TAHOE-SIERRA PRESERVATION COUNCIL, 
INC., et al. 

                         Plaintiffs/Appellees/ 
                      Cross-Appellants, 

v.  

TAHOE REGIONAL PLANNING AGENCY, et al. 

    Defendants/Appellants/     
 Cross-Appellees.

_______________________  

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEVADA  
_______________________ 

BRIEF OF AMICUS CURIAE 
INTERNATIONAL MUNICIPAL LAWYERS ASSOCIATION 
IN SUPPORT OF THE DEFENDANTS-APPELLANTS ______________________ 

QUESTION PRESENTED

          Whether a land use regulation may effect a per se taking under Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), where the regulated land has value.

STATEMENT OF INTEREST

The International Municipal Lawyers Association (IMLA), whose members include attorneys from more than 1400 municipalities throughout the United States, has a strong interest in the law of regulatory takings.  Local governments "have long engaged in the commendable task of land use planning."  Dolan v. City of Tigard, 512 U.S. 374, 396 (1994).  These planning efforts, which often include temporary planning moratoria, sometimes give rise to regulatory takings claims.  This case, which involves a takings challenge to temporary planning moratoria designed to preserve a threatened and treasured natural resource, falls squarely within that focus.   

This brief addresses the elements of a per se takings challenge to land use controls, an issue of vital importance to the continued viability of municipal protections for local communities.  It is filed pursuant to the written consent of all the parties. 

PRELIMINARY STATEMENT AND

SUMMARY OF ARGUMENT 

          The ruling below rests on a radical and unwarranted expansion of per se takings liability that contravenes Supreme Court precedent and common sense.

          In Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), the Supreme Court articulated a per se rule of takings liability.  In so doing, the Court was careful to limit that rule to the rare and extraordinary situation in which government action renders land "valueless." 

In the case at bar, the lower court unequivocally found that "none of the [claimants'] land is completely 'valueless,' as was the case in Lucas." Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 34 F. Supp. 2d 1226, 1243 (D. Nev. 1999).  Incredibly, the lower court then ignored the Supreme Court's painstaking limitation of the per se rule and held that the protections for Lake Tahoe at issue effected a temporary per se taking under Lucas. 

The district court so ruled notwithstanding the claimants' failure to offer any evidence of value reduction for any parcel at issue (id. at 1241), and notwithstanding its finding that "all land in the Tahoe Basin has, and has always had, some value, no matter how limited its uses."  Id. at 1242-43.  The ruling directly contravenes Lucas and stands as an aberrational outlier among Lucas's progeny.  The ruling is all the more remarkable because the district court found that under the multi-factor inquiry traditionally used in takings analysis, every factor weighs against a finding of a taking.  We demonstrate in this brief that this ruling is seriously flawed and that Lucas's narrow per se rule is inapplicable to this case. 

          The source of the district court's error lies in confusing dicta from Del Monte Dunes at Monterey, Ltd. v. City of Monterey, 95 F.3d 1422 (9th Cir. 1996), aff'd on other grounds, 119 S. Ct. 1624 (1999).  There, the panel suggested that in analyzing a per se takings claim under Lucas, the "focus is primarily on use, not value."  Id. at 1433.  We show below that this purported distinction between economic use and value is both meaningless and directly contrary to Lucas.

          The district court recognized the controlling nature of its attempt to distinguish between use and value, describing this portion of its analysis as the "key to our case, because it is clear that the plaintiffs' properties -- no matter how restricted their use -- did retain some value during the period at issue."  34 F. Supp. 2d. at 1242.  We agree.  The issue is controlling, and a proper reading of Lucas requires the rejection of the per se claims because the claimants' land was not rendered valueless.

This brief proceeds in three parts.  In Section I, we demonstrate that Lucas's per se rule is inapplicable unless government action renders land valueless.  In Section II, we explain how the panel in Del Monte Dunes arrived at its erroneous "use/value" dicta.  We ask this Court either to repudiate the dicta or limit it to the unique facts of Del Monte Dunes.  In Section III, we demonstrate how the district court multiplied this error, and we show that the Tahoe Regional Planning Agency (TRPA) is entitled to a ruling as a matter of law that its protections for Lake Tahoe do not constitute a per se taking.[1]   

ARGUMENT

I.           LUCAS'S PER SE RULE APPLIES ONLY WHERE LAND IS
      RENDERED "VALUELESS."   

Most takings claims proceed under the now-familiar, multi-factor inquiry set forth in Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978).  After finding that every factor of this test cuts against liability (34 F. Supp. 2d at 1240-42), the district court concluded that the challenged moratoria effected a per se taking under Lucas. 

