Source: https://law.justia.com/cases/federal/appellate-courts/F2/791/893/333138/
Timestamp: 2019-08-19 10:50:24
Document Index: 682501732

Matched Legal Cases: ['§ 1491', '§ 1251', '§ 1344', '§ 1344', '§ 1362', '§ 702', '§ 1344']

Florida Rock Industries, Inc., Appellee/cross-appellant, v. the United States, Appellant/cross-appellee, 791 F.2d 893 (Fed. Cir. 1986) :: Justia
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Florida Rock Industries, Inc., Appellee/cross-appellant, v. the United States, Appellant/cross-appellee, 791 F.2d 893 (Fed. Cir. 1986)
US Court of Appeals for the Federal Circuit - 791 F.2d 893 (Fed. Cir. 1986)
This appeal from the Claims Court, 8 Cl.Ct. 160, confronts us with important and novel issues as to the application of the fifth amendment and, consequently, the Tucker Act, 28 U.S.C. § 1491, to measures by the Secretary of the Army, through the Army engineers under authority of the Clean Water Act, 33 U.S.C. § 1251(a) (1) and ff, to protect Florida wetlands against disturbance by the owner's limestone mining. At times, as by the holding below here, what were intended as mere regulations are converted by force of law into involuntary purchases called "takings." We have the benefit of amicus briefs supporting both sides. We consider it is not legally impossible that the regulatory measures here involved could be a taking, and not impossible that no taking occurred. The trial judge failed to apply the evidence in a manner correct in all respects to determine whether he had an actual instance of a taking before him. The mere existence of authority to regulate did not itself constitute the taking, and a regulation severely damaging an owner's expectations of realizing profit from his holdings, may not because of that necessarily be a taking either. We remand for determination of the taking question according to right principles, as it would be improper for us to constitute ourselves fact finders and weigh the evidence ourselves.
It is conceded that before the 1972 amendments to the Clean Water Act, supra, Pub. L. No. 92-500, Florida Rock had the local zoning classification requisite to allow it to mine the limestone and needed no consent by the Federal Government. The amendments followed the acquisition and, according to the trial judge, Florida Rock need not have foreseen them. Actually, because of a slump in the construction industry, Florida Rock allowed the land to remain untouched, though it paid the taxes on it, until 1978, and then commenced to mine. The Army engineers learned of this and stopped it with a cease and desist order. Florida Rock, on October 1, 1980, applied to the Army engineers for a section 404 (33 U.S.C. § 1344) permit to cover 98 acres only. This was estimated to suffice for three-years production, and the Army engineers refused to consider more. Florida Rock would have preferred a permit for the whole 1,560 acres, all of which it meant to mine eventually, but cut down the scope of the application to obtain consideration which would otherwise have been refused.
Dade County pointed out that Florida Rock would need various documents from it, including a Tree Removal Permit, and should make certain agreements with the county. The engineers, respecting their jurisdiction, pointed out that their definition of "waters of the United States" in 33 C.F.R. Sec. 323.2(a) (3) includes "wetlands * * * the use, degradation or destruction of which could affect interstate or foreign commerce including any such waters."
Since the oral argument, we have received from appellant's counsel copies of a decision of the District Court of Appeals of Florida, Third District, styled Florida Rock Industries, Inc. v. Franklin B. Bystrom, Dade County Property Appraiser, et al., 485 So. 2d 442 (1986). This material is on Lexis and Westlaw. Filed February 25, 1986, it reflects appellate and trial court affirmance of the action of the Dade County appraisers in assessing the 1,560 acres, the subject of the appeal before us, as of January 1, 1982, at a fair market value of $4,089,950. We do not consider it as evidence of any facts or as part of our record. We cite it, infra, as interesting and relevant case authority, though, of course, not a binding precedent in this court. Upon our remand, if this opinion is offered, the trial court will have to determine what use to make of it.
