Amicus Curiae Brief — Lucas v. South Carolina Coastal Council

No. 91-453 i

aod

In The

Supreme Court of the United States

October Term, 1991

¢

DAVID H. LUCAS,

Petitioner,

SOUTH CAROLINA COASTAL COUNCIL,

Respondent

+

On Writ Of Certiorari

To The South Carolina Supreme Court

+

BRIEF OF THE INSTITUTE FOR JUSTICE AS

AMICUS CURIAE IN SUPPORT OF PETITIONER

.

INSTITUTE FOR JUSTICE RicHARD A. EPSTEIN

WittiamM H. Me ctor III* 1111 East 60th Street

CLINT BoLick Chicago, IL 60637

JONATHAN W. Emorb (312) 702-9563

Scott G. BuLLocKk

1001 Pennsylvania Avenue, N.W

Suite 200 South

Washington, D.C. 20004

(202) 457-4240

*Counsel of Record

COUCKLE LAW BRIEF PRINTING CO. (800) 225 6964

OR CALL COl CT (4% a2 cf

TABLE OF CONTENTS

URE GO BOON SULA occ cccncsscescnvcvess

CONDENSED STATEMENT OF FACTS AND SUM-

ARY OF PROCEEDINGS BELOW ..............

ee Me Ree eer

SET Setuclurelanwan Sings cxceneSasessnececes

IV.

ANY RESTRICTION ON THE ORDINARY USE

OF PROPERTY IMPOSED BY THE STATE IS A

PARTIAL REGULATORY TAKING FOR WHICH

COMPENSATION IS REQUIRED UNLESS A

POLICE POWER JUSTIFICATION IS ESTAB-

DPT i ds a6 oks CRU CLOR RRC ce LEOE eR SAAN twee ©

THE MARKET VALUE OF THE PROPERTY IN

QUESTION AFFORDS THE PROPER MEASURE

OF COMPENSATION FOR THE LOSS IN QUES-

EP rrr ee rr TT Tree TCT eee

THE SOUTH CAROLINA SUPREME COURT

DID NOT RECOGNIZE THE DISTINCTION

BETWEEN THE PUBLIC USE AND THE

POLICE POWER REQUIREMENTS UNDER

THE JUST COMPENSATION CLAUSE ........

A. The South Carolina Supreme Court mis-

takenly used the generous standards of the

public use requirement to pass on the more

stringent standards for justification under

et EE soaps cksnerdinerbevecsaves

B. The antinuisance approach to the police

power allows for a coherent analysis of the

BMA that supports the anti-erosion provi-

sions of the statute but invalidates the

ED se cccnecnsedecwenncoes

THE REQUIREMENT THAT SOUTH CARO-

LINA PAY JUST COMPENSATION IN THIS

CASE, FURTHERS AND DOES NOT RETARD,

INSTITUTIONS OF SOUND GOVERNANEE ..

13

15

15

21

24

V.

Vi.

TABLE OF CONTENTS - Continued

Page

THE REMEDY AWARDED BY THE DISTRICT

COURT IS INCORRECT BECAUSE IT DENIES

THE STATE THE OPTION OF REPEALING THE

RESTRICTIONS IN QUESTION UPON PAY-

MENT OF INTERIM DAMAGES UNDER THE

FIRST ENGLISH OPTION .......ccccccccncseses 27

CONCLUGION ....ccccccccscsssceseunnennane 28

se

TABLE OF AUTHORITIES

Page

Cases

Bamford v. Turnley, 3 B & S. 67, 122 Eng. Rep. 27

EGU a a awe necescscsessccsscsecss 17

Berman v. Parker, 348 U.S. 26 (1954)................. 15

Corporation of Birmingham v. Allen, L.R. 6 Ch. D.