Lucas articulates a per se rule that imposes takings liability without regard to the public interest advanced by the regulation at issue.  The Lucas Court recognized, however, that the Takings Clause was originally understood as applying only to physical expropriations of property,[2] and thus it was careful to confine the per se rule for regulatory takings to what it described as "extraordinary circumstance[s]."  Lucas, 505 U.S. at 1017.[3]   As shown in this Section, these extraordinary circumstances are limited to situations where government action renders land valueless. 

The district court acknowledged that this case is fundamentally different from Lucas because "none of the [claimants'] land is completely 'valueless,' as was the case in Lucas." 34 F. Supp. 2d at 1243.   It found that the claimants failed to offer evidence of value reduction regarding any parcel at issue (id. at 1241), and that "it is clear that the plaintiffs' properties -- no matter how restricted their use -- did retain some value during the period at issue."  Id. at 1242.  It further found that the record shows that "all land in the Tahoe Basin has, and always had, some value, no matter how limited its uses."  Id. at 1242-43.  Properties comparable to the claimants' sold to private parties for as much as $110,000 during the relevant time periods, and some actually appreciated in value from 1980 to 1987.[4]

As shown below, the Lucas opinion, other Supreme Court precedent, and lower court rulings make clear that Lucas's per se rule does not apply here because the claimants' land was not rendered valueless.  

A.   "Economically Beneficial or Productive Use" Includes the Ability to
 Sell Land for Value. 

          The Lucas Court held that unless a regulation may be justified under background principles of law (505 U.S. at 1027-32), a categorical taking occurs "where regulation denies all economically beneficial or productive use of land."  Id. at 1015 (emphasis added).  The Court made clear that one economically productive use of property is the sale of that property.  Id. at 1027-28 (discussing situations where "the property's only economically productive use is sale or manufacture for sale"). 

This equation of economic use and value reflects the commonsense notion that the ability to sell property for value constitutes both a use of the property and an economic benefit to the owner.  Indeed, for many real estate investors who buy and sell raw acreage to profit from the appreciation, the selling of vacant land is the only economically beneficial use they ever make of it.  Because Lucas's per se rule applies only where regulation denies all beneficial use, it is inapplicable where the owner is able to sell the land for value or make any other beneficial use of it.

In view of this reciprocal relationship between economic use and value, the Lucas Court quite naturally used the terms interchangeably.  In describing how to determine whether there is a denial of "all economically feasible use," Lucas emphasizes the importance of accurately defining "the 'property interest' against which the loss of value is to be measured."  Id. at 1016 n.7 (emphasis added).  This same discussion includes five additional references to value in analyzing how to show denial of all economically feasible use.  Id.  The Lucas Court elsewhere combines the two phrases, describing the per se rule as applying where the government "eliminate[s] all economically valuable use."  Id. at 1028.  And in explaining why total deprivation of value is the equivalent of a physical appropriation from the landowner's perspective, the Lucas Court equates land use with monetary gain, stating:  "'[F]or what is the land but the profits thereof[?]'"  Id. at 1017 (quoting 1 E. Coke, Institutes, ch. 1 § 1 (1st Am. ed. 1812)). 

The Lucas Court's treatment of beneficial use and economic value as virtually synonymous reflects the Court's historic understanding of these concepts in takings analysis.  Lucas relies heavily on Agins v. City of Tiburon, 447 U.S. 255 (1980), which holds that a taking may occur where zoning denies a landowner "economically viable use" of the land.  Id. at 260.  As in Lucas, the Agins Court was careful to stress that this inquiry required examination of the "diminution in market value" caused by the zoning at issue.  Id. at 262; see also Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 502 n.29 (1987) (it could not be determined whether the claimants were denied "economically viable use" of their support estate in coal because "[t]here is no record as to what value" the support estate had).

Some takings claimants argue that Lucas establishes a new "right to develop" property and that a per se taking occurs whenever regulation prohibits development, regardless of the effect on value.  In fact, there is no such "right to develop."  Just two years after Lucas, the Supreme Court made clear that a development permit is a "discretionary benefit" that may be withheld where the public interest so requires.  Dolan v. City of Tigard, 512 U.S. 374, 385 (1994).  More to the point, Lucas describes its per se rule as applying where regulation denies the owner "all economically beneficial or productive use of the land," not where it denies the owner the ability to develop.  To be sure, mere denial of permission to develop might constitute a non-per se taking under the multi-factor inquiry articulated in Penn Central.  But a development ban must render land valueless -- and thereby deny the owner "all economically beneficial or productive use" -- to trigger the Lucas per se rule.