* To repeat, the Claims Court reviewed the evidence and found as a fact that the proposed limestone mining would not pollute. This would appear to be an issue as to the jurisdiction of the Army engineers to regulate the activity in question. Under the authority relied on by them, 33 U.S.C. § 1344, permits can be required for discharge of pollutants, including rock and sand, see definition, 33 U.S.C. § 1362(6), into federal waters. It is clear from both the district engineer's decision denying the permit, and the government's brief and oral argument before us, that this is the sole basis in law for the Army engineers taking action. Absent pollution, as defined in the statute, the preservation or destruction of the instant wetlands would be a state or local issue only. The question of "public interest," as addressed in the district engineer's decision, is far broader and involves what he described as grave dangers to the environment over a wide area and not at all dependent on pollution. Should the plaintiff discover some means of removing the limestone without putting any rock or sand in government waters, the "public interest," as stated by the district engineer, would hardly be different at all if the wetlands were still eliminated. It was not contended the "pollutants" would be more than temporary turbidity, and the possible long-term harm by it would be minimal or nonexistent. One, therefore, must, in considering a document such as the district engineer's decision in issue, distinguish very sharply between "jurisdiction" and "public interest" considerations. Clearly the challenge by the court below to the possibility of pollution has to do with the jurisdiction of the Army engineers to grant or withhold the permit in question, not to the broad range of "public interest" issues considered and applied by them when they deem they have jurisdiction. The finding by the trial court that there would be no pollution therefore attacks indirectly the right of the engineers to apply their conception as to the far weightier "public interest" issue.
Defendant further says, and we think it is indisputable, that the proper way to challenge the decision to grant or withhold the permit would be under the Administrative Procedure Act (APA), 5 U.S.C. § 702 and ff. If there was no pollution, even giving due weight to the contrary determination, as held in Di Vosta Rentals, Inc. v. Lee, 488 F.2d 674 (5th Cir. 1973), cert. denied, 416 U.S. 984, 94 S. Ct. 2387, 40 L. Ed. 2d 761 (1974), then the Army engineers had no statutory authority to act. The Tucker Act suit in the Claims Court is not, however, available to recover damages for unauthorized acts of government officials. Armijo v. United States, 663 F.2d 90, 229 Cl.Ct. 34 (1981); NBH Land Company v. United States, 576 F.2d 317, 217 Cl.Ct. 41 (1978). What is meant by authority in these premises is aptly illustrated by Portsmouth Harbor Land & Hotel Co. v. United States, 260 U.S. 327, 43 S. Ct. 135, 67 L. Ed. 287 (1922) where Army ordnance officers fired heavy coast defense guns over the plaintiff's hotel land. Justice Brandeis, dissenting, denied that the officers had authority to acquire an interest in hotel land, but Holmes, for the majority, held that whether they had authority to fire the guns was the decisive authority question. As to how authority is determined, see also Armijo v. United States, supra, and Drakes Bay Land Co. v. United States, 424 F.2d 574, 191 Cl.Ct. 389 (1970). In the instant case, therefore, the district engineer did not need authority to acquire the 98 acres he is held below to have acquired on behalf of the United States, but he did need, or rather plaintiff needed him to have, authority to regulate the proposed mining as a de jure pollution, however minimal, of federal waters. In Armijo v. United States, 663 F.2d at 93, the Court of Claims said of regulatory taking cases justiciable under the Tucker Act " [i]n such cases the characteristic feature is the defendant's use of rightful property, contract, or regulatory rights to control and prevent exercise of ownership rights the defendant is unwilling to purchase and pay for." [Emphasis supplied.] In stating, therefore, "we have to take it for granted that this was a proper exercise of statutory and regulatory authority" the court recognized the limits of his role in a taking case, and in assuring him that "the Corps' denial of permit to rock mine the property advances a legitimate public purpose" counsel stipulated that such an issue was not before the court for adjudication. Logically, a decision that there was no threatened pollution does not support an award of $1,029,000. It would support either a dismissal of the complaint or a transfer of the case to a court having APA jurisdiction.
