Regulatory Takings Update:
Amelia Island, Florida
August 23, 2001
Timothy J. Dowling
Chief Counsel
Community Rights Counsel
Community Rights Counsel
 Nonprofit public interest law firm
 Assists local governments in defending land use controls
and other community protections
 Emphasis on takings cases
 Close working relationship with the International Municipal
Lawyers Association
Community Rights Counsel Cases
 Rhode Island wetland protections (Palazzolo)
 Mamaroneck, NY open space protections
 Lake Tahoe planning moratoria
 Washington, DC historic preservation laws
 Anchorage fair housing laws
 San Francisco tenant protections
 Riverside, CA fire safety protections
 Pennsylvania & Ohio bans on harmful coal mining
Palazzolo v. Rhode Island
121 S. Ct. 2448 (June 28, 2001)
5-4 win for landowner
“Movement” case handled by Pacific Legal
Foundation in the Supreme Court
Elderly claimant: 80-year-old Anthony Palazzolo
The Palazzolo Court
“[S]ome, but not too specific, guidance”
since Pennsylvania Coal Co. v. Mahon (1922)
Palazzolo: Six Opinions
Justice Kennedy (Majority) -- joined by Chief Justice
Rehnquist and Justices
O’Connor, Scalia, and
Thomas
Justice O’Connor (Concurrence)
Justice Scalia (Concurrence)
Justice Stevens (Dissent)
Justice Ginsburg (Dissent)
Justice Breyer (Dissent)
Palazzolo’s Coastal Wetlands
Palazzolo’s Coastal Wetlands
Palazzolo’s Coastal Wetlands
Palazzolo’s Coastal Wetlands
Ownership History
In 1959, Shore Gardens buys the land for $13,000
Subdivides the land into 80 lots
Sells off six upland lots for a profit
In 1978, Palazzolo personally acquires the
remaining 74 lots from defunct Shore Gardens
Regulatory History
In 1971, Rhode Island enacts coastal protection
legislation creating the state Coastal Resources
Management Council
The Council issues rules prohibiting the filling of
coastal wetlands like Palazzolo’s
Special exception to the ban where the fill serves
a “compelling public purpose”
Application History
1962 -- Shore Gardens applies to fill all 18 acres;
denied because the application was incomplete
1963 -- Second application to fill 18 acres
1966 -- Third application to fill 11 acres for a beach
club
Both applications are referred to the Rhode Island
Dep’t of Natural Resources, which initially approved
them, but shortly thereafter the approval is
withdrawn due to environmental harm
Application History (continued)
Council wetland rules become effective; Palazzolo
personally acquires the property in 1978
1983 -- Palazzolo applies to fill all 18 acres of
wetlands; no purpose specified; application denied
because it was “vague and inadequate”
 1985 -- Palazzolo applies to fill 11 acres to build a
private beach club; application denied because the
proposal did not serve a “compelling public purpose”
A Private Beach Club?
Justice Kennedy: “The details of the [beach club]
proposal do not tend to inspire the reader with an
idyllic coastal image, for the proposal was to fill 11
acres of the property with gravel to accommodate ‘50
cars with boat trailers, a dumpster, port-a-johns,
picnic tables, barbecue pits of concrete, and other
trash receptacles.’”
Justice Ginsburg: “a most disagreeable beach club…
[T]o get to the club’s water, i.e. Winnepaug Pond
rather than the nearby Atlantic Ocean, ‘you’d have to
walk across the gravel fill, but then work your way
through approximately 75 feet of marsh land…’”
Palazzolo’s Takings Suit
Palazzolo seeks $3,150,000 based on profits
allegedly expected from 74 single-family homes
Undisputed that he may build at least one single
-family house: land worth $200,000 (1986 dollars)
Trial Court Ruling
No Taking
Proposed subdivision = a nuisance due to
septic tank contamination of community drinking
water supplies
Proposed wetland destruction = a nuisance due
to harm to fish populations
Not denied all economically viable use
No interference with expectations because
Palazzolo knew about state wetland protections
when he acquired the property in 1978
Rhode Island Supreme Court Ruling
Not ripe because Palazzolo never applied for the
subdivision
Not ripe because record fails to show the extent
to which land may be developed
No taking under Lucas because pre-existing
wetland protections were “background principles”
No taking under Penn Central because preexisting wetland protections defeated any
expectation to fill the property
Not denied all economically viable use
Summary of U.S. Supreme Court Rulings
Case is ripe
Claim is not barred simply because Palazzolo
acquired the land after the wetland rules were
issued
No per se take under Lucas because the land
retained significant value
The Ripeness Ruling: Finality
Reaffirms the basic ripeness rules: agency must
reach a final decision (Williamson County) and
the final decision must inform the court of the
extent of permitted development (MacDonald)
The “unequivocal nature” of the wetland
protections showed that no fill would be
allowed: “There is no indication that the Council
would have accepted the application had
petitioner’s proposed beach club occupied a
smaller surface area.”
