CHAPTER 5. Takings and Takings: The Conflict Between the Endangered. Species Act and Property Rights

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1 CHAPTER 5 Takings and Takings: The Conflict Between the Endangered Species Act and Property Rights Richard A. Horder and Edwin S. Schwartz Kilpatrick & Cody Atlanta, Georgia Synopsis Introduction Overview of the Endangered Species Act. [1]--The "Jeopardy" Prohibition of Section 7(a)(2). [2]--The "Taking" Prohibition of Section 9. [3]--Impact of ESA Regulation on Private Property Rights Constitutional Taking. [1]--Overview of Taking Law. [2]--The "New" Lucas Taking Standard. [3]--Effect of Lucas Conclusion Introduction. The Endangered Species Act (1) (ESA or Act) was enacted in 1973 to promote the conservation of protected domestic species of plants, fish, wildlife, and the ecosystems on which these species depend. (2) At the time of its enactment, few appreciated, or even envisioned, the potential implications of the Act's provisions. The ESA had originally gained notoriety for its prohibition, under Section 7, of federal government activities that could jeopardize the continued existence of a species. As it enters its twentieth year, the ESA has matured into a substantially more comprehensive statute. As a result of a shift in focus from Section 7 to the Section 9 prohibition on the "taking" (including the modification of habitat) of any protected species, the

2 ESA has been applied more broadly. It is imposing stringent restrictions on the use of property. These property use restrictions may significantly reduce or eliminate the development potential and, consequently, the value of private property. Thus, this new direction in ESA regulation has generated a conflict with private property rights. Although the judiciary has not yet had occasion to address this conflict, the deprivation of all economically beneficial use of private property by regulations promulgated under other environmental laws has been recognized as a regulatory "taking" under the Fifth (3) and Fourteenth (4) Amendments to the United States Constitution, requiring just compensation. Consistent with this precedent, ESA requirements for the perpetuation of species that cause the "extinction" of property rights would be subject to constitutional limitations Overview of the Endangered Species Act. The ESA creates two categories of protected species (5) -- "endangered" and "threatened" species. An "endangered" species is one that is "in danger of extinction throughout all or a significant portion of its range." (6) A "threatened" species is one that is "likely to become an endangered species within the foreseeable future." (7) Section 4 of the ESA (8) directs the Secretary of the Interior (Secretary) to prepare a list of species in the appropriate category and concurrently to designate their critical habitats. (9) To determine whether any species is endangered or threatened, the Secretary considers criteria such as the present or threatened destruction, modification, or curtailment of its habitat or range; over-utilization for commercial, recreational, scientific, or educational purposes; disease or predation; the adequacy of existing regulatory mechanisms; and other natural or man-made factors affecting its continued existence. (10) While the responsibility for listing terrestrial species as endangered or threatened lies with the Secretary, the Secretary has delegated this authority to the U.S. Fish and Wildlife Service (FWS). The Secretary of Commerce is responsible for listing marine species and has delegated this authority to the National Marine Fisheries Services (NMFS). Listing occurs through notice and comment rulemaking procedures initiated by the FWS or any interested person. (11) Decisions about species-listing must be based entirely on biological factors, using the "best scientific and commercial data available." (12) They cannot consider the economic impact of listing. (13) The ESA requires the designation of critical habitat at the time a species is proposed for listing. (14) "Critical habitat" is defined as the specific geographic area occupied by the species at the time of listing, and those areas outside that geographic area that possess those biological and physical characteristics essential to conservation of the species. (15) Unlike the process involving a species-listing decision, before designating critical habitat, the FWS must consider the economic and other relevant impacts of the decision. (16) Unless the FWS determines that the failure to designate it as critical habitat will result in the extinction of the species concerned, an area may be excluded from critical habitat designation on the basis of economic impacts where the benefits of exclusion are greater than the benefits of designation. (17) The FWS may refrain, however, from designating critical habitat during the listing process if it determines either that (1) designation is not prudent because identifying the critical habitat would be expected to increase the threat of takings or other impacts from human activities or (2) there is insufficient scientific information to make a decision. (18) Once listing has been accomplished, the ESA establishes two important mechanisms for protection of the listed species: the Section 7 "jeopardy" prohibition and the Section 9 "taking" prohibition. Under Section 7, (19) federal agencies are required to ensure that their actions will not jeopardize the continued existence of any listed species or result in the destruction or adverse modification of the species' critical habitat. Section

3 9 makes it unlawful for any person to "take" any endangered species of fish or wildlife within the United States. Violations of the ESA are subject to civil and criminal sanctions. The FWS may assess civil administrative penalties of up to $25,000 for each unlawful taking of a listed species. (21) The alleged violator is afforded an opportunity for a hearing before an administrative law judge and subsequent judicial review. (22) The federal government may seek to enjoin any taking of fish or wildlife, plant destruction, or a jeopardy violation. (23) Any person who "knowingly" violates the taking provision is subject to criminal penalties of up to $50,000 and one year imprisonment for each violation. (24) In addition to governmental enforcement, private citizens may initiate actions to enjoin the taking of listed fish and wildlife, plant destruction, or a jeopardy violation. (25) In addition to the listing of endangered and threatened species and the designation of critical habitat, the ESA prescribes measures to enhance species populations and habitat. Under Section 4, (26) the Secretary is required to develop "recovery plans" for the conservation and survival of the species, with priority given, to the maximum extent possible, to those species that would benefit most from the plan. (27) The Act also encourages states to develop species protection and conservation programs. Section 6 (28) authorizes the Secretary to enter into cooperative agreements with any state that establishes and maintains an adequate and active program for the conservation of endangered and threatened species. [1]--The "Jeopardy" Prohibition of Section 7(a)(2). Section 7(a)(2) of the ESA states: Each Federal agency shall, in consultation