OPINION
BACKGROUND
This is а regulatory takings case, based on the refusal of the United States Army Corps of Engineers (the Corps) to issue a permit to dredge and fill the plaintiffs’ property for development. This court rendered an earlier opinion, denying plaintiffs’ motion for summary judgment on their regulatory takings claim, and granting the defendant’s cross-motion for summary judgment. Palm Beach Isles Assocs. v. United States,
On appeal, in its first opinion, the United States Court of Appeals for the Federal Circuit vacated and remanded the case, having determined that summary judgment was inappropriate due to a genuine issue of material fact regarding the applicability of the federal navigational servitude. Palm Beach Isles Assocs. v. United States,
The Federal Circuit also noted that, in 1972, Congress enacted the Clean Water Act (codified at 33 U.S.C. §§ 1251-1376 (1994 & Supp. Ill 1997)). Section 404 of the Clean Water Act (codified at 33 U.S.C. § 1344 (1994)), also requires a permit from the Corps for dredging and filling navigable waters of the United States, and requires thаt environmental concerns be taken into consideration in issuing a permit. Palm Beach Isles Assocs. v. United States,
In 1988, as required by state law, plaintiffs applied to the Florida State Department of Environment Regulation for a permit to dredge and fill the submerged 49.3 acres and the 1.4 acre shoreline wetlands. The State of Florida denied the permit on environmental grounds, plaintiffs sued, and a subsequent settlement removed this state obstacle to property development. The Federal Circuit noted that:
In Florida, title to the beds of navigable waterbodies is held by the state in public trust; the Trustees of the Internal Improvement Fund administer the trust, and*659 in general have power to convey submerged lands to private owners if the sale is not contrary to the public interest. In the early years of Florida’s development, much of the States’s sovereignty land was so conveyed.
Palm Beach Isles Assocs. v. United States,
On May 31, 1989 plaintiffs applied to the Corps for a permit pursuant to section 10 of the Rivers and Harbors Act and section 404 of the Clean Water Act. After review, on May 16, 1990, the Corps denied plaintiffs’ application for a permit. As to the basis for the denial, the Federal Circuit stated: “The Corps’ denial letter made clear that the denial was primarily predicated on environmental grounds and the requirements of the Clean Water Act,” but the permit denial also addressed the impact of the proposed project on navigation. Palm Beach Isles Assocs. v. United States,
In its analysis, the Federal Circuit first identified the proper parcel for review. A 311.7 acre parcel had been purchased by plaintiffs in 1956, and 261 acres of this parcel were sold in 1968 for a substantial gain, leaving the 49.3 acres of lake bottom and adjoining 1.4 acres along the shoreline. The Federal Circuit determined that the proper parcel for review was not the 311.7 acres, but only the unsold remainder of 50.7 acres (49.3 acres plus 1.4 acres). The Federal Circuit concluded that:
Once the proper parcel is defined as the 50.7 acres, it becomes clear that, without the dredge and fill p emits, the entire 50.7 acres, including the 1.4 acres of wetlands, have no or minimal value. Thus, the facts are uncontrovertible that the permit denial has the effect of denying the property owner all economically viable use of the property, and, since the State has stipulated that the property owner under state law has the right to dredge and fill, the denial by the Corps of the permits constitutes a categorical taking of the 50.7 acres by the Federal Government.
Palm Beach Isles Assocs. v. United States,
The Federal Circuit also concluded that the submerged 49.3 acres was subject to the federal navigational servitude, and that navigational servitude may serve as a defense to a regulatory taking. Id. at 1382-84. “[T]he Government must show that the regulatory imposition was for a purpose related to navigation ____ In the present case, we are unable to determine whether the Government has made a sufficient showing of a navigational purpose behind the permit denial.” Id. at 1385. By way of example, the Federal Circuit noted that the Memorandum accompanying the Corps’ permit denial letter (the Corps’ Statement of Finding) stated that granting the permit would result in “the elimination of [49.3] acres of navigable waters,” but also stated that “the project should not have a significant adverse impact on navigation, in general.” Id. at 1386 (alteration in original). The Federal Circuit viewed the Corps’ language as contradictory, and concluded that “the issue of whether the Government had a navigational purpose for its permit denial is a disputed material fact,” remanding the issue to this court. Id. Under the Federal Circuit’s analysis, if the government cannot demonstrate that one of the grounds for denying the permit was the federal navigational servitude, the government’s defense fails. On the other hand, if the government can demonstrate a navigational purpose behind the permit denial, then there is no compensable taking of the 49.3 acres of lake bottom. Id.
The government filed a combined petition for rehearing by the Federal Circuit panel, and also for rehearing by the Federal Circuit en banc. See Palm Beach Isles Assocs. v. United States,
The Federal Circuit Order on the petition for rehearing noted that the 1.4 acres are not submerged property potentially subject to the federal navigational servitude defense, and, therefore, should be analyzed separately:
On further review, then, we conclude that the proper disposition of the issue regarding the 1.4 acres is to remand the question of a taking to the trial court. If the trial court determines that the permit denial constituted a categorical taking of the 1.4 acre tract, then, absent any other defenses the Government may have, PBIA is entitled to compensation as if it were a physical taking for government purposes. If the trial court determines that, on the facts, the permit denial constituted less than a total wipeout of economically viable use, the court must then determine if there is a partial taking, applying the Penn Central1 criteria (as modified by Lucas2 — see this court’s explanation in Loveladies Harbor,3 see also Florida Rock ).4
Palm Beach Isles Assocs. v. United States,
FINDINGS OF FACT
The property in dispute consists of a 50.7 acre parcel of land located in the City of Riviera Beach, Palm Beach County, Florida. Of the 50.7 acres, 49.3 acres consists of lake bottom along the eastern shoreline of Lake Worth, Florida. The remaining 1.4 acres is a narrow strip of land running along the eastern shoreline of Lake Worth and adjoining the submerged 49.3 acres. Lake Worth itself is a long, narrow lake lying in a north to south configuration. An artificial inlet connects Lake Worth to the Atlantic Ocean. Lake Worth serves as a segment of the Atlantic Intracoastal Waterway, which consists of “[t]wo inland water routes approximately paralleling the Atlantic coast between Norfolk, Virginia, and Miami, Florida, for 1,192 miles ....” 33 U.S.C. § 1804(6) (2000).
On May 31, 1989, the Corps received a permit application from plaintiffs pursuant to section 10 of the Rivers and Harbors Act of 1899, codified at 33 U.S.C. § 403, and section 404 of the Clean Water Act, codified at 33 U.S.C. § 1344. The application sought permission to fill the 49.3 acres of lake bottom and 1.4 acres along the adjoining shоreline, for the purpose of constructing a residential housing development.
Plaintiffs’ permit application (Department of Army Permit Application No. 89IPD-90481) was assigned for processing to Donald Borda, a project manager in the Jacksonville, Florida District Office of the Corps of Engineers. In processing the permit application, the Corps completed an environmental assessment, issued a public notice for comment, and received comments from a number of other governmental agencies. The Environmental Protection Agency, the Fish and Wildlife Service, and the National Marine Fisheries Service recommended that the permit be denied. The City of Riviera Beach, Florida, in a letter to the Corps, stated that it “strongly oppos[es] such a request to fill approximately 50 acres of submerged lake bottom in Lake Worth.” The Board of County Commissioners, Palm Beach County, passed a resolution declaring that the filling of fifty acres of seagrass habitat would be contrary to the public interest. The Corps transmitted the comments it had received to
The plaintiffs responded to the comments and concerns on February 8,1990. As to the concerns raised by the Palm Beach County Department of Environmental Resources Management, the City of Riviera Beach, Department of Community Development and Environmental Control, and other groups and federal agencies, the plaintiffs acknowledged that “the construction of the proposed project will result in the loss of a natural resource from which the public currently benefits.” Plaintiffs also stated that the “[cjompensating public benefit however is derived from an increase in the tax base.” In addition, plaintiffs replied to the numerous public interest concerns by emphasizing that zoning for the property only allows “single family residential” land use and not “water dependant uses such as marinas.” The plaintiffs also emphasized that “the subject property comprises the extent of the applicant’s holdings. No other site is available to the applicant for the proposed use or alternative uses.” In closing, plaintiffs stated that “[t]he site plan finally sеlected represented the most favorable balance of impacts on the environment vs. economic return to the applicant.”
The Corps denied Palm Beach Isle’s permit application on May 16, 1990. The cover letter accompanying the denial by the Corps stated:
The evaluation of your proposal has been completed and it has been determined that the issuance of the permit is contrary to the 404(b)(1)5 guidelines and contrary to the public interest. The project would result in the elimination of 50.7 acres of important Lake Worth shallow water habitat.
Based on the evaluation of all pertinent facts in the file, the permit to fill 50.7 acres of Lake Worth shallow water habitat is hereby denied.
