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Environmental Law

: ESA Blawg

U.S Court of Federal Claims rejects (again) the unripe takings claims of wanna-be developer who lacked an ITP

By Keith Rizzardi

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Schooner Harbor Ventures, Inc. v. U.S., 92 Fed.Cl. 373 (April 10, 2010).

BACKGROUND: The Mississippi Sandhill Crane was designated an endangered species FN1 in 1973. In 1975, the United States Department of the Interior, Fish and Wildlife Service (FWS) acquired acreage to establish the Mississippi Sandhill Crane National Wildlife Refuge (Refuge), in Jackson County, Mississippi, with subsequent acreage added. In 1977, the FWS established a critical habitat for the Mississippi Sandhill Crane, which also included land outside of the Refuge… From late 2000 through March 2001, the Navy began searching for property in Jackson County, Mississippi suitable to build 188 units of housing for Navy personnel and their families assigned to the Naval Station at Pascagoula. The Navy became interested in Schooner Harbor's property, which was identified as Site 28.

HISTORY: The United States Court of Federal Claims, Marian Blank Horn, J., 81 Fed.Cl. 404, granted summary judgment to the government, and the Developer appealed. The United States Court of Appeals, Gajarsa, Circuit Judge, 569 F.3d 1359, reversed and remanded. On remand, government moved to dismiss on ripeness grounds. In the prior Court of Federal Claims proceeding in this case, the Court held that “The government was under no obligation to purchase the plaintiff's property in particular, nor was the seller obligated to sell to a particular buyer if the buyer imposed conditions on the sale. The plaintiff cannot now rewrite the terms of the agreement through a takings claim, given that the Government clearly did not utilize its position as sovereign to appropriate private property from its rightful owner." Schooner Harbor Ventures, Inc. v. United States, 81 Fed.Cl. at 413-15. On appeal, the United States Court of Appeals for the Federal Circuit focused on the difference in plaintiffs right to sell as opposed to the right to develop their land. Regarding the former, although reversing and remanding, the appellate court agreed with the trial court's analysis, stating: “Thus, the only possible direct limitation on Schooner Harbor's right of alienation was, as the trial court found, the inability to sell without conditions. Indeed, Schooner Harbor explicitly alleged that it could not sell to the Navy without meeting the Navy's conditions, and that FWS's determination of the scope of those conditions constitutes a taking. The trial court appropriately analyzed and disposed of this ‘property’ right.” Schooner Harbor Ventures, Inc. v. United States, 569 F.3d at 1364. However, the Federal Circuit focused attention on plaintiff's “right to develop its land,” which it deemed a cognizable property interest. The Federal Circuit noted that Schooner Harbor “has consistently conflated the right to sell land with the right to develop land,” and identified the latter as the appropriate property right to be reviewed... "We do not hold that FWS has in fact regulated Schooner Harbor's use of Site 28 pursuant to the Endangered Species Act, rather than simply regulating the Navy. This issue does not affect the nature of the property interest asserted, however, but rather affects ripeness.... The trial court must therefore consider whether the case presents a ripened claim that FWS's enforcement of the Endangered Species Act, such as it was, amounts to a compensable taking."

ARGUMENT: Defendant argues that, because plaintiff never applied for an incidental take permit pursuant to Section 10 of the Endangered Species Act, “[t]he FWS therefore never issued or had reason to issue a final agency decision regarding Plaintiff's private development of the property. Thus, Plaintiff has failed to establish that its takings claim is ripe, and the Court must dismiss the claim for lack of subject matter jurisdiction.”

RULING: Because plaintiff no longer owns the property at issue, plaintiff has no present right to develop the property or ability to seek an incidental take permit from the FWS. Therefore, plaintiff cannot cure the defect in its case. Plaintiff's takings claim was not ripe and never can be ripe for adjudication.

ANALYSIS: Section 9 of the Endangered Species Act (codified at 16 U.S.C. ? 1538, titled “Prohibited acts”), provides that it is unlawful to “take” an endangered species. 16 U.S.C. ? 1538(a)(1)(B). Private parties seeking to develop property with Endangered Species Act impacts may proceed under Section 10 of the Act (codified at 16 U.S.C. ? 1539), titled “Exceptions,” and subsection (a), titled “Permits”. A private party, such as Schooner Harbor, can request an “incidental take permit” from the FWS. The Secretary of the Interior may permit “any taking otherwise prohibited by section 1538(a)(1)(B) of this title if such taking is incidental to, and not the purpose of, the carrying out of an otherwise lawful activity.” 16 U.S.C. ? 1539(a)(1)(B). The parties have stipulated for the purpose of this motion that Schooner Harbor did not consult the FWS prior to purchasing the 82 acres at issue, had no contact with the FWS prior to learning of the Navy's interest in the property, and never applied to the FWS for an incidental take permit in accordance with Section 10 of the Endangered Species Act…

In the present case, Schooner Harbor never submitted a first permit application. It would be contrary to the public policy of the Endangered Species Act, designed to protect endangered species, to obviate the need to apply for incidental take permits on specific projects just because another development on adjacent land was denied a permit or, as here, was granted permission to develop, but had to take mitigation measures in order to proceed. The Navy's experience reflects that, depending on the use, type and intensity of a public or private plan or proposal, the exercise of FWS' discretion and mitigation are possible, and the project can go forward. Denial by the FWS of a Section 10 incidental take permit was not a foregone conclusion. The nature of the FWS response, which we do not have in the case of Schooner Harbor, is necessary to proceed with a Penn Central regulatory, takings analysis, when all beneficial use of a property is not foreclosed. Again, the Navy's experience suggests that not all beneficial uses of the property at issue necessarily would have been foreclosed by a private plan or proposal for the property. Schooner Harbor's decision to unilaterally bypass the Section 10, incidental take permit process renders its takings claim unripe, and leaves this court without jurisdiction to proceed on plaintiff's claim.

KEITHINKING: Maybe this decision will finally end this needless litigation. The landowner willingly sells his land to the Navy -- at quite a premium -- yet sues the government for making a massive profit. Then again, the landowner has lots of extra money to spend! As noted previously in ESA blawg, the landowner sold portions of the property to others, and the remainder to the U.S. Navy, and in a very brief time, made over $1 million, realizing a doubling in property values, and nearly 10 times the capital outlay of $110,000 or so...

Full post as published by ESA Blawg on July 05, 2010 (boomark / email).