Sea e ses c csc cccesescecsesseess 17

Ensign v. Walls, 323 Mich. 49, 34 N.W.2d 549 (1948) .... 20

Erznoznik v. City of Jacksonville, 422 U.S. 205 (1975) .... 18

First English Evangelical Lutheran Church v. County

of Los Angeles, 482 U.S. 304 (1987) ............. 24, 27

Gasque v. The Town of Conway, 194 S.C. 15, 8 S.E.2d

ee ecco ceesecscesecssseses 10

Hadacheck v. Sebastian, 239 U.S. 394 (1915)........ 20, 23

Hawaii Housing Authority v. Midkiff, 467 U.S. 229

See Sess ccccccccccccssesessscees 15

Head v. Amoskeag Mfg. Co., 113 U.S. 9 (1885) ........ 16

Keystone Bituminous Coal Ass'n v. DeBenedictis, 480

EEE IEEE 21

nr oe Ge. of (1989) ......-.......... 18

Lucas v. South Carolina Coastal Council, 404 S.E.2d

ee ia sev aesdescccccscces passim

Monongahela Navigation Co. v. United States, 148

a nes dee egy scscssccccccccees 12

Nollan v. California Coastal Commission, 483 U.S.

eh esc csccccseccccscsseceess 24

Penn Central Transportation Co. v. City of New York,

Nee ee sa ease c ssc c cscs esceccccces 20

iV

TABLE OF AUTHORITIES ~— Continued

Page

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922)..... 8

Sturges v. Bridgman, 11 Ch. D. 852 (1878)............ 20

United States v. Armstrong, 364 U.S. 40 (1960)........ 25

United States v. Bodcaw Co., 440 U.S. 202 (1979)...... 12

United States v. General Motors, 323 U.S. 373 (1945) ..9, 10

STATUTES

S.C. Code Amn. § 46-39-10 cf G66. 2... cc csccccccccaces 3

MISCELLANEOUS

W. Blackstone, Commentaries (1765)..............005. 24

L. Cohen, Holdouts and Free Riders, 20 J. Legal

SUID Tre GHP oho eceaesexgisaa dues cseehenduss 19

Funk & Wagnalls New Comprehensive International

Dictionary of the English Language (1982)............ 9

A.M. Homore, “Ownership,” in Oxford Essays in

Jurisprudence (A.G. Guest, ed. 1961)................ 9

M. Olson, The Logic of Collective Action (1965) ....... 19

Restatement (Second) of Torts (1977) ............... 17, 20

J. Tully, A Discourse on Property: John Locke and His :

SIS GH oak bk wes bade uavacocdabsetwensess y

No. 91-453

e

In The

Supreme Court of the United States

October Term, 1991

o

DAVID H. LUCAS,

Petitioner,

SOUTH CAROLINA COASTAL COUNCIL,

Respondent.

e

On Writ Of Certiorari

To The South Carolina Supreme Court

¢

BRIEF OF THE INSTITUTE FOR JUSTICE AS

AMICUS CURIAE IN SUPPORT OF PETITIONER

¢

INTEREST OF THE AMICUS

This brief is submitted by the Institute for Justice as

amicus curiae. We have secured the consent of both par-

ties to the filing of this brief and letters of consent have

been filed with the clerk. The Institute supports the posi-

tion of the petitioner in this case and urges reversal of the

decision of the South Carolina Supreme Court.

The Institute for Justice is a non-profit, public interest

legal foundation litigating and educating in the areas of

economic liberty, property rights, and the First Amend-

ment. One of the pillars of the Institute’s program is

]

securing full constitutional protection for private prop-

erty rights threatened by government regulation.

The instant case could have a profound impact on the

regulation of property throughout the country. Therefore,

it directly implicates the Institute’s mission. Furthermore,

the Institute believes that the analysis of a noted author-

ity on property and takings law contained in this brief

will assist the Court in addressing the constitutional

issues involved in the case.

e

CONDENSED STATEMENT OF FACTS

AND SUMMARY OF

PROCEEDINGS BELOW

The complete statement of facts and the history of

this litigation have already been presented by both par-

ties. This brief summary of them is designed to highlight

those facts and legal determinations that we believe are

critical to the proper understanding and disposition of

the case.