The permit denial addressed a number of factors, including economics, environmental concerns, wetlands, fish and wildlife, flood hazards, flood plain, land use, shore erosion and accretion, recreation, water supply and conservation, water quality and safety, as well as navigation. In addressing the impact of the proposed development upon navigation, the Corps stated:
(11) Navigation: Shallow water depths that already exist in the proposed project area have limited boating activities to shallow draft vessels. Therefore, other than the elimination of 48.4 acres6 of navigable waters, the project should not have a significant adverse impact on navigation, in general.
In a related comment, the Corps also stated that:
(13) Recreation: The proposed project would eliminate an open water area of 48.4 acres currently utilized by recreational (as well as commercial) fishermen and boating enthusiasts, not to mention the scores of residents, educators, students, bird-watch*662 ers, and others who enjoy the fish, wildlife, and flora resources of the area.
Donald Borda, the project manager who processed the plaintiffs’ permit application, in a declaration dated December 21, 1994, attempted to clarify the Corps’ statement on navigability which accompanied the May 16, 1990 permit denial:
On pages 12 and 13,7 Item (11), Navigation, I state, “Shallow water depths that already exist in the proposed project area have limited boating activities to shallow draft vessels. Thеrefore, other than the elimination of 49.48 acres of navigable waters, the project should not have a significant adverse impact on navigation, in general.” It is important to clarify that I was referring, there, solely to navigation in the broad sense of the commercial or recreational vessels that utilize the adjacent federal navigation channel (Intracoastal Waterway) and that travel in deeper waters. While the proposed fill might not have a significant adverse effect upon the ability of such vessels to move in the federal channel (although it could cause some shoaling of the channel and/or changes in quantity, quality, and direction of flow of the waters), the proposed fill would certainly have an adverse effect on shallow draft vessels that utilize the shallower areas by eliminating over 49 acres of these shallows and by altering the course, location, condition, and capacity of [the] entire waterbody.
The aforementioned statement at pages 12 and 13, Item (11), Navigation, should not be interpreted to mean.that the proposed filling would not have a significant adverse impact on “navigable waters of the United States” under § 10 of the Rivers and Harbors Act of 1899 (“RHA”), 33 U.S.C. § 403, as defined in 33 C.F.R. Part 329. The fill would, without doubt, have a significant adverse affect [sic] upon the entire waterbody by altering or modifying the course, location, condition, or capacity of the lake and the navigation channel, in violation [of] RHA § 10. This is one of the principal reasons the permit was denied.
At the hearing, during direct examination, Mr. Borda was asked again what he meant by the statement in the Corps’ Statement of Finding, that: “The project should not have a significant adverse impact on navigation in general.” Mr. Borda responded, “I meant that it [the proposed project] would not have an adverse impact upon vessels, deep draft vessels, actually using the Federal channel [the Atlantic Intercoastal Waterway].” Mr. Borda added: “There was information that was received through the public notice comments about the area being used by recreational boaters, by fishermen, by local universities for marine studies, and this paragraph relates to that by showing that it would eliminate this open water area of 48.4 acres that were currently used by those interests.” On cross-examination, Mr. Borda stated that, “what I was referring to was that it was very obvious that a fill, which I considered to be very massive and significant, of 48.4 acres did in fact have an adverse effect on the navigable capacity of navigable waters of the United States, but it did not have a significant adverse impact on the deep draft vessels traveling within the intercoastal waterway channel.” Finally, Mr. Borda stated during cross-examination that “there were two principal reasons that the permit was denied, and that was because of navigation and because of environmental reasons. So it was certainly twofold.”
At the time of the permit denial, John Adams was the Chief of the Regulatory Division, United States Army Corps of Engineers, Jacksonville District. At the hearing, Mr. Adams testified that he performed a supervisory review of the recommendation to deny plaintiffs’ request for a permit, and that: “It [the federal navigation purpose]
Mr. Adams acknowledged that a permit to dredge and fill the 49.3 submerged acres at issue was requested by plaintiffs on October 17, 1956, that navigable capacity would have been considered before issuance of a permit in 1956, and that the requested permit was approved on July 26, 1957. The 1957 permit contained a preamble, “express[ing] the assent of the of the Federal Government so far as concerns the public rights of navigation.” Mr. Adams also acknowledged that the changes in the Corps’ review of such permit applications, which occurred between 1957, when the first permit was granted, and 1989, when the permit at issue in this case was denied, were changes having to do with environmental concerns, not navigational concerns.
One of plaintiffs’ witnesses at the hearing, Braxton Kyzer, a professional engineer, had retired from the Army Corps of Engineers. The court qualified Mr. Kyzer as an expert on the impact of proposed projects on navigation. Mr. Kyzer reviewed the permit denial file in the present case, made a site visit, and gave his opinion that the proposed project at issue would not have had an adverse impact on navigation — that the permit to dredge and fill was denied for environmental reasons rather than navigation reasons. Mr. Kyzer stated that his review of the Corps’ Statement of Finding supporting the permit denial indicated that the public comments, the issues the permit applicant was asked to address, and the Corps’ findings and conclusions concerned primarily environmental matters and not navigation matters. Mr. Kyzer stated that he defined navigable capacity as the ability of an intercoastal waterway channel to serve commercial navigation.
Another witness for the plaintiffs, H. Wayne Beam, has a doctorate in environmental sciences, and was qualified as an expert in navigation and environmental affairs. After a review of the permit file at issue, Dr. Beam testified that there was ample support in the permit file for the denial of the permit “on strictly environmental grounds.” Dr. Beam further testified that he did not believe the plaintiffs’ proposed development project would have an effect on commercial navigation, given the shallow depth of the submerged parcel.
Robert W. Higgins, a professional engineer who qualified as an expert in water resources and hydrology, also testified for the plaintiffs. Mr. Higgins stated that he submitted the permit application for the plaintiffs, that the Corps never raised any questions about navigation, that the water over the submerged parcel was shallow, about three to four feet in depth, and that he did not believe there would be any impact on navigation from the plaintiffs’ proposed project. On cross-examination, Mr. Higgins was asked:
Q. Now how do you define navigation within the meaning in Section 10 [of the Rivers and Harbors Act]?
A. That it would be used for commercial and recreational purposes.
Q. And are you limiting that definition to navigation within a Federal project such as the intercoastal waterway or the Federal channel?
A. Not necessarily, no.
Q. So if it was possible that recreational boating could have taken place across this 40 or 50 acres of submerged land, then that water in your definition would be navigable?
A. Yes.
Q. So if in fact there was some evidence in the record when the Corps was processing the permit, I just want you to assume this, assume there is some evidence in the record when the Corps is processing the permit that this area is used by fishermen. If that’s the set of facts in front of you, would you agree that the Corps would then have a navigational purpose in denying the permit under Section 10?
A. No.
Q. Why not?
*664 A. Because that’s not necessarily the only place where fishing could occur within Lake Worth. There’s other suitable locations.
Q. So your definition then of impact upon commercial fishing under Section 10 is, that if a project is done at one location but you can still fish next door, you’re not impacting navigation?
A. As long as there’s not a demonstrated cumulative approval of those fill projects, correct.
Martin Gauthier, a professional engineer testifying for the plaintiffs, processed the permit application for the plaintiffs. Mr. Gauthier testified that none of the public comments on the permit application had to do with the impact of the proposed project on navigation, and that the Corps never asked plaintiffs to address possible negative impacts on navigation. In Mr. Gauthier’s opinion, the plaintiffs’ project would not have had an impact on navigation in Lake Worth. Mr. Gauthier acknowledged during cross-examination that the plaintiffs’ project would have removed from the navigable capacity the acreage of the submerged land.
As for the 1.4 acre parcel along the shoreline of Lake Worth, Nathanial J. Orr, a real estate appraiser testifying for the plaintiffs, stated that he visited the parcel, concluded that the narrow strip of land could not be developed, and that “[t]he only possible use in my opinion would be to combine it with the land immediately west of it which was a total of about 50 acres of land, to develop the entire tract.”
DISCUSSION
The Evidentiary Standard
Defendant acknowledges that the Federal Circuit in its first Palm Beach Isles opinion placed the burden of proof on defendant to establish a defense based on the navigаtional servitude. In this regard, the Federal Circuit stated:
Thus it is clear that in order to assert a defense under the navigational servitude, the Government must show that the regulatory imposition was for a purpose related to navigation; absent such a showing, it will have failed to “identify background principles ... that prohibit the uses [the landowner] now intends.” Lucas [v. South Carolina Coastal Council,]505 U.S. at 1031 ,112 S.Ct. at 2886 .
In the present case, we are unable to determine whether the Government has made a sufficient showing of a navigational purpose behind the permit denial. ******
On remand, the Court of Federal Claims should determine whether the Government had bona fide navigational grounds for its permit denial. If so, the Government will have sustained its defense under Lucas, and there will be no taking. If, on the other hand, the Government cannot demonstrate that it denied the permit on navigational grounds, then its defense under the navigational servitude fails.