with, and with the assistance of the Secretary, insure that any action authorized, funded, or carried out by such agency (hereinafter in this section referred to as an "agency action") is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of habitat of such species which is determined by the Secretary, after consultation as appropriate with affected states, to be critical.... (29) Regulations promulgated pursuant to Section 7 further define the jeopardy and adverse modification concepts. Generally, an agency action causes jeopardy if the incremental effects of the agency action, and the cumulative effects of foreseeable actions not performed by the agency, would significantly reduce the likelihood of survival of the species. (30) Thus, effects of any future activities that would not occur "but for" the proposed federal action must be considered. (31) Federal agency actions regulated under Section 7 include the issuance of federal licenses, permits, contracts, leases, rights-of-ways and easements, and grants. Therefore, development activities on federal property, and on private property when some form of federal authorization or funding is required, are subject to Section 7 jeopardy provisions. To facilitate determinations about the potential for an agency action to jeopardize a listed species or to destroy or modify adversely a critical habitat, the agency proposing the action (the action agency) (32) is required to consult with the appropriate wildlife agency, usually the FWS. (33) If the action agency determines that its proposed action may adversely affect a listed species or its critical habitat, it must engage in formal consultation with the FWS. (34) Following formal consultation, the FWS is required to prepare a biological opinion about the effects of the proposed action on the species and its critical

4 habitat. (35) If the species is likely to be endangered by the action, the FWS makes a "jeopardy" finding. A jeopardy biological opinion must include "reasonable and prudent alternatives" to mitigate the effects of the proposed action. (36) Although the action agency is not bound by the FWS opinion, (37) agencies ordinarily defer substantially to the FWS's expertise and adopt an FWS opinion. A "no jeopardy" finding is made if the action is determined to be unlikely to jeopardize the continued existence of the species. (38) When the FWS determines that implementation of an agency action will not result in jeopardy to a listed species, (39) but that an incidental injury to a listed species will result from the action, the FWS must include an "incidental take statement" in the biological opinion. (40) As long as the action is conducted in accordance with the conditions of the incidental take statement in the biological opinion, the action will not violate the Section 9 "takings" prohibition regardless of its impact on a listed species. (41) Section 7 matters involving actions of the federal government were the principal focus of initial ESA attention. In the seminal case of Tennessee Valley Authority v. Hill (TVA), (42) the Supreme Court, determining that Congress intended listed species "to be afforded the highest of priorities," halted the completion of the Tellico Dam after the expenditure of over $100 million. Operation of the dam would have resulted in the destruction of the critical habitat and jeopardize the continued existence of the endangered snail darter. (43) In other Section 7 cases, the U.S. Navy was determined to have violated Section 7 by failing to obtain a biological opinion on the effect of military operations on listed species; (44) the EPA decision to issue a National Pollutant Discharge Elimination System permit for an oil refinery was vacated and remanded to the EPA for reconsideration of the effects of the water discharge on right and humpback whales; (45) the Corps denied a permit to construct a dam based on the impact to whooping crane critical habitat; (46) and construction of a timber road was enjoined because of the effect on the endangered Rocky Mountain grey wolf, pending completion of a biological opinion. (47) The TVA case, and its progeny, exemplify the narrow scope of Section 7. First, Section 7 actions typically involve a singular project or action of a federal agency. Second, the federal action must be determined to place the species in jeopardy of extinction. Because of this focus, Section 7 has had only limited impact on private property development activities. [2]--The "Taking" Prohibition of Section 9. Section 9(a)(1) prohibits any person, including any individual or corporation, from performing certain actions with respect to any endangered species of fish or wildlife listed pursuant to the ESA. (48) One unlawful action is to "take" endangered fish and wildlife anywhere in the United States. (49) By regulation, this prohibition generally extends also to threatened species of fish or wildlife. (50) Thus, the prohibition against taking applies to endangered and threatened fish and wildlife, but not to plants similarly listed. As defined by the Act, the term "take" means to "harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or attempt to engage in any such conduct." (51) "Harm" has been broadly defined as any act that actually kills or injures wildlife, including significant habitat modification or degradation that disrupts or impairs essential behavioral patterns, including breeding, feeding, or sheltering. (52) Thus, significant modification of the habitat of protected species constitutes "harm" within the definition of "take" and, therefore, is prohibited by Section 9 of the ESA. (53) To avoid liability under Section 9, a person may seek an "incidental take permit" from the FWS under

5 Section 10. This permit may allow for the taking of a listed species in an otherwise lawful activity if the taking is "not the purpose of the activity" and "will not appreciably reduce the likelihood of the survival and recovery of the species in the wild." (55) To obtain an incidental take permit, the applicant must prepare and submit a habitat conservation plan to the FWS. The habitat conservation plan must indicate the impact of the incidental take on the species and describe measures to minimize and mitigate those impacts. (56) Section 9 of the ESA has a much broader application than Section 7. Unlike Section 7, which regulates federal activities causing jeopardy to a species, Section 9 prohibits the "taking" of any individual member of an endangered or threatened species by private as well as governmental actions. Therefore, private property development activities that cause a significant habitat modification of a listed species could be determined to be a taking violative of Section 9. The potency of the Section 9 prohibition of habitat modification became apparent in its first judicial interpretation. In Palila v. Hawaii Department of Land & Natural Resources (Palila I), (57) the plaintiffs sought to enjoin the State of Hawaii's practice of maintaining feral goats and sheep on designated critical habitat of the Palila, an endangered species of bird. The plaintiffs alleged that goat and sheep consumption of mamane seedlings prevented the regeneration of the mamane forest required by the Palila for food and shelter. The court found that the state's failure to remove these animals caused a significant