Palm Beach Isles Associates v. United States

231 F.3d 1354, 2000 WL 1665135
Court of Appeals for the Federal Circuit·Decided November 6, 2000·No. No. 99-5030·Published·Cited by 7 cases

Opinion

ON PETITION FOR REHEARING

PLAGER, Circuit Judge.

ORDER

1.

In the original opinion in this regulatory takings case, the court (1) held that there was a categorical taking of the 50.7 acres at issue; (2) stated its understanding of the law that when there is a categorical taking, i.e., a deprivation of all economically viable use of the subject property, the question of investment-backed expectations drops out of the analysis; and (3) concluded that, under the proper analysis of nuisance-type legal defenses remaining to the Government, the federal navigation servitude qualified as such a defense, assuming that protection of navigation was the purpose for the Government’s regulatory imposition. See Palm Beach Isles [1357]*1357Assocs. v. United States, 208 F.3d 1374 (Fed.Cir.2000). We remanded the case to the trial court for fact-finding with regard to the Government’s purpose for imposing the regulatory constraint.

The Government has filed a petition for rehearing by the panel, and, in the event it does not succeed in that regard, for rehearing by the court en banc. In its petition for rehearing by the court en banc, the Government re-raises the same issue, the role of investment-backed expectations in regulatory takings law (discussed in detail infra), that it places before the panel.

In addition, the Government raises two other issues for consideration by the court en banc. The first issue is whether the Government’s invocation of the navigational servitude as a defense (in reference to regulation of a piece of land to which the servitude properly applies) provides an absolute defense regardless of the facts underlying the alleged purpose for the regulatory imposition, or whether the Government can be challenged to establish that it had a bona fide navigational purpose. As noted, the earlier opinion of this court held the latter. The second issue the Government raises is whether the panel correctly held that, for its takings analysis, the property at issue was the 50.7 acres, rather than the original 311 acre parcel once owned by the plaintiffs. Both of these issues were fully dealt with in our earlier opinion; since the Government’s petition presents no new matter regarding them, further comment by the panel is not warranted. They will be referred to the en banc court in due course.

The main issue presented in the petition for rehearing, and the one addressed initially to the panel, is whether the court failed to follow its own controlling precedent when it stated that, if a taking is “categorical,” that determination removes from the analytical equation the question of investment-backed expectations. In its original opinion, the panel, assuming that the law on this point was already well established, and quoting from the court’s earlier opinion in Florida Rock Industries v. United States, 18 F.3d 1560 (Fed.Cir. 1994), stated in summary fashion “that ‘[i]f a regulation categorically prohibits all economically viable use of the land — destroying its economic value for private ownership — the regulation has an effect equivalent to a permanent physical occupation. There is, without more, a com-pensable taking.’ ” Palm Beach Isles, 208 F.3d at 1379 (quoting Florida Rock, 18 F.3d at 1564-65). In a footnote we observed that subsequent statements in opinions by this court could not change the law, and mentioned Good v. United States, 189 F.3d 1355, 1361 (Fed.Cir.1999) by name. See id. at 1379 n. 3. We went on to note that, of course, the statement in Florida Rock was subject to the Government’s nuisance defense preserved for it by the Supreme Court in Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992).

A “categorical” taking is, by accepted convention, one in which all economically viable use, i.e., all economic value, has been taken by the regulatory imposition. Such a taking is distinct from a taking that is the consequence of a regulatory imposition that prohibits or restricts only some of the uses that would otherwise be available to the property owner, but leaves the owner with substantial viable economic use. In the original opinion in this case, the court, following what it believed to be established law, treated the categorical regulatory taking for purposes of the case before it as akin to a physical taking. In a physical taking context, the question is not why the owner acquired the property taken, but only did she own it at the time of the taking. Questions of whether the owner had reasonable investment-backed expectations at the time the property was first acquired are simply not part of the analysis.

The Government points to the contrary statement in Good that “reasonable investment-backed expectations are an element [1358]*1358of every regulatory takings case.” Id. The Government argues that on this issue Florida Rock is not controlling, that the statement in Good is consistent with the prior law of this court, specifically Lovela-dies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed.Cir.1994), and therefore the panel in this case was bound to follow Loveladies Harbor and Good unless and until the court determines otherwise en banc.

The Government’s position in this, and in its other arguments, is variously supported by amicus briefs from the Community Rights Counsel and from the Environmental Policy Project of Georgetown University Law Center on behalf of the Florida Audubon Society. Since the Government has made this issue its central ground for relief, and since there seems to be doubt in the minds of others, we grant the Government’s petition for rehearing by the panel for the purpose of adding this Order as an addendum to the original opinion of the court; in all other respects the opinion and judgment of the court is reaffirmed.

2.

The Government places much weight on this court’s earlier opinion in Loveladies Harbor, stating that “Good’s carefully-reasoned holding follows directly from this Court’s analysis in Loveladies.” The “holding” referred to by the Government is the above-quoted statement in Good that “reasonable investment-backed expectations are an element of every regulatory takings case.” Since the Government’s position is premised on our Loveladies Harbor decision, we examine that case first.

Loveladies Harbor, as does this case, involved a categorical taking. The issue in Loveladies Harbor was the proper application of the Supreme Court’s Penn Central test, the established analytical test for regulatory takings, to determine whether the trial court was correct that a taking had occurred. See Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). As we explained in the Loveladies Harbor opinion, the original Penn Central

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