Palm Beach Isles Assocs. v. United States,
Plaintiffs argue that the defendant should be required to prove its navigable servitude defense with clear and convincing evidence, citing A.C. Aukerman Co. v. R.L. Chaides Construction Co.,
In civil cases litigants are generally required to prove facts by a preponderance of the evidence. See C. McCormick, McCormick on Evidence § 339 (2d ed.1972); 9 J. Wigmore, Wigmore on Evidence § 2498 (Chadbourn ed.1981). “[E]vidence preponderates when it is more convincing to the trier than the opposing evidence.” McCormick, swpra, at 793. The higher standard of “clear and convincing” proof is typically employed where the danger of deception is present (e.g., establishing the terms of a lost will), where a particular claim is disfavored on policy grounds (e.g., reformation or modification of a written contract), or where a*665 particularly important individual interest is at stake such as one’s reputation (e.g., fraud or undue influence). Id. at 797-98; SSIH [Equip. S.A. v. United States Int’l Trade Comm’n], 718 F.2d [365,] 380-81, 218 USPQ [678,] 691 [(1983)]. The clear and convincing standard has also been imposed in some aspects of patent litigation by reason of the specific statutory provision that a patent is presumed valid. However, neither laches nor estoppel attacks a patent’s validity.
A.C. Aukerman Co. v. R.L. Chaides Constr. Co,
Plaintiffs acknowledge that they have the burden of proof as to the alleged taking of the 1.4 acre parcel.
The Arbitrary or Capricious Standard of Review
Plaintiffs also argue that judicial review of the Corps’ denial of plaintiffs’ permit application should inquire as to whether the agency action in question, the Corps’ permit denial, was arbitrary, capricious, or an abuse of discretion. Plaintiffs do not explicitly cite to the Administrative Procedure Act’s (APA’s) standard of review at 5 U.S.C. § 706 (2000), but do cite the case of Taylor v. District Engineer, U.S. Army Corps of Engineers, Jacksonville, Florida,
Plaintiffs also cite a military pay case before the Court of Federal Claims, Zavislak v. United States,
The United States Court of Federal Claims does not have jurisdiction to conduct an APA review unless directed by statute, and generally does not use an arbitrary or capricious standard of review unless binding case precedent requires it. Examples of the use of the arbitrary or capricious standard of review include the review of Board for Correction of Military Records decisions in military pay cases, prevailing rate civilian pay disputes noted by the plaintiffs, and the court’s review of bid protests, prescribed by statute at 28 U.S.C. § 1491(b)(4) (2000) (In a bid protest, the United States Court of Federal Claims “shall review the agency’s decision pursuant to the standards set forth in section 706 of title 5.”). In general, however, APA reviews are conducted in federal district court, rather than the Court of Federal Claims, since the APA generally addresses “relief other than money damages,” 5 U.S.C. § 702 (1994), and money damages are the cornerstone of this court’s Tucker Act jurisdiction. The United States Court of Appeals for the Federal Circuit noted in Consolidated Edison Company of New York, Inc. that:
The Supreme Court has explained that a litigant may invoke the APA as a waiver of sovereign immunity, thereby invoking district court jurisdiction, if the litigant can satisfy both 5 U.S.C. § 702 (by requesting “relief other than money damages”) and 5 U.S.C. § 704 (1994) (no “adequate remedy” is available elsewhere, such as the Court of Federal Claims). Bowen v. Massachusetts, 487 U.S. [879, 892-93, 904-05,108 S.Ct. 2722 ,101 L.Ed.2d 749 (1988)].
Consol. Edison Co. of New York v. United States,
This court has employed an arbitrary or capricious standard of review on proper occasions, as noted above. No statute or binding case authority, however, has directed this court to employ such a standard to review the type of action at issue in this case by the Army Corps of Engineers. Moreover, the United States Court of Appeals for the Federal Circuit, in its multiple remand opinions and orders, has not indicated that an APA review, or that the use of an arbitrary or capricious standard, would be the appropriate standard on remand of plaintiffs’ case to this court. Plaintiffs in the present action before this court have brought a takings claim for money damages in excess of $10,000.00 under the Tucker Act. Plaintiffs argue that there is no support in the record for the navigational servitude defense, that the record instead supports only an environmental basis for permit denial. The defendant has the burden of proof to show, by a preponderance of the evidence, that there was “a navigational purpose behind the permit denial.” Palm Beach Isles Assocs. v. United States,
The Relevant Parcel for Analysis
In supplemental briefing, defendant, citing recent United States Supreme Court and United States Court of Appeals for the Federal Circuit opinions, attempts to argue, once again, that the relevant parcel in the present case should be the “parcel as a whole,” that is, the original 311.7 acre parcel owned by plaintiffs. See Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Planning Agency,
The plaintiffs in the present case had purchased a 311.7 acre parcel in 1956, then 261 acres of this original parcel were sold in 1968, leaving the 49.3 acres of lake bottom and adjoining 1.4 acres along the shoreline at issue. On appеal, the Federal Circuit specifically considered and rejected the trial court’s finding that the relevant parcel was the whole 311.7 acre parcel. “As we said in Loveladies Harbor, ‘[o]ur precedent displays a flexible approach, designed to account for factual nuances.’
The 1*9.3 Acre Submerged Parcel
Defendant also attempts to revisit the argument that plaintiffs have the burden of proof to demonstrate a taking of the 49.3 acre submerged parcel. Defendant states that: “This burden entails establishing each of the elements necessary to prove a regulatory taking under the test announced in Penn Central,” citing Forest Properties, Inc. v. United States, 177 F.Sd at 1367. In Forest Properties, the Federal Circuit restated the Penn Central factors to be considered for a regulatory taking, as modified by Lucas v. South Carolina Coastal Council,
The analytical method for examining a regulatory taking claim is set forth in Lo-veladies Harbor, Inc. v. United States,28 F.3d 1171 (Fed.Cir.1994). Loveladies Harbor extensively reviewed the law of regulatory takings as it stood prior to the Supreme Court’s decision in Lucas v. South Carolina Coastal Council,505 U.S. 1003 ,112 S.Ct. 2886 ,120 L.Ed.2d 798 (1992), and then explained the impact of Lucas on that body of law. As a result of this analysis, Loveladies Harbor described the law of regulatory takings in the following manner:
a) A property owner who can establish that a regulatory taking of property has occurred is entitled to a monetary recovery for the value of the interest taken, measured by what is just compensation.
b) With regard to the interest alleged to be taken, there has been a regulatory taking if
(1) there was a denial of economically viable use of the property as a result of the regulatory imposition;
(2) the property owner had distinct investment-backed expectations; and
(3) it was an interest vested in the owner, as a matter of state property law, and not within the power of the state to regulate under common law nuisance doctrine.
28 F.3d at 1179 .
Palm Beach Isles Assocs. v. United States,
The Federal Circuit’s first remand opinion in Palm Beach Isles continued with a description of a categorical taking:
Subsequently, again citing Lucas, this court explained in Florida Rock Indus, v. United States,18 F.3d 1560 (Fed.Cir.1994), 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 compensa-ble taking.” Id. at 1564-65. Florida Rock went on to point out that even when the taking is considered “categorical,” Lucas preserved for the Government a nuisance*669 defense to such a taking claim. See id. at 1565 n. 10. Thus, when the analysis of prong (1) reveals that the regulatory imposition has deprived the owner of all economically viable use of the property (a “categorical taking”), then the only remaining issue is the Government’s defense under prong (3).
Palm Beach Isles Assocs. v. United States,
The Federal Circuit, in its first remand opinion, concluded that there was a categorical taking of the submerged land in the present case. See Palm Beach Isles Assocs. v. United States,
The Permitting Process
The Corps’ permit approval process considers proposed project impact in a number of different areas, including evaluating project impact on the navigational servitude. Since 1968, permit applications have been subject to the Corps’ broad “public interest review” regulations. According the pertinent regulation:
All factors which may be relevant to the proposal must be considered including the cumulative effects thereof: among those are conservation, economics, aesthetics, general environmental concerns, wetlands, historic properties, fish and wildlife values, flood hazards, floodplain values, land use, navigation, shore erosion and accretion, recreation, water supply and conservation, water quality, energy needs, safety, food and fiber production, mineral needs, considerations of property ownership and, in general, the needs and welfare of the people.
33 C.F.R. § 320.4(a) (1989); see also United States v. Alaska,
Mr. Adams, who, at the time of the plaintiffs’ permit application was Chief of the Regulatory Division, Jacksonville District, testified that: “In my view the elimination of 48.4 acres of navigable waters absolutely impacts the capacity of navigable waters.” According to Mr. Adams, the elimination of nearly fifty acres of open water in Lake Worth “affects the course, condition and capacity of that water body.”