modification of habitat essential to the Palila's survival. This habitat modification, the court concluded, was a "taking" of the Palila in violation of ESA Section 9. (58) In 1986, the plaintiffs in Palila I initiated a second citizen suit (59) against the State of Hawaii. Here the plaintiffs alleged that mouflon sheep consumption of mamane seedlings in the critical habitat of the Palila were causing the same type of harm to the Palila as that caused by the feral goats and sheep. In Palila II, the plaintiffs sought to compel the State of Hawaii to remove the mouflon sheep from the critical habitat. The district court found that the plaintiffs had the burden of proving of "actual injury to the species," rather than proving the death of an individual member of the species. Despite the FWS's argument that the redefinition of "harm" did not include future injury to species by habitat modification, the district court determined that the plaintiffs had met their burden by demonstrating that habitat modification would eventually cause the extinction of the species and prevent its recovery. On appeal, the Ninth Circuit affirmed the finding of a taking based on the likelihood of injury to the Palila by habitat degradation. (60) After the two Palila decisions, other courts have rendered even more far-reaching interpretations of the Section 9 "taking" prohibition. In Defenders of Wildlife v. EPA, (61) two environmental groups sued the EPA regarding its decision to allow above-ground use of the pesticide strychnine. The plaintiffs claimed that members of various protected species were being poisoned as a result of strychnine use. The Eighth Circuit, affirming the district court ruling, held that the EPA's decision to register pesticides containing strychnine, or to continue these registrations, was resulting in the killing of endangered species that had either directly or indirectly ingested strychnine. Thus, the court concluded that the EPA's registration of strychnine was a taking of an endangered species. (62) Sierra Club v. Lyng (63) involved a challenge to timber management practices of the United States Forest Service because of impacts on the habitat of the endangered Red-cockaded Woodpecker in four national forests in Texas. The plaintiffs alleged that the Forest Service's failure to follow its own guidelines for protecting the woodpecker was responsible for a drastic decline in woodpecker populations in these forests. The district court found that the Forest Service's even-aged management practices (clear-cutting) of oldgrowth pine stands, which comprised woodpecker habitat, impaired the birds' breeding, feeding, and nesting activities by isolating woodpecker colonies. (64) Based on these findings, the court concluded that the Forest Service had caused the taking of the woodpecker in violation of Section 9. The court imposed a mandatory

6 injunction directing the Forest Service to cease its timber management practices within 1,200 meters of a woodpecker colony site and to prescribe practices designed to maximize the probability of woodpecker survival. (65) The Fifth Circuit affirmed the district court's holding that the Forest Service had committed a taking under Section 9. (66) However, the Circuit Court vacated those portions of the injunction directing the adoption of specific practices as part of a new forest management plan, stating that development of an appropriate management plan was the function of the Section 7(a)(2) consultation process. In a recent unpublished opinion, Sierra Club v. Lujan, (67) the district court held that a taking occurred from the cumulative effect of withholding groundwater from the Edwards Aquifer. The withdrawal resulted in the modification of the critical habitat of a number of endangered and threatened species up to 100 miles away. The Edwards Aquifer is the sole source of drinking water for a six-county area in central Texas. It provides water for municipal, industrial, and agricultural users. The Edwards and its springs are also the home of such endangered species as the Fountain darter, the San Marcos gambusia, Texas wild rice, and the Texas blind salamander, and such threatened species as the San Marcos salamander. The plaintiffs alleged that the groundwater withdrawal disrupted the continuous natural flow of fresh water through the aquifer and its springs on which these species rely for their survival. The court found that the amount of groundwater withdrawal is equal to or greater than the estimated amount of recharge water and will inevitably reduce water flow in the aquifer and up to 100 miles downstream. Because of extensive pumping from the Edwards in the summers of both 1989 and 1990, minimum continuous natural spring flow rates could not be sustained, causing injury or death to the endangered and threatened species. The court declared that the groundwater withdrawal constituted a taking of and jeopardy to these species. Additionally, the court held that the failure of the FWS to develop and implement a recovery plan for the endangered and threatened species also constituted to a taking. Under the rationale of Sierra Club v. Lujan, the scope of liability under Section 9, as compared to that of Section 7, is virtually limitless. Liability for a taking requires only the existence of some nexus, however remote, between an activity and an alleged taking resulting from that activity. (68) Hence, the court was able to determine that a taking resulted from groundwater withdrawals occurring great distances from the site of the affected species. Further, the individual user would be liable for the cumulative effects of all other regional water users, even though that individual's contribution to the take might be nominal. (69) Extending the rationale of Sierra Club v. Lujan to its logical extreme would dictate that few private or public activities could not fall within the purview of Section 9. (70) Consider the situation in which four forest industry companies seek a federal permit to build barge terminals on the Tennessee River to serve nearby wood chip mills. In its permitting decision, the Tennessee Valley Authority (TVA) proposes to consider both on-site and off-site (meaning sourcing area) effects that may be attributed to the proposed barge facility. The sourcing area effects to be considered include those from timber harvesting activities that would take place on private property in a 42 county area in which endangered and threatened species are known to exist. Since these species would be adversely affected by the increased harvesting, the TVA is proposing to consider these effects in determining whether, and under what conditions, to permit the facility. Query, whether ESA jurisdiction should extend to the management of a natural resource when issuing a permit for a facility to be used merely as a transportation component for a product derived from that resource. Under this approach, hypothetically, the FWS may be able to impose a utility surcharge in midwestern states to discourage use of electricity should it determine that local electric power companies contributes to the acidification of a lake in Maine that supports an endangered species. Considering the amorphous liability standard in ESA takings law, this hypothetical regulation would not appear to be outside the realm of possibility.