The plaintiff, David H. Lucas, purchased two unde-

veloped waterfront lots, Numbers 22 and 24, in the Wild

Dunes development on the Isle of the Palms in Char-

leston County, South Carolina in December, 1986, paying

$455,000 for lot 22 and $500,000 for lot 24. Lucas bor-

rowed $900,000 toward the purchase price from the North

Carolina National Bank, secured by a mortgage on the

two lots. At the time of the purchase both lots were zoned

for single-family home development, and a similar home

had at that time been built on lot 23, located between the

two Lucas lots, and on other similar lots along the beach.

About eighteen months after purchase, Lucas’ proposed

development of the lots was thwarted by the Beachfront

Management Act, S.C. Ann. § 49-39-10 et seq. (1988)

(hereinafter BMA), passed by the South Carolina legisla-

ture on July 1, 1988 (Act 634), and administered by the

state’s Coastal Council. The BMA prohibited all new con-

struction between the beach and certain setback lines.

BMA § 280(A). The BMA also prohibited the reconstruc-

tion of existing houses that had been destroyed. One of

the objects of the statute is to promote a “gradual retreat

from the [coastal] system over a forty-year period.” BMA

§ 280.

One immediate consequence of the BMA was to per-

manently deprive Lucas of the ability to use the property

for its intended purpose, the construction of a single

family home. South Carolina did not wrest from Lucas

possession of the land; nor did it deprive him of the

power to sell the land, subject of course to the restrictions

imposed by the BMA. The statute also allowed Lucas to

use his property for recreational purposes (picnics and

outings), and to pitch tents or erect other temporary

structures on the land. Trial Transcript (hereinatter Ir

Trans.) at 16-25; 91-98. The BMA did not, howeyer, relieve

Lucas of any potential liabilities of a landowner, or of the

taxes he had to pay on the land. South Carolina claimed

that Lucas’ two lots retained some residual! value because

he was allowed to make some limited use of them under

the BMA. Lucas testified that the lots had negative value

because the value of the residual uses was lower than the

cost of the liability insurance, and the real estate taxes

remained unabated. Tr. Trans. at 31.

The trial judge found that the property had no mar-

ket value after the imposition of the regulation, and that

the regulation worked a “total taking of Lucas’s two

beach front lots.” Order of Trial Judge at 130. He found

Lucas is “entitled under both the State and Federal Con-

stitutions to the payment of just compensation.” Id. He

further concluded that “since the State has totally

acquired Lucas’s property, it is entitled to a deed to the

property free and clear of any encumbrances,” a total

condemnation of the property. Id. Accordingly, he

ordered the state to pay: (1) compensation equal to the

full market value of the lots without the restriction

(which he found to be $585,000 per lot), (2) the real estate

taxes paid on the property from the time the BMA went

into effect, and (3) interest on the mortgage, for a total of

$1,232,387.50, plus interest from the date of judgment. /d.

The South Carolina Supreme Court reversed the deci-

sion below and held that the regulations in question did

not constitute a taking, even if they did wipe out the

entire value of the property in question. Lucas v. South

Carolina Coastal Council, 404 S.E.2d 895, 898 (S.C. 1991). In

the view of the South Carolina Supreme Court, the regu-

lation in question was, as the plaintiff admitted below, a

valid exercise of the police power. The Court therefore

allowed the state to impose the regulation without com-

pensation. In its view Lucas made a fatal concession by

acknowledging that the BMA “is properly designed to

preserve the extremely valuable resource which is South

Carolina’s beaches.” Id. at 896. From this, the South Caro-

lina Supreme Court held that Lucas conceded “the val-

idity of the legislative declaration of its ‘findings’ and

‘policy,’ ” id. at 896, and conceded that “discouraging

new construction in close proximity to the beach/dune

area is necessary to prevent great public harm.” Id. at 898.

The Court deemed itself “bound by these uncontested

legislative findings.” Id. It then rejected Lucas’ contention

that so long as the landowner has been deprived of ” ‘all

economically viable use’ of his property, it has worked a

‘taking’ for which compensation is due, regardless of any

other consideration.” /d.

In a strong dissenting opinion, Judge Harwell

refused to accept the proposition that South Carolina

could regulate property to “oblivion” and found that

while the taking was permissible for a public purpose, it

was not designed to prevent any nuisance or noxious

activities on the plaintiff's land, and that therefore com-

pensation was required. /d. at 906.

e

SUMMARY OF ARGUMENT

Amicus curiae urges this Court to reverse the deci-

sion of the South Carolina Supreme Court and to restore

the condemnation award made by the trial judge below.

