Florida Rock Industries, Inc. v. U.S.

• Decision Date: 10 March 1994
• Docket Number: No. 91-5156,91-5156
• Citation: 18 F.3d 1560
• Parties: , 62 USLW 2588, 24 Envtl. L. Rep. 21,036 FLORIDA ROCK INDUSTRIES, INC., Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1560

18 F.3d 1560

38 ERC 1297, 62 USLW 2588, 24 Envtl.

L. Rep. 21,036

FLORIDA ROCK INDUSTRIES, INC., Plaintiff-Appellee, v.The UNITED STATES, Defendant-Appellant.

No. 91-5156.

United States Court of Appeals Federal Circuit.

March 10, 1994.

Rehearing Denied; Suggestion for Rehearing In Banc

Declined June 21, 1994. ^*

John A. DeVault, III, Bedell, Dittmar, DeVault & Pillans, P.A., Jacksonville, FL, argued for plaintiff-appellee.With him on the brief was C. Warren Tripp, Jr., of counsel.

Robert L. Klarquist, Atty., Dept. of Justice, Washington, DC, argued for defendant-appellant.With him on the brief were Barry M. Hartman, Acting Asst. Atty. Gen., Environment & Natural Resources Div., John A. Bryson and Fred R. Disheroon, Attys., Washington, DC.Also on the brief was Roger B. Clegg, Acting Asst. Atty. Gen., Environment & Natural Resources Div., Washington, DC.

Timothy C. Searchinger, Environmental Defense Fund, of New York City, was on the brief for amicus curiae, The Environmental Defense Fund, Inc., The Nat. Wildlife Federation, Inc.

James S. Burling, Ronald A. Zumbrun and Robin L. Rivett, Pacific Legal Foundation, Sacramento, CA, were on the brief for amicus curiae, Pacific Legal Foundation.

Mary V. Dicrescenzo, Nat. Ass'n of Home Builders, Washington, DC, was on the brief for amicus curiae, The Nat. Ass'n of Home Builders, Nat. Ass'n of Realtors, Intern. Council of Shopping Centers, Nat. Ass'n of Indust. and Office Parks, Nat. Realty Committee, Nat. Multi Housing Council and Florida Home Builders Ass'n.With her on the brief was William H. Ethier, Cohn & Birnbaum, Hartford, CT.

George W. Miller, Walter A. Smith, Jr. and Jonathan L. Abram, Washington, DC, were on the brief for amicus curiae, Whitney Benefits, Inc., Peter Kiewit Sons Co.

Before NIES, Chief Judge, NEWMAN and PLAGER, Circuit Judges.

PLAGER, Circuit Judge.

This is a regulatory taking case.It arose when the plaintiffFlorida Rock Industries Inc.(Florida Rock) sought a permit under Sec. 404 of the Clean Water Act ¹ from the Army Corps of Engineers (Corps) to mine the limestone which lay beneath a tract of wetlands.The Corps denied the permit on October 5, 1980.On May 25, 1982, Florida Rock filed suit in the United States Court of Federal Claims, ² seeking monetary compensation from the defendant United States (Government); Florida Rock alleged that the Corps' permit denial constituted an uncompensated taking of private property for public use in violation of the Fifth Amendment.³The Court of Federal Claims agreed, Florida Rock Indus., Inc. v. United States, 8 Cl.Ct. 160(1985)(Florida Rock I ), and awarded Florida Rock $1,029,000 plus attorney fees and simple interest.On appeal, this court vacated the judgment that a taking had occurred and remanded for further consideration.Florida Rock Indus., Inc. v. United States, 791 F.2d 893(Fed.Cir.1986), cert. denied479 U.S. 1053, 107 S.Ct. 926, 93 L.Ed.2d 978(1987)(Florida Rock II ).On remand, the Court of Federal Claims found that the permit denial deprived Florida Rock of all value in its land, and so again concluded that there had been a taking and reinstated the $1,029,000 damages award, this time with compound interest.Florida Rock Indus., Inc. v. United States, 21 Cl.Ct. 161(1990)(Florida Rock III ).The Government appeals both the damages award and the choice of compound rather than simple interest.We again find it necessary to vacate the judgment that there has been a taking, and remand for further consideration consistent with this opinion.

BACKGROUND

The detailed background of the case is described in the several opinions referred to above as Florida Rock I-III.We provide here only a brief overview before proceeding to the heart of the matter: whether the Corps' denial of the Sec. 404 permit effected a regulatory taking, thus requiring the Government to pay just compensation.The answer to that question depends on the impact the regulatory imposition had on the economic use, and hence value, of the property.

In 1972, shortly before the enactment of the Clean Water Act, Florida Rock purchased a 1,560 acre wetlands parcel in Dade County, Florida, to the west of suburban Miami.The purchase price was $2,964,000 (an average of $1,900 per acre).⁴ Florida Rock obtained the parcel in order to extract the underlying limestone--a process which destroys the surface wetlands.