7 Although Section 7 was the primary focus of early ESA actions, Section 9 has emerged as the dominant force in conserving and protecting endangered and threatened wildlife species. The broader application of Section 9 takings to habitat modification activities by governmental and private entities has facilitated the extension of ESA regulatory authority from single federal activities to comprehensive land use management. (71) Further evidence of the use of the ESA as a mechanism to influence land use management decisions is apparent in the FWS administrative guidelines regarding two wildlife species -- the threatened Northern Spotted Owl and the endangered Red-cockaded Woodpecker. The FWS's Procedures -- Leading to ESA Compliance for the Northern Spotted Owl (72) (Owl Guidelines) embodies perhaps the most far-reaching interpretation of the term "harm" promulgated by the FWS. The Owl Guidelines restrict timber harvesting activities in the old-growth forest of the Pacific Northwest, large portions of which are designated critical habitat for the owl. To comply with the ESA, the Owl Guidelines prohibit private property owners from engaging in timber harvesting activities within up to 3,960 acres surrounding an owl nest. These measures were determined to be necessary to avoid harm to the owl through habitat modification. Although they were not promulgated as regulations by the FWS, the Owl Guidelines explicitly advise that the FWS would refrain from initiating an enforcement action for violation of the Section 9 takings prohibition against a person whose actions meet the Guidelines. However, any injury to the owl resulting from timber harvest activities inconsistent with the Owl Guidelines may be subject to prosecution. Further, the States of Washington and California have adopted regulations incorporating the ESA taking concepts for permitting determinations regarding private timber harvesting under their Forest Practices Acts. (73) These requirements have sparked a heated conflict that pits the timber industry, claiming the right to conduct logging activities on private and federal lands, against environmental activists concerned with the survival of the species. (74) In the southeastern United States, a similar controversy has erupted regarding the Red-cockaded Woodpecker. The Red-cockaded Woodpecker is located primarily in the old-growth forests of the southeastern United States. In October 1992, the FWS published a Draft Red-cockaded Woodpecker Procedures Manual for Private Lands (Draft Woodpecker Guidelines). (75) The Draft Woodpecker Guidelines proscribe activities that would injure the species. Activities such as removing or damaging trees, using pesticides, constructing roads or other facilities, and conducting any activity that may cause stress to or harassment of the woodpecker are prohibited. Further, each woodpecker cluster must be provided foraging habitat contiguous to and within one-quarter to one-half mile of the cluster. To prevent a foraginghabitat-related "take" of the woodpecker, between 60 and 300 acres of foraging habitat of pine and pinehardwood stands must be provided for each active cluster. A minimum basal (cross-sectional) area of trees and tree stems must exist within the foraging habitat. The FWS presumes that implementation of these management procedures will provide sufficient habitat to ensure the survival of existing woodpecker populations. These Draft Woodpecker Guidelines, currently being used as a working draft by the FWS, have been used as the basis for an April 8, 1993 Red-cockaded Woodpecker Management Memorandum of Agreement Between Georgia-Pacific Corporation and the FWS (the Agreement). According to the Agreement, Georgia- Pacific will adopt an integrative plan for the conservation and management of the woodpecker on all but a small portion of its timberland consistent with the Draft Woodpecker Guidelines. On the remaining portion, Georgia-Pacific will attempt to sustain existing woodpecker colonies on a reduced foraging area and will fund FWS research of this effort over a five year period. [3]--Impact of ESA Regulation on Private Property Rights. Both Sections 7 and 9 may limit the development of private property. Section 7 applies only indirectly to

8 private property, requiring a triggering federal action. If no federal action is involved, private property owners have no duty to comply with Section 7. Section 9, however, has a far greater potential for limiting private property development. This Section's taking restriction applies to private, as well as government, actions on both private and public property. Because taking has been defined to include habitat modification, Section 9 has been used to restrict activities on private property. Constraints on lawful development are likely to become more substantial and to occur with greater frequency as the FWS implements fish and wildlife conservation and management measures more aggressively and for an increasing number of species. (76) Constitutional Taking. [1]--Overview of Taking Law. Under the Fifth and Fourteenth Amendments to the United States Constitution, private property may not be taken for public use without just compensation. (77) Until the early part of this century, a constitutional "taking" included only the permanent physical appropriation of property (78) or the equivalent of a practical ouster of possession. (79) Therefore, takings traditionally occurred as the result of the exercise of eminent domain power or when government actions resulted in the occupation or destruction of private property. However, in Pennsylvania Coal Co. v. Mahon, (80) the Supreme Court recognized that a taking requiring just