In our view, the case should be understood as a standard

takings case in which the state has deprived its owner of

one of the indispensabie attributes of ownership, the

ordinary use of the property so owned. In reaching this

conclusion, ownership should not be understood simply

as the bare possession of a physical object, but as a set of

complete and well defined rights over the property. As

repeated decisions of this Court have recognized, owner-

ship includes the right to possession, use, and disposition

of the property in question, and that takings can occur

even when the original owner of the property has been

left, as here, in undisturbed possession of the land whose

use has been regulated.

The massive restrictions on use in this case thus

amount to a prima facie taking, which the state has to

justify or provide compensation. In dealing with this

question of justification, it is critical to distinguish, as the

South Carolina Supreme Court did not, between two

separate questions of takings jurisprudence: (1) whether

the taking was for public use, and (2) whether the taking

was justified under the police power. The radically differ-

ent nature of these two inquiries is well revealed by the

consequences that are attached to each. If the state cannot

show that a taking is for public use, then it cannot pro-

ceed by the eminent domain power, but must (unless its

actions be ultra vires) proceed by voluntary purchase. But

if the public use requirement alone is satisfied, the taking

can only go forward if just compensation is paid.

The police power functions in a wholly separate fash-

ion — as a justification for taking the property, or for

restricting its use without compensation - and can be

established only by meeting requirements more stringent

than those necessary to establish a public use, namely

that the landowner’s intended use of the property has

caused, or threatens to cause, a nuisance (public or pri-

vate) which is appropriately neutralized by the land use

restriction. Any broader conception of the police power

allows the state, as agent of its citizens, to take without

compensation property that the citizens themselves

would have to purchase from the landowner.

The decision of the South Carolina Supreme Court is

fatally flawed because, far from observing the structura!

distinction between public use and police power, the

Court treated the two different conceptions as identica!

South Carolina has advanced a large number of justifica-

tions for its stringent restriction on land use; some of

these go to the protection of the beach against erosion,

BMA § 250 (2)-(6). These provisions prevent potential!

nuisances which, in principle, South Carolina should be

able to prevent without the payment of compensation. Yet

other justifications in the BMA, such as the promotion of

tourism, and for the leisure of South Carolina citizens,

BMA § 250(1)(b),(d), only identify public uses for which

Lucas’ land may be taken with just compensation. Lucas

conceded below that the BMA amounted to a “laudable

goal.” Lucas, 404 S.E.2d at 896. The court erred by inter-

preting this statement to be a concession that his planned

beachfront home shouild be treated as a nuisance or other

noxious activity that South Carolina may restrain without

compensation. This error arose from the court's failure to

make the proper terminological distinctions.

Once the relevant distinctions become clear, the deci-

sion of the South Carolina Supreme Court should be

reversed, but on a theory that is different from that on

which the plaintiff requests relief. In his petition for

certiorari, the plaintiff inexplicably disclaims the theory

on which the trial judge entered a decision in his favor by

insisting: “This petition does not concern the exercise of

eminent domain. Petitioner concedes that no permanent

physical occupation occurred here.” Petition for Cer-

tiorari at 5. The absence of the physical occupation only

shows that the case raises the issue of a regulatory, or

partial taking, not that takings issues are absent. The

massive restriction on land use, whether or not total,

amounts to a taking of the property for which compensa-

tion is required in the absence of justification. South

Carolina here has not offered any justification to show

how the elimination of the construction on this property

advances its legitimate end of controlling the erosion of

the beachfront, which rests in public hands. South Caro-

lina has been prepared to appropriate $10,000,000 to the

maintenance of the public beaches. Tr. Trans. at 69. If it

wishes to expand the area of undeveloped land, it is free

to do so, as long as it pays the owner the market value of

the property. It is not sufficient to allow South Carolina to

regulate because it wants to do so. “[A] strong public

“desire to improve the public condition is not enough to

warrant achieving the desire by a shorter cut than the

constitutional way of paying for the change.” Pennsylva

nia Coal v. Mahon Co., 260 U.S. 393, 416 (1922) (per Holmes,

J.), quoted by the dissent in Lucas, 404 S.E.2d, at 903.

