the alternative theory set out above. In Kaiser Aetna the question did not involve water pollution or destruction of natural resources, but public access to property. The Court stated as to cases dealing with authority to regulate navigation and the navigational servitude: "'[A]ny reliance upon judicial precedent must be predicated upon careful appraisal of the purpose for which the concept of "navigability" was invoked in a particular case.'" 444 U.S. at 171, 10 ELR at 20044 (emphasis in original, quoting the district court opinion). The purpose of public access is in the nature of physical invasion for which the Court has traditionally upheld taking claims along with the payment of compensation as a remedy. Mandelker, Land Use Takings: The Compensation Issue, 8 HASTINGS CONST. L.Q. 491, 495-96 (1981); see also Penn Central, 438 U.S. at 124, 8 ELR at 20533.

Not allowing taking claims in the cases involving water pollution and wetlands destruction would not leave a landowner without a judicial recourse, which courts rarely countenance. Rather, the landowner could sue on the basis of the Administrative Procedure Act or the Due Process Clause of the Fifth Amendment to invalidate the government action as arbitrary and capricious or unauthorized by statute. See supra note 5. This would not represent much of a change from the results of present practice since the regulatory taking cases have typically confused their analysis of taking with due process (see supra text accompanying notes 4-5) and have granted as relief injunction and declaratory judgment (see supra text accompanying note 7), which are actually more consistent with the due process violation rather than with a taking, for which the traditional remedy is compensation, consistent with the constitutional prohibition against private property "being taken for public use without compensation." (Emphasis supplied). Thus, an alternative to applying the general taking criteria liberally to uphold public regulation (as have the wetlands cases prior to 1902 Atlantic) is to simply reject the possibility of a taking for federal regulation controlling water pollution and wetlands destruction.

101. Discussed supra in text accompanying notes 27-32.

102. Discussed supra in text accompanying notes 55-57.

103. Discussed supra in text accompanying notes 66-69.

104. Discussed supra in text accompanying notes 33-50.

105. See supra text accompanying note 87.

106. Discussed supra in text accompanying notes 73-74.