The complete statement in the Corps’ Statement of Finding referred to by Mr. Adams is as follows:
(11) Navigation: Shallow water depths that already exist in the proposed project area have limited boating activities to shallow draft vessels. Therefore, other than the elimination of 48.4 acres of navigable waters, the project should not have a significant adverse impact on navigation, in general.
On cross-examination, Mr. Gauthier, an engineer who processed the permit application for plaintiffs, acknowledged the elimination of submerged land:
Q. Now I’d like to explore for moment the question of navigable capacity, moving to that area. You do admit, do you not, that filling this property, whether it be 40 acres or 50 acres, would have taken out of the navigable waters 40, 50 acres, whatever it is; isn’t that correct?
A. It would have taken out, right, the navigation of whatever those submerged lands were that the subject property encompasses.
Q. I’m sorry, I didn’t hear the last part. A. It would have taken out of navigation whatever the acreage of the submerged lands in that project encompasses.
In addition to paragraph “(11) Navigation,” of the Corps’ Statement of Finding, quoted above, a second paragraph stated:
(13) Recreation: The proposed project would eliminate an open water area of 48.4 acres currently utilized by recreational (as well as commercial) fishermen and boating enthusiasts, not to mention the scores of residents, educators, students, bird-watchers, and others who enjoy the fish, wildlife, and flora resources of the area.
As to this second statement, Mr. Adams was asked on cross-examination the following questions:
Q. And it’s your testimony that that states a — that you interpret to be a finding of fact that holds that this project, if it had gone forward, would have been an adverse impact to the navigation capacity of Lake Worth?
A. It says that the project, and in my opinion, the words here say that it will have an impact or an affect [sic] on both commercial and recreational, fishermen and boaters utilizing the area. So it will have an affect on folks, these parties being able to navigate and use that particular portion of the water body.
Q. Okay. So recreational boating, you’re identifying the ability to traverse this area for recreational boating, you’re equating that to a loss of navigable capacity in Lake Worth?
*671 A. Yes, I think it would.
The record contains several inputs on the proposed project received by the Corps which provided support for Mr. Adams’ testimony. For example, the Florida Department of Environmental Regulation, in a May 13, 1990 letter to Mr. Adams, attached its April 13, 1990 denial of plaintiffs’ application for a permit, which stated:
The Department hereby denies the permit for the following reasons:
The proposed project is expected to result in the elimination of 50.7 ac. of healthy and productive estuarine wetland and submerged habitat in Lake Worth.
* * * * * ❖
This project will also result in the following matters which are contrary to the public interest pursuant to Section 403.918(2), Florida Statutes:
a. adversely affect the conservation of fish and wildlife, including endangered or threatened species, or their habitats;
b. adversely affect navigation or the flow of water or cause harmful erosion or shoaling;
c. adversely affect the fishing or recreational values or marine productivity in the vicinity of the project____15
In addition to the input from the Florida Department of Environmental Regulation, the record contains other inputs supporting Mr. Adams’ testimony. The South Atlantic Fishery Management Council, in a January 23, 1990 letter to Colonel Malson, the Corps District Engineer, expressed concern about the project’s destruction of recreational and commercial fishing opportunities. The United States Department of the Interior Fish and Wildlife Service, in a January 4, 1990 letter to Colonel Malson, also recommended denial of the permit application due to the impact on commercial and recreational fishing and wildlife. The National Marine Fisheries Service, in a December 14, 1989 letter to Colonel Malson, expressed concern about the project’s impact on marine fisheries. Similarly, the Palm Beach County Board of County Commissioners, in a January 10,1989 meeting, stated that the project was contrary to the public interest due to its impact on cоmmercial and recreational fishing. A number of property owners protested the project based on its impact on fishing, boating and the study of marine biology.
Donald Borda, the Corps’ project manager who processed the plaintiffs’ permit application and recommended its denial, in a declaration dated December 21, 1994, attempted to clarify the Corps’ statement on navigability which accompanied the May 16, 1990 permit denial:
On pages 12 and 13 [of the Statement of Finding], Item (11), Navigation, I state, “Shallow water depths that already exist in the proposed project area have limited boating activities to shallow draft vessels. Therefore, other than the elimination of 49.4 acres of navigable waters, the project should not have a significant adverse impact on navigation, in general.” It is important to clarify that I was referring, there, solely to navigation in the broad sense of the commercial or recreational vessels that utilize the adjacent federal navigation channel (Intracoastal Waterway) and that travel in deeper waters. While the proposed fill might not have a significant adverse effect upon the ability of such vessels to move in the federal channel (although it could cause some shoaling of the channel and/or changes in quantity, quality, and direction of flow of the waters), the proposed fill would certainly have an adverse effect on shallow draft vessels that utilize the shallower ar*672 eas by eliminating over 49 acres of these shallows and by altering the course, location, condition, and capacity of [the] entire waterbody.
The aforementioned statement at pages 12 and 13, Item (11), Navigation, should not be interpreted to mean that the proposed filling would not have a significant adverse impact on “navigable waters of the United States” under § 10 of the Rivers and Harbors Act of 1899 (“RHA”), 33 U.S.C. § 403, as defined in 33 C.F.R. Part 329. The fill would, without doubt, have a significant adverse affect [sic] upon the entire waterbody by altering or modifying the course, location, condition, or capacity of the lake and the navigation channel, in violation [of] RHA § 10. This is one of the principal reasons the permit was denied.
During direct examination, Mr. Borda was asked what he meant by the statement in the Corps’ Statement of Finding, that “[t]he project should not have a significant adverse impact on navigation, in general.” Mr. Bor-da responded, “I meant that it [the proposed project] would not have an adverse impact upon vessels, deep draft vessels, actually using the Federal channel [the Atlantic Inter-coastal Waterway].” Mr. Borda added: “There was information that was received through the public notice comments about the area being used by recreational boaters, by fishermen, by local universities for marine studies, and this paragraph relates to that by showing that it would eliminate this open water area of 48.4 acres that were currently used by those interests.” On cross-examination, Mr. Borda stated that, “what I was referring to was that it was very obvious that a fill, which I considered to be very massive and significant, of 48.4 acres did in fact have an adverse effect on the navigable capacity of navigable waters of the United States, but it did not have a significant adverse impact on the deep draft vessels traveling within the intercoastal waterway channel.”
The testimony of Mr. Adams and Mr. Bor-da was generally consistent with that of the plaintiffs’ witnesses on the impact of plaintiffs’ proposed project on navigation. For example,. Mr. Kyzer, who qualified as an expert on the impact of projects on navigation, testified for the plaintiffs that the proposed project would not have had an adverse impact on navigation — defining navigable capacity as the ability of an intercoastal waterway channel to serve commercial navigation. Mr. Adams and Mr. Borda similarly agreed that the project would not have a significant, adverse impact on deep draft vessels using the Atlantic Intracoastal Waterway, since only shallow draft craft could use the water over the 49.3 submerged acreage. Dr. Beam, who qualified as an expert in navigation, testified for plaintiffs that he did not believe the project would have an adverse effect on commercial navigation, given the shallow depth of the submerged land that would be filled. Mr. Adams and Mr. Borda acknowledged the shallow depth of the submerged land that would be filled.
Mr. Higgins, who qualified as an expert in water resources, also testified for plaintiffs that the water over the submerged land was shallow, about three to four feet in depth, and that he did not believe the project would have any adverse impact on navigation. Mr. Higgins, however, was not thinking of navigation only in terms of deep draft vessels using the Atlantic Intracoastal Waterway. Mr. Higgins defined navigation to include commercial and recreational purposes, such as fishing and recreational boating. On cross-examination, Mr. Higgins testified as follows:
Q. So if it was possible that recreational boating could have taken place across this 40 or 50 acres of submerged land, then that water in your definition would be navigable?
A. Yes.
Q. So if in fact there was some evidence in the record when the Corps was processing the permit, I just want you to assume this, assume there is some evidence in the record when the Corps is processing the permit that this area is used by fishermen. If that’s the set of facts in front of you, would you agree that the Corps would then have a navigational purpose in denying the permit under Section 10?
A. No.
Q. Why not?
*673 A. Because that’s not necessarily the only place where fishing could occur within Lake Worth. There’s other suitable locations.
Q. So your definition then of impact upon commercial fishing under Section 10 is, that if a project is done at one location but you can still fish next door, you’re not impacting navigation?
A. As long as there’s not a demonstrated cumulative approval of those fill projects, correct.
The Federal Circuit, in its first remand opinion, determined that the 49.3 acres of submerged land is subject to the federal navigational servitude. Palm Beach Isles Assocs. v. United States,
The two critical paragraphs in the Corps’ Statement of Finding, which provided the rationale for permit denial, stated:
(11) Navigation: Shallow water depths that already exist in the proposed project area have limited boating activities to shallow draft vessels. Therefore, other than the elimination of 48.4 acres of navigable waters, the project should not have a significant adverse impact on navigation, in general.
