Lucas v. South Carolina Coastal Council: The Takings Test Turns a Corner

Barry M. Hartman

Editors' Summary: Lucas v. South Carolina Coastal Council evoked great interest during the U.S. Supreme Court's 1991-92 Term, attracting dozens of amicus briefs and producing speculation about whether the case would be a referendum on the entire environmental movement. In Lucas, the Court reversed the South Carolina Supreme Court's ruling that no compensation is due under the Fifth Amendment of the U.S. Constitution when a landowner's private use threatens serious public harm. Writing for the five-member majority, Justice Scalia set forth a new two-part takings standard. First, compensation is due under the Fifth Amendment when regulations enacted for public purposes deprive landowners of all economically beneficial use of their property. Second, under the nuisance exception to compensable takings, regulation may do no more than duplicate the result that the courts would reach under traditional principles of nuisance and property law. Before Lucas, courts used the nuisance exception to excuse the payment of compensation if the state action was within the broad scope of its police power. Now, the takings inquiry is limited to an assessment of the property's value before and after the alleged taking occurs, and the government may avoid compensation for a regulation that deprives landowners of all economic value of their property only when the government acts to prevent a traditional nuisance.

The two Dialogues below evaluate Lucas' impact on takings law. In the first, Barry M. Hartman argues that the Court's decision in Lucas represents a necessary departure from a policy-based takings jurisprudence to an objective approach more consonant with the courts' proper constitutional role. In the second, Barry I. Pershkow and Robert F. Housman contend that the decision's impact will be minimal, assuming that courts will correctly apply Lucas only when a total loss of economically viable use occurs. Ultimately, Lucas' impact on challenges to land use regulations will hinge on two questions: what constitutes a total loss of economically viable use, and when does a regulation go beyond traditional principles of nuisance and property law? Finding the answers will test the relationship of public and private interests in land use and environmental protection into the next century.

Barry M. Hartman is a partner in the law firm of Kirkpatrick & Lockhart in Washington, D.C. Prior to joining Kirkpatrick & Lockhart, Mr. Hartman was Acting Assistant Attorney General for the U.S. Department of Justice, Environment and Natural Resources Division, where he oversaw takings litigation involving the United States and arising out of environmental laws. The views expressed here are solely Mr. Hartman's. Mr. Hartman wishes to thank Susan L. Buckingham and Dana A. Elfin, associates with Kirkpatrick & Lockhart, for their assistance with and substantial contributions to this Dialogue.

[23 ELR 10003]

The U.S. Supreme Court's decision in Lucas v. South Carolina Coastal Council¹ is significant in three respects. First, the decision represents an evolution in the test for determining if governmental action constitutes a taking for which just compensation is due under the Fifth Amendment.² Second, Lucas establishes a takings test that will result in more principled, and less policy and outcome-oriented, judicial decisionmaking. Third, Lucas is likely to lead to more decisions, at least at the federal level, finding that certain types of regulation require the government to compensate property owners for the loss of value caused by the regulation.

A New Takings Test

[23 ELR 10004]

The Lucas decision has changed the test for determining whether a regulatory action constitutes a taking.³ Before the Lucas ruling, courts generally applied a three-tiered balancing test to determine whether a compensable taking had occurred. The three factors of the pre-Lucas test include (1) the character of the governmental action; (2) the property owner's reasonable investment-backed expectations; and (3) the economic impact of the regulatory action.⁴ This three-factor test has been the standard litany of takings jurisprudence.

Unquestionably, Lucas has changed the character of the takings test in two ways. First, the Court held in Lucas that "when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle, he has suffered a taking."⁵ The Court recognized, without reservation, that complete loss of economic viability constitutes a compensable taking.⁶ Thus, the legitimacy of a governmental regulatory action no longer qualifies as a discrete factor in takings analysis. Rather, judicial inquiry is now limited to an assessment of the value of the land before and after the alleged taking occurs.⁷

Second, the Court in Lucas narrowed the so-called nuisance exception to the rule that compensation must be paid when property is taken through government regulation. Before Lucas, courts employed the nuisance exception to excuse the payment of compensation to a landowner if the state action was in the broad scope of its police power, notwithstanding the adverse effect of the governmental action on the value of the owner's property. In Lucas, the Court appears to have adopted Chief Justice Rehnquist's dissent in Keystone Bituminous Coal Ass'n v. DeBenedictis, concluding that the nuisance exception is not co-extensive with the government's police power.⁸ To avoid paying compensation under the Lucas takings formulation, the state's limitation on property use must "inhere in the title itself, in the restrictions that background principles of the State's law of property and nuisance already place upon land ownership."⁹ Thus, the government may avoid compensation for a regulation that deprives the landowner of all economic value of his property only when the government acts to prevent a traditional nuisance.

