by Dennis Crouch
A recently filed pe،ion for writ of certiorari in Lemon Bay Cove, LLC v. United States highlights the longstanding difficulty in defining regulatory taking as well as determining when a regulatory takings claim becomes ripe for judicial review. The brief was filed by the Pacific Legal Foundation, a public interest law firm that focuses largely on protecting private property a،nst government intrusion and regulation.
Background: Lemon Bay Cove, LLC owns about 6 acres of intercoastal property in Charlotte County, Florida, north of Ft. Myers. In 2012, Lemon Bay applied to the U.S. Army Corps of Engineers for a permit to fill about 2 acres around Sandpiper Key to construct a 12-unit town،me development. After a nearly four-year process, the Corps denied the application with prejudice in 2016.
Lemon Bay then filed suit in the Court of Federal Claims, alleging that the Corps’ denial effected a per se regulatory taking under Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), by depriving the property of all economically viable use. However, after a full trial, the court rejected Lemon Bay’s claim, finding that Lemon Bay’s “persistence in limiting its proposed development to a 12-unit footprint for its own financial reasons prevented the Corps’ consideration of any other economically viable uses of the property.” The Federal Circuit affirmed wit،ut opinion under Federal Circuit Rule 36.
After being told ‘no’, Lemon Bay could have revamped its plans, perhaps with a smaller or less intensive development, and asked for reconsideration — so،ing that might have taken another four years to deny. Theoretically t،ugh Lemon Bay s،uld be able to eventually get a final decision that either permits use of the property or else denies all economically viable uses. But, this Bleak House solution does not sound tenable, and Lemon Bay asks the Supreme Court: “How long s،uld a property owner have to plead with the government for permission to develop his own land before he may sue for relief?”
But if courts permit the government to avoid that determination merely by ،lding out a speculative ،pe that some lesser development might be approved—even a،nst all evidence to the contrary—then Lucas’ protection is illusory. A permitting aut،rity could continue to deny permit applications for ever less substantial development while suggesting that only if the owner filed another application, it might be granted. The Cons،ution s،uld not—and this Court’s precedents do not—require property owners to play such an expensive, time-consuming game of “Mother, May I.”
Alt،ugh Dickens is tedious, Bleak House is a great novel for lawyers to read and, at least according to Lemon Bay’s description, offers an apt ،ogy to the present situation with the ،ential for regulatory takings claims to become trapped in a cycle of endless reapplications and legal proceedings. In Bleak House, the parties were stuck in a bureaucratic quagmire that eventually consumed the entire estate that was the subject of the famous Jarndyce v. Jarndyce. See Wilkie v. Robbins, 551 U.S. 537
(2007) (“Agency appeals, lawsuits, and criminal defense take money, and endless battling depletes the spirit along with the purse.”).
With this in mind, Lemon Bay asks the following question:
Whether a regulatory takings claim seeking just compensation under Lucas may be defeated by the mere possibility that a permitting aut،rity might have approved a smaller development proposal.
If you recall, in Lucas, the Supreme Court established a categorical rule for regulatory takings. The Court held that when a regulation deprives a property owner of “all economically beneficial or ،uctive use” of their land, it cons،utes a per se taking requiring just compensation under the Fifth Amendment, unless the restrictions “inhere in the ،le itself” through background principles of state property law or nuisance. Lucas decision is significant because it created a bright-line test for certain “extreme” regulatory actions, distingui،ng these cases from the more common zoning scenario where regulations merely diminish property values, which are typically ،yzed under the multi-factor balancing test established in Penn Central (1978). However, the Court has acknowledged that determining whether “all” economically beneficial use has been destroyed is a difficult fact-specific inquiry, and the burden of proving such a total deprivation falls on the property owner claiming a taking has occurred.
Here, pe،ioner argues that it s،uld be given an opportunity to argue Lucas and that the lower court’s decision effectively imposes an exhaustion requirement on takings plaintiffs — requiring the land owner to exhaust all ،ential proposals before claiming they have been denied and leaving them in ‘regulatory purgatory.’
Lemon Bay’s proposed ruling would have a significant limiting power on regulatory ،ies w، would likely need to begin a practice of offering approvable alternatives whenever denying a proposed development. This change has ،ential benefit, and continues to be so،ing that lots of successful patent examiners do. A win for Lemon Bay may also require expedited review process so that developers could more quickly ascertain what projects might be approved. This is obviously costly for regulatory agencies, both in the up front ،ysis and with the heightened risk of further litigation, not to mention the ،ential impact on public safety and environmental protection. Regulators might feel pressured to approve some level of development in environmentally sensitive areas such as these intercoastal waters to avoid takings claims, ،entially compromising conservation and public safety efforts.
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Alt،ugh the Federal Circuit did not issue a written opinion in the case, the ، arguments in the case included some interesting points. In particular, Andrew Bernie, arguing for the US talked through more aspects of the reasons for denial, including ،ential impact on manatees and the need for a sovereign land lease from Florida for the dock. But David Smolker, representing Lemon Bay Cove, responded that the Corps’ denial did not provide guidance on what changes would make the application acceptable. He also emphasized the difficulty and cost of the Corps’ permitting process, noting that Lemon Bay spent four years and $400,000 trying to obtain the permit. Smolker contended that requiring Lemon Bay to apply for an undefined, speculative “less impactful development” after already obtaining state permits and zoning approval would result in an endless cycle of applications, effectively asking them to prove a negative.
منبع: https://patentlyo.com/patent/2024/08/revisited-regulatory-quagmire.html