B.   Value is Central to the Entire Lucas Opinion.

The Lucas Court's equation of economically beneficial use and value, by itself, is sufficient to show that its per se rule applies only where land is rendered valueless.  If any further support were needed, Lucas provides it overwhelmingly, for the essential role of value to the per se rule permeates the entire opinion.

The very first paragraph recites the trial court's finding that the challenged development ban rendered Mr. Lucas's land "valueless," and it then articulates the question presented as whether the development ban effects a taking due to its "dramatic effect on the economic value of Lucas's lots."  505 U.S. at 1007. 

The Court describes Lucas's complaint as rooted in the government's "complete extinguishment of his property's value."  Id. at 1009.  It characterizes the state supreme court's ruling as finding no taking "regardless of the regulation's effect on the property's value."  Id. at 1010.  It describes the state supreme court dissent as concluding that a taking occurred due to the government's "obliteration of the value of petitioner's lots."  Id.  Thus, the record and posture of  Lucas starkly presented the U.S. Supreme Court with the issue of whether a complete obliteration of value effects a taking.

In delineating its per se rule of takings liability, the Lucas opinion once again emphasizes the key factual predicate that underlies the per se rule:  the trial court's finding that the lots had been "rendered valueless" by the regulation at issue.  505 U.S. at 1020.  The pivotal nature of this finding is evidenced by the Majority's specific justification for accepting it,[5] as well as the skepticism regarding its accuracy expressed by each of the four separate opinions in the case.[6]

Lucas then emphatically addresses the question of whether the per se rule applies to a near-complete, but not total, deprivation of value.  Responding to a hypothetical regarding a "landowner whose property is diminished in value 95%" -- in language that could not be clearer -- Lucas states that "in at least some cases the landowner with 95% loss [in value] will get nothing" under the Takings Clause because such an owner would "not be able to claim the benefit of [the Lucas] categorical formulation."  Id. at 1019-20 n.8 (emphasis in original).  Of course, the landowner with a 95% loss could argue a claim under Penn Central, but both the Majority and Justice Stevens in dissent agree that only "the landowner who suffers a complete elimination of value" recovers under the per se rule.  Id. at 1019 n.8 (quoting Justice Stevens's dissent, 505 U.S. at 1064).  This exchange shows that the per se rule is inapplicable where land may be sold for 5% of its original value, even where the land is required to be left vacant.  The inquiry that drives the per se rule is value, not the ability to build.

To reinforce this point, the Court distinguished several earlier cases that found no taking because "[n]one of them * * * involved an allegation that the regulation wholly eliminated the value of the claimant's land."  Id. at 1026 & n.13.  One of the cases so distinguished -- Hadacheck v. Sebastian, 239 U.S. 394 (1915) -- involved a value loss of 92.5% (from $800,000 to $60,000), further demonstrating that the Lucas per se rule applies only where land suffers a 100% value loss.

The Lucas Court noted that land typically will not be rendered valueless unless it is required to be left in its natural state.  Id. at 1018.  The point is an obvious one.  But the Court was quick to emphasize that its per se rule applied only where the owner of such land "sacrifices all economically beneficial uses."  Id. at 1019 (emphasis in original).  Thus, where land is required to be kept undeveloped but may be sold for value or put to other beneficial use, no per se taking occurs. 

C.   Other Binding Supreme Court Precedent Confirms the Central Role of
 Value in Takings Analysis. 

Other cases also reflect the High Court's special concern with regulation that renders land valueless.  Just one year after Lucas, a unanimous Supreme Court cited with approval cases finding no taking despite land value losses exceeding 90%.  See Concrete Pipe & Products of California, Inc. v. Construction Laborers Pension Trust for Southern California, 508 U.S. 602, 645 (1993) (citing Hadacheck and other cases). 