¢

ARGUMENT

I. ANY RESTRICTION ON THE ORDINAKY USE OF

PROPERTY IMPOSED BY THE STATE IS A PAR-

TIAL REGULATORY TAKING FOR WHICH COM-

PENSATION IS REQUIRED UNLESS A POLICE

POWER JUSTIFICATION IS ESTABLISHED.

It is well recognized that property constitutes more

than permanent physical objects that are the subject of

external sensation. Instead private property refers to the

complex of rights over a particular thing that the owner

of that property enjoys against the entire world. The

ordinary conception of property thus embraces far more

than the right to naked possession of real property, and

the associated right to exclude all other persons. It

embraces the right to make ordinary use of the property

in question, and to dispose of it by sale, lease, mortgage

or other forms of voluntary exchange. Definitions of this

sort have been recognized -from every source. The stan-

dard dictionary definitions all embrace the three elements

of possession, use, and disposition;! the definition is part

and parcel of the accounts of property that are used by

common lawyers? and political philosophers* and, most

critical in the evaluation of takings cases, under the tak-

ings clause itself. Thus this Court has written in United

States v. General Motors as follows:

The critical terms [of the takings clause] are

“property,” “taken” and “just compensation.” li

is conceivable that the first was used in its vul-

gar and untechnical sense of the physical thing

with respect to which the citizen exercises rights

recognized by the law. On the other hand, it

may have been employed in a more accurate

sense to denote the group of rights inhering in

the citizen’s relation to the physical thing, as the

right to possess, use and dispose of it. In pornt

' “Property: 2. Ownership or dominion; the legal right to

the possession, use, enjoyment and disposal of a thing; a

valuable legal right or interest in or to particular things.” Funk

& Wagnalls, New Comprehensive International Dictionary of the

English Language 1011 (1982).

2 See A.M. Honore, “Ownership,” in Oxford Essays in Jurts-

prudence 107 (1961).

> See J. Tully, A Discourse on Property: John Locke and His

Adversaries (1980).

10

of fact, the construction given the phrase has

been the latter.4

Under this definition it is clear that there cannot be a

watertight line drawn between those actions of the state

that allow it to enter into possession, and those which

regulate the way in which it is used by its private owner.

The imposition of any restriction upon use, above and

beyond those inherent in the law of nuisance, can ordi-

narily be done by private parties only if they purchase a

restrictive covenant over the land in question. There is no

reason in law or principle why the same individuals who

in their private capacity are required to purchase this

interest in land are in their public capacity allowed to

take it by majority vote for nothing. The restrictions

imposed upon Lucas’ use of land under the BMA should

be understood as a covenant in gross (that is, a covenant

unattached to any dominant tenement) that is held by the

public at large. It is quite sufficient for the protection of

all public interests to allow the state to do what no

private owner could do: compel the surrender of the

covenant against the will of the person who owns the

land. It is wholly unnecessary, and ultimately mischie-

vous, to give any state the additional power to compel

the surrender of the covenant without payment of any

compensation for the loss in value, great or small, that is

brought about by the restriction in question.

4 United States v. General Motors Corp., 323 U.S. 373, 377-78

(1945). South Carolina law contains an identical account of

ownership. See Gasque v. The Town of Conway, 194 S.C. 15, &

S.E.2d 871 (1940).

11

In his arguments throughout the case, Lucas has

avoided one implicit consequence of this argument. Lucas

takes the position that the regulation automatically

requires full compensation where the restriction on use

results in a total loss of value, but acknowledges that

South Carolina is free to impose substantial restrictions

on use where there is some residual use in question. In

essence, Lucas has sought to develop a per se rule that

deals with a wipe-out case but does not extend his theory

to any case of partial restrictions. This approach is con-

ceptually inadequate because it creates a gratuitous and

unprincipled conceptual gulf between total restriction on

use and massive partial restrictions.

