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Two Washington state solid waste companies lost their bid June 27 to have the U.S. compensate them for a six-year delay in processing their wetlands permit application after the U.S. Supreme Court denied their petition to overturn the dismissal of their takings claim ( Res. Invs., Inc. v. United States, 2016 BL 204470 , U.S., No. 15-802, cert. denied 6/27/16 ).
Six years after Resource Investments Inc. and Land Recovery Inc. applied to the U.S. Army Corps of Engineers for a Section 404 Clean Water Act permit related to their plans to develop a solid waste landfill in Washington state, the agency denied the application. They filed an Administrative Procedure Act action in the U.S. District Court for the Western District of Washington in 1996 and then filed a takings claim in the Court of Federal Claims in 1998.
Although the U.S. Court of Appeals for the Ninth Circuit eventually ruled for the companies on appeal, and they opened the landfill in 1999, they maintained that the agency's extraordinary delay in acting on the permit amounted to a taking of their property without just compensation in violation of the Fifth Amendment.
While the takings claim was pending in the Court of Federal Claims, the U.S. Supreme Court issued a significant opinion clarifying the scope of Section 1500 of the little-known Tucker Act. This provision limits the jurisdiction of the Court of Federal Claims to certain claims seeking monetary damages against the federal government, such as takings.
In 2011, the Supreme Court ruled that under Section 1500, a plaintiff who has a claim pending against the U.S.—such as one seeking equitable relief in federal district court—can't then seek monetary damages in the Court of Federal Claims if the claims “are based upon substantially the same operative facts” ( United States v. Tohono O'odham Nation, 563 U.S. 307, 79 U.S.L.W. 4271, 2011 BL 109773 (2011)).
Based on Tohono, the Court of Federal Claims granted the government's motion to dismiss the companies' takings claim for lack of subject matter jurisdiction, and the U.S. Court of Appeals for the Federal Circuit affirmed.
The Supreme Court's order lets stand the Federal Circuit's 2015 ruling that the district court APA claim and the Court of Federal Claims takings claim “were based on substantially the same operative facts”—the denial of the Section 404 permit and economic loss attributable to the denial. Because the two actions relate to the same transaction—the denial of the permit—Section 1500 bars the later filed Court of Federal Claims case ( Res. Invs., Inc. v. United States, 785 F.3d 660, 80 ERC 1768, 2016 BL 137868 (Fed. Cir. 2015)).
“The Federal Circuit’s decision in this case deprives property owners of their constitutional right to just compensation,” partner Robert Loeb and associate Marc Shapiro of Orrick, Herrington & Sutcliffe LLP told Bloomberg BNA in a June 27 e-mail.
Loeb was counsel of record for the companies.
“It is unfortunate the Supreme Court declined to take the opportunity to correct the court of appeals’ adoption of an erroneous test for jurisdiction under Section 1500—one that is far broader than that embraced by the Supreme Court—and address the unresolved question of whether Section 1500 applies to constitutional claims,” they wrote.
In their Dec. 16 petition for writ of certiorari, the companies asked the court whether the Federal Circuit impermissibly broadened the scope of Section 1500 and deviated from settled precedent when it interpreted the Supreme Court's straightforward “substantially the same operative facts” standard to mean “arising out of the same transaction.”
The companies wrote that although APA and takings claims in this case involve an operative seed fact—the permit—they focus on different issues: the district court case on the corps' jurisdiction and the Court of Federal Claims case on the economic impact of the corps' delay. As such, there will rarely be a substantial overlap of the operative facts for Section 1500 purposes, according to the companies.
They also asked whether Section 1500 should be read to preclude takings claims and, if so, whether such an interpretation would be unconstitutional.
In its May 16 brief in opposition, the U.S. wrote the court of appeals' ruling “is correct and consistent with” Supreme Court decisions construing Section 1500.
This case is a poor vehicle for review, because the companies did not properly plead a temporary takings claim and no longer assert a permanent takings claim, according to the U.S.
Moreover, the U.S. wrote that the court should deny the companies' constitutional question because claims arising from “substantially the same facts” can, if properly pleaded, be litigated in the district court and then the Court of Federal Claims without causing constitutional issues.
Solicitor General Donald B. Verrilli Jr. was counsel of record for the U.S.
The U.S. Supreme Court's denial of the petition for writ of certiorari in Resource Investments, Inc. v. United States is available at http://src.bna.com/gha.
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