compensation could occur through governmental regulation of property. In Pennsylvania Coal, Justice Holmes explained that, while property may be regulated to a certain extent, "if regulation goes too far it will be recognized as a taking." (81) Exactly when a regulation "goes too far" has been the subject of much judicial debate and discussion. In 1978, the Supreme Court elaborated on this issue in Penn Central Transportation Co. v. City of New York. (82) In Penn Central, the plaintiff, owner of Grand Central Terminal in New York City, sought to construct an office building above the Terminal. Pursuant to the City's Landmarks Preservation Law, (83) the Landmarks Preservation Committee disapproved the construction plans as incompatible with the historic character of the Terminal. The Committee's action prompted the lawsuit by Penn Central on the basis that the disapproval resulted in the taking of the plaintiff's property rights. After noting that each regulatory taking claim had to be considered on an "ad hoc" basis, the Court identified several factors to be balanced in determining when regulation constitutes a taking: (1) the degree of economic impact of the regulation on the claimant, (2) the extent to which the regulation has interfered with distinct investment-backed expectations, and (3) the relation of the regulation to the effectuation of a substantial public purpose. (84) The Court assessed the economic effects of the City's action on the nature and extent of the interference with the plaintiff's rights in the "parcel as a whole." (85) It cited previous cases in which 75% and 87.5% diminution in value had been deemed insufficient to constitute a taking. (86) Thus, relying on the beneficial use remaining in the Terminal, the Court concluded that the denial of air rights to Penn Central did not constitute a taking. (87) In Agins v. City of Tiburon, (88) the Court repeated the Penn Central standard of review for land use regulations: A regulation will constitute a taking if it does not substantially advance a legitimate state interest and it denies an owner economically viable use of the owner's land. In Agins, landowners challenged a city zoning ordinance limiting development of their five acres of unimproved property. Without seeking any zoning approval for property development, the plaintiffs challenged the ordinance as a taking in violation of the Fifth and Fourteenth Amendments. The Court determined that the zoning ordinance substantially advanced legitimate police power goals by "discouraging the premature and

9 unnecessary conversion" of land to urban use. Moreover, the ordinance allowed other economically viable uses of the property. Thus, the zoning ordinance did not constitute a taking. (89) The federal government's concern as to the effect of this taking standard on governmental activity was manifested in a 1988 Executive Order issued by President Reagan entitled "Governmental Actions and Interference with Constitutionally Protected Property Rights." (90) This Executive Order directs Executive Branch departments and agencies to assess the takings implications of proposed policies and actions on private property. Its stated purpose is to ensure that government policymakers are informed of the government's potential liabilities for the taking of private property rights and to minimize these liabilities. [2]--The "New" Lucas Taking Standard. The Court's latest pronouncements in Lucas v. South Carolina Coastal Council (91) further advance, even if they do not clarify, the present state of takings law. Lucas originated in 1986, when David Lucas, a real estate developer, purchased two vacant water-front lots on the Isle of Palms, a coastal barrier island near Charleston, South Carolina. Lucas paid $975,000 for the two lots, intending to construct two homes there. In 1988, however, South Carolina passed the Beachfront Management Act (92) (BMA), which effectively prohibited construction of any permanent structure on Lucas' properties. Lucas sued in state court, claiming that the BMA resulted in an unconstitutional taking of his property without compensation. The state trial court determined that the building prohibition precluded all economic use of the lots and constituted a taking requiring compensation. On appeal, the South Carolina Supreme Court reversed. (93) That court held that the BMA represented the legislature's determination that new construction in the coastal zone threatened valuable public resources. In the South Carolina Supreme Court's view, the takings doctrine did not require compensation for losses by reason of regulations imposed to protect the public health and safety, regardless of their economic impact. Lucas appealed the South Carolina Supreme Court's decision to the United States Supreme Court. The Supreme Court's decision in Lucas formulated a new (94) approach to the classic dilemma in takings jurisprudence: the degree to which compensation should be awarded when a government action intended to prevent or abate a public nuisance has the effect of denying an owner all economically viable use of its property. The majority opinion, authored by Justice Scalia, holds that the Fifth Amendment takings analysis begins with the categorical rule that, if a regulation deprives a landowner of "all economically beneficial or productive use of property," the landowner is entitled to just compensation for this taking. (95) The "total takings" inquiry requires an evaluation of the degree of harm to public lands and resources or adjacent private property posed by the landowner's proposed activities; the social value of the landowner's proposed activities and their suitability to the locality