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Mike Mehaffy v. United States

December 10, 2012


Appeal from the United States Court of Federal Claims in Case No. 09-CV-860, Judge Christine O.C. Miller.

The opinion of the court was delivered by: Rader, Chief Judge.

NOTE: This disposition is non-precedential.

Before RADER, Chief Judge, LOURIE and WALLACH, Circuit Judges.

In this case, Appellant Mike Mehaffy seeks compensa- tion from the government, claiming a taking of his real property in violation of the Fifth Amendment to the United States Constitution. Mr. Mehaffy's claim arises from a decision by the United States Army Corps of Engineers (the "Corps") denying Mr. Mehaffy's fill permit application under section 404 of the Clean Water Act, 33 U.S.C. § 1344. The United States Court of Federal Claims granted summary judgment for the government on the ground that Mr. Mehaffy had not met the require- ments for a regulatory taking under Penn Central Trans- portation Co. v. City of New York, 438 U.S. 104 (1978) ("Penn Central"). This court affirms the decision of the trial court.


The land subject to this litigation is a seventy-three acre parcel bordering the Arkansas River in North Little Rock, Arkansas. In 1970, the property was owned by Nomikano, Inc. ("Nomikano"), an Arkansas corporation holding assets for the benefit of the Mehaffy family and whose business was conducted by Mr. Mehaffy's father, the Honorable Pat Mehaffy.

On March 2, 1970, the United States purchased a flowage easement ("the easement") from Nomikano that covered roughly forty-nine acres of the subject property. The easement was purchased as part of a congressionally authorized effort to construct locks and dams along the Arkansas River. It gave the government the right to, among other things, "permanently overflow, flood and submerge the land lying below elevation 249, [mean sea level], and to occasionally overflow, flood, and submerge the land lying above elevation 249, m.s.l., in connection with the operation and maintenance of Lock and Dam No. 7, Arkansas River project." Mehaffy v. United States, 102 Fed. Cl. 755, 757 (2012).

However, the easement also contained a reservation of certain rights. According to the easement deed, Nomikano reserved for itself, its successors, and assigns, all such rights and privileges as may be used and enjoyed without interfering with [the govern- ment's purpose in obtaining the easement]. In- cluded among those rights specifically reserved to the landowner, its successors and assigns, is the right to place fill in the area of said tract and to place structures on said fill above elevation 252 feet, m.s.l. Notwithstanding, the above exception does not permit the placing of structures for hu- man habitation thereon.

Id. This reservation of rights was included in the easement deed at the request of Mr. Mehaffy's father.

After the government purchased the easement, Con- gress enacted the Clean Water Act of 1972, Pub. L. No. 95-217, 91 Stat. 15656 (as amended at 33 U.S.C. §§ 1251- 1387 (2006)) (the "CWA"). Section 404 of the CWA, codi- fied at 33 U.S.C. § 1344, "establishes a program for the regulation of fill activities involving waters of the United States. The basic premise of the program is that no discharge of dredged or fill material into waters of the United States is permitted if a practicable alternative exists that is less damaging to the environment." Nor- man v. United States, 429 F.3d 1081, 1086 n.1 (Fed. Cir. 2005) (internal quotations omitted). On October 10, 1980, the Corps notified Nomikano and its officers (including Mr. Mehaffy), that the property and the easement were subject to the terms of the CWA. The letter specifically stated the easement, by itself, "is not sufficient to author- ize work requiring authorization under [the CWA]," and thus a section 404 permit would be required should Nomikano desire to place fill material in any of the wet- lands located on the property. Mehaffy, 102 Fed. Cl. at 758.

In 1987, Nomikano was dissolved, its assets liqui- dated, and the property sold to Mehaffy Construction Company Inc. ("MCC"). While Mr. Mehaffy was the main executive for MCC at that time, the sale was a "negoti- ated, arm's-length transaction for $75,000" which was then the fair market value of the land. Id. In May 2000, the property was sold a second time. Mr. Mehaffy had relinquished managerial control of MCC by that time, and MCC sold the property to him for $10.00.

In 2004, the Mehaffys began to develop the property. The Corps identified wetland-delineated areas on the subject property, and MCC cleared and leveled approxi- mately nine to ten acres of the uplands portion of the subject property. The Mehaffys then used this cleared land as a storage yard for their construction business.

In September 2006, Mr. Mehaffy filed an application for a section 404 permit to fill approximately forty-eight acres of wetlands on the subject property. The application stated the purpose of the permit was to exercise the right granted in the 1970 easement. After several months of communication between the Corps and Mr. Mehaffy, a period of public comment, and input from several federal and state governmental agencies, the Corps denied Mr. Mehaffy's permit application. The Corps emphasized that Mr. Mehaffy had failed to demonstrate that his proposed placement of 230,000 cubic yards of fill within a desig- nated floodway and wetland "did not have any practicable alternatives which would have less adverse environmental impacts." Id. at 761.

The Corps informed Mr. Mehaffy of his agency appeal options, and he subsequently appealed the permit denial through the Corps' administrative appeals process. The Corps ultimately denied his appeal, and, as the trial court found, this denial represented the final ...

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