More recently, in Suitum v. Tahoe Regional Planning Agency, 520 U.S. 725 (1997), the Court examined a takings claim based on regulation that allegedly "deprived [the claimant] of 'all reasonable and economically viable use' of her property."  Id. at 731.  Although the agency argued that the claim was unripe because the claimant did not attempt to sell her transferable development rights (TDRs), the Court deemed the claim ripe because the trial court could determine a market value for the TDRs without an actual sale.  Id. at 740-42.  In other words, the lower court could determine whether the claimant lost all economically viable use because the record allowed for a determination of value.  As in Lucas, value evidence informed the "viable use" inquiry.

Even before Lucas, the Court expressed heightened concern for regulation that completely devalues property.  In Pumpelly v. Green Bay Co., 13 Wall. 166 (1872), the Court found that flooding of property effected a taking because it caused the "total destruction" of the land and "destroy[ed] its value entirely."  Id. at 177-78.  Justice Scalia, the author of Lucas, has written elsewhere that "[t]raditional land-use regulation (short of that which totally destroys the economic value of property) does not violate [the Takings Clause]."  Pennell v. City of San Jose, 485 U.S. 1, 20 (1988) (Scalia, J., concurring in part and dissenting in part).

D.   Lower Courts and Commentators Agree that Lucas's Per Se Rule is  
 Limited to Regulation that Renders Land Valueless. 

In assessing takings liability for alleged denials of economically viable use, federal appeals courts across the country limit such liability to government action that renders land valueless.  The Federal Circuit, which has jurisdiction over all takings claims for compensation against the United States, has rejected the very position adopted by the district court here.  See Florida Rock Indus., Inc. v. United States, 791 F.2d 893 (Fed. Cir. 1986) (five judge panel), cert. denied, 479 U.S. 1053 (1987).  In assessing whether a federal permit denial deprived a landowner of "economically viable use" of the land, the Florida Rock court held that where the owner can mitigate the impact of the regulation by selling the property for value, "that would be a sufficient remaining use of the property to forestall a determination that a taking had occurred * * *."  Id. at 903.       

Other federal appeals courts are in accord.[7]  To our knowledge, no federal court has ever found a per se taking under Lucas where the land at issue has value.  Legal scholars across the philosophical spectrum agree that the per se rule of Lucas is limited to government action that renders land valueless.[8]

In short, Lucas, other Supreme Court precedent, and Lucas's progeny compel the

conclusion that the Lucas per se rule applies only where land is rendered valueless.[9] 

II.        THE DEL MONTE DUNES "USE/VALUE" DICTUM CONTRAVENES
        LUCAS. 

In Del Monte Dunes, a panel of this Court upheld a jury determination that a municipal permit denial caused a taking.  In so ruling, the panel rejected the city's contention that the owner's sale of the property to the State of California, while the litigation was pending, precluded takings liability.  The panel expressed concern that relying on such a government buyout to defeat a takings claim might allow the government to acquire property without paying full "just compensation" as required by the Fifth Amendment.  95 F.3d at 1432.  The record before the panel suggested that from the outset, the city wanted the State to acquire the property for use as a public park, giving rise to the inference that the permit denial was a ruse to compel a sale to the government at a reduced price.  See City of Monterey v. Del Monte Dunes at Monterey, Ltd., 119 S. Ct. 1624, 1633-34 (1999).  The panel further held that the jury reasonably could have concluded that the land was rendered unsaleable and the claimant had no choice but to sell to California.  Id. at 1433-34.

The panel should have stopped there, for these rulings were sufficient to dispose of the city's arguments regarding California's purchase of the property.  Unfortunately, the panel went on to suggest in dicta that while value is relevant to the multi-factor inquiry under Penn Central, under Lucas the "focus is primarily on use, not value."   Id. at 1433.  The panel thereby created an artificial distinction between economically viable use and value, and ignored Lucas's limitation of its per se rule to government action that renders land valueless.

In articulating this purported distinction between use and value, the panel committed two critical errors.  First, it failed to recognize that per se rules of takings liability are derived from, and form part of, the multi-factor takings inquiry under Penn Central, and that both Penn Central and Lucas thus focus on value.  Second, the panel misread a Lucas footnote and relied on non-per se case law to support its erroneous suggestion that Lucas's per se rule may apply even where land may be sold for value.  We address these errors separately below.  We request this court either to repudiate the erroneous "use/value" dicta or limit it to the unique facts of Del Monte Dunes.[10]

A.   Per Se Rules of Takings Liability are Integrally Related to the 
 Multi-Factor Inquiry. 

In stating that Lucas's per se rule focuses primarily on use and not value, the Del Monte Dunes panel attempted to drive a wedge between per se and non-per se takings analyses, stating:

[F]ocusing solely on property values confuses the economically viable use inquiry [under Lucas] with the diminution of value inquiry normally applied only where no categorical taking exists.   