in question; and the relative ease with which the alleged harm can be avoided through measures taken by the claimant and the government or adjacent private landowners. (96) If, based on this inquiry, the regulation is considered a total taking, compensation is required unless the regulation was inherent in the "background principles of state nuisance and property law." (97) The categorical rule, the Court states, applies in circumstances in which no productive or economically beneficial use may be made of the real property, an event the Court anticipated would occur only rarely. (98) Thus, under Lucas, the taking inquiry is limited to an analysis of the property's value before and after the occurrence of the alleged taking. The government may avoid compensation for a regulation that deprives a property owner of all economic use of the property only if the government can establish that the regulation was enacted for the purpose of preventing a traditional public nuisance. (99) In situations involving the regulation of property resulting in less than a total loss in value, the court must balance the nature of the government action, its economic impact, and its effect on the owner's investment-backed expectations (100)

10 to determine whether there has been a taking. (101) The Lucas decision left a few important issues unresolved. The Court did not directly address whether, when determining if property is deprived of all economic value, the "parcel" to be evaluated is the larger parcel of which a smaller portion has been affected or the smaller portion itself. (102) This determination would be critical in deciding whether a regulation affecting a part of a parcel would be considered a deprivation of all economically beneficial use of the burdened portion of the property, or as one in which the owner has suffered a mere diminution in value of the tract as a whole. Although it did not directly address this issue, the Court intimated, or at least Justice Scalia's interpretation was, that a regulation preventing beneficial use of any part of property would constitute a total categorical taking of that part. In a footnote, the Court declared "unsupportable" a takings focus based on diminution in value of the parcel. (103) The United States Claims Court (now the United States Court of Federal Claims) has addressed the issue of "the parcel as a whole" in Loveladies Harbor, Inc. v. United States (104) and Florida Rock Industries v. United States. (105) This issue may be addressed by the Federal Circuit in the near future, as the appeal in Loveladies was argued in March of (106) In Loveladies, the plaintiffs had purchased 250 acres of property on the New Jersey shore in 1956 for development purposes. Subsequently, after the passage of the Clean Water Act, (107) the plaintiffs were denied a federal permit to develop 12.5 acres of wetlands. The plaintiffs sought compensation for this alleged taking. The Claims Court did not consider the entire 250 acres as the "parcel as a whole." Instead, it discounted the previously developed acres and found a taking of the remaining 12.5 acres. The Claims Court awarded the plaintiffs the full market value of the acres before permit denial. (108) In Florida Rock, a mining company had purchased over 1,500 acres in Florida for mining limestone. As in Loveladies, the subsequently enacted Clean Water Act amendments required Florida Rock to apply for a permit to fill 98 acres of wetlands on the property. In the takings suit following permit denial, the Claims Court determined that the diminution in value of the 98 acres was a compensable taking and awarded the company their fair market value as damages. (109) Another unresolved issue in Lucas relates to the definition of "economically beneficial use" and "productive use." For practical purposes, the economically beneficial use of a property would necessarily be a function of such factors as the value of the property at the time of the regulatory taking, the purchase price of the property, and the value the property would bring upon sale after the regulation has become effective. The court provided no direction for determining the consideration, if any, to be given to each of these factors in analyzing the economically beneficial use of the property. Further, it offered no guidance as to whether a purchaser's purpose in purchasing a property should be considered in determining a "productive use." For instance, when property has been purchased for mining, and the purchaser is denied the right to mine that property by regulation, the property is lacking all productive use for that owner. However, it still may be useful for purposes other than mining. [3]--Effect of Lucas. The Lucas standard for determining the occurrence of a constitutional taking is clearly set forth in the Supreme Court's opinion. However, there is no consensus of opinion among scholars and authors about its substantive effect. Some praise the opinion as establishing a novel methodology to achieve more objective, consistent judicial decision-making in cases involving non-physical governmental burdens that deprive owners of the economic value of their property. (110) Others denounce it as "indirection," replete with inconsistencies and omissions that will encourage inconsistent interpretations when applied by courts. (111)