The potential danger of Lucas’ position is further

revealed by a close examination of the underlying facts of

the instant case. South Carolina introduced evidence that

the value of the property was positive because the plain-

tiff, in addition to retaining the rights of possession and

disposition, also retained the rights to use the land for

recreation and for temporary structures. Tr. Trans. 56. The

trial judge rejected that evidence because he believed that

the market value of the property in question was zero.

But suppose he believed that the value of these residual

uses increased the value of the land to $9,000 or one

percent of its original cost, and a slightly smaller fraction

of its present market value. Suppose also that the trial

judge found that the residual tort liability and real estate

taxes were tantamount to a lien of $8,000 on the land,

leaving the property with a net valuation of $1,000.

Under these circumstances, the proper approach is to

hold that the plaintiff is entitled to the market value of

12

the property®> less the residual value of the property in

private use.®

Under the plaintiff’s faulty approach, the restriction

on use would not, or at least might not, amount to a

taking. In such a case, compensation, if owed at all,

would be payable under some fluid and unprincipled

balancing test. Yet if the value of the accumulated liens

were $10,000 (and thus exceeded the residual value in

use), the plaintiff would be entitled to full compensation

of the property in question. A shift of $2,000 in the

relative value of the residual uses and the ongoing tax

and tort liabilities should alter the level of compensation

only by the same $2,000. It should not precipitate a huge

> The reference to the market value reflects the current

state of the Supreme Court law, Monongahela Navigation Co. v.

United States, 148 U.S. 312 (1893) (compensation only for the

market value of the property taken); United States v. Bodcaw

Co., 440 U.S. 202 (1979), and ignores the important issue of

compensation for the loss of subjective value in excess of

market value.

* Note that if the state leaves the individual owner with

net liabilities, then it should pay compensation in excess of the

fair market value. The right formula in all cases is the fair

market value of the property taken, less value of property

retained. If the value of the property equals zero, then the

compensation is equal to its market value. But if the value of .

the property is negative, then the compensation owed equals

the market value of the property taken plus the residual lia-

bilities retained by the landowner. In the case at hand the trial

judge avoided these valuation difficulties by ordering Lucas to

deliver deed of title to South Carolina, thereby wiping out any

residual liabilities. For the weaknesses of his approach, see

Section V, infra.

13

swing in the recoverability of millions of dollars in com-

pensaticn.

The proper rule is thus one of strict proportion: the

greater the taking, the greater the restriction, then the

greater the compensation that must be paid. The just

compensation clause should induce the state to act

responsibly in dealing with its citizens. It should not spur

irresponsible brinkmanship by public officials, whereby

small differences in valuation generate enormous differ-

ences in outcome.

Il. THE MARKET VALUE OF THE PROPERTY IN

QUESTION AFFORDS THE PROPER MEASURE

OF COMPENSATION FOR THE LOSS IN QUES-

TION.

In the course of its argument at trial, the Coastal

Council adopted an alternative approach which is likely

to be repeated on appeal. It urged that the property in

question was subject to a serious erosion risk, and in fact

had been underwater for a substantial period of time

during the past 40 years. Tr. Trans. at 36-39. Its argument

in effect, although not reached by the South Carolina

Supreme Court, was that, even if the total restriction on

use amounted to a taking, no compensation was owed

because the property was valueless for its intended use.

No prudent person would build in light of the unstable

conditions on the South Carolina coast.

The chief mistake in this argument is that it elimi-

nates the market value test of eminent domain and sub-

stitutes a bureaucratic determination of value that reflects

the self-serving desire of public officials to create the

14

impression that environmental regulation causes no

serious private harm. But the Coastal Council’s argument

overlooks the fact that the dangers to Lucas’ plot were

evident to all persons who bought and sold property on

the island (Lucas himself was a native islander and a real

esti te broker who had bought and sold between 1000 and

1500 properties on the island since he arrived on Palm

Island in 1978-1979. Tr. Trans. at 32-35). The erosion and

hurricane risks were well known to all persons who lived

on the island.

