## Facts

- Loveladies Harbor, Inc. and a related entity acquired about 250 acres on Long Beach Island, New Jersey, in 1958 for residential development.
- By roughly 1972, Loveladies had developed about 199 acres; about 51 acres remained largely undeveloped and included wetlands.
- In dealings with New Jersey regulators, Loveladies obtained approval to develop a 12.5-acre portion of the remaining area in exchange for conveying 38.5 acres to the State for conservation, which Loveladies conveyed.
- To proceed with filling wetlands on the 12.5-acre tract, Loveladies applied to the U.S. Army Corps of Engineers for a Clean Water Act § 404 permit.
- The Corps denied the § 404 permit (following a state recommendation of denial), preventing the planned fill and residential development.
- In the Court of Federal Claims, Loveladies asserted the permit denial effected a Fifth Amendment regulatory taking of the 12.5-acre tract.
- The trial court treated the 12.5-acre tract as the relevant property interest, found a 100% loss of economic use of that tract after denial, and awarded just compensation.

## Issues

1. Whether the relevant “parcel” for takings analysis was the entire 250-acre holding or the 12.5-acre tract subject to the denied § 404 permit.
2. Whether denial of the § 404 permit effected a compensable regulatory taking under the Fifth Amendment, including under Lucas’s total-deprivation rule and/or Penn Central’s factors.
3. Whether the government avoided takings liability by showing the prohibited fill and development were already barred by “background principles” of New Jersey property or nuisance law.

## Decision

- The Federal Circuit affirmed the judgment for Loveladies.
- The court upheld the trial court’s determination that the 12.5-acre tract was the relevant parcel on these facts.
- The court agreed that the permit denial left the 12.5-acre tract without economically viable use, supporting a compensable taking.
- The court rejected the government’s claim that New Jersey nuisance or property law independently prohibited the proposed use so as to defeat liability under Lucas.
- The compensation award determined by the trial court was left undisturbed.

## Legal Principles

- The “parcel as a whole” inquiry is fact-specific; a discrete, separately treated portion of a larger holding may be the relevant parcel where the challenged government action is directed at that portion and surrounding circumstances support separate treatment.
- Under Lucas, a regulation that eliminates all economically beneficial or productive use of the relevant parcel is a per se taking unless the restricted use was never part of the owner’s title due to background principles of state property or nuisance law.
- The government must identify concrete, preexisting state-law limitations to invoke the Lucas background-principles exception; modern statutory or regulatory restrictions generally cannot supply that exception merely because they reflect public environmental interests.
- Penn Central considerations (economic impact, reasonable investment-backed expectations, and character of governmental action) may confirm a taking where a regulation imposes a severe, targeted value-destroying burden on a specific owner after substantial development-related investment and reliance.

## Conclusion

The Federal Circuit held that the Corps’ denial of a § 404 permit, evaluated against the 12.5-acre tract at issue, effected a compensable regulatory taking because it caused a total loss of economically viable use and the government failed to show that New Jersey’s preexisting property or nuisance law independently barred the proposed fill and residential development.


Loveladies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1994)