11 Whether the Lucas holding will have significant implications for federal statutes that regulate the use of private property, including the ESA, will depend on (1) whether a regulation deprives an owner of all economically beneficial use or productive use of its property and (2) whether the regulation is within state nuisance and property law. However, the Court's decision implies a greater willingness to find a deprivation of all economically beneficial use or productive use by considering a portion of property as the relevant parcel. Further, Lucas creates a very narrow nuisance exception for total takings, one that must be affirmatively proven by the government. While certain environmental regulations concerning air and water may be founded in common law of nuisance and property, it is unclear whether ESA regulation will satisfy this standard. Arguably, land use restrictions for the preservation of plant, fish, and wildlife resources are not of the type contemplated by the Supreme Court as "inherent in the background principles of state nuisance and property law." The combination of these factors may enable claimants under the ESA to be more successful under the Lucas test than they would have been under the Penn-Central three-tiered approach. (113) The ultimate effect of Lucas on ESA regulation is unclear. However, as the scope of ESA regulation through the Section 9 taking provision expands to require habitat preservation, the probability of the invasion of private property rights to the extent of a constitutional taking is heightened. This probability has not gone unnoticed. The conflict between the ESA and property rights is acknowledged in a recently proposed ESA reauthorization amendment that would, among other things, require compensation to private property owners adversely affected by Section 7(e) (jeopardy), Section 7(q) (proposed amendment to incorporate consultation procedures under Section 7 for non-federal persons), and Section 10(a) (incidental take permit) decisions. (114) Without the passage of this amendment, the government may be expected to deter this confrontation through the more frequent use of habitat conservation plans. The habitat conservation plan process would be the most effective, and perhaps the only, mechanism currently available to balance properly societal desires of conserving endangered and threatened species and sustaining economic development. Embraced by both development and environmental communities, habitat conservation plans offer the important benefits of addressing conservation issues on a regional, rather than the more limited project-specific, basis through a reasoned, long-term program. (115) This comprehensive approach is vastly superior to a multiplicity of fragmented and inconsistent requirements imposed to mitigate the taking of listed species by development activities without a habitat conservation plan. (116) Conclusion. Sections 7 and 9 of the ESA seek to achieve the listed species protection and conservation objectives of the Act by prohibiting actions that would result in "jeopardy toll" or the "taking of" a listed species. The term "harm" in the definition of "take" is broadly defined under existing regulatory definition, case law, and administrative interpretations to include habitat modifications that kill or injure protected fish and wildlife species by significantly impairing behavioral patterns. Bolstered by this liberal construction of the term "take," Section 9 and, to a lesser degree, Section 7 are capable of precluding or restricting land use activities by private and public property owners. Consequently, ESA regulation may be subject to constitutional limitations. This conflict between ESA regulation and private property rights will invite challenge to ESA regulation of private property as a taking under the Fifth and Fourteenth Amendments. The courts will have the onerous responsibility of applying the standard of review espoused in Lucas to resolve these conflicts Endangered Species Act of 1973, as amended, 16 U.S.C (1988 & Supp. II 1990) U.S.C. 1531(b).

12 3. U.S. Const., amend. V U.S. Const., amend. XIV In addition to biological species, the definition of "species" includes "any subspecies of fish or wildlife or plants, and any distinct population segment of any species of vertebrate, fish or wildlife which interbreeds when mature." 15 U.S.C. 1532(16) U.S.C. 1532(6) U.S.C. 1532(20) U.S.C The list of endangered and threatened wildlife species appears at 50 C.F.R (h) (1992); endangered and threatened plant species at 50 C.F.R (h) (1992); designated critical habitat for fish and wildlife at 50 C.F.R (1992); and designated critical habitat for plants at 50 C.F.R (1992) U.S.C. 1533(a)(1) The notice and comment rule-making procedures for the listing of endangered and threatened species and designation of critical habitat are specified at 50 C.F.R. pt U.S.C. 1533(a)(1) U.S.C. 1533(b)(1) U.S.C. 1533(a)(3) U.S.C. 1532(5)(A)(iii) U.S.C. 1533(b)(2) U.S.C. 1533(b)(2) C.F.R (a) (1992). As a practical matter, the FWS typically delays designating critical habitat under either of these two exceptions. M.C. Blumm & A. Simrin, "The Unraveling of the Parity Promise: Hydropower, Salmon, and Endangered Species in the Columbian Basin," 21 Envtl. L. 657, 719 (1991). As of October 1991, critical habitat had been designated for only 1/3 of the 597 fish and wildlife species listed. See 50 C.F.R and (1992) U.S.C. 1536(a)(2) U.S.C. 1538(a)(1)(B) U.S.C. 1540(a) U.S.C. 1540(a)(1), (2). See also, 50 C.F.R (establishing procedures for assessment, hearing, and appeal of civil penalties) U.S.C. 1540(e)(6) U.S.C. 1540(b). The "knowing" requirement of the ESA has been construed to mean that a person must be found to have acted with general intent at the time of the taking, not that a person have specific knowledge that the species was listed as endangered. See United States v. Billie, 667 F. Supp (S.D. Fla. 1987) U.S.C. 1540(g). Citizen suits are subject to a mandatory 60 day written notification requirement of 16 U.S.C.