During the 1970s, however, the ecological importance of wetlands was increasingly appreciated.The Corps in 1977 enacted regulations requiring owners of wetlands parcels to obtain permits under Sec. 404 of the Clean Water Act before engaging in dredging or filling activities.See generallyUnited States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 123-24, 106 S.Ct. 455, 457, 88 L.Ed.2d 419(1985).Not long after, Florida Rock began mining operations on the parcel, without having applied for a Sec. 404 permit.The Corps issued a cease and desist order on September 7, 1978.Florida Rock stopped mining, restored the area as best it could, and began negotiating with the Corps for the permit.

Initially, Florida Rock sought a permit for the entire 1,560 acres.The Corps responded that permits would be issued only for parcels of a size to suffice for three years of mining; in Florida Rock's case, 98 acres would serve its anticipated needs for three years.Florida Rock acquiesced in the Corps' demand and applied for a permit covering only the 98 acre parcel at issue here.After considering the revised application, the Corps concluded that the proposed mining would cause irremediable loss of an ecologically valuable wetland parcel and would create undesirable water turbidity.The permit application was denied on October 2, 1980.

Florida Rock, conceding the validity of the Corps' actions, ⁵ filed suit in the United States Court of Federal Claims, alleging that the permit denial was an uncompensated regulatory taking of its land.In Florida Rock I, the Court of Federal Claims found that the value of the parcel before the taking was $10,500 per acre and that the value after the taking was negligible because rock mining--in the view of the court, the only viable economic use--had been foreclosed.Florida Rock I, 8 Cl.Ct. at 164(citingHodel v. Virginia Surface Mining and Reclamation Ass'n, 452 U.S. 264, 295-96, 101 S.Ct. 2352, 2370, 69 L.Ed.2d 1(1981)).The Court of Federal Claims concluded that the permit denial was a regulatory taking, for which the landowner must be compensated.Florida Rock I, 8 Cl.Ct. at 165.

On appeal to this court, that judgment was vacated in Florida Rock II.The Federal Circuit held that the Court of Federal Claims in determining the after-taking value of the affected property had erred in focusing on immediate use--the proper focus should instead have been on a determination of "fair market value."Id., 791 F.2d at 903.The case was remanded to the Court of Federal Claims for further proceedings.

On remand, the Court of Federal Claims entertained evidence seeking to establish the fair market value of the property subsequent to the permit denial.The Government presented two assessors, Mr. Slack and Mr. Cantwell, who had investigated contemporaneous land sales in the area.Using the standard comparable sales valuation method, one assessor concluded that the property had a fair market value of $4,000 per acre, while the other found a value of $4,615 per acre.In addition, Florida Rock had received actual purchase offers in the range of $4,000 per acre.The President of Florida Rock Industries, Mr. Edward Baker, testified that he believed the property to be worth $10,000 per acre, even after the Corps' permit denial (thus presumably explaining why all such purchase offers were declined).

Finally, the Government presented a state court opinion which had affirmed the state's tax assessment of $4,089,950 for the 1,560 acre parcel, based on comparable sales of nearby parcels during the 1979-1982 time period.(This assessment figure for the larger parcel reflects an average value of $2,621.76 per acre;seesupra note 3.)Florida Rock Indus., Inc., v. Bystrom, 485 So.2d 442, 444-45(Fla.App.1986), review denied, 492 So.2d 1332(1986)(Bystrom ).That assessment was based on comparable sales which presumably reflected the market's evaluation of present and future land use restrictions.Id. at 444 and 447. ⁶

Florida Rock, on the other hand, read Florida Rock II to require a detailed inquiry into the motivations and sophistication of buyers of the comparable properties upon which assessment was based.It crafted a survey--viewed by the Court of Federal Claims to be "admittedly novel,"Florida Rock III, 21 Cl.Ct. at 173--and concluded that virtually all the buyers of the comparable properties were lacking in sufficient knowledge in order for their purchases to qualify as truly comparable sales.Florida Rock's assessor, Mr. Failla, used the results of this survey to justify discarding evidence that the average retail price of parcels in the vicinity of Florida Rock's land was $6,100 per acre, and concluded that the actual fair market value of the tract following the permit denial was negligible.Implicit in this result is the assumption that no one with full knowledge of the regulatory regime would be willing to gamble that concern for the ecological importance of the wetlands would give way in the future to the economics of development pressure from nearby Miami.The Court of Federal Claims in Florida Rock III agreed with Florida Rock's view of the matter, and decided accordingly.

DISCUSSION

A.

How to determine whether a regulatory taking under the Fifth Amendment has occurred is a subject of on-going debate.⁷The Supreme Court has provided various articulations, influenced, as could be expected, by the particular circumstances of the cases before it.One formula that has emerged and has been repeated in several cases requires that the court balance several pragmatic...