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Court Applies Principles of Penn Central v. New York in Coastal Wetlands Case

In Scot Netherlands, Inc. v. State of New Jersey, the plaintiff owned a 22.87-acre plot of land in Atlantic City that was vacant wetlands except for a rent-producing billboard on the site. In 2007, after owning the property for 30 years, the plaintiff filed an application with New Jersey Department of Environmental Protection (“DEP”) for a coastal and freshwater wetlands permit to fill 17.44 acres to build parking and an additional 1.36 acres to build two stormwater management basins. The DEP denied these permits. This decision was appealed to the Office of Administrative Law, and the plaintiff was denied relief. A final decision was then issued by the DEP. This decision was then brought to the Law Division, where the plaintiff argued that the denial of this permit was an inverse condemnation that deprived them of all economic benefit of the site.

At the trial level, Judge Winkelstein found against the plaintiff. He based this decision on several factors. The first of these was that the property retained some economic beneficial value despite the denial, as demonstrated by the billboard on the property. Second, even if the permit had been granted by DEP, the plaintiff failed to request the proper §404 permits from the Army Corps of Engineers under the Federal Water Pollution Control Act (“FWPCA”) and failed to demonstrate the likelihood of acquiring such a permit. Also, in 2008, the property had been rezoned by the city from highway commercial to tidal marshlands. This zoning designation change made development unlikely even if the DEP permits had been granted. The DEP and Army Corp of Engineers regulating authority were both understood by the plaintiff at the time of purchase, and the city real estate tax had assessed the property based on its non-build-able wetlands character.

Applying these findings to the three-prong test for regulatory takings found in Penn Central Transportation Company v. New York , 43 US 104, Judge Winkelstein held that the plaintiff failed to demonstrate that the proposed development would be viable but for the regulation and failed to demonstrate reasonable investment-backed expectations that the property would not be subject to this regulation. Further the Judge noted that the purpose of the regulations addressed public health and safety concerns, and that the property was not singled out for enforcement.

On appeal, the Appellate Division upheld the Trial Court’s ruling, noting that an owner is not entitled to the full intensive use value of the land, but rather protected from losing all economically beneficial uses of the land. They noted that the property still has a value of $200,000 despite the existing DEP regulations and can continue to be used for the billboard. They found no error in Judge Winkelstein’s factual findings, nor in the legal conclusions drawn from these facts.

The attorneys at Lieberman & Blecher are highly experienced in matters involving land use, regulatory and permit requirements, and wetlands. If you are having issues with development, zoning, or other land use matters, please do not hesitate to contact our office to discuss how we can help.


 This blog post was researched and drafted by Aaron Hopkins, Intern at Lieberman & Blecher, P.C.


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