(13) Recreation: The proposed project would eliminate an open water area of 48.4 acres currently utilized by recreational (as well as commercial) fishermen and boating enthusiasts, not to mention the scores of residents, educators, students, bird-watchers, and others who enjoy the fish, wildlife, and flora resources of the area.
Paragraph (11), immediately above, indicated that approximately 49 acres of navigable water would be eliminated by the proposed project, that only shallow draft vessels could operate in the shallow water over the approximately 49 acres of submerged land at issue, and that deep draft vessels operating in the deeper Atlantic Intracoastal Waterway to the west of the 49 acres would not be significantly impacted by the proposed project. Paragraph (13) added that recreational and commercial fishermen and boaters would be impacted by elimination of the approximately 49 acres of shallow water. The issue, then, is whether the Corps’ citation of the removal of 49 acres of shallow water, navigable only by the shallow draft craft of commercial and recreational fishermen and boaters, will support a bona fide navigable servitude defense.
Navigable Servitude
The United States Court of Appeals for the Federal Circuit in its first remand opinion in Palm Beach Isles stated that the navigational servitude stems from the Commerce Clause of the United States Constitution, providing the federal government with the “power to regulate and control the waters of the United States in the interest of commerce.” Palm Beach Isles Assocs. v. United States,
The first Palm Beach Isles remand opinion continued:
Where the State seeks to sustain regulation that deprives land of all economically beneficial use, we think it may resist compensation only if the logically antecedent inquiry into the nature of the owner’s estate shows that the proscribed interests were not part of his title to begin with.
Palm Beach Isles Assocs. v. United States,
[W]e assuredly would permit the government to assert a permanent easement that was a pre-existing limitation upon the landowner’s title____Scranton v. Wheeler,179 U.S. 141 ,163,21 S.Ct. 48 ,45 L.Ed. 126 (1900) (interests of “riparian owner in the submerged lands ... bordering on a public navigable water” held subject to Government’s navigational servitude).
Palm Beach Isles Assocs. v. United States,
Invocation of the navigational servitude cannot be a pretext to avoid an otherwise compensable taking. Palm Beach Isles Assocs. v. United States,
Addressing the navigational servitude, Congress, in broad language, prohibits any unauthorized obstruction to the navigable capacity, requires a permit from proper authority before the construction of any structure in a navigable waterbody, and requires a permit from proper authority before obstructing, excavating, filling, altering or modifying the navigable capacity of any bodies of water within the United States.
The creation of any obstruction not affirmatively authorized by Congress, to the navigable capacity оf any of the waters of the United States is prohibited; and it shall not be lawful to build or commence the building of any wharf, pier, dolphin, boom, weir, breakwater, bulkhead, jetty, or other structures in any port, roadstead, haven, harbor, canal, navigable river, or other water of the United States, outside established harbor lines, or where no harbor lines have been established, except on plans recommended by the Chief of Engineers and authorized by the Secretary of the Army; and it shall not be lawful to excavate or fill, or in any manner to alter or modify the course, location, condition, or capacity of, any port, roadstead, haven, harbor, canal, lake, harbor or refuge, or inclosure within the limits of any breakwater, or of the channel of any navigable water of the United States, unless the work has been recommended by the Chief of Engineers and authorized by the Secretary of the Army prior to beginning the same.
Rivers and Harbors Act of 1899, § 10, 30 Stat. 1151 (Mar. 3, 1899), codified at 33 U.S.C. § 403 (2000).
Plaintiffs argue that this court’s focus should be exclusively on the Intercoastal Waterway. Plaintiffs support this contention by citing to the following underlined portion of the Rivers and Harbors Act of 1899, section 10:
[I]t shall not be lawful to excavate or fill, or in any manner to alter or modify the course, location, condition, or capacity of, any port, roadstead, haven, harbor, canal, lake, harbor or refuge, or inclosure within the limits of any breakwater, or of the channel of any navigable water of the United States, unless the work has been recommended by the Chief of Engineers and authorized by the Secretary of the Army prior to beginning the same.
Rivers and Harbors Act of 1899, § 10, codified at 33 U.S.C. § 403 (emphasis added by plaintiffs). Although the term “channel” is included in the act, as noted above, review of prior judicial interpretation of the act is necessary to evaluate plaintiffs’ argument that section 10 is concerned only with the channel of the Atlantic Intercoastal Waterway.
The reach of section 10 has been declared by the United States Supreme Court to be expansive:
The language of this provision [section 10] is quite broad. It flatly prohibits the “creation of any obstruction” to navigable capacity that Congress itself has not authorized, and it bans construction of any structure in any water of the United States “except on plans recommendеd by the Chief of Engineers and authorized by the Secretary of the Army.”
United States v. Alaska,
It is urged that the true construction of this act limits its applicability to obstructions in the navigable portion of a navigable stream, and that as it appears that, although the Rio Grande may be navigable for a certain distance above its mouth, it is not navigable in the territory of New Mexico, this statute has no applicability. The language is general, and must be given full scope. It is not a prohibition of any obstruction to the navigation, but any obstruction to the navigable capacity, and anything, wherever done or however done, within the limits of the jurisdiction of the United States, which tends to destroy the navigable capacity of one of the navigable waters of the United States, is within the terms of the prohibition____[I]t would be to improperly ignore the scope of this language to limit it to the acts done within the very limits of navigation of a navigable stream.
United States v. Rio Grande Dam & Irrigar tion Co.,
The United States Court of Appeals for the Federal Circuit, in the first Palm Beach Isles remand opinion, addressed the fact that the 49.3 submerged acres are under shallow water, and concluded that the shallow water is subject to the navigable servitude:
PBIA [Palm Beach Isles Associates] argues that the water depth over the 49.3 acres (1-3 feet) is insufficient to support commercial navigation, and thus does not implicate the navigational servitude. Under this view, the underlying land would not be subject to it. According to PBIA, the fact that Lake Worth as a whole is navigable is irrelevant; only the navigability of the 49.3 acre portion matters. The*676 Government counters that navigation need not be “commercial” to implicate the navigational servitude, and the mere ability of the water to support even small boats is suffiсient to implicate it; since Lake Worth as a whole is navigable, the entire body up to the mean high water mark is subject to the navigational servitude, regardless of particular depths.
A review of the relevant authorities and precedent indicates that the Government’s understanding of the concept of federal navigability is closer to correct than is PBIA’s, and that the property is subject to the navigational servitude. In [United States v.J Rands, [389 U.S. 121 ,88 S.Ct. 265 ,19 L.Ed.2d 329 (1967),] the Supreme Court noted that the navigational servitude “extends to the entire [navigable] stream and the stream bed below ordinary high-water mark.”389 U.S. at 123 ,88 S.Ct. 265 . This court later cited Rands and other Supreme Court precedent and said that “[l]and or property within the bed [of a navigable waterbody] are always subject to (or burdened with) the potential exercise of the navigational servitude,” and that “the Supreme Court has left no doubt that the high-water mark bounds the bed of the [navigable body].” Owen v. United States,851 F.2d 1404 , 1409 (Fed.Cir.1988) (en banc). Thus, since the parcel at issue lies below the high water mark, is part of the bed of Lake Worth, and Lake Worth is a navigable water of the United States, the parcel is subject to the navigational servitude. The particular water depth over PBIA’s land is not controlling.
Palm Beach Isles Assocs. v. United States,
In determinations of navigability, use and capability for use of a wаterbody by even small draft vessels have been dispositive. For example, the United States Supreme Court, in Appalachian Electric Power Co., found a river to be navigable, after considering the use of flat-bottomed boats on the river, “with a draft of two feet and a carrying capacity varying up to 10 or 12 tons ... used commercially to transport lumber, tobacco and other products of the region.” United States v. Appalachian Elec. Power Co.,
The Supreme Court in Appalachian Electric Power Co. added: “Nor is lack of commercial traffic a bar to a conclusion of navigability where personal or private use by boats demonstrates the availability of the stream for the simpler types of commercial navigation.” United States v. Appalachian Elec. Power Co.,
Similarly, in Part 329, “Definition of Navigable Waters of the United States,” the Corps’ regulations stress the capability of waterbodies for use in transportation and commerce, as well as the role of shallow draft vessels, including recreational vessels, in demonstrating the capability of waterbodies to be navigable:
(a) Nature of commerce: type, means, and extent of use. The types of commercial use of a waterway are extremely varied and will depend on the character of the region, its products, and the difficulties or dangers of navigation. It is the water-body’s capability of use by the public for purposes of transportation of commerce which is the determinative factor, and not the time, extent or manner of that use. As discussed in § 329.917 of this Part, it is sufficient to establish the potential for commercial use at any past, present, or future time. Thus, sufficient commerсe may be shown by historical use of canoes, bateaux, or other frontier craft, as long as that type of boat was common or well-suited to the place and period. Similarly, the particular items of commerce may vary widely, depending again on the region and period. The goods involved might be grain, furs, or other commerce of the time. Logs are a common example; transportation of logs has been a substantial and well-recognized commercial use of many navigable waters of the United States. Note, however, that the mere presence of floating logs will not of itself make the river “navigable”; the logs must have been related to a commercial venture. Similarly, the presence of recreational craft may indicate that a waterbody is capable of bearing some forms of commerce, either presently, in the future, or at a past point in time.