The Ripeness Ruling: Finality (continued)
Court reaffirms “the important proposition” that a
regulatory takings case is not ripe until the
agency has the chance “to decide and explain the
reach of a challenged regulation”
The briefs and oral argument clarified that the
Council would not allow filling of any wetlands for
any purpose. Thus, “further permit applications
were not necessary to establish this.”
But what if the briefs and argument hadn’t been
so clear? Did the case ripen through briefing and
argument?
The Ripeness Ruling: Other Upland
Development
Rhode Island: Palazzolo might be able to build on
other upland portions of the land
The Court: State failed to make this point clearly
in its cert. opposition
Justice Ginsburg: State had no incentive to show
that Palazzolo could build more than one house
because the claim in state court was a Lucas
claim; PLF switched the claim to a Penn Central
claim and then misrepresented the facts in its
cert. petition; Court should not become “supreme
topographical factfinder” and resolve ambiguities
in Palazzolo’s favor
The Ripeness Ruling: Hypothetical Uses
Rhode Island and amici: Palazzolo failed to apply
for the subdivision proposal that formed the heart
of his takings claim as litigated
The Court: this failure goes only to damages, not
ripeness
The Court reaffirms that bait-and-switch issue is a
“valid concern”; state law may impose additional
ripeness rules and “normal planning procedures”
to control damage awards based on hypothetical
uses
The Ripeness Ruling: Confusion
Compare:
“[T]here is no indication that any use involving
substantial structures or improvements would have
been allowed.”
with
Where the “denial of the application makes clear
the extent of development permitted ... federal
ripeness rules do not require the submission of
further and futile applications ...”
The “Notice Rule” Ruling
Post-enactment acquisition is not an absolute bar
to a takings challenge to a statute or regulation
Fairness concerns
Nollan footnote controls: “prior owners must be
understood to have transferred their full property
rights in conveying the lot.”
Statutes and Rules May Be Background
Principles
“We have no occasion to consider the precise
circumstances when a legislative enactment can
be deemed a background principle of state law or
whether those circumstances are present here.”
Background principles may include “an existing,
general law”
Background principles include any “common,
shared understandings of permissible limitations
derived from a State’s legal tradition.”
See also Justice Kennedy’s concurrence in Lucas:
the entirety of a State’s legal tradition determines
whether taking occurs
Palazzolo: Expectations Analysis
Justice O’Connor plus four dissenters: Pre-existing
statutes and rules are relevant to Penn Central
No other Justice joined Scalia’s view to the contrary
The Lucas Per Se Rule
$200,000 in value (6.4% of claimed value) defeats
a Lucas per se claim; a 93.6% value loss is not
enough to trigger the Lucas per se rule
“Token interest” does not defeat a Lucas claim
Palazzolo describes Lucas test both in terms of
“use” and “value”
Palazzolo: Concluding Observations
1. Both sides claim victory
2. No discussion of the value of wetlands
3. More charged rhetoric from Justice Scalia
4. More rhetorical flourish from the Court in favor of
takings claimants
Tahoe-Sierra Preservation Council, Inc.
v.
Tahoe Regional Planning Agency,
216 F.3d 764 (9th Cir. 2000),
cert. granted, 121 S. Ct. 2589 (June 29, 2001)
“Whether the Court of Appeals properly determined
that a temporary moratorium on land development
does not constitute a taking of property requiring
compensation under the Takings Clause of the
United States Constitution?”
Lake Tahoe Picture #1
Lake Tahoe Picture #2
Tahoe Facts
Lake losing one foot of clarity every year due to
uncontrolled development
32-month planning moratorium to allow for
preparation of a regional growth plan
450 landowners brought facial takings claim
Tahoe: Trial Court
Moratorium reasonable in scope and duration
No interference with reasonable expectations
(average holding period in the Tahoe Basin = 25
years)
No Penn Central Taking
Per se taking under Lucas
Tahoe: Ninth Circuit
No Lucas Taking
Must consider all uses, including future uses
Cannot “temporally sever” the landowners’ property
interests (parcel-as-a-whole rule)
Agins v. City of Tiburon, 447 U.S. 255 (1980) -“mere fluctuations in value during the process of
government decisionmaking, absent extraordinary
delay . . . cannot be considered a ‘taking’ . . .”
Tahoe: In the Supreme Court
Key issue = meaning of the Court’s 1987 ruling in
First English
The only claim before the Court is the Lucas claim
The trial court found that none of the land is
“valueless”
The moratorium was reasonable in scope and
duration
Restrictions under the two regional plans are not
before the court