State, Water Dev. v. Hearts Bluff Game

313 S.W.3d 479, 2010 Tex. App. LEXIS 3620, 2010 WL 1930216
CourtCourt of Appeals of Texas
DecidedMay 13, 2010
Docket03-09-00598-CV
StatusPublished
Cited by8 cases

This text of 313 S.W.3d 479 (State, Water Dev. v. Hearts Bluff Game) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State, Water Dev. v. Hearts Bluff Game, 313 S.W.3d 479, 2010 Tex. App. LEXIS 3620, 2010 WL 1930216 (Tex. Ct. App. 2010).

Opinion

OPINION

J. WOODFIN JONES, Chief Justice.

Appellee Hearts Bluff Game Ranch, Inc. (“Hearts Bluff’) sued appellants the State of Texas and the Texas Water Development Board (“the Board”) (collectively, “the State Defendants”) alleging a regulatory taking. The State Defendants filed a plea to the jurisdiction, which the trial court denied. On appeal, the State Defendants argue that the jurisdictional facts pleaded by Hearts Bluff do not allege a valid regulatory taking and, consequently, that Hearts Bluff has not pleaded a claim for which sovereign immunity has been waived. We will reverse the trial court’s order and dismiss the cause for lack of subject-matter jurisdiction.

FACTUAL AND PROCEDURAL BACKGROUND

The following facts are taken from Hearts Bluffs live pleading.

Hearts Bluffs sole line of business is “mitigation banking.” Under federal law, a mitigation bank is a preserved, restored, established, or enhanced wetland area set aside in perpetuity to compensate for unavoidable losses to similar wetland areas elsewhere. In exchange for creating a mitigation bank, a landowner receives valuable “mitigation banking credits” from the federal government, which the landowner sells to third parties who are required under federal law to offset some other environmentally harmful activity. Unlike other forms of environmental-damage mitigation under federal law, mitigation banks are not situated directly adjacent to the site of the negative environmental impact. Rather, a mitigation bank is established as a distinct conservation area located somewhere within the same watershed as the negative environmental impact that it offsets. The Army Corps of Engineers (“the Corps”) is, in most cases, the federal agency primarily responsible for designating mitigation banks and issuing mitigation-banking credits.

Hearts Bluff purchased approximately 4,000 acres of bottomland — a term used to describe seasonally or continuously flooded deciduous hardwood river swamps — in Titus County, a rural county east of Dallas, with the intention of creating a mitigation bank. The land is located near the Sulfur River, an area that, off and on for at least twenty years, has been considered by the State Defendants as a site for a future water reservoir called the Marvin Nichols Reservoir (“the .Reservoir”). The Reservoir, if created, would inundate all of Hearts Bluffs land, thereby preventing it from being used as a perpetual mitigation bank. When it purchased the land, Hearts Bluff was aware that the State Defendants had considered creating the Reservoir and knew that its land was within the Reservoir’s footprint. Hearts Bluff assumed, however, that the Reservoir was “only an idea that had been floating around for forty years” because the State Defendants had taken no “concrete” steps toward its formation.

It is undisputed that the Reservoir was controversial from its conception, as it pitted rural interests against urban by proposing to flood a vast tract of rural land to meet the water needs of Dallas-Fort Worth. According to Hearts Bluffs petition, controversy over the fate of the Reservoir existed even within the ranks of the regional and state water planners themselves. Hearts Bluff pleaded that the Region D Water Planning Group — one of several regional planning groups that, together with the Board, develop the state *482 water plan — purposely omitted the Reser-vón.' from its 2006 regional water plan in an effort to “kill” the project. In light of this controversy, Hearts Bluff assumed that plans for the Reservoir were either “dead” or “dying.” Hearts Bluff pleaded:

In 2004, when Hearts Bluff acquired its property in Titus County, [the Reservoir] was merely an idea. It had not yet been declared to be a necessary or feasible project. And, no decisions had been made with respect to whether it would ever or even needed to be built.

Although it assumed that the Reservoir’s construction was unlikely, before purchasing the land, Hearts Bluff consulted with the Corps about the viability of forming a mitigation bank on the site in light of the possibility that the Reservoir might be built. According to Hearts Bluffs petition, “[t]he Corps told Hearts Bluff there were no impediments to permitting that site [as it was] and that because mitigation banks are comprised of wetlands, mitigation banks routinely are found in the footprint of potential reservoir sites.”

After Hearts Bluff bought the land and conducted an engineering survey, it applied to the Corps for a permit to create a mitigation bank. 1 In September 2004, the Corps sent notice of the application to all known interested parties, including the Board, and solicited public comment. It was at this point, Hearts Bluff contends, that the State Defendants began their efforts to actively block Hearts Bluffs application. Hearts Bluff pleaded that the Board and the Region C Water Planning Group (“Region C”) immediately began “intense lobbying” of the Corps to convince it to deny Hearts Bluffs application. Hearts Bluff also pleaded that the State Defendants took “efforts to discourage [Hearts Bluffs engineering firm] from continuing to represent Hearts Bluff in connection with the mitigation banking process,” resulting in the firm’s dropping Hearts Bluff as a client.

According to Hearts Bluff, beginning “in or before December of 2004,” the Board “began to formulate a plan to deny the Hearts Bluff mitigation banking permit and reserve the property for its own purposes.” According to Hearts Bluff’s pleadings, the State Defendants had two motivations. “First, the State Defendants were concerned that a mitigation banking permit might preempt the State’s later actions to acquire property for the [Reservoir].” In other words, if the mitigation bank were to exist, federal law might prevent the State from later taking the property for use as a reservoir. “Second, the State Defendants were very concerned that their costs in creating the [Reservoir] would be much higher if Hearts Bluff received its permit.”

Shortly after it received notice from the Corps, the Board contacted the Corps in writing, expressing concerns that the proposed mitigation bank would make the planned reservoir project less viable, if not entirely infeasible. It also sought to convince the Corps that the site’s lack of a “unique-reservoir-site” designation, a legislative designation that prevents state agencies from acquiring land within the site, was irrelevant to the Corps’s consideration of whether the reservoir was likely to be built — a position that Hearts Bluff asserts the Board later reversed once the site received such a declaration. Hearts *483 Bluff also pleaded that Region C asserted to the Corps that its designation of the Reservoir as part of its regional water management strategy meant that the entire footprint of the Reservoir was essentially “off limits” to development.

After Hearts Bluff made minor changes in its mitigation-permit application in mid-2005, the Corps told Hearts Bluff that it had completed the “technical requirements” for receiving a permit. In the autumn of that year, Hearts Bluff asserts that the Corps told it to expect a “Christmas present” — i.e., that its permit application was all but assured and would be granted before the end of the year.

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313 S.W.3d 479, 2010 Tex. App. LEXIS 3620, 2010 WL 1930216, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-water-dev-v-hearts-bluff-game-texapp-2010.