33 C.F.R. § 329.6(a) (1989); see also Atlanta Sch. of Kayaking, Inc. v. Douglasville-Doug-las County Water and Sewer Auth., 981
Plaintiffs argue that the record contains no evidence that the deepwater channel of the Atlantic Intercoastal Waterway would have been disturbed by the proposed project. When Mr. Borda, the Corps’ project manager who processed the plaintiffs’ permit application, was asked what he meant by the language in the Statement of Finding accompanying the permit denial — that “the project should not have a significant adverse impact on navigation, in general,” he testified: “I meant that it would not have an adverse impact upon vessels, deep draft vessels, actually using the Federal channel [Atlantic Inter coastal Waterway].” Plaintiffs’ conclusion is that: “Because there is no evidence in the record that the ICW [Intercoastal Waterway] channel in Lake Worth would have been disturbed by the Plaintiff’s project, there is no legal support for the government’s invocation of the navigational servitude with respect to the 49.3-acre parcel.” This view is consistent with plaintiffs’ witnesses who testified that they thought the proposed project would have no impact on navigable capacity. For example, Mr. Kyzer, a professional engineer, defined navigable capacity in terms of an intercoastal waterway channel to serve commercial navigation. Another of plaintiffs’ witnesses, Dr. Beam, testified that, in his view, the 49.3 acres was too shallow to support commercial navigation.
Plaintiffs argue that the Rivers and Harbors Act was not designed to prevent all actions taken by a riparian owner — short of interference with navigation in a Federal channel — and cite several cases in an attempt to support their argument. The first case cited by plaintiffs is People v. Amerada Hess Corporation,
But while a riparian owner who seeks to improve his property must do so without obstructing the navigability of a waterway or without destroying the property of another riparian owner, he is, nevertheless, entitled to build some form of protection to establish his boundary or to prevent the loss of soil by the process of erosion.
This court rejects the conclusion that Rule 3(b) requires permission from a governmental body before a person or a corporation reinforces his or its existing boundary line. Further, the court rejects the view that a boundary repair is the equivalent of a fill operation within the meaning of the section. In that regard the proof fails.
People v. Amerada Hess Corporation,
Plaintiffs also cited United States v. Republic Steel Corporation,
The teaching of those cases is that the term “obstruction” as used in § 10 is broad enough to include diminution of the navigable capacity of a waterway by means not included in the second or third clauses [of § 10]. In the Sanitary District [of Chicago v. United States,266 U.S. 405 ,45 S.Ct. 176 ,69 L.Ed. 352 (1925)] case it was caused by lowering the water level. Here it is caused by clogging the channel with deposits of inorganic solids. Each affected the navigable “capacity” of the river. The concept of “obstruction” which was broad enough to include the former seems to us plainly adequate to include the latter.
United States v. Republic Steel Corp.,
The plaintiffs also cited United States v. 412.715 Acres of Land, Contra Costa County, Cal,
In Bailey, plaintiffs were lessees of submerged land for purposes of oyster farming. Bailey v. United States,
Small draft vessels operating in shallow water can and have rendered a waterbody navigable. See United States v. Appalachian Elec. Power Co.,
In conclusion, the Federal Circuit has considered, and rejected, the concept that the shallow water depth of the 49.3 acres in question is insufficient to support commercial navigation and insufficient to implicate the navigational servitude. See Palm Beach Isles Assocs. v. United States,
The court concludes that the navigable servitude was invoked by the Corps as one of the reasons for the permit denial. Furthermore, the implication of the navigable servitude was legitimate, in that navigable capacity is concerned with more than deep draft vessels operating in a federal channel. Shallow water portions of a waterbody have constituted support for navigability determinations, and the preservation of the shallow water portions of a navigable waterbody represents a legitimate concern when considering, and denying permits. The plaintiffs’ proposed project would have altered the course and capacity of a navigable water body of the United States. The Corps possessed a bona fide navigational purpose in the permit denial, which constitutes a complete defense to a compensable regulatory taking of the 49.3 submеrged acres.
14 Acre Shoreline Parcel
The Federal Circuit Order on the defendant’s petition for rehearing noted that the 1.4 acres are not submerged property potentially subject to the federal navigational servitude defense, and, therefore, should be analyzed separately from the 49.3 acre submerged parcel:
On further review, then, we conclude that the proper disposition of the issue regarding the 1.4 acres is to remand the question of a taking to the trial court. If the trial court determines that the permit denial constituted a categorical taking of the 1.4 acre tract, then, absent any other defenses the Government may have, PBIA is entitled to compensation as if it were a physical taking for government purposes. If the trial court determines that, on the facts, the permit denial constituted less than a total wipeout of economically viable use, the court must then determine if there is a partial taking, applying the Penn Central18 criteria (as modified by Lucas19 — see this court’s explanation in Loveladies Harbor,20 see also Florida Rock ).21
Palm Beach, Isles Assocs. v. United States,
Plaintiffs acknowledge that they have the burden of proof to demonstrate a compensa-ble taking of the 1.4 acre parcel. Nathanial J. Orr, a real estate appraiser testifying for the plaintiffs, stated that he visited the 1.4 acre parcel and concluded that the narrow strip of land could not be developed. Mr. Orr testified that: “The only possible use in my opinion would be to combine it with the [submerged] land immediately west of it which was a total of about 50 acres of land, to develop the entire tract.” The government agrees with Mr. Orr’s conclusion, stipulating, along with plaintiffs, that the 1.4 acre parcel “has no economically viable uses when considered separately from the 49.3 acres of
Plaintiffs reason that, if there was value in the 1.4 acre parcel before permit denial, and no value in the parcel after permit denial, the property value must have been eliminated as a result of the permit denial — a prong one regulatory takings analysis resulting in a categorical taking.
As we noted at the beginning of this Order, we have no doubt that the relevant parcel for analysis is not the entire 311-acre parcel first purchased in 1956, but a subset of that parcel. The subset we defined in the original opinion — the 50.7 acres — consists of 49.3 acres of submerged lands, and 1.4 acres of adjacent uplands, described as wetlands. We concluded in the original opinion that, based on the trial court’s findings, these two tracts should be treated together.
However, the wetlands are essentially upland property, and are not subject to the Government’s defenses under the navigational servitude. Accordingly, the 1.4 acres should be analyzed separately. In her summary judgment order, the trial court concluded that there had not been a taking of the 1.4 acres on three grounds. First, the court determined that the relevant parcel was the entire 311 acres, and that therefore the 1.4 acres was subsumed within it. As we have held, that finding is erroneous. Second, the trial court held that PBIA [plaintiffs] knew when it bought the property that it would need permits to develop the land, and thus the existing statutory regime precluded any reasonable investment-backed expectation of being able to develop the property. And third, the court found that while the 1.4 acre section by itself is insufficient for building homes, PBIA had not established that all other uses were foreclosed.
On the second point, the record suggests that PBIA may well have had investment-backed expectations for the 1.1 acres, since shortly after purchasing the property in 1957 they were able to obtain dredge and fill permits from the Corps of Engineers. The existence of a regulatory regime does not per se preclude all investment-backed expectations for development. The difficulty with the third point is that it involves a disputed question of fact — what uses are left for the tract after the permit denial— and the case was decided on summary judgment.
