Regulatory Takings Update: Amelia Island, Florida August 23, 2001

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Regulatory Takings UpdateAmelia Island,
Florida August 23, 2001

• Timothy J. Dowling
• Chief Counsel
• Community Rights Counsel

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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

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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

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(No Transcript)
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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

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The Palazzolo Court
Some, but not too specific, guidance
since Pennsylvania Coal Co. v. Mahon (1922)
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Palazzolo Six Opinions
Justice Kennedy (Majority) -- joined by Chief
Justice
Rehnquist and Justices
OConnor, Scalia, and

Thomas Justice OConnor (Concurrence) Justice
Scalia (Concurrence) Justice Stevens
(Dissent) Justice Ginsburg (Dissent) Justice
Breyer (Dissent)
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Palazzolos Coastal Wetlands
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Palazzolos Coastal Wetlands
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Palazzolos Coastal Wetlands
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Palazzolos Coastal Wetlands
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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

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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 Palazzolos
• Special exception to the ban where the fill
  serves a compelling public purpose

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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 Dept of Natural Resources, which
  initially approved them, but shortly
  thereafter the approval is withdrawn due to
  environmental harm

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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

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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 To get to the clubs water, i.e.
  Winnepaug Pond rather than the nearby Atlantic
  Ocean, youd have to walk across the gravel
  fill, but then work your way through
  approximately 75 feet of marsh land

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Palazzolos 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)

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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

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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 pre-
  existing wetland protections defeated any
  expectation to fill the property
• Not denied all economically viable use

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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

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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 petitioners proposed beach club occupied
  a smaller surface area.

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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 hadnt been
  so clear? Did the case ripen through briefing
  and argument?

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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 Palazzolos favor

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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

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The Ripeness Ruling Confusion

• Compare
• There 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 ...

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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.

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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 States legal tradition.
• See also Justice Kennedys concurrence in Lucas
  the entirety of a States legal tradition
  determines whether taking occurs

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Palazzolo Expectations Analysis

• Justice OConnor plus four dissenters
  Pre-existing statutes and rules are relevant
  to Penn Central
• No other Justice joined Scalias view to the
  contrary

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• 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

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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
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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?
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Lake Tahoe Picture 1
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Lake Tahoe Picture 2
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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

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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

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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 . . .

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Tahoe In the Supreme Court

• Key issue meaning of the Courts 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