Orion Corp. v. State

Decision Date17 December 1987
Docket NumberNos. 52165-4,52529-3,s. 52165-4
Citation747 P.2d 1062,109 Wn.2d 621
Parties, 18 Envtl. L. Rep. 20,697 The ORION CORPORATION, a Washington corporation, Respondent, v. STATE of Washington, Ken Eikenberry in his capacity as Attorney General for the State of Washington; the Department of Ecology, Donald W. Moos, in his capacity as Director of Department of Ecology; Department of Game, Frank R. Lockard, in his capacity as Director of Department of Game; Milt Martin, in his capacity as Manager of Padilla Bay Estuarine Sanctuary Project; Department of Fisheries, Rolland A. Schmitten, in his capacity as Director of Department of Fisheries; Skagit County; Skagit County Board of Commissioners; Jerry Mansfield, Bud Norris and Howard Miller, in their capacities as County Commissioners for Skagit County, Appellants.
CourtWashington Supreme Court

Kenneth Eikenberry, Atty. Gen., Charles W. Lean, Asst. Atty. Gen., Olympia, for appellant State.

C. Thomas Moser, Skagit County Pros., John R. Moffat, Deputy Pros., Mount Vernon, Keller & Rohrback, William C. Smart, Irene M. Hecht, Seattle, for appellant Skagit County.

Hillis, Clark, Martin & Peterson, P.S., Mark S. Clark, James J. Ragen, Joseph B. Genster, Richard R. Wilson, Seattle, for respondent.

Norm Maleng, King County Pros., Phyllis K. MacLeod, Deputy Pros., Seattle, Patrick D. Sutherland, Thurston County Pros., Thomas R. Bjorgen, Deputy Pros., Olympia, Douglas Jewett, Seattle City Atty., Dennis J. McLerran, Asst. City Atty., Law Offices of J. Richard Aramburu, John R. Aramburu, Seattle, amicus curiae for appellants.

UTTER, Justice.

Orion Corporation (Orion) filed this action in 1982, in part alleging an inverse condemnation by excessive regulation (regulatory taking). According to Orion, the Shoreline Management Act (SMA) and the Skagit County Shoreline Management Master Program (SCSMMP) had taken its In the instant appeal, the State of Washington (State) and Skagit County (County) challenge summary judgment granted Orion on remand. Orion and PBA also assign error to several trial court rulings. The trial court rejected several procedural challenges and dismissed PBA's takings claim, along with all of Orion's claims except for the regulatory taking. We affirm each of these decisions. Concerning the regulatory takings claim, the trial court granted Orion summary judgment against both the State and the County, holding that the SMA and the SCSMMP had taken Orion's property without just compensation. In appealing the grant of summary judgment, the State and County raise three main issues: (1) what effect the public trust doctrine has on Orion's takings claim; (2) at what point, if ever, do land-use regulations become so excessive as to constitute a taking without just compensation; and (3) what remedy and measure of damages apply if such an unconstitutional taking occurs.

                Padilla Bay tideland property without just compensation.   In a previous appeal, we held that Orion need not exhaust its administrative remedies because under the regulatoryscheme, Orion could not obtain a permit to make any reasonably profitable use of its property.   Orion Corp. v. State, 103 Wash.2d 441, 457-60, 693 P.2d 1369 (1985) (Orion I).   On remand after Orion I, the trial court added Padilla Bay Associates (PBA) as coplaintiff, and all parties moved for summary judgment on a variety of issues
                

On the public trust issue, we affirm the trial court's conclusion that Orion purchased its tidelands subject to the requirements of the public trust doctrine. We remand, however, for the trial court to determine what effect the trust has on Orion's takings claim. On the question of whether an unconstitutional taking has in fact occurred, we reverse, but reach different conclusions concerning each appellant. Because the County acted as the State's agent, it has no individual liability, and thus must be dismissed as a party. As to the State, we conclude that several genuine issues of material fact exist, making summary judgment If upon remand the trial court determines that an unconstitutional taking has occurred, application of the regulatory regime to Orion's property is invalid. Because the taking is "temporary" and reversible, we hold that the State has the option of curing the taking or maintaining the status quo by exercising eminent domain. Regardless of how the State exercises its legislative prerogative, while the regulation remains effective, the state and federal constitutions require the State to pay just compensation in the form of the leasehold value of the land.

                improper.   We therefore remand for resolution of the factual issues
                

FACTS

Padilla Bay, an area of approximately 11,000 acres, lies east of Anacortes, Washington. It is the most diverse, least disturbed, and most biologically productive of all major estuaries on Puget Sound. The Bay sustains a diverse and densely populated ecology, intensely important to a variety of life forms, including endangered species and a wide variety of commercially harvested species, such as juvenile salmon and Dungeness crab. Navigable at high tide, Padilla Bay has been used by the public for navigational and recreational purposes.