A More Objective Approach to Takings Analysis Is Proper for the Courts

The Court's decision in Lucas represents more than just a change in the legal test to be applied in regulatory takings cases. Lucas also represents a departure from a policy-based takings jurisprudence to an objective approach more consonant with the courts' proper constitutional role.

From Ad Hoc, Three-Tiered Balancing to Objective Valuation

Until Lucas, the unpredictability and inconsistency of judicial decisionmaking in applying the three-tiered analysis was often excused by the treatment of takings decisions as ad hoc factual determinations.¹⁰ Courts had difficulty making these determinations, because the three-tiered test, balancing "legitimate" governmental action, "reasonable" investment-backed expectations, and economic impact, is by its very nature an exercise in economic and social policymaking, not judicial decisionmaking. Prior to Lucas, results in takings cases often turned on the personal or political values of the particular judges hearing the case. Underscoring this point, Justice Scalia points out in Lucas that, in evaluating the legitimacy of the governmental action, whether such action is "harm-preventing" or "benefit-conferring" is often in the eye of the beholder.¹¹ Indeed, two [23 ELR 10005] sets of decisions applying the three-tiered balancing test illustrate its flaws.

The first set of cases involve landowners who had developed portions of their property before passage of the 1972 Clean Water Act,¹² and wished to further develop their land. In Deltona Corp. v. United States,¹³ the U.S. Claims Court found that no taking had occurred, yet in Loveladies Harbor, Inc. v. United States,¹⁴ on nearly identical facts, the Claims Court found a taking.¹⁵ Clearly, the two courts viewed the nature of the government action at issue differently. The court in Deltona found that protection of the environment outweighed the landowner's investment-backed expectations, while the court in Loveladies reached the opposite conclusion. These two cases can be reconciled only by concluding that the two courts reached different decisions based on their conflicting policy views.

Two additional cases, Yancey v. United States¹⁶ and Empire Kosher Poultry, Inc. v. Hallowell,¹⁷ also epitomize the policy-driven outcomes reached in takings cases before Lucas. Both cases involved U.S. Department of Agriculture orders imposing a quarantine on interstate shipment of live poultry, poultry manure, poultry litter, carcasses, and eggs to prevent the spread of the avian flu virus. The plaintiffs in Yancey and Empire Kosher sought government compensation for the destruction of their poultry.¹⁸ In Empire Kosher, the destruction of the healthy flock was not found to be a taking, while in Yancey it was. In both instances, the government was undeniably acting to protect the health and welfare of the citizenry. What the court in Yancey questioned, however, was the government's ability to take such action without paying compensation.¹⁹ The divergent outcomes in Yancey and Empire Kosher apparently reflect the particular panels' perceptions of fairness.²⁰ Neither Yancey nor Empire Kosher misapplied the three-tiered test; rather, the three-part test itself encouraged, and perhaps compelled, such results.

Lucas will go far toward restoring objective, principled determinations to takings cases based on considerations appropriate for the judiciary. The economic valuation test is a proper measure for courts to use in takings cases.²¹ In determining just compensation, courts have quite properly sought to measure the fair market value of the property on the date of taking.²² The courts have also used fair market value as a measure of comparison to account for the value of potential future uses of the property.²³ Economic land valuation determinations as of a particular point in time have been, and will continue to be, properly made by the judiciary.