In Deltona Corp. v. United States, 657 F.2d 1184, 228 Ct. Cl. 476 (1981), cert. denied, 455 U.S. 1017, 102 S. Ct. 1712, 72 L. Ed. 2d 135 (1982), the Court of Claims considered permit denial issues under the Clean Water Act, of the same general kind as here. The claimant, before its Court of Claims suit, had actually litigated its issues as to the validity of permit denial in an APA suit, and a United States District Court had upheld the denial in all respects. In that context, the court held that the propriety of the permit withholding was "given" in the Tucker Act suit. We now hold that the election of a Tucker Act suit, without a previous test of validity issues under the APA, accomplishes the same result because of the necessity of conceding the engineers' authority to act. In defending, the government may deny the authority and in that way authority could become an issue in a Tucker Act taking case.
Apart from the foregoing, the unexplained switch in the trial court's position appears improper under the Law of the Case doctrine. Yachts America, Inc. v. United States, 779 F.2d 656, 659-60 (Fed. Cir. 1985); Northern Helex Company v. United States, 634 F.2d 557, 561-62, 225 Ct. Cl. 194 (1980); United States v. Turtle Mountain Band of Chippewa Indians, 612 F.2d 517, 519-22, 222 Ct. Cl. 1 (1979). He was identified, during his chief judgeship, with the practice of delivering orally from the bench opinions and fact findings in complex cases, saving time and conserving judge power. Often, as here, he undertook to answer questions so that his position would be thoroughly understood by counsel, and future proceedings in the case would be governed accordingly. The discussion here referred to occurred during such a question and answer period. The proceedings were recorded with care in the trial transcript. Between them and the retraction in the May 6, 1985, decision, the trial on damages occurred. We would not think of applying law of the case to mere colloquies between court and counsel, but this was more and different. We think that when an oral presentation by a judge is given the prominence it enjoyed here, it, or the transcript of it, should have the same dignity as written findings and conclusions would have if they existed.
A good deal is said in this case about the apparent indifference of the Army engineers and their advising agencies in the United States Government to the loss of a valuable asset on the part of Florida Rock, one in which substantial capital was invested. Whether or not able counsel ultimately extricate the government from becoming an involuntary purchaser, it would seem officials who have studied all other aspects of their exercise of regulatory authority with the care the administrative record reveals, would give some thought to that. They appear to have believed it was enough to tell Florida Rock it could get its limestone elsewhere, disregarding the fact that in this tract it had invested its capital. Yet apparent official unwisdom does not make a constitutional violation. If one otherwise would have occurred here in the form of a taking without just compensation, it is cured by the Tucker Act and a more cautious construction of the Clean Water Act is not legally required. Cf. United States v. Riverside Bayview-Homes, Inc., --- U.S. ----, 106 S. Ct. 455, 88 L. Ed. 2d 419 (1985).
We can, therefore, turn to the ultimate issue in this case, which is whether duly authorized and lawful acts of the Army engineers, denying a permit under 33 U.S.C. § 1344, constitute a taking and subject the United States to money liability in the Claims Court under the Tucker Act.
