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Orion Corp. v. State

ELR Citation: 18 ELR 20697
Nos. Nos. 52165-4, 52529-3, 747 P.2d 1062/109 Wash. 2d 621, (Wash., 12/17/1987)

The Washington Supreme Court holds that privately owned tidelands in Padilla Bay are subject to the public trust doctrine and thus the state Shoreline Management Act (SMA) does not effect a taking by prohibiting dredge and fill activities, but the doctrine does not completely preclude plaintiff's takings claim, since the state regulations may prevent any reasonably profitable use of the property. The court first holds that plaintiff's regulatory takings claim is ripe for review. The county shoreline management plan (county plan), enacted pursuant to the SMA, allows only aquaculture and recreational use on plaintiff's land. Although plaintiff has not submitted an application for a shoreline development permit, the evidence indicates that application would be futile. This court held earlier in this litigation that the state's creation of an estuarine sanctuary in Padilla Bay would require denial of an aquaculture conditional use permit for plaintiff's tidelands, and recreational use would not provide any economic return. The court holds that plaintiff's claim is not barred by a three-year statute of limitations for property damage cases or a federal three-year limit for claims under 42 U.S.C. §1983. The sanctuary's creation in 1980 is the operative date for a takings analysis, and plaintiff initiated its claim in 1982. The court holds that even if the federal government is an indispensable party because of federal regulation of dredge and fill activity under the Federal Water Pollution Control Act, the action should not be dismissed since otherwise plaintiff would not have a forum for its action. The court holds that the owner of unexercised options to purchase Padilla Bay tidelands property lacks standing to bring a claim for a regulatory taking. On a final procedural issue, the court holds that the trial court properly exercised its discretion in admitting for a limited purpose the affidavit of an expert witness who testified on the history of the regulatory scheme and prior development of the tidelands.

The court holds that plaintiff's tidelands are subject to the public trust doctrine. The legislature's sale of large tracts of tidelands to private parties does not negate the trust, since the sales are subject to the public's paramount rights of navigation, fishing, and recreational uses. The court holds that neither the SMA nor the county plan effected a taking by prohibiting plaintiff from engaging in dredge and fill activities, since plaintiff never had the right to engage in activities that would impair the trust. The court holds, however, that the public trust doctrine does not completely preclude plaintiff's takings claim.

The court dismisses the county as a defendant in the action, since the county acted under the state's direction and control in developing its shoreline management plan, state regulations required the county to give preference to certain uses, and the county plan did not become effective until approved by the state Department of Ecology (DOE). The court holds that the fact that DOE does not have the power of eminent domain under the SMA does not preclude plaintiff's inverse condemnation action, since the agency's actions can still deprive plaintiff of its property for public use. The court holds that for the regulatory takings claim to succeed, plaintiff must demonstrate that its tideland property was reasonably adaptable, both economically and functionally, to some present, reasonably profitable use, legally permissible under the public trust doctrine prior to enactment of the SMA and the county plan. The SMA's stated purposes to safeguard the environment, protect against adverse effects to the public health and safety, ensure shoreline development compatible with public trust rights of navigation, and protect Padilla Bay as a shoreline of statewide significance insulate the statute from characterization as a taking if the statute denied all profitable uses, since no compensable taking can occur as long as regulations substantially serve the legitimate public purpose of prohibiting uses of property injurious to the public interest in health, environment, or fiscal integrity of the community. At most, such regulations would be subject to invalidation under substantive due process as an unreasonable burden on private landowners.

The court holds that if the tidelands are adaptable to aquaculture and the SMA did not prohibit use of the tidelands for this use, creation of the Padilla Bay estuarine sanctuary proximately caused the denial of all reasonably profitable use. Plaintiff must then demonstrate either that the regulations do not substantially advance a legitimate governmental purpose or that the restrictions cause a sufficiently significant economic deprivation. The court holds that plaintiff has not demonstrated an unlawful nexus between the public purpose of the regulatory scheme and its application to plaintiff's property, such as was struck down by the United States Supreme Court in Nollan v. California Coastal Commission, 17 ELR 20918. Creation of the sanctuary may have triggered the alleged taking, but the state's use of a voluntary sale approach for land acquisition is not simply an attempt to avoid condemnation proceedings. The court holds, however, that the Court's decision in Keystone Bituminous Coal Association v. DeBenedictis, 17 ELR 20440, indicates that a compensable taking may have occurred if plaintiff suffered a significant economic deprivation as a result of the sanctuary's effect on plaintiff's ability to make some present, reasonably profitable use of its property. The court holds that the regulations did not impermissibly interfere with plaintiff's investment-backed expectations, since the only expectations plaintiff had related to its proposed dredge and fill projects, which were precluded by the public trust. The court holds that if the creation of the sanctuary effected a taking, the trial court must determine whether the state's offer to purchase the tidelands for inclusion in the sanctuary constituted just compensation. The court also holds that if there was an unconstitutional taking, it was temporary and reversible, and that the state may cure the taking by amending the regulations or rescinding the sanctuary. Pursuant to the United States Supreme Court's decision in First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 17 ELR 20787, the court holds that the proper measure of damages is the leasehold value of the tidelands for the period during which the regulations remained effective.

The court holds that there has been no inverse condemnation by physical invasion. Promotional materials prepared during the initial stages of development of the sanctuary depicting all of Padilla Bay, including plaintiff's property, as within the sanctuary boundaries do not constitute a physical invasion, and there is no evidence of trespass by the state. The court declines to recognize a cause of action for inverse condemnation where a decrease in market value occurs as a result of the state's unreasonable delay in commencing eminent domain proceedings, noting that plaintiff's claim would fail even if it did recognize the cause of action. Finally, the court holds that the trial court correctly dismissed plaintiff's § 1983 claim as unripe.

One dissenting judge would hold that plaintiff's takings claim is unripe since neither the county nor the state has issued a final decision regarding the application of the SMA, the county plan, or the Padilla Bay sanctuary to plaintiff's property.

Counsel for Respondent
Mark S. Clark, James J. Ragen, Joseph B. Genster, Richard R. Wilson
Hillis, Clark, Martin & Peterson
500 Galland Bldg., 1221 Second Ave., Seattle WA 98101-2925
(206) 623-1745

Counsel for Appellant
Charles W. Lean, Ass't Attorney General
Temple of Justice
Olympia WA 98504
(206) 753-2550

PEARSON, C.J., BRACHTENBACH, CALLOW, GOODLOE, and DURHAM, JJ., and WILLIAMS, J., Pro Tem., concur. ANDERSEN, J., concurs in result.