Palm Beach Isles Associates v. United States,
Plaintiffs have not demonstrated economical uses of the 1.4 acre parcel either before or after permit denial, apart from joint development with the 49.3 submerged acres. The 1957 permit, and the permit sought in 1989, were not permits to dredge and fill exclusively the 1.4 acre parcel. Both permits were to dredge and fill the 1.4 acres with the adjoining 49.3 acres, thereby providing no indication that the 1.4 acres had some economical use standing alone. Plaintiffs’ own witness, real estate appraiser Orr, in uncontested testimony, testified that: “The only possible use in my opinion would be to combine it [the 1.4 acres] with the [submerged] land immediately west of it which was a total of about 50 acres of land, to develop the entire tract.” Plaintiffs may have intended that Mr. Orr’s statement only address value of the 1.4 acre parcel after permit denial, but plaintiffs have not explained why the statement does not also apply to the value of the 1.4 acre parcel before permit denial. Plaintiffs introduced no evidence that conditions after permit denial were any different from conditions before permit denial. Plaintiffs have not contradicted the conclusion that the only possible use of the 1.4 acres, before or after permit dеnial, was to combine it with the larger parcel of submerged land. Mr. On- testified that the 1.4 acre strip was about 2000 feet long and about 25 to 30 feet in width, “[a]nd I couldn’t see any way you could develop that little narrow strip of land there.” Even though Mr. Orr and plaintiffs may have been attempting to limit his evaluation of the value of the strip of land to an after permit denial perspective, the conditions Mr. Orr described which limited its use — the length, width and location of the strip — were the same before permit denial. Thus, it is logical to reach the same conclusion as to the absence of viable economical uses of the strip of land at issue before permit denial that Mr. Orr and both parties came to regarding the absence of viable economical uses after permit denial. According to Mr. Orr: “I still don’t see any value to it by itself." (emphasis added).
Prong one of the regulatory takings test states that there has been a taking if “there was a denial of economically viable use of the property as a result of the regulatory imposition.” Palm Beach Isles Assocs. v. United States,
Plaintiffs argue, however, that “[t]his situation is related to, although not identical with, severance damages that are owed by the government when a physical taking of one portion of property causes damages to a portion of the property not taken,” citing Hendler v. United States,
In cases of a partial physical taking as that here, just compensation under the takings clause of the Constitution includes “not only the market value of that part of the tract appropriated, but the damage to the remainder resulting from that taking, embracing ... injury due to the use to which the part appropriated is to be devoted.”
Hendler v. United States,
In Hendler, the federal government entered the plaintiffs’ land and sunk wells to monitor the migration of contaminated water. Id. at 1376. The plaintiffs in Hendler argued, inter alia, that the property taken by
The United States Court of Appeals for the Federal Circuit in Hendler also noted that:
If a regulation categorically prohibits all economically beneficial use of land there is, without more, a compensable taking. See Florida Rock,18 F.3d at 1564-65 . On the other hand, though it is not necessary to have a total wipeout before the Constitution compels compensation, if the regulatory action is not shown to have had a negative economic impact on the property, there is no regulatory taking. See generally id. at 1569-71; Loveladies,28 F.3d at 1180 . The question of the economic impact of a particular regulatory action is of course fact-specific to the case. See Florida Rock,18 F.3d at 1570 .
Hendler v. United States,
It is settled law in Fifth Amendment takings cases that a strip of land along the shore does not take value from submerged land as to which the navigational servitude applies. See United States v. Twin City Power Co.,
As found earlier, the plaintiffs may not develop the 49.3 acres of lake bottom due to the Corps’ permit denial, which was based, in part, on the navigational servitude. Plaintiffs have failed to demonstrate that it was the Corps’ permit denial that took away the value of the 1.4 acres. Instead, the 1.4 acres were impacted by the adjoining 49.3 acres of submerged land, as to which the navigational servitude applies, a factor which cannot be invoked to enhance the value of the 1.4 acres, and the peculiar length, width and location of the shoreline strip of land itself, which eliminated economically viable uses (prong one of the regulatory takings test).
State and Local Permits
Defendant also contends that state and local authorities, based on their land use regulations, would have prevented any development of the plaintiffs’ property, such that the Corps’ permit denial effectively was without any economic impact. Defendant argues that, because plaintiffs cannot establish that they could obtain the necessary State of Florida, County of Palm Beach and City of Riviera Beach approvals for their proposed development, plaintiffs, therefore, cannot establish the requisite adverse economic impact as a result of the Corps’ permit denial.
The United States Supreme Court, in Pa-lazzolo v. Rhode Island,
The State’s concern may be that landowners could demand damages for a taking based on a project that could not have been constructed under other, valid zoning restrictions quite apart from the regulation being challenged. This, of course, is a valid concern in inverse condemnation cases alleging injury from wrongful refusal to permit development.
The mere allegation of entitlement to the value of an intensive use will not avail the landowner if the project would not have been allowed under other existing, legitimate land use limitations. When a taking has occurred, under accepted condemnatiоn principles the owner’s damages will be based upon the property’s fair market value, see, e.g., Olson v. United States,292 U.S. 246 , 255,54 S.Ct. 704 ,78 L.Ed. 1236 (1934); 4 J. Sackman, Nichols on Eminent Domain § 12.01 (rev.Sd ed.2000) — an inquiry which will turn, in part, on restrictions on use imposed by legitimate zoning or other regulatory limitations, see id., at § 12C.03[1],
Palazzolo v. Rhode Island,
Defendant contends that state and local land use restrictions will be an impediment to the plaintiffs’ proposed development, and, therefore, should be factored into the equation in determining whether a regulatory taking has occurred, before the anticipated impediments ripen. Defendant’s crystal ball, however, is not completely clear on this point. The Federal Circuit in this case addressed the role of the State of Florida in the plaintiffs’ proposed development:
In Florida, title to the beds of navigable waterbodies is held by the state in public trust; the Trustees of the Internal Improvement Fund administer the trust, and in general have power to convey submerged lands to private owners if the sale is not contrary to the public interest. In the early years of Florida’s development, much of the State’s sovereignty land was so conveyed.
Palm Beach Isles Assocs. v. United States,
Defendant, however, states that, after the conclusion of the hearing in the present case, it first learned of a May 31, 1994 State of Florida DER Suggestion of Error and Motion for Remand, filed by the DER in the Florida Supreme Court in an attempt to avoid its earlier settlement of the ease with plaintiffs. The Florida DER attempted to reverse its prior position, and requested that the matter be remanded for an administrative hearing to determine anew if permits are required to dredge and fill plaintiffs’ property. Defendant further advises the court that, pursuant to the Florida DER’s motion, the matter has been remanded and stayed pending resolution of this present litigation in the Court of Federal Claims. Defendant’s information is incorrect. On April 24, 1995, the Supreme Court of Florida denied the Florida DER’s motion for remand. See Singer Island Civic Ass’n, Inc., et al. v. Dep’t of Env’t Regulation, No. 83,470, Order at 1 (Fla. Apr. 24,1995). Defendant was served with a copy of the Singer Island Civic Association case by plaintiffs, and have conceded the point.
In continuing the review of defendant’s contention, that state and local land use restrictions loom in the future, plaintiffs point to recent litigation regarding property similar to that of the plaintiffs, which indicates that the City of Riviera Beach’s Comprehensive Land Use Plan does not prohibit similarly proposed property development. See Joan B. Taylor v. City of Riviera Beach, No. CL 00-2662 AJ (Fla. 15th Cir. Ct. June 6, 2003) (“[I]f the Plaintiff/owner or her successor obtains the necessary permits to fill the Subject Property from every applicable State and/or Federal agency, no fill permit is needed from the Defendant City of Riviera Beach for the work to proceed to fill Subject Property.”) Defendant also concedes this point. The court has no indication in the record before it, that the City of Rivera Beach itself intends to impede plaintiffs’ plans for development.
Defendant nevertheless retains faith that the County of Palm Beach will frustrate plaintiffs’ development plans, such that the Corps’ permit denial is without consequence. The record does contain a January 10, 1989 resolution by the Board of County Commissioners of the County of Palm Beach opposing the plaintiffs’ proposed development, as contrary to the public interest. Defendant argues that an application from the plaintiffs to the county for project approval would be rejected. Defendant argues that the Corps’ disapproval essentially did not matter since the project would have been disapproved by county authorities anyway, and that the absence of viable economical uses is a function of not being able to surmount all of these obstacles.
The court, however, cannot rely on defendant’s power of prediction. Defendant argued that the State of Florida and the City of Palm Beach would frustrate plaintiffs development plans, contentions which are, upon further review, incorrect. Defendant has not presented the court with a county permit denial, and merely speculates that its county argument will not evaporate, as have its state and city arguments. On the other hand, the Corps’ permit denial has occurred and is before the court, on specific remand issues from the United States Court of Appeals for the Federal Circuit. As indicated by the Supreme Court in Palazzolo and the Federal Circuit in the present case, other land use restrictions are not irrelevant, but typically are considered in the damages phase of a case. In light of the court’s earlier findings, that the Corps’ permit denial had a navigational purpose, and that the acknowledged absence of economically viable uses for the 1.4 acre strip was not the result of federal regulatory imposition, the court need not reach the defendant’s land use restrictions argument.
CONCLUSION
The United States Court of Appeals for the Federal Circuit previously, in its first remand opinion, concluded that the denial by the Army Corps of Engineers of the plaintiffs’ requested permit to dredge and fill represents a categorical taking of the 49.3 acres of lake bottom; that this submerged land is subject to the federal navigational servitude; and that the navigational servitude may serve as a complete defense to a regulatory taking. See Palm Beach Isles Assocs. v. United States,
The Federal Circuit, in its Order on the petition for rehearing, also stated that since the adjoining 1.4 acre parcel along the shore of Lake Worth is not submerged property, these 1.4 acres are not subject to the federal navigational servitude defense. See Palm Beach Isles Assocs. v. United States,
IT IS SO ORDERED.
