Lands Letter - 03/05/2004 (Plain Text Version)

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In this issue:
LANDS Annual Roundtable & Workshop
New York Homeowner Wins on Penn Central Balancing Test
Developer Prevails in Washington Regulatory Fee Case
EPA Establishing Investigation Standard for Environmental Contamination
Eminent Domain Cases in the Economic Development Context
Glass Half Full for Takings Plaintiffs
Recent Land Use News
Legislative Updates
Attorney Profile

New York Homeowner Wins on Penn Central Balancing Test

A New York appellate court recently affirmed a lower court ruling that the application of the state’s wetlands regulations to a Village of Southampton residential property affected a taking under Penn Central’s balancing factors.

In Friedenburg v. New York State Dep’t of Environmental Conservation, the Supreme Court, Appellate Division, Second Department (767 N.Y.S.2d 451 (Nov. 24, 2003)), found that the Department of Environmental Conservation’s (DEC) denial of a property owner’s application for a tidal wetlands permit, while not a per se taking ala Lucas, created for the property owner a financial impact so severe that the balance tipped in favor of the owner under Penn Central.

At the time of purchase, the 2.5-acre property was not encumbered with any restrictions prohibiting the construction of single-family homes. However, with the passage of the state’s Tidal Wetlands Act in 1973, all but a small upland portion of the parcel was classified as tidal wetlands. In 1987, the property owner applied to the DEC for a tidal wetlands permit to build a single-family residence. After several years of administrative proceedings, the DEC denied the application in 1995, due to concerns over the release of sewage effluent from the septic system. The property owner then filed a lawsuit alleging a taking of its property without the payment of just compensation.

After having determined that the DEC’s denial of the tidal wetlands permit did not constitute a categorical or per se taking (the subject property retained at least a 5% residuary value), the court then turned to Penn Central to engage in an "ad hoc, factual inquiry." Honing in on the "economic impact" factor, the court observed that the regulation reduced the property’s value by 95% from its non-regulated value. Moreover, the court found that because the impact was “so severe” it was “clear that a taking has taken place as the petitioners are bearing the brunt of the burden.” Finally, the court ruled that any proceedings to determine the amount of compensation due the property owner must be conducted in the state’s Court of Claims.