In 1963, Orion began purchasing tideland acreage for the purpose of dredging and filling Padilla Bay to create a residential, Venetian-style community. By 1968, Orion had acquired approximately 5,600 acres of tidelands. In 1971, Orion acquired options to purchase additional acreage. 1 Orion stockholders later assigned ownership of these options to a separate entity, Padilla Bay Associates (PBA). Orion's predecessors acquired the tideland acreage from the State during the early part of the twentieth century. Early development efforts focused first on a diking district to create Prior to 1969, various state and county officials expressed support for Orion's Venetian-style development proposal. To pursue its project, however, Orion had to obtain a permit from the Army Corps of Engineers. 2 Before Orion could proceed with its development plans, this court held that "the public has the right to go where the navigable waters go, even though the navigable waters lie over privately owned lands." Wilbour v. Gallagher, 77 Wash.2d 306, 315-16, 462 P.2d 232 (1969), cert. denied, 400 U.S. 878, 91 S.Ct. 119, 27 L.Ed.2d 115 (1970). As a result of Wilbour, Governor Evans placed all tideland fill projects under a moratorium, which lasted until 1971, when the SMA was enacted.

                farmland, but the project failed.   Later, the focus turned to raising oysters, which proved profitable until the expansion of nearby pulp mills and their discharge of untreated wastes into the Bay.
                

The SMA identified Padilla Bay as one of five "shorelines of statewide significance," and declared that state policy required preservation and protection of designated shorelines. See RCW Chapter 90.58. Like other local jurisdictions, the SMA required Skagit County to formulate a master program to implement state policy and regulate its particular shorelines. Until the County formulated its program and received approval from the Department of Ecology (Ecology), regulations promulgated by Ecology governed the issuance of any shoreline development permits. Believing that the SMA precluded its project, Orion abandoned its Venetian-style development plan.

In 1973, the county assessor valued Orion's land at $45 per acre, basing the appraisal on the original tideland use--oyster production. Because the assessor failed to take the SMA into account, Orion appealed and succeeded in having the assessed value reduced to $12 per acre. Over the next year, Orion rejected two separate joint venture proposals in aquaculture 3 on its property, both of which would have been permissible under the SMA guidelines in force at the time. 4 In late 1974, Orion rejected the State Department of Game's offer to purchase the tideland holdings for $90 per acre, a fair market value determined by a commercial appraisal firm.

By 1976 further development took place in the state regulatory regime. First, Ecology adopted the Washington State Coastal Zone Management Program (WSCZMP), which designated Padilla Bay an area of particular concern. While the WSCZMP made the state eligible for federal grants, it did not impose any new land-use restrictions or regulations. Orion I, 103 Wash.2d at 449, 693 P.2d 1369. Second, Ecology approved and adopted the SCSMMP as state regulation. WAC 173-19-010; WAC 173-19-370. The SCSMMP became the principal land use plan applicable to Orion's property. It designated Orion's property as "aquatic," a designation that foreclosed Having concluded that aquaculture was not economically feasible, Orion explored the possibility of selling its land to the State. Nevertheless, Orion refused an offer of $110 per acre made by an environmental group, The Nature Conservancy. In 1977, Ecology attempted to interest the United States Fish & Wildlife Service (USFWS) in purchasing Padilla Bay, but USFWS had no interest because existing state and federal regulations adequately protected the Bay's resources. Wilbur Hallauer, Ecology Director, suggested the State look for a way to compromise on the "takings" issue. Consequently, in 1978 Ecology initiated a serious effort to take advantage of a federal program under the Coastal Zone Management Act, which provided 50 percent of the funds necessary to fund establishment of estuarine sanctuaries.

                dredging and filling the tidelands, as Orion [747 P.2d 1067] had intended.   The only possible uses of any particular value were nonintensive recreation and aquaculture, the latter of whichrequired a conditional use permit.  Orion I, at 458-60, 693 P.2d 1369. 5
                

Rather than pursuing formal condemnation proceedings, Ecology adopted a "willing seller" approach, under which tideland owners could either accept or reject the purchase offer without threat of a subsequent condemnation proceeding. A 1979 appraisal by a private firm concluded...

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