Notes
. Penn Central Transportation Company v. New York,
. Lucas v. South Carolina Coastal Council,
. Loveladies Harbor, Inc. v. United States,
. Florida Rock Industries, Inc. v. United States,
. Section 404(b)(1) of the Clean Water Act, codified at 33 U.S.C. § 1344(b)(1).
. The cited figure of "48.4 acres” was used in the Corps' May 16, 1990 Statement of Finding supporting the permit denial. Different figures have been used to describe the acreage at issue. Prior to the hearing, the parties had stipulated that the figure for the lake bottom acreage was "49.3 acres,” and the figure for the adjoining acreage along the shoreline was "1.4 acres.” At the hearing, defendant introduced a survey prepared by Brown & Phillips, Inc., Professional Surveying Services, indicating that the lake bottom area was “39.03 acres, approximately,” and that the previously identified adjoining "1.4 acres" along the shoreline was approximately "1.02 acres,” for a total of 40.05 acres. The record reflects that plaintiffs have variously estimated the lake bottom and shoreline acreage together at "approximately 40 acres"; "40.7 acres”; and “somewhere in the area of 40 plus acres.” However, one of the plaintiffs' witnesses, Martin Gau-thier, an engineer who processed the permit application for the plaintiffs, stated that the western boundary of the submerged parcel has never been clearly established, which would be required for a definitive survey. Plaintiffs' supplemental post-hearing memorandum referred to the submerged land as “40 plus acres," and the upland as the "1.02 acre” parcel. In the face of the differing estimates, for purposes of this opinion, the court will refer to the size of the parcels as jointly stipulated to by the parties — 49.3 acres of lake bottom, and 1.4 adjoining acres along the shoreline, for a total of 50.7 acres.
. The reference to pages 12 and 13 is to the “Department of the Army Environmental Assessment and Statement of Finding for Above-Numbered Permit Application” (Statement of Finding), dated May 16, 1990, a document prepared by Donald Borda, Senior Project Managеr; reviewed by Bertil A. Heimer, Chief, South Permits Branch; and approved by Colonel Bruce A. Mal-son, the Corps District Engineer.
. The figure actually used on page 13 of the May 16, 1990 Memorandum was 48.4 acres, rather than 49.4 acres stated here. See note 6, supra.
. “The Plaintiff acknowledges that it bears the burden of proof on the issue of the categorical taking of the 1.4-acre parcel and must establish the elements of such a taking by the preponderance of the evidence.”
. The court notes that even if the standard had been clear and convincing evidence, as will be seen below, defendant also meets this higher standard in demonstrating that a navigational purpose was one of the reasons for the Corps' denial of a permit to develop the 49.3 submerged acres.
. In any event, the arbitrary or capricious standard of review would not assist plaintiffs in this case. The arbitrary or capricious standard is highly deferential to the agency, constituting the narrowest scope of judicial review of an agency’s fact finding. ”[T]he reviewing court analyzes only whether a rational connection exists between the agency’s fact findings and its ultimate action ....” In re. Gartside,
The Federal Circuit, in its Order on the petition for rehearing, stated that the defendant cannot merely invoke the navigational servitude defense:
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.
Palm Beach Isles Assocs. v. United States,
In a supplementary post-hearing brief, plaintiffs modified their earlier position on the arbitrary or capricious standard of review somewhat, stating that: "The law is well established that the United States cannot be arbitrary and capricious in its processing of permit application [sic]. This, however, is not an issue because this is a takings case and the only question is whether or not the Defendant met its burden of proving its affirmative defense which, if it could have, would have necessarily demonstrated that its actions relating to this issue were not arbitrary and capricious.”
. Circuit Judge Gajarsa, dissenting, addressed the issue of the relevant parcel as follows:
*668 Essentially, the panel concludes that the Rivers and Harbors Act did not apply to the upland property because the development of the 261 acres of upland property "was physically and temporally remote from, and legally unconnected to, the 50.7 acres of wetlands and submerged [property]." [Palm Beach Isles As-socs. v. United States,208 F.3d at 1381 (alteration in original).] This approach contradicts the clear mandate of the Supreme Court that a unit of property cannot be subdivided for the purpose of takings analysis merely because the regulations apply to one portion of the property. See Penn Central,438 U.S. at 130-31 ,98 S.Ct. at 2662 . Penn Central and its progeny maintain that we should look to the “parcel as a whole” and view the bundle of property rights in its entirety. See id. The Supreme Court has recently reaffirmed this proposition. See Dolan v. City of Tigard,512 U.S. 374 , 400-01,114 S.Ct. 2309 , 2324-25,129 L.Ed.2d 304 (1994) (“where an owner possesses a full bundle of property rights, the destruction of one strand of the bundle is not a taking, because the aggregate must be viewed in its entirety”); Keystone Bituminous Coal Assoc, v. DeBenedic-tis,480 U.S. 470 , 497-98,107 S.Ct. 1232 , 1248,94 L.Ed.2d 472 (1987) (same).
Palm Beach Isles Assocs. v. United States,
. On rehearing, the Federal Circuit in Palm Beach Isles provided a further description of a categorical taking:
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.
Palm Beach Isles Assocs. v. United States,
. Section 10 of the Rivers and Harbors Act provides that "it shall not be lawful to excavate or fill, or in any manner to alter or modify the course, location, condition, or capacity” of a waterbody, unless the work has received prior approval. 33 U.S.C. § 403.
. The Florida permit denial adds:
In denying the permit, the Department notes that the applicants' deed from the Trustees of the Internal Improvement Trust Fund may confer an independent right to fill the property. The Department offers no opinion concerning the validity or extent of any such right, but waives the water quality certification required by Public Law 92-500 as a prerequisite for federal dredge and fill permits. As noted earlier, plaintiffs sued the State of Florida, and in a subsequent settlement, the State acknowledged that, pursuant to the terms of the deed from the Trustees of the Internal Improvement Fund, plaintiffs had the legal right to dredge and fill the 49.3 submerged acres, at least at far as the State of Florida was concerned. See Palm Beach Isles Assocs. v. United States,208 F.3d at 1378 .
. Volume 33 of the C.F.R. is titled "Navigation and Navigable Waters.” Navigable waters of the United States are defined in the regulation as: those waters that are subject to the ebb and flow of the tide and/or are presently used, or have been used in the past, or may be suscepti
33 C.F.R. § 329.4 (1989).
. Section 329.9, titled "Time at which commerce exists or determination is made,” states:
(a) Past use. A waterbody which was navigable in its natural or improved state, or which was susceptible of reasonable improvement (as discussed in § 329.8(b) of this Part) retains its character as “navigable in law” even though it is not presently used for commerce, or is presently incapable of such use because of changed conditions or the presence of obstructions. Nor does absence of use because of changed economic conditions affect the legal character of the waterbody. Once having attained the character of "navigable in law,” the Federal authority remains in existence, and cannot be abandoned by administrative officers or court action....
(b) Future or potential use. Navigability may also be found in a waterbody's susceptibility for use in its ordinary condition or by reasonable improvement to transport interstate commerce. This may be either in its natural or improved condition, and may thus be existent although there has been no actual use to date. Non-use in the past therefore does not prevent recognition of the potential for future use.
33 C.F.R. § 329.9 (1989).
. Penn Central Transportation Company v. New York,
. Lucas v. South Carolina Coastal Council,
. Loveladies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed.Cir.), reh’g and rehearing en banc denied (1994).
. Florida Rock Industries, Inc. v. United States,
. In its earlier remand opinion, the Federal Circuit had stated:
The trial court concluded that, without development of the 49.3 acres of submerged land, the 1.4 acres of adjoining wetlands would be of little, if any, value. Upon full examination of the record, we see no error in that conclusion. If there is a taking by the Government of the 49.3 acres, then there also must be a taking of the adjoining wetlands as well, and PBIA will be entitled to compensation therefor; if there is no taking because of the navigational servitude, the developmental value of the adjacent wetlands strip standing alone would be at most nominal — the attorney for PBIA admitted as much in oral argument — and in any event PBIA has failed to establish that no other uses are available to it.
Palm Beach Isles Assocs. v. United States,
. The Federal Circuit's statement of the test for a compensable regulatory taking is as follows:
(1) there was a denial of economically viable use of the property as a result of the regulatory imposition;
(2) the property owner had distinct investment-backed expectations; and
(3) it was an interest vested in the owner, as a matter of state property law, and not within the power of the state to regulate under common law nuisance doctrine.
Palm Beach Isles Assocs. v. United States,