Good v. United States
1997 U.S. Claims LEXIS 179, 45 ERC (BNA) 1518, 39 Fed. Cl. 81 (1997)
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Rule of Law:
A landowner's claim for a regulatory taking under the Fifth Amendment will fail for lack of reasonable investment-backed expectations if the owner acquired or invested in the property with knowledge of a pervasive and restrictive regulatory scheme that could prevent the desired development.
Facts:
- In April 1973, Lloyd A. Good Jr. entered into a contract to purchase "Sugarloaf Shores," a 40-acre property in Monroe County, Florida, consisting of 32 acres of wetlands and 8 acres of uplands.
- The purchase contract explicitly acknowledged that some lands might be below the mean high tide line and that "there are certain problems in connection with the obtaining of State and Federal permission for dredging and filling operations."
- Good acquired the property in October 1973.
- In October 1980, Good hired Keycology, a land planning firm, to obtain development permits, acknowledging in the agreement that "obtaining said permits is at best difficult and by no means assured."
- The property provided habitat for several species, including the Lower Keys marsh rabbit and the silver rice rat, which were later listed as endangered species under the Endangered Species Act (ESA).
- In 1990, Good submitted a new permit application to the U.S. Army Corps of Engineers seeking to build 16 single-family residences, a boat canal, and a tennis court, all within the wetlands.
- The U.S. Fish and Wildlife Service (FWS) issued a biological opinion concluding that Good's proposed development plans would jeopardize the continued existence of the endangered marsh rabbit and silver rice rat.
- On March 17, 1994, the Corps denied Good's 1990 permit application, citing the FWS's jeopardy finding under the ESA.
Procedural Posture:
- Lloyd A. Good Jr. submitted his first permit application to the U.S. Army Corps of Engineers in March 1981 and received several permits and extensions through the 1980s, but he was unable to secure the necessary state and county approvals to begin work.
- In 1990, Good submitted a new application to the Corps for a different development plan.
- On March 17, 1994, the Corps denied the 1990 permit application on grounds that it would violate the Endangered Species Act.
- On July 11, 1994, Good filed a takings claim in the U.S. Court of Federal Claims, alleging the permit denial constituted a taking entitling him to $2.5 million in just compensation.
- The case came before the Court of Federal Claims on cross-motions for summary judgment on the issue of liability.
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Issue:
Does the denial of a federal dredge and fill permit for wetlands development constitute a regulatory taking under the Fifth Amendment when the property owner was aware of extensive state and federal environmental regulations at the time of purchase and subsequent investment?
Opinions:
Majority - Merow, Judge.
No, the denial of the permit does not constitute a regulatory taking. The plaintiff's claim fails under both the Lucas per se rule and the Penn Central balancing test. The permit denial did not deprive the property of all economic value, as it retained substantial value through alternative development possibilities suggested by the FWS and through the sale of transferable development rights (TDRs). Furthermore, the plaintiff lacked reasonable investment-backed expectations, as he purchased the property and invested in its development with full awareness of the extensive federal and state regulatory schemes restricting development in wetlands. The plaintiff's contracts explicitly acknowledged the difficulty of obtaining the necessary permits, demonstrating that he assumed the risk of his speculative investment.
Analysis:
This case significantly reinforces the principle that a property owner's knowledge of the regulatory landscape at the time of investment is a critical, and often dispositive, factor in regulatory takings claims. The decision establishes that when an owner is on notice of pervasive regulations, their expectation to develop in contravention of that scheme is not objectively reasonable, thereby defeating a Penn Central claim. It also clarifies that for a Lucas 'total taking' claim, the economic analysis must consider the value of alternative uses, including transferable development rights, not just the loss of the most profitable desired use. This holding creates a high barrier for takings claims in historically and heavily regulated industries like coastal development.
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