The market valuations reflected the erosion risk. If

that risk were zero, then the value of the property would

doubtless have been far higher than it was. Indeed some

portion of the high appreciation — by one estimate, at 56

percent per annum average over a 7 year period between

1979-1986, Tr. Trans. at 44-45 -— was attributable to the

perception that the island was “accreting” so that the risk

of destruction by hurricane or weather was reduced as

the size of the island expanded. Indeed, at trial the beach

was a “football field away from the property line,” which

might be regarded as “ocean view” and perhaps not as

“ocean front” property. Tr. Trans. 36, 38.

Just because members of the Coastal Commission

would not invest their own money on the island does not

mean that other people are foolish or imprudent to do so.

The market allocates resources to those persons who

value a given asset the most, not those who value it least.

That true market value, and not the arbitrary value

assigned to it by government bureaucrats, is the proper

measure of compensation.

15

Ill. THE SOUTH CAROLINA SUPREME COURT DID

NOT RECOGNIZE THE DISTINCTION

BETWEEN THE PUBLIC USE AND POLICE

POWER REQUIREMENTS UNDER THE JUST

COMPENSATION CLAUSE.

A. The South Carolina Supreme Court mis-

takenly used the generous standards of the

public use requirement to bypass the more

stringent standards under the police power.

The text of the just compensation clause contains an

explicit reference to the public use requirement, but no

reference at all to the police power. The cardinal mistake

made by South Carolina has been to analyze the case as

though there were no distinction between the public use

and the police power requirements under the clause. Yet

it is imperative to make some distinction between the

two. Thus suppose that South Carolina chooses to con-

demn the Lucas’ property, anu then to resell it at the same

cost to Lucas’ neighbor on plot 23. The police power

justification is negated by the payment of compensation,

so that the only unresolved issue is whether the taking

for resale is a taking for a public use under the rules

developed in Berman v. Parker, 348 U.S. 26 (1954) and

Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984).

Even if this broad account of public use correctly

identifies the occasions where state coercive power may

be directed against individual citizens, it surely says

nothing about whether compensation is owing when the

state seeks to take or to regulate. When the state takes

land for use as a highway or a post office, the presence of

an unquestionable public use does not excuse it from its

duty to pay compensation to the landowner. Or suppose,

16

as was the case in the nineteenth century. that the state

wishes to authorize a private party to flood the land of a

neighbor in order to form a reservoir sufficient to operate

a mill. See Head v. Amoskeag Mfg. Co., 113 U.S. 9 (1885).

Even though this Court held this taking was for a public

purpose, the private party responsible for the flooding

had to pay for the damage caused on land that was not

occupied. Compensation and public use are determined

by radically different tests.

The test for a public use today is any form of public

benefit from the government action undertaken. But what

about the police power? Here the traditional conception

of the police power was tied to the commission of a

common law nuisance, a point conceded by the South

Carolina Supreme Court in Lucas itself. Lucas, 404 S.E.2d

at 899. It might seem odd at first blush that the limits of

state power to regulate could be determined, even in

part, by the common law conceptions of nuisance that

have been developed over the centuries in such radically

different contexts. But the intimate historical connection

between the law of nuisance and the proper scope of the

police power remains in principle as vital and important

today as it has ever been. In the private context, the

defendant who creates a nuisance can be shut down

without compensation, and without the need to purchase

a restrictive covenant. Instead the owner of the private

property must purchase the easement to cause damages.

Nuisance law thus determines when one neighbor must

compensate another for the restrictions imposed on the

use of property. That is precisely the same question that is

17

asked when “the community” (a group of many neigh-

bors) seeks to impose restrictions on some of its mem-

bers.

The tests to determine what constitutes a nuisance at

common law are often complex. See Restatement (Second)

of Torts § 825ff. Thus normally a physical invasion is

required, be it of smells, fluids, dust, gasses and the like.

See, e.g., Bamford v. Turnley, 3 B & S. 67, 83, 122 Eng. Rep.