Toward a Narrow Nuisance Exception

Another effect of the ruling in Lucas is that courts will now properly apply the nuisance exception in takings cases. Justice Scalia noted in Lucas that "the distinction between regulation that 'prevents harmful use' and that which 'confers benefits' is difficult, if not impossible, to discern on an objective, value-free basis…."²⁴ After Lucas, to avoid compensation for the loss of all economically beneficial use of land, government regulation can "do no more than duplicate the result that could have been achieved in the courts … under the State's law of private nuisance…."²⁵ Courts can avoid evaluating the legitimacy — and indeed, wisdom — of particular governmental actions, and also avoid having to balance the government's interests against the interests of the landowner. The moving party need only establish that the governmental action has eliminated the economic value of his property in order to make out a prima facie compensable taking. Once such complete diminution in value is established, the burden shifts to the government to establish, using traditional notions of nuisance, that the government activity was designed to prevent a nuisance, thereby excusing the government from paying compensation.²⁶

Impact of Lucas on the Federal Circuit and the Claims Court

Takings claims against the federal government are litigated in the U.S. Claims Court and in the Federal Circuit.²⁷ Before Lucas, these courts already had indicated their [23 ELR 10006] willingness to find a taking in many factual situations when applying the pre-Lucas three-tiered test. For example, in Whitney Benefits, Inc. v. United States,²⁸ the Claims Court found a legislative taking based on a single statement made on the floor during debate on the federal Surface Mining Control and Reclamation Act.²⁹ The court in Whitney Benefits also found that the environmental concerns expressed in the statute were outweighed by the adverse economic impact of the regulation on private property rights, because the regulations eliminated all economic value of the landowner's property.³⁰ Moreover, in both Loveladies Harbor, Inc. v. United States³¹ and Florida Rock Industries v. United States,³² the Claims Court again dismissed the government's argument that its regulatory activity was sufficiently important to overcome the reasonable investment-backed expectations of the landowner.³³ In fact, in Florida Rock, the Claims Court went as far as to dismiss the government's argument — and evidence — that there was an investment value remaining in the land, instead finding in favor of the plaintiff. Specifically, the Claims Court found in Florida Rock that the plaintiff had purchased the property solely for the purpose of limestone mining and that "there is virtually no other business by which the plaintiff could 'recoup its investment or better, subject to the regulation.'"³⁴

Finally, in Hendler v. United States,³⁵ the Federal Circuit found a taking even before the lower court had ruled on the takings issue. The Claims Court had dismissed the action as a sanction for the plaintiff's failure to cooperate in discovery. On appeal, the Federal Circuit not only reversed the dismissal, but found on the merits for the plaintiff, although no trial had ever been conducted.³⁶

Thus, before Lucas, the Federal Circuit had already started to take a narrow view of permissible government regulation which would justify not paying compensation to adversely affected landowners. The Lucas decision, confirming the narrow focus embodied in the nuisance exception, will likely encourage continued findings in favor of claimants, including those suing under environmental laws.

Takings claims may enjoy more success after Lucas — particularly in the Federal Circuit, which has veered awayfrom finding compensable takings — because the Lucas test shifts the burden of proof to the government.³⁷ Under the traditional three-tiered analysis, the moving party had to show that his economic interest and expectation of return outweighed the countervailing regulatory interest of the government.³⁸ After Lucas, a landowner need only show that he has suffered a sufficiently adverse economic impact because of the regulation. The government then must establish, as an affirmative defense, that its action falls within the traditional concepts of nuisance, or that it is acting to prevent the spreading of a fire or to forestall other grave threats to health and property.³⁹ While some federal laws may indeed meet that stringent test, it is unclear whether many regulatory purposes, such as permitting for dredging and filling wetlands under the Clean Water Act⁴⁰ or regulation of financial institutions under, for example, the Federal Institutions Reform, Recovery, and Enforcement Act of 1989,⁴¹ will meet the new test.⁴²

What's Next?

