Hearts Bluff Game Ranch, Inc. v. State, 381 S.W.3d 468

Hearts Bluff purchased ~4,000 acres of bottomland near the Sulphur River to create a federal mitigation bank.
Hearts Bluff applied to the Army Corps of Engineers (USACE) for a mitigation banking permit; the Corps denied the permit.
The land lies within the footprint of Marvin Nichols Reservoir, a potential reservoir site identified by the Texas Water Development Board (TWDB) since 1968 and designated as a “unique” site in 2007.
The Corps’ denial was based on concerns that the mitigation bank would affect the reservoir project and not on Hearts Bluff’s lack of compliance with federal criteria.
TWDB’s 2006 water plan and 2007 water plan adopted the reservoir site; the Legislature later codified a “unique” designation for Marvin Nichols.
Hearts Bluff alleged the State acted to depress the property’s value to favor reservoir plans, seeking $80–$70 million in damages; the trial court dismissed for lack of jurisdiction.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the State may be sued for inverse condemnation when the federal permit denial was by the Corps.	Hearts Bluff asserts State actions caused the denial.	The Corps alone had authority; State actions were downstream lobbying.	No; lack of State regulatory power defeats takings claim.
Whether the State’s designation of Marvin Nichols as a unique site constitutes a taking.	Unique designation intentionally depressed value and caused denial.	Designation is a broad policy statement not directly restricting Hearts Bluff.	No direct restriction; not a compensable taking.
Whether there was causation between State actions and the Corps’ denial.	State actions proximate cause of denial.	Corps had sole discretion; State lacked authority to deny.	Causation not established; Corps acted independently.
Whether bad faith by the State would alter liability.	Bad faith could support a taking despite lack of direct authority.	No evidence of bad faith in record.	Bad faith not proven; not dispositive.
Whether the pleadings permitted inverse condemnation to proceed under Texas sovereign immunity rules.	Pleadings alleged viable takings claim.	Plea to jurisdiction should dismiss for lack of viable claim.	Undertakings on jurisdiction upheld; subjective state authority lacking.

Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104 (U.S. 1978) (regulatory takings framework and Penn Central factors)
Sheffield Dev. Co. v. City of Glenn Heights, 140 S.W.3d 660 (Tex. 2004) (takings analysis and public-use considerations)
Mayhew v. Town of Sunnyvale, 964 S.W.2d 922 (Tex. 1998) (investment-backed expectations, economics, and regulation factors)
Westgate, Ltd. v. State, 843 S.W.2d 448 (Tex. 1992) (no inverse condemnation for future condemnation announcements absent direct restriction)
Teague v. City of Austin, 570 S.W.2d 389 (Tex. 1978) (government action for its own advantage may require compensation)
Garrett Bros. v. City of San Antonio, 528 S.W.2d 266 (Tex. Civ. App.—San Antonio 1975) (regulatory influence without regulatory authority is not takings liability)
Biggar v. State, 873 S.W.2d 11 (Tex. 1994) (bad faith use of power can support takings liability when appropriate)