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Forest Properties, Inc. v. United States

ELR Citation: 29 ELR 21174
Nos. No. 97-5145, 177 F.3d 1360/48 ERC 1823/(Fed. Cir., 05/19/1999) Affirmed

The court holds that the federal governments' denial of a developer's application for a Federal Water Pollution Control Act (FWPCA) §404 permit to dredge and fill certain underwater lakebottom property did not constitute a regulatory taking. The developer claimed that the denial resulted in a taking because it deprived the developer of productive use of the lakebottom property and would result in title to the lakebottom land reverting to a local water district under the terms of a prior contractual agreement. The court first holds that the case involves a regulatory, not a physical, taking claim. The reversion of the lakebottom land to the water district would not be attributable to the government's action, but to the prior contractual arrangement between the developer and the water district. The court also holds that the relevant parcel for takings analysis is the entire 62-acre project, not just the 9.4 acres of lakebottom property. The record shows that from the outset, the upland and lakebottom property were treated as a single integrated development project.

Next, the court holds that the government's denial of the permit was not a regulatory taking. The character of the government action does not have an impact on this case because the dredging and filling of the submerged area would not constitute a nuisance under state law. In addition, the denial of the permit has not significantly interfered with distinct investment-backed expectations. The U.S. Army Corps of Engineers' guidelines governing the issuance of FWPCA §404 permits made clear that filling wetlands to construct housing on the reclaimed land was disfavored and that it was unlikely that such a project would be approved. Moreover, the developer failed to introduce convincing evidence to show the amount, if any, by which the value of the 62 acres was reduced by the denial of the permit. Based on the record, therefore, the denial of the permit did not prevent all or substantially all of the economically viable use of the property, and the economic impact of the regulation is not sufficiently severe to constitute a taking.

[The district court's decision in this litigation is published at 27 ELR 21454. Briefs and Pleadings in this litigation are digested at ELR BRIEFS & PLEADS. 66624.]

Counsel for Plaintiff
John H. Findley
Zumbrun & Findley
2150 River Plaza Dr., Ste. 255, Sacramento CA 95833
(916) 641-0015

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

Before Lourie and Rader, JJ.