In the wake of Lucas, there will be much debate over the proper interpretation of "nuisance." Taking Justice Scalia's description of the nuisance theory as a starting point, it appears that the scope of the nuisance exception has returned to its more traditional underpinnings. Two issues should be addressed, however, before the debate on nuisance begins: (1) whether, when an area of land is deprived of all economic value, it is to be evaluated as part of a larger parcel owned [23 ELR 10007] by the same claimant, or whether it will be evaluated standing alone; and (2) the meaning of "economic value or productive use."⁴³

Justice Scalia's opinion in Lucas takes note of the first issue. Scalia explains that, according to U.S. Supreme Court precedent, the Fifth Amendment right to compensation is triggered when land use regulation deprives an owner of all economically viable use of his land.⁴⁴ Under current takings jurisprudence, this approach is commonly known as the "parcel as a whole" theory. Under this theory, the government generally argues that if a landowner is able to develop, for example, 98 out of 100 acres, but is not able to develop the last two acres, no taking exists because the property is valued based on its entirety, not merely on a portion of the property at issue in the permit application.

Scalia recognizes the problems with the "parcel as a whole" theory by stating:

Regrettably, the rhetorical force of our "deprivation of all economically feasible use" rule is greater than its precision, since the rule does not make clear the "property interest" against which the loss of value is to be measured. When, for example, a regulation requires a developer to leave 90% of a rural tract in its natural state, it is unclear whether we would analyze the situation as one in which the owner has been deprived of all economically beneficial use of the burdened portion of the tract, or as one in which the owner has suffered a mere diminution in value of the tract as a whole.⁴⁵

Although the Lucas decision does not resolve the "parcel as a whole" problem, the Claims Court has squarely addressed the issue in Loveladies Harbor, Inc. v. United States,⁴⁶ and may be addressed by the Federal Circuit in the near future. In Loveladies Harbor, plaintiffs had developed all but 51 acres of a purchase of 250 acres, when they were required to obtain federal and state permits. Loveladies was able to obtain a permit from the New Jersey Department of Environmental Protection for 12.5 acres, but the U.S. Army Corps of Engineers denied Loveladies' federal permit application for the same 12.5 acres. The Claims Court did not consider the entire 250 acres as the "parcel as a whole," but instead discounted (1) the previously developed acres, (2) the previously developed acres that had been sold, and (3) the already filled acres located within the 50 undeveloped acres. On this basis, the Claims Court found a taking of the 12.5 acres at issue. Now on appeal, the government argues that the court should have considered the entire 250 acres, as purchased by Loveladies, when determining the impact of the Clean Water Act on the value of the property.⁴⁷

Lucas leaves open another issue relating to valuation. Although courts have been assessing property values for years in land use litigation, they have yet to address whether there is a difference in valuation between a situation in which a piece of property is worth $ 100 per acre, but one owner paid $ 150 per acre and another landowner paid $ 1,000,000 per acre for comparable property. Moreover, if either owner could sell the property for $ 150, a court must decide whether that constitutes any remaining economically beneficial use. Finally, it must be decided whether the economically beneficial or productive use must be beneficial only to the owner, or whether a use would be considered economically beneficial if it remains viable to someone other than the landowner.⁴⁸

Conclusion

The Lucas decision should result in more consistent, principled judicial decisionmaking in cases involving nonphysical governmental invasions that deprive landowners of economically beneficial uses of their property. The holding, instructing that a taking occurs when a landowner is deprived of all economically beneficial use of his property, is likely to leave little room for political and policy-oriented judicial decisions by courts.

1. 112 S. Ct. 2886, 22 ELR 21104 (1992).

2. U.S. CONST. amend. V.

3. A regulatory taking should be distinguished from a physical taking. A regulatory taking does not involve any government occupation of the owner's property but instead involves governmental restrictions on an owner's use of his property. A physical taking, on the other hand, involves governmental occupation of the owner's property. Physical takings are almost always compensable, and while regulatory takings that eliminate all productive use are also compensable, it is less clear whether elimination of some but not all value would also require compensation. Compare Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (law requiring landlords to allow cable television installation on their property constituted a minor but permanent physical occupation for which compensation was due) with Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 8 ELR 20528 (1976), reh'g denied, 439 U.S. 883 (1978) (New York's historic preservation law restricting the property owner's options concerning landmark site did not constitute a compensatory regulatory taking).

4. See Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211, 225 (1986); Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 191 (1985); Kaiser Aetna v. United States, 444 U.S. 164, 175, 10 ELR 20042, 20045 (1979); Penn Central, 438 U.S. at 124, 8 ELR at 20533.

