Regulating, Not Taking
Timothy J. Dowling
appeared in LEGAL TIMES OF WASHINGTON
March 26, 2001
It is no surprise that Eric Grant, counsel for Pacific Legal
Foundation and the claimant in Palazzolo v. Rhode Island,
presents a one-sided view of the case in his [March 20] opinion
piece. Here's the rest of the story.
Palazzolo -a regulatory takings challenge to state
protections for pristine wetlands along the Rhode Island coast
- presents two issues to the U.S. Supreme Court that Grant
virtually ignores. First, the Rhode Island Supreme Court ruled
that Palazzolo's taking claim is unripe because he never applied
for permission to build the residential subdivision that formed
the basis of his lawsuit at trial.
Palazzolo now contends that his claim has nothing to do with the subdivision, but instead is rooted in the state's denial of permission to build a beach club on the property. But the trial record is devoid of any valuation evidence regarding a beach club because the case as litigated by Palazzolo was based on the subdivision proposal. Palazzolo should not be allowed to engage in this bait-and-switch strategy.
Second, Palazzolo argues that the wetland protections worked a per se taking under Lucas v. South Carolina Coastal Council. But the Lucas per se rule applies only where regulation denies a landowner all economically viable use of the land. It is undisputed that Palazzolo may build at least one home on his land, and that the land is worth at least $200,000-almost 16 times his corporation's $13,000 purchase price. A denial of all economically viable use? Hardly.
Grant contends that takings liability should attach even where a landowner buys land after the enactment of the challenged restriction, as Palazzolo did. Under this approach, however, land speculators could reap unjust windfalls by scooping up long-protected lands at bargain prices and then suing for a taking based on the value of the land as fully developed.
Fortunately, that is not the law. Lucas holds that
no taking occurs where a permit denial is authorized by a
pre-existing "background principle" of law that shapes the
landowner's title, like Rhode Island's wetland protection
law. Grant contends that under Lucas, background principles
include only common-law doctrines like nuisance, not statutes
and other positive law. But Lucas and other rulings recognize
that positive law defines property rights in ways that affect
constitutional analysis.
As Justice Anthony Kennedy noted in his Lucas concurrence,
the takings inquiry should embrace "the whole of our legal
tradition," not just common law principles. Moreover, because
the trial court found that Palazzolo's proposed wetland destruction
would constitute a nuisance, it is especially appropriate
to give background principles status to a statute designed
to protect neighboring landowners and the public from such
nuisances and nuisancelike activity.
Grant further argues that the background principles defense
is limited to ancient, "frozen" principles of law. But Lucas
makes clear that the defense is more flexible, stating that
"changed circumstances or new knowledge may make what was
previously permissible no longer so" without working a taking.
Every judge who has considered Palazzolo's takings claim has rejected it. So should the U.S. Supreme Court.
Timothy J. Dowling is chief counsel at the Community Rights
Counsel, which submitted an amicus brief in Palazzolo.
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