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1902 Atl. Ltd. v. United States

ELR Citation: 23 ELR 21202
Nos. No. 637-87L, 26 Cl. Ct. 575/35 ERC 1706/(Ct. Cl., 06/19/1992)

The court holds that the U.S. Army Corps of Engineers (Corps) was arbitrary and capricious in denying a developer's application for a dredge and fill permit under §404 of the Federal Water Pollution Control Act (FWPCA), but the developer is not due any compensation for the temporary taking. The developer purchased property containing a borrow pit, intending to fill the pit for future commercial or industrial development. The pit, which resulted from the excavation of highlands for a nearby highway construction project, was connected by a ditch to a creek that was a tributary of the Elizabeth River. After the Corps denied the developer's initial §404 permit application, the developer submitted additional information and plans for mitigation in support of an amended application. The Corps notified the developer of its plans to deny the revised application, and after the developer's third modified application was denied, it challenged the Corps' denials as arbitrary and capricious. The trial court found that the Corps had unlawfully taken the developer's property by denying the permit, and remanded to the Corps for reconsideration or to commence condemnation proceedings. Subsequently, the Corps reviewed additional information and again advised the developer that its application would be denied. The developer thereafter filed a motion in district court to compel the Corps to comply with the court's previous order and the Corps ultimately issued a §404 permit for the developer's project. The developer now seeks compensation for the temporary taking that occurred between the time when the Corps initially denied the permit application until the time when all the necessary state and local permits, which lapsed during these proceedings, were reissued.

The court first holds that it will not consider the period prior to the Corps' final decision to deny the developer's permit application for purposes of determining the temporary taking. This is necessary because disapproval of the developer's amended applications was not a foregone conclusion until the Corps made its decision final. Turning to the three-prong takings test, the court holds that the Corps' action had a severe economic impact on the developer during the period in question, because absent the permit, there was not a realistic market for the property. The courrt holds that because the developer purchased the property solely as an investment, its investment-backed expectations were frustrated beginning with the Corps' final denial and continuing until the permit was issued. The court holds that the character of the Corps' action was arbitrary and capricious. The evidence shows that Corps' officials disregarded the marginal importance of the borrow pit as a wetlands site and the agency's actions went against the clear instructions of the district court.

The court, however, concludes that no temporary taking occurred during any of the periods claimed by the developer, because never during the entire administrative and judicial process was the developer actually entitled to a permit. The period for governmental decisionmaking permitted by statute is what the developer alleges was a temporary taking. Thus, the only way the developer can recover is to prove that this period constituted extraordinary delay. The court holds that mere fluctuations in value during the process, absent extraordinary delay, are incident to ownership and do not constitute a taking in the constitutional sense. Nor is it sufficient for the developer to show that the land was essentially "pickled" during the litigation. The temporary harms suffered by the developer during the period its permit was denied were significant, but the government cannot be charged with the delay necessary to complete the review process. Moreover, the lapse in the developer's state and local permits during the litigation does not establish a taking, because the litigation did not impede the developer from maintaining the permits as current.

Counsel for Plaintiff
James J. Knicely
Knicely & Cotorceanu
487 McLaws Cir., Ste. 2, P.O. Drawer GK, Williamsburg VA 23185
(804) 253-0026

Counsel for Defendant
Fred R. Disheroon, Susan V. Cook
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000