5. Lucas, 112 S. Ct. at 2895, 22 ELR at 21108.

6. Arguably, this holding may be viewed as a reaffirmation of Agins v. City of Tiburon, 447 U.S. 255, 10 ELR 20361 (1980). In that case, the Court held that a taking occurs "if the [governmental action] does not substantially advance legitimate state interests … or denies an owner economically viable use of his land…." Id. at 260, 10 ELR at 20362 (emphasis added) (citations omitted). Since Agins was decided, some decisions have dismissed or ignored the word "or," instead holding that there had to be a physical invasion or a meeting of the three-pronged test to constitute a taking. See, e.g., Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 17 ELR 20440 (1987); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982).

7. The third tier of the pre-Lucas balancing test, reasonable investment-backed expectations, remains relevant in the takings analysis to the extent such expectations bear on the value of the property before the alleged taking occurs. Traditionally, an assessment of the reasonableness of possible future uses for land is a part of land valuation litigation in any eminent domain proceeding. See Olson v. United States, 292 U.S. 246 (1934); Yachts Am. v. United States, 779 F.2d 656 (Fed. Cir. 1985), cert. denied, 479 U.S. 832 (1986); United States v. 158.24 Acres of Land, More or Less, Situated in Ashley, Bradley and Union Counties, Arkansas, 696 F.2d 559 (8th Cir. 1982); United States v. 320.0 Acres of Land, More or Less in Monroe County, Florida, 605 F.2d 762 (5th Cir. 1979).

In his concurring opinion in Lucas, Justice Kennedy stresses that "[w]here a taking is alleged from regulations which deprive the property of all value, the test must be whether the deprivation is contrary to reasonable, investment-backed expectations." Lucas, 112 S. Ct. at 2903, 22 ELR at 21112 (Kennedy, J., concurring). Thus, Justice Kennedy's concurring opinion is not inconsistent with the majority's test, which focuses solely on the economic value of the property.

8. 480 U.S. at 511, 17 ELR at 20451 (Rehnquist, C.J., dissenting).

9. Lucas, 112 S. Ct. at 2900, 22 ELR at 21111.

10. Ad hoc balancing is a significant hallmark of takings jurisprudence. See Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 124, 8 ELR 20528, 20533 (1978); see also Hodel v. Irving, 481 U.S. 704, 714 (1987); Goldblatt v. Hempstead, 369 U.S. 590, 594 (1962).

11. Lucas, 112 S. Ct. at 2897-98, 22 ELR at 21109-10.

12. Federal Water Pollution Control Act, 33 U.S.C. § 1251-1387, ELR STAT. FWPCA 001-071.

13. 657 F.2d 1184, 11 ELR 20905 (Cl. Ct. 1981), cert. denied, 455 U.S. 1017 (1982).

14. 21 Cl. Ct. 153, 20 ELR 21207 (Cl. Ct. 1990).

15. The Claims Court in Deltona was a federal appellate panel with jurisdiction prior to the enactment of the Tucker Act, 28 U.S.C. § 1491 (1982), and that Loveladies was not an appellate decision.

16. 915 F.2d 1534 (Fed. Cir. 1990).

17. 816 F.2d 907 (3d Cir. 1987).

18. The plaintiffs in Yancey bought their flock to breed, and were forced to slaughter them, whereas the plaintiffs in Empire Kosher intended to slay their chickens. While the court in Yancey recognized this distinction, it did not find it very important, stressing that Empire Kosher was inconsistent with the intent of the Fifth Amendment — to compensate for proper government interference that results in a taking. Yancey, 915 F.2d at 1541.

19. Id.

20. See R. Marzulla and N. Marzulla, Regulatory Takings in the United States Claims Court: Adjusting the Burdens That in Fairness and Equity Ought To Be Borne by Society as a Whole, 40 Cath. U. L. Rev. 549, 565 (1991) (discussing equitable results in the takings context).

21. Making a determination of economic valuation is quite different from determining whether the amount of established loss is "enough" to constitute a taking. Whether the remaining value is economically productive or beneficially usable will largely be determined by the nature of the claim. For a discussion of the Lucas decision and its emphasis on valuation, see David Coursen, Lucas v. South Carolina Coastal Council: Indirection in the Evolution of Takings Law, 22 ELR 10778, 10782-84 (Dec. 1992).

