Argument Preview

As we have been reporting, five cases being argued in March at the Federal Circuit attracted amicus briefs. One of these cases is Lemon Bay Cove LLC v. United States. In it, the Federal Circuit will review a judgment of the Court of Federal Claims, which held that the denial of a wetland permit by the United States Army Corps of Engineers was not a categorical taking or regulatory taking of Lemon Bay’s land. This is our argument preview.

In its opening brief, Lemon Bay argues the trial court “misapplied” precedent by failing to “credit the fact that the Corps denied Lemon Bay’s application with prejudice.” Lemon Bay argues the decision by the Corps removed “the possibility . . . it would ever allow residential development of [Lemon Bay’s] Property.” Furthermore, Lemon Bay argues, the trial court failed to consider “whether the Corps might conceivably approve some lesser impactful development” especially “where the Corps has given no indication that it might approve [Lemon Bay’s] development.” As a result, Lemon Bay contends, it cannot be required to show “less impactful alternatives.” Moreover, according to Lemon Bay, the trial court “ignored” its “substantial efforts to avoid, minimize and mitigate the impacts of its proposed development.” Lemon Bay maintains the trial court did not consider “the undisputed fact that the Corps’ permit denial left the Property and bulkhead and fill rights economically idle.”

The government in its response brief argues precedent relied upon by Lemon Bay “is reserved for those extraordinary cases in which the regulation permanently prohibits all economic beneficial use of the property.” The government maintans that, when it denied Lemon Bay’s “twelve-unit development proposal,” the Court of Federal Claims “did not foreclose any and all development plans or deprive Lemon Bay of all economic use of the parcel, as is required for a categorical taking.” The government goes on to explain that “Lemon Bay failed to demonstrate a reasonable, investment-backed expectation in its proposed development.” Furthermore, the government argues, “Lemon Bay failed to show that the regulatory restrictions in this case, which are tied to natural physical conditions of the property that make it unsuitable for substantial development, are of the ‘character’ of a taking.” In sum, the government contends, “Lemon Bay failed to demonstrate that that the Corps’ permit denial caused it any significant economic impact.”

In its reply brief, Lemon Bay argues the government “cannot fulfill its burden by inferring an improbable, speculative future prospect of obtaining a permit for a smaller fill footprint.” Lemon Bay emphasizes that, “[t]hroughout the permit process, administrative appeal process[,] and this case, the Government has given no indication of what, if any, smaller fill footprint ‘might’ be approved.” Furthermore, Lemon Bay suggests, “the burden of the permit denial was solely and disproportionately placed upon Lemon Bay, forcing it to forego any feasible development of its property.”

An amicus brief was filed by Pacific Legal Foundation in support of Lemon Bay and reversal. Pacific argues a “Transfer of Density Units (TDU)” is a “a new right conferred upon the landowner in exchange for the taking, rather than a reduction of the taking.” Pacific maintains “TDUs should not factor into the Court’s regulatory takings analysis.”

Oral argument will be heard on Tuesday, March 5. We will keep track of this case and report on any developments.