Defendant no longer argues, as it did below, if the regulation is lawful it cannot constitute a taking; in that event, it was once said it was not an exercise of the power of eminent domain but of the police power or some other different source of authority. This argument got its start in Mugler v. Kansas, 123 U.S. 623, 8 S. Ct. 273, 31 L. Ed. 205 (1887), much discussed below, in which the Kansas legislature, having determined that beer was an obnoxious and toxic beverage, prohibited its manufacture in the appellant's brewery, rendering the brewery, of course, of no value. While the court below deemed Mugler's precedential authority much abated, we may concede as a hypothetical, if Florida Rock produced on its tract a fluid as septic as Kansas then considered beer to be, and proposed to drain it into the Miami drinking water, this could be stopped without compensation. But the scope of permissible regulation has much increased since 1887 and it is no longer asserted that a regulation, by its very nature as a regulation, cannot be an exercise of eminent domain. The holding or plain implication of United States v. Riverside Bayview-Homes, Inc., supra, is that a regulation under the Clean Water Act can be a taking if its effect on a landowner's ability to put his property to productive use is sufficiently severe. See statement of Justice White, 106 S. Ct. at 459 n. 4. The Clean Water Act in its present form, of course, goes far beyond the concerns of navigation, and such concerns are not implicated in this case, but in any event, the effect of Kaiser Aetna v. United States, 444 U.S. 164, 100 S. Ct. 383, 62 L. Ed. 2d 332 (1979) is that the old "navigation servitude," often used to excuse what looked suspiciously like takings, is no longer available for that duty in regulatory taking cases. Defendant, however, invoked the navigation servitude to excuse a regulation under the Clean Water Act that completely denied to the owner of a small island, any economic use of it, but the Court of Claims in Laney v. United States, 661 F.2d 145, 228 Ct. Cl. 519 (1981) held that this could be a taking, and a summary judgment holding it could not be was denied. This court has held that a taking can occur by a valid regulation with no physical invasion. Skaw v. United States, 740 F.2d 932 (Fed. Cir. 1984). Under these authorities, the question has got to be faced whether the impact of the regulation here involved was sufficiently severe under the facts, as undisputed or as found, and the unchallengeable legality in this proceeding of the regulatory act here involved, does not answer the question or even lead towards the answer. In Laney, too, the legality of the regulation under the Clean Water Act was conceded.
Connolly v. Pension Benefit Guaranty Corp., --- U.S. ----, ----, 106 S. Ct. 1018, 1025, 89 L. Ed. 2d 166 (1986)
The fifth amendment, as backed by the safety net of the Tucker Act, does not find a taking in a mere denial of the "highest and best use," i.e., most profitable use, that would be available in the absence of regulation. It was so held in considering a Clean Water Act regulation in Deltona Corp. v. United States, 657 F.2d 1184, 228 Ct. Cl. 476 (1981), cert. denied, 455 U.S. 1017, 102 S. Ct. 1712, 72 L. Ed. 2d 135 (1982); Jentgen v. United States, 657 F.2d 1210, 228 Ct. Cl. 527 (1981), cert. denied, 455 U.S. 1017, 102 S. Ct. 1711, 72 L. Ed. 2d 134 (1982). The regulation may allowably have some adverse effect on the market value, as of course is almost inevitable if the most profitable use is prohibited. Andrus v. Allard, 444 U.S. 51, 66, 100 S. Ct. 318, 327, 62 L. Ed. 2d 210 (1979); Penn Central Transportation Co. v. New York City, 438 U.S. 104, 131, 98 S. Ct. 2646, 2662, 57 L. Ed. 2d 631 (1978). In cases of relatively recent date, e.g., Penn Central, supra, the decision of Hadacheck v. Sebastian, 239 U.S. 394, 36 S. Ct. 143, 60 L. Ed. 348 (1915) is often referred to as an instance of truly spectacular reduction in value, from $800,000 to $60,000, caused by the regulation, which was held valid. However, this was just an allegation, not a finding, and the case appears to belong to the period when it was held a valid "police power" regulation could not also be an exercise of eminent domain. The case generally considered to have broken with this analysis came later: Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S. Ct. 158, 67 L. Ed. 322 (1922). In that case, Justice Brandeis' dissent cites Mugler v. Kansas and Hadacheck v. Sebastian and points out quite clearly how the Court is breaking with its precedents. There is no fixed formula to determine how much diminution in market value is allowable without the fifth amendment coming into play. We are not cited to, nor have we found, cases comparing the owner's investment or basis with the market value subject to the regulation and applying any rule or formula with respect thereto, but we deem that a relevant consideration for exercise of a value judgment.
The court below relied on statements that a regulation was a taking if it "denies an owner economically viable use of his land" citing Hodel v. Virginia Surface Mining & Reclamation Association, Inc., 452 U.S. 264, 296, 101 S. Ct. 2352, 2370, 69 L. Ed. 2d 1 (1981);* Agins v. City of Tiburon, 447 U.S. 255, 100 S. Ct. 2138, 65 L. Ed. 2d 106 (1980). It found as a fact that such denial occurred. This finding seems not clearly erroneous only if immediate use is meant. Defendant's suggestion of other immediate uses we deem obviously mere window dressing in light of its own expert witness' concession that a "willing buyer" subject to the regulation would have to be, and would be, one who expected to put the property to no immediate use. The position of the court was that if there was, under the regulation, no allowable and practicable immediate use, this established a taking regardless of the impact of the regulation on fair market value, even if it had no impact. Defendant said and says that a fair market value was real and its indications should govern.