22. See, e.g., United States v. Miller, 317 U.S. 369 (1943); United States v. 320.0 Acres of Land, More or Less in Monroe County, Florida, 605 F.2d 762, 781 (5th Cir. 1979).

23. See Miller, 317 U.S. at 369; 320.0 Acres of Land, 605 F.2d at 781.

24. Lucas, 112 S. Ct. at 2899, 22 ELR at 21110.

25. Id. at 2900, 22 ELR at 21111.

26. Id. at 2901-02, 22 ELR at 21111. For examples of government activities designed to prevent a nuisance, see Bowditch v. Boston, 101 U.S. 16, 18-19 (1879); Respublica v. Sparhawk, 1 U.S. (1 Dall.) 357, 362 (1788) (government may tear down a structure, without compensating the owner, to create a firebreak).

27. Tucker Act, 28 U.S.C. §§ 1295, 1491-1509 (1988). The Federal Circuit has held that 28 U.S.C. § 1500 divests the Claims Court of jurisdiction when a claim originally filed in Claims Court is, at any time before or during the proceeding, also filed in federal district court. UNR Indus., Inc. v. United States, 962 F.2d 1013, 22 ELR 21413 (Fed. Cir. 1992), cert. granted sub nom. Keene Corp. v. United States, 61 U.S.L.W. 3301 (U.S. Oct. 19, 1992).

28. 18 Cl. Ct. 394, 20 ELR 20610 (Cl. Ct. 1989), aff'd, 926 F.2d 1169, 21 ELR 20806 (Fed. Cir. 1991).

29. 30 U.S.C. §§ 1201-1328, ELR STAT. SMCRA 001-066. The congressional statement upon which the court relied mentioned Whitney Benefits by name. See Whitney Benefits, 18 Cl. Ct. at 406-07, 20 ELR at 20615-16.

30. Whitney Benefits, 18 Cl. Ct. at 417, 20 ELR at 20621.

31. 21 Cl. Ct. 153, 20 ELR 21207 (Cl. Ct. 1990).

32. 791 F.2d 893, 16 ELR 20671 (Fed. Cir. 1986), cert. denied, 479 U.S. 1053 (1987), on remand, 21 Cl. Ct. 161, 20 ELR 21201 (Cl. Ct. 1990). Like Loveladies Harbor, Florida Rock involved denial of a wetlands dredge-and-fill permit under § 404 of the Clean Water Act, 33 U.S.C. § 1344, ELR STAT. FWPCA 060, but this denial was based on a desire to protect the wetlands against disturbances caused by limestone mining.

33. The Federal Circuit in Florida Rock, before remanding the case to the Claims Court, stressed that the "private interest [was] much more deserving of compensation…." 791 F.2d at 904, 16 ELR at 20675.

34. Florida Rock, 21 Cl. Ct. at 175, 20 ELR at 21206.

35. 952 F.2d 1364, 22 ELR 20646 (Fed. Cir. 1991). Hendler involved a U.S. Environmental Protection Agency (EPA) order that provided the government access to plaintiff's property to monitor and contain hazardous substances, and authorized the government to install monitoring wells.

36. Id.

37. See supra note 26 and accompanying text.

38. See supra note 4 and accompanying text.

39. Lucas, 112 S. Ct. at 2900 & n.16, 22 ELR at 21111 & n. 16. During oral argument in Lucas, Justice Scalia raised the question of whether a sufficiently grave threat existed to excuse the requirement to pay compensation. See Arguments Before the Court, 60 U.S.L.W. 3609, 3610 (Mar. 10, 1992) (statement of C.C. Harness III, General Counsel of South Carolina Coastal Council) ("The threat is very real…. Erosion can uproot houses and cause them to crash into other structures; it can break sewer lines; it can contaminate water."). However, neither party presented evidence on the issue. Instead, both parties proceeded on the assumption that the state was exercising its lawful police power. Id. at 2890, 22 ELR at 21105-06. Lucas contended that the legitimate exercise of such power which completely extinguishes his property's value requires the payment of compensation. The South Carolina Supreme Court concluded that conceding the legitimacy of the state law precluded any claim for compensation. The Supreme Court remanded for a determination of whether principles of nuisance and property law support the prohibited use because of its grave threat to health and property, and the Court expressly rejected reliance on "artful harm-preventing characterizations" in the preamble to the challenged laws to make such a determination. Id. at 2898 n.12, 22 ELR at 21110 n.12.

