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Loveladies Harbor, Inc. v. United States

Citation: 19 ELR 20092
No. No. 243-83L, 15 Cl. Ct. 381/(Cl. Ct., 08/12/1988)

The court holds that developers, alleging that the Corps of Engineers' refusal to issue a permit to fill wetlands constituted a taking, have shown that their private interest in developing their land outweighs the governmental interest in preserving wetlands, but the court refuses to find a taking because factual issues remain as to whether the land has been deprived of all of its economic viability. The court first holds that the claim is ripe for review. Plaintiffs have submitted their permit application to the Corps containing a proposed development plan and the Corps has denied the application. Plaintiffs are not required to submit less ambitious proposals, since the Corps has taken a final, definitive position that any development on the wetlands is unacceptable. Even accepting the dubious premise that less ambitious proposals must be submitted in every case, the case is still ripe because plaintiffs previously submitted more ambitious applications to the Corps and the New Jersey Department of Environmental Protection. Plaintiffs are also not required to submit a variance application for the case to be considered ripe, since no such alternative is available under the Federal Water Pollution Control Act (FWPCA).

The court holds that plaintiffs' private interest in developing their land outweighs the government's interest in preserving wetlands under FWPCA § 404. The court concludes that it is bound by the Federal Circuit's decision in Florida Rock Industries v. United States, 16 ELR 20671, which held that the balance favored the landowner because the FWPCA's goal of preserving wetlands was for the maintenance of a public benefit rather than the prevention of a public harm. While noting that each takings claim must rest on its own facts, the court finds Florida Rock indistinguishable, since the public interest in preserving wetlands is the same and the potential pollution from plaintiffs' activities in this case is less substantial. The court, however, refuses to find a taking on this basis alone. The harm/benefit distinction used in Florida Rock is flawed, since it could just as reasonably be argued that FWPCA's wetlands preservation goal is designed to prevent harm to the environment as for the preservation of aesthetic benefits. Further, no court has ever found a taking solely because a legitimate state interest was not substantially advanced.

Turning to the issue of whether the permit denial has deprived plaintiffs of all economically viable uses of their land, the court first holds that the character of the government's action is not equivalent to the physical destruction or intrusion characterized by an act of eminent domain. The court holds that only the 12.5 acres affected by the permit application should be considered for purposes of measuring the regulation's economic impact and its interference with reasonable investment-backed expectations, not the original 250 acres purchased by plaintiffs. Under the Supreme Court's decision in Keystone Bituminous Coal Association v. DeBenedictis, 17 ELR 20440, the court may only consider the 57.4 acres that plaintiffs held when the taking was said to have occurred. The court excludes an additional 38.5 acres from consideration, since [19 ELR 20093] New Jersey has already denied the permits for that area. The court also excludes 6.4 acres of noncontiguous property not affected by the Corps' permit denial.

The court, assuming for purposes of the government's motion for summary judgment that plaintiffs' property lost 98 percent of its value after the permit denial, holds that the government is not entitled to dismissal of the takings claim. Under these facts, the court holds that plaintiffs' property was left with no viable commercial or recreational uses. The court rejects the line of cases holding that land cannot be viewed as taken where the land must remain in its natural state. The court also rejects the government's motion for summary judgment concerning one acre of uplands. Although this acre is outside the Corps' jurisdiction, it is surrounded by wetlands. The facts do not exclude the possibility that plaintiffs have been effectively denied all meaningful access to this land.

The court also denies plaintiffs' motion for summary judgment, since the facts most favorable to the government do not exclude the possibility that the land has some remaining use. The government alleges that the one acre of uplands could be used for development and the surrounding wetlands could be used as a right-of-way, and that the value of the property would be reduced by the permit denial from $ 3.79 million to $ 680,000. The court holds that under these facts the land still has some reasonable economic use. Plaintiffs will prevail if they can prove at trial that the property must remain in its natural state as an empty lot.

[A related case is published at 15 ELR 20088.]

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

Counsel for Defendant
Michael M. Wenig
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 786-4787