95 F.3d at 1433.  This conclusion reflects a serious misunderstanding of the relationship between per se and non-per se standards of liability in takings jurisprudence.

Per se rules are not separate, independent tracks of takings analysis, but instead specific applications of the multi-factor test.  The per se rules are derived from, and integrally related to, the multi-factor inquiry.  For example, the Loretto Court held that a government-compelled, permanent physical occupation is a per se taking, and it expressly tied this per se rule to the multi-factor inquiry under Penn Central.  After noting that Penn Central requires an examination of the character of the government action, the Loretto Court explained that "when the physical intrusion reaches the extreme form of a permanent physical occupation, * * * 'the character of the government action' not only is an important factor in resolving whether the action works a taking but also is determinative."  Loretto, 458 U.S. at 426.  Such permanent occupations are a taking "without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner" under Penn Central.  Id. at 434-35.  Thus, the analytical relationship between Loretto and Penn Central is evident from the face of Loretto.

So too in Lucas.  The Lucas Court articulated its per se rule within the general context of Penn Central, explaining that although Penn Central generally requires a multi-factor inquiry, per se takings rules create liability "without case-specific inquiry [under Penn Central] into the public interest advanced in support of the restraint."  505 U.S. at 1015.  Lucas juxtaposes the per se and multi-factor tests in a way that shows both their integration and mutual focus on value, stating that takings claimants must allege either "a diminution in (or elimination of) value".  Id. at 1017 n.7; accord, Multi-Channel TV Cable Co. v. Charlottesville Quality Cable Corp., 65 F.3d 1113, 1123 (4th Cir. 1995) (Lucas and Loretto per se rules are specific and dispositive applications of the Penn Central inquiry).

The Supreme Court's use of per se takings rules tracks its use of per se rules in other areas of the law.  In antitrust law, for instance, the Court employs a multi-factor "rule of reason" to evaluate the reasonableness of a trade practice, but it has derived rules of per se liability "[o]nce experience with a particular kind of restraint enables the Court to predict with confidence that the [multi-factor] rule of reason will condemn it."  Arizona v. Maricopa County Medical Soc'y, 457 U.S. 332, 344 (1982).  In the same way, the Court derives per se rules of takings liability if a particular kind of land use restriction always leads to takings liability under the multi-factor inquiry.  The Loretto and Lucas per se rules are simply shorthand inquiries under certain Penn Central factors that dispense with the need to examine the other factors.

From the very first regulatory takings case through the modern era, the Supreme Court has evaluated takings liability by examining the regulation's effect on value.  Compare Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413 (1922) (diminution in value is relevant to takings analysis) with Keystone, 480 U.S. at 497 (regulatory takings analysis "requires us to compare the value that has been taken from the property with the value that remains").  Lucas's per se rule does not shift the focus away from value, but simply abbreviates the traditional analysis in cases where land is rendered valueless.  Thus, it was error for the Del Monte Dunes panel to suggest that value is primarily relevant only to Penn Central.  Because Penn Central focuses on value, Lucas necessarily focuses on value as well.

B.   The Del Monte Dunes Panel Misread a Lucas Footnote and Used  
 Non-Per Se Case Law in Improperly Expanding the Reach of Lucas. 

Del Monte Dunes interpreted footnote 8 of Lucas as "implicitly" rejecting the proposition that the ability to sell land for value precludes per se takings liability.  95 F.3d at 1433 (citing Lucas, 505 U.S. at 1018-20 & n.8).  In fact, neither footnote 8 of Lucas nor the accompanying text says any such thing.  In responding to Justice Stevens's dissent, which criticized the Majority for focusing on development uses, the Majority stressed that takings jurisprudence recognizes the importance of non-economic interests as well.  Id. at 1020 n.8.  Justice Stevens did speculate that Lucas could have sold his land to a neighbor (id. at 1065 n.3), but the Majority's response to this speculation was to insist that the record and posture of the case required the assumption that Lucas's land had been rendered "valueless."  Id. at 1020 & n.9.  The dissent's disagreement stemmed from the Majority's acceptance of this finding (which compelled the conclusion that Lucas's land was unsaleable), not from any "implicit" refusal by the Majority to consider ability to sell.  Nowhere does the Majority state that per se liability may attach where the land has value and thus is saleable.  As shown in Section I, supra, it repeatedly says just the opposite.