13 1540(g)(2)(A)(i). See Maine Audubon Soc'y v. Purslow, 672 F. Supp. 528 (D. Me. 1987) (complaint alleging ESA violation dismissed for failure to comply with notice requirement) U.S.C. 1533(f) The FWS, however, has not approved recovery plans for all protected species. Even if recovery plans had been approved, the ESA does not require adherence to or implementation of the plans by agencies outside the Department of the Interior or by the private sector. One court has gone so far as to state that there is no duty for any Interior Department agency to implement recovery plans. National Wildlife Fed'n v. National Park Serv., 669 F. Supp. 384, (D. Wyo. 1987) U.S.C U.S.C. 1536(a)(2) C.F.R , l Fed. Reg. 19,926, 19,932 (1986) (codified at 50 C.F.R. pt. 402) Action agencies typically include the United States Environmental Protection Agency (EPA), the U.S. Army Corps of Engineers (Corps), the Federal Highway Administration and the Coast Guard C.F.R U.S.C. 1536(b)(1) C.F.R (f)(4) U.S.C. 1536(b)(4)(ii); 50 C.F.R (h)(3) U.S.C. 1536(b)(3)(A); see, e.g., Sierra Club v. Froehlke, 534 F.2d 1289 (8th Cir. 1976) ("[R]esponsibility for decision after [ 7] consultation is not vested in [the] Secretary, but in the agency involved.") U.S.C. 1536(b)(3)(A); 50 C.F.R (h)(3) This determination will result in either a no jeopardy biological opinion or a jeopardy biological opinion incorporating a reasonable and prudent alternative U.S.C. 1536(b)(4)(iii) U.S.C. 1536(0)(2); 16 U.S.C. 1536(b)(4) U.S. 153 (1978) In 1978, after the Supreme Court decision in TVA, Congress amended the ESA to create the Endangered Species Committee (the so-called "God Squad"), 16 U.S.C 1536(e). This Committee may authorize case-by-case exemptions from ESA requirements if it concludes that the social and economic costs of protecting a species outweigh the benefits of species conservation. 16 U.S.C. 1536(h). Primarily because of administrative complexities, the Committee has rarely been used. However, it was con-vened recently to determine economic impacts of timber harvest regulation proposed to protect the Northern Spotted Owl in the Pacific Northwest Romero-Barcelo v. Brown, 643 F.2d 835 (1st Cir. 1981), rev'd on other grounds, 456 U.S. 305 (1982) Roosevelt Campobello Int'l Park Comm'n v. EPA, 684 F.2d 1041 (1st Cir. 1982) Riverside Irrigation Dist. v. Andrews, 568 F. Supp. 583 (D. Colo. 1983), aff'd, 758 F.2d 508 (10th Cir. 1985).

14 Thomas v. Peterson, 753 F.2d 754 (9th Cir. 1985) U.S.C. 1538(a)(1) U.S.C. 1538(a)(1)(B) C.F.R. 17.3(1)(a) U.S.C. 1532(19) C.F.R The propriety of incorporating habitat modification as a 9 "taking" has been one of the most controversial issues debated under the Act. Several commentators have concluded that, because the Senate expressly rejected language that included habitat modification as a "take" during the ESA authorization process (S. Rep. No. 307, 93rd Cong., 1st Sess. 14 (1973)), the FWS' regulatory definition is unlawful. See M.J. Bean, The Evolution of National Wildlife Law, 343 n. 116 (2d ed. 1983); J.A. MacLeod, T.C. Means, & T.R. Lundquist, "Endangered Species Act: A Comprehensive Evaluation for the Coal Industry," 93 W. Va. L. Rev. 673, (1991) (the FWS definition of "harm" to include habitat modification arguably reaches a result that Congress expressly declined to authorize). Instead of endorsing habitat modification as a type of take, these commentators suggest that Congress opted to protect endangered species that inhabit private property through a federal land acquisition program. In fact, the legislative history of the Act is replete with congressional statements to the effect that habitat modification should be addressed through land acquisition. See 119 Cong. Rec. 25,669-25,691 (1973), and 119 Cong. Rec. 30,162-30,166 (1973). Finally, it is argued that the term "harm," which was added to the definition of "take" as a technical and clarifying amendment by the Senate, should not be interpreted to expand the definition substantively to include habitat modification. Since no other component of the take definition includes habitat modification, it would be inconsistent with and violative of the principles of legal construction to define "take" in this manner U.S.C. 1539(a)(1)(B) U.S.C. 1539(a)(1)(B), (2)(B)(iv) U.S.C. 1539(a)(2)(A) F. Supp. 985 (D. Haw. 1979), aff'd, 639 F.2d 495 (9th Cir. 1981) Reacting to the Ninth Circuit decision in Palila I that habitat modification could constitute a "taking" under 9, the FWS proposed an amendment to the regulatory definition of "harm." The proposed redefinition specified that "harm" was the actual injuring or killing of wildlife; it did not mention habitat modification. 46 Fed. Reg. 29,453, 29,490 (1968). The intent of the FWS was to clarify that habitat modification in the absence of some identifiable injury to a species would not constitute "harm." The Solicitor's opinion supported the proposed amendment. The final rule promulgated by the FWS, however, deviated only grammatically from the original and continued to include "significant habitat modification or degradation where it actually kills or injures wildlife by significantly impairing essential behavioral patterns." 46 Fed. Reg. 54,721, 54,750 (1981) (codified at 50 C.F.R. 17.3); See J.C. Kilbourne, "The Endangered Species Act Under the Microscope: A Closeup Look From a Litigator's Perspective," 21 Envtl. L. 499, 577 (1991) Palila v. Hawaii Dep't of Land & Natural Resources, 649 F. Supp (D. Haw. 1986), aff'd, 852 F.2d 1106 (9th Cir. 1988) (Palila II) Id. at The court did not reach the issue of whether "harm" includes habitat modification that is likely to prevent species recovery. However, the federal government, in its appellate amicus brief, contended that the definition of "harm" excludes habitat modification actions that only prevent the species recovery. Federal amicus brief in Palila v. Hawaii Dep't of Land & Natural Resources, No (9th Cir.), at (filed December 17, 1987) F.2d 1294 (8th Cir. 1989) Id. at 1301.