Thus, we have set up for adjudication a contest for employment as a test between immediate use value or nonvalue and fair market value. In Goldblatt v. Town of Hempstead, 369 U.S. 590, 82 S. Ct. 987, 8 L. Ed. 2d 130 (1962), it is held that without evidence of a diminution in fair market value, a prohibition of mining on a tract cannot be held a taking. In Florida Rock Industries, Inc. v. Bystrom, supra, the Florida court holds that the lack of any immediate use of or for land does not exclude determination of its fair market value by analysis based on comparable sales of similarly restricted land. Slip op. at 8. Our trial court, as we read it, selected the immediate use value because it thought it prescribed by the language of the Supreme Court, read as saying that a denial of an immediately viable use is a taking, regardless of any fair market value analysis. No such analysis appears to have been before the Supreme Court when it gave such weight to such denial in the cases cited. We doubt very much whether the Court ever meant to say, or would have said, that a denial of any immediately viable use must be a taking even though it had no effect on the fair market value of the property. The further reason for the Claims Court's election was that it believed Dr. Nicholas that the only "willing buyers" were victims of deception, and disbelieved Mr. Cantwell that there were serious and well-informed "willing buyers."
The trial court also invoked the rule that damages must not be speculative, by analogy as he was not ascertaining damages at that point. This rule, however, means that the court must not, itself, speculate, i.e., guess, about potential end uses or markets when the speculation is so remote or improbable that one would not invest his money in it. It does not exclude consideration of a relevant market made up of investors who are real but are speculating in whole or major part. Florida Rock Industries, Inc. v. Bystrom, supra, 485 So. 2d at 447. Anyone who buys mineral property is speculating to a large extent, and so is even to some extent one who buys "blue chip" securities. See Orgel Valuation Under Eminent Domain Sec. 31 (2d ed. 1953).
The court's methodology is objectionable for the further reason that, by dispensing with the fair market value test in determining the occurrence of a taking, it makes the case improperly one to recover for frustration of business expectations. A taking is founded on the fact that Florida Rock is prevented from doing a profitable business in the extraction and sale of its limestone. Yet frustration in performance of even an existing contract is not a taking of contract rights, Omnia Commercial Co. v. United States, 261 U.S. 502, 43 S. Ct. 437, 67 L. Ed. 773 (1923) still less a hope of future profitable contracts. This case is cited and followed in Connolly v. Pension Benefit Guaranty Corp., supra, our latest Supreme Court pronouncement. Cf. Kimball Laundry Co. v. United States, 338 U.S. 1, 69 S. Ct. 1434, 93 L. Ed. 1765 (1949) in which, in the case of a temporary taking some injury to business is allowed to be awarded, with a careful explanation that this would not be so of a permanent taking. If, therefore, the award here was for a temporary interruption of production, the rule might be different.V
According to Agins v. City of Tiburon, 447 U.S. at 261, 100 S. Ct. at 2141, the question of identifying a regulatory taking involves a "weighing of private and public interests." What is called the "seminal decision" in Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 47 S. Ct. 114, 71 L. Ed. 303 (1926) is cited as illustrative. There the challenged zoning laws were held to bear "a substantial relationship to the public welfare, and their enactment inflicted no irreparable injury upon the landowner." 447 U.S. at 261, 100 S. Ct. at 2141.
The Court cited Hodel for a proposition other than the portion of Hodel relying on National League of Cities v. Usery, 426 U.S. 833, 96 S. Ct. 2465, 49 L. Ed. 2d 245 (1976), overruled in Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, 105 S. Ct. 1005, 83 L. Ed. 2d 1016 (1985)