Del Monte Dunes also cites certain cases for the proposition that a taking may occur where land retains significant value.  95 F.3d at 1433.  As shown in the margin, however, these cases are non-per se cases, and none of them found a per se taking under Lucas where land had value.[11]  In short, both Lucas and uniform lower court rulings confirm that Lucas's per se rule is inapplicable unless regulation renders land valueless.

III.      THE DISTRICT COURT MISAPPLIED LUCAS'S PER SE RULE AND
IMPROPERLY DISREGARDED ITS OWN FINDINGS THAT THE CLAIMANTS' LAND HAS VALUE. 

The court below correctly concluded that under Penn Central, all three factors -- expectations, economic impact, and the character of the government action -- weigh in favor of TRPA.  34 F. Supp. 2d at 1240-42.  Regarding economic impact in particular, the court emphasized the claimants' total failure to meet their burden of proving diminution in the value of the property at issue.  Id. at 1241.  The court stressed that the plaintiffs' counsel evidently made a "calculated choice" not to offer the requisite proof on this element of their takings claim.  Id.   The court further found that the temporary moratoria did not interfere with any reasonable, investment-backed expectations.  Id. at 1240-41.

          After disposing of the plaintiffs' claims under Penn Central, however, the court found a temporary, per se taking under Lucas.  We are not aware of any other case in the entire corpus of takings jurisprudence in which a court imposed per se takings liability after finding that every factor under Penn Central's multi-factor inquiry weighed against liability.  This unprecedented ruling not only ignores the analytical relationship between per se rules and the multi-factor inquiry (see Section II.A), but also ironically suggests that it is easier to prevail on a per se claim under Lucas -- claims that succeed only in the most "extraordinary circumstance[s]" (505 U.S. at 1017) -- than to succeed under Penn Central.

The district court erred in two fundamental ways. 

First, it took the "use/value" discussion in Del Monte Dunes -- dicta unnecessary to the panel's ruling (see pages 17-18, supra) -- and improperly elevated it to the status of a holding.  34 F. Supp. 2d at 1242-43.  While recognizing that "Lucas clearly relied on the lower court's finding that the regulations at issue had in fact rendered the plaintiff's property 'valueless'" (id. at 1242), the district court stated that it need not resolve the use/value issue because, "regardless of how Lucas could be read, [Del Monte Dunes] has essentially resolved the issue for us."  Id.  In other words, the district court refused to look to the plain holding of Lucas because it read Del Monte Dunes as ruling that the Lucas per se rule may apply even where land has value.  Id.  It bears repeating that the district court viewed this conclusion as the "key to our case, because it is clear that the plaintiffs' properties -- no matter how restricted their use -- did retain some value during the period at issue."  Id. at 1242.  The district court should not have viewed the Del Monte Dunes "use/value" dicta as binding precedent that trumps the plain language of Lucas itself.

Second, the district court latched onto a single phrase in the Del Monte Dunes dicta -- "competitive market" -- and misapplied it to justify disregard of its own findings that the claimants' land has value.  The Del Monte Dunes panel equated a competitive market with an open market, thereby suggesting that value evidence is relevant to the takings inquiry so long as it is based on arm's-length transactions in the marketplace.  95 F.3d at 1433 (citing Richmond Elks Hall Ass'n v. Richmond Redevelopment Agency, 561 F.2d 1327, 1330-31 (9th Cir. 1977) (finding a taking where land was rendered "unsaleable on the open market")).  The panel also relied on Formanek, in which two offers were held not to establish a competitive market because they "'were not the product of negotiations between a willing buyer and seller under no duress.'"  Formanek, 26 Cl. Ct. at 340 (citation omitted).  Read in its entirety, the discussion confirms that the Del Monte Dunes panel used the phrase "competitive market" simply to exclude from takings analysis offers made under duress.

The district court misread this "competitive market" dicta from Del Monte Dunes as requiring the government to show not only lack of duress, but some unidentified, critical mass of purchases and offers for the same property.  The court required TRPA to show that "a sufficient number of people would be willing to buy the property for [a particular] use," emphasizing that "if there is only one willing buyer, there would not, by definition, appear to be a 'competitive market.'"  34 F. Supp. 2d at 1243. 