40. Federal Water Pollution Control Act § 404, 33 U.S.C. § 1344, ELR STAT. FWPCA 060.

41. Pub. L. No. 101-73, 103 Stat. 183 (codified in scattered sections of 12 U.S.C.).

42. Interestingly, plaintiffs affected by the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 claimed the Act breached their contracts with the government and effected a Fifth Amendment taking in Winstar Corp. v. United States, 25 Cl. Ct. 541 (Cl. Ct. 1992) and Statesman Sav. Holding Corp. v. United States, Nos. 90-773C, -772C (Cl. Ct. July 24, 1992). The Claims Court, however, deferred consideration of the takings claims because recovery on a breach of contract theory would preclude recovery. Winstar, 25 Cl. Ct. at 543; Statesman Sav., Nos. 90-773C, -772C, slip op. at 2. These cases have been consolidated and appealed to the Federal Circuit.

43. See Reahard v. Lee County, 22 ELR 21455 (11th Cir. Aug. 14, 1992), following Lucas, and holding that a lower court must first determine facts relevant to economic impact and reasonable investment-backed expectations before finding a taking. The court found the legitimacy of the governmental action to be irrelevant, because the claim was one for just compensation, and casually dismissed any thought that a law designating property for resource protection under a land use plan required no compensation pursuant to the state's common law of nuisance. Id. at 21456-57.

For a discussion of the difficulties encountered after Lucas in defining "economic use" and the "parcel," see Barry I. Pershkow & Robert F. Housman, In the Wake of Lucas v. South Carolina Coastal Council: A Critical Look at Six Questions Practitioners Should Be Asking, 23 ELR 10008, 10012-13 (Jan. 1993).

44. Lucas, 112 S. Ct. at 2893-95, 22 ELR at 21107-08.

45. Id. at 2894 n. 7, 22 ELR at 21107-08 n.7.

46. 21 Cl. Ct. 153, 20 ELR 21207 (Cl. Ct. 1990).

47. Brief for Appellant, United States, Loveladies Harbor, Inc. v. United States (Fed. Cir. Apr. 1991) (No. 91-5050), ELR PEND. LIT. 66143. In its Brief, the government stresses that in Deltona Corp. v. United States, 657 F.2d 1184, 11 ELR 20905 (Cl. Ct. 1981), a case also involving a wetlands purchase, the court found no taking, in part because it considered the entire acreage as originally purchased as the "parcel as a whole." The government asserted that this approach is consistent with Loveladies' reasonable investment-backed expectations at the time it purchased the entire 250 acres.

48. The FWPCA § 404 wetland dredge-and-fill permitting process, 33 U.S.C. § 1344, ELR STAT. FWPCA 060, provides an example of the potential conflict between an owner's beneficial use of property, and the property's potential economically beneficial use to others. A developer precluded from building on wetlands is deprived of beneficial use. Wetlands' advocates argue, however, that wetlands save millions of dollars in flood control, and are thus economically beneficial to the community as a whole. See Cass Peterson, Major Changes to Protect U.S. Wetlands; Panel Urges Legislative, Economic Steps, WASH. POST, NOV. 16, 1988, at A3 (cost estimated at $ 1.5 billion to provide flood control in New Jersey Passaic River Valley where wetlands that once provided natural flood control have been destroyed by development). For another example, see Whitney Benefits, Inc. v. United States, 18 Cl. Ct. 394, 20 ELR 20610 (Cl. Ct. 1989), aff'd, 926 F.2d 1169, 21 ELR 20806 (Fed. Cir. 1991), in which the Claims Court held that a law denying a property owner the right to mine on the land, when the land was purchased for that reason, deprived the owner of all economic value and constituted a taking. It was at least arguable, however, that the land could have had economically beneficial uses to others as something other than a mining operation (e.g., agriculture).