As a result, the district court disregarded its own findings of value based on actual sales of comparable land because, in the court's view, the comparable sales did not constitute the undefined critical mass of sales needed to demonstrate a competitive market.  Id. at 1243-44.  There is no evidence, however, that the comparable sales at issue were made under duress, or that they were anything other than bona fide, arm's-length transactions.  They constitute the very essence of fair market value.  To disregard them because they did not constitute some undefined, critical mass of offers is economic and legal nonsense. 

Nothing in Del Monte Dunes justifies the trial court's disregard of its own findings of value based on comparable sales.  To be sure, the Del Monte Dunes panel stated that evidence of one willing buyer, "especially where the buyer is the government, does not, as a matter of law, defeat a takings claim." 95 F.3d at 1433.  This is no doubt true on the facts of Del Monte Dunes, where the record suggested that the claimant had no choice but to sell to the government  (id. at 1432-34), and that from the outset the government wanted to acquire the property.  See City of Monterey, 119 S. Ct. at 1633-34.  The Del Monte Dunes panel emphasized the phrase "especially if that buyer is the government" precisely because the claimant in that case evidently had no other choice but to sell to the government.  Id.  This dicta, however, does not justify the trial court's disregard of its own findings of value based on arm's-length, private transactions between a willing buyer and a willing seller. 

In deriving its competitive market dicta, the Del Monte Dunes panel cited two Second Circuit cases that make clear that a single arm's-length transaction is sufficient to defeat takings liability.  In both cases -- Park Ave. Tower Assocs. v. City of New York, 746 F.2d 135 (2d Cir. 1984), cert. denied, 470 U.S. 1087 (1985), and Sadowsky v. City of New York, 732 F.2d 312 (2d Cir. 1984) -- the Second Circuit ruled that an owner has no takings claim where the permissible use of land allows the owner "to 'sell the property to someone for that use.'"  Park Avenue, 746 F.2d at 139 (quoting Sadowsky, 732 F.2d at 318).  In Sadowsky, the Court specifically held that to prevail on a takings claim, the landowner has the burden to show the absence of marketability because sale of property to another is a viable use:

Appellants argue that there was no evidence in the record regarding the marketability of the properties in question, and that the district court was therefore in error in reasoning that the properties might be sold.  Since, however, appellants had the burden to show that economically viable uses were not available, the court did not abuse its discretion in determining that, where appellants did not show unmarketability, sale of the properties was a possible use.

Id. at 318 n.3; accord, Pompa Constr. Corp. v. City of Saratoga Springs, 706 F.2d 418, 424 (2d Cir. 1983) (in determining whether a claimant can make beneficial use of land by selling it for religious use, "the key question" is not whether the use would be a profitable enterprise, but whether anyone would purchase the land for that purpose).

A fortiori, where (as here) the trial court finds that the land at issue has value based on comparable sales, the defendant should prevail on a per se takings claim as a matter of law.  The record shows that the permissible uses of the regulated land allowed the owners of Class 1-3 and SEZ lands to sell their parcels to someone else for value.  This ability to sell to another in an arm's-length transaction to recoup value precludes per se taking liability.  As discussed in Section I, Lucas makes clear that the ability to sell land for value is, by definition, a beneficial use of the land.

The implications of the district court's analysis are startling.  The court's misapplication of Lucas would allow claimants to extract pre-regulation market value from taxpayers under a per se takings theory notwithstanding their ability to sell the property at a profit.  Because the Takings Clause and the Lucas per se rule reach only physical expropriations of property and their functional equivalent (Lucas, 505 U.S. at 1014, 1017), it is inappropriate to allow such an unjust windfall.

CONCLUSION

To establish a per se taking claim under Lucas, the claimants had the burden of showing that TRPA's planning moratoria rendered their land valueless.  Even if they could have proven that their land had lost 95% of its value, they would not be permitted to take advantage of Lucas's per se rule.  Lucas, 505 U.S. at 1019 n.8.  In fact, the district court found that they presented no value evidence whatsoever.  This failure of proof, along with the district court's findings based on comparable sales that the lots had value at all relevant times, require a ruling for TRPA on the per se claims as a matter of law.

                                                Respectfully submitted,

TIMOTHY J. DOWLING
           Community Rights Counsel
           1726 M Street NW 
           Suite 703
           Washington, D.C. 20036
           (202) 296-6889         

Attorney for Amicus Curiae International Municipal Lawyers Association

August 9, 1999

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