27, 32-3 (Ex. 1862) (Bramwell, B.). Yet in some instances

low level nuisances are not regarded as actionable under

the “live and let live” rule. In other circumstances, non-

invasive conduct is regarded as a nuisance, as with the

obligations of lateral support. See, e.g., Corporation of

Birmingham v. Allen, L.R. 6 Ch. D. 284 (C.A. 1877) for an

exceptionally clear statement of the relevant rules. In

each of these cases the objective of the law is to resolve

conflicts in ways that maximize the joint value of all

resources owned by the parties to the dispute. And the

rules of common law nuisance do that better than any

alternative set of rules. Would neighboring landowners

really prefer to be in an initial position in which none

could develop property without the consent of all neigh-

bors? Would they prefer to be in a position in which all

are required to pay compensation for the trivial and

repetitive nuisances that each inflicts on the other? Would

they prefer to allow each to dig to the boundary of the

land even though the land, natural growth, and houses

on the adjacent plot may be damaged? In each case the

set of mutual restrictions works to the benefit of both

parties subject to the regulation.

When these rules are carried over to the law of

eminent domain, their force cannot be gutted simply bya

18

legislative determination that certain conduct is a nui-

sance, without any proof thereof. The entire structure of

the just compensation clause would be frittered away if

the state could take what it pleases when it pleases sim-

ply by declaring the prohibited use a “nuisance.” This

Court has never tolerated so casual and slippery a con-

ception of nuisance in the first amendment area. Unsup-

ported legislative declarations that certain forms of

conduct are a nuisance are without constitutional weight.

See Erznoznik v. City of Jacksonville, 422 U.S. 205 (1975).

The state must show, in accordance with traditional com-

mon law rules, that the noise and inconveniences caused

by certain activities do rise to the level of common law

public nuisance. See Kovacs v. Cooper, 336 U.S. 77 (1949).

Certainly the legislature could not get around the prohi-

bitions against taking by declaring X to be Y’s debtor, and

then allowing Y to collect the sum in question by an

ordinary common law action. At every point the manipu-

lation of common law categories must meet the tests of

judicial scrutiny.

The legislature cannot evade its constitutional obliga-

tions by resorting to creative redefinitions. This single,

but vital limitation on legislative power explains why the

common law nuisance is an indispensable ingredient of

the law of takings. The great difficulties with takings

arise when individuals abandon the private remedies that

they have against their neighbor and seek to obtain

redress through the political process. In any constitu-

tional system, the critical element is to make sure that

political opportunism is not the reason for the resort to

the political process. Thus if A and B by agreement

between themselves could not condemn the property of C

19

for their own use, then what additional powers should

they obtain by appealing (in a three person society) to a 2

to 1 vote in the political arena? The use of the nuisance

requirement means that the majority of two cannot con-

vert a private loss into a public victory. It prevents,

therefore, an illicit shift to the public sector that might

overwhelm the system of property rights that establishes

the relation of person to person.

But it may be protested that ours is not a society of

small numbers but of millions. And so it is. Yet it is

precisely for that reason that there is greater necessity

today to enforce the limitations that the just compensa-

tion clause imposes on the political process. The basic

inquiry has two parts. First, there is the question of why

political majorities should be able to condemn with com-

pensation. When we deal not with a majority of 2, but of

2,000 or 2,000,000 persons, it is not possible for them by

unanimous voluntary agreement to coordinate their

efforts to purchase needed property from the class of

persons in the position of C. The temptation of individual

citizens to free ride on their neighbors is too great.”

Eminent domain allows the state to use its power of

taxation and deliberation to organize the coalition that

purchases property with tax revenues. Yet at the same

time the just compensation clause prevents politics from

allowing an end run around the compensation require-

ments normally applicable in private disputes. That addi-

tional restriction on government should not be imposed

where the private parties can on their own initiative

7 See Cohen, Holdouts and Free Riders, 20 J. Legal Studies

351 (1991); M. Olson, The Logic of Collective Action (1965).

20

restrict land use without compensation. But it is required

where private actors could not restrict as of right. The

nuisance law determines that boundary in the private

sphere, and to maintain the parity between the two sys-

tems, it must do so in the public sphere as well. A group

that is not prepared to pay $1,000 to purchase a restrictive

covenant should not be allowed to get that self-same

interest by spending $500 in the political arena.

Private parties cannot restrict ordinary activities of

landowners without compensating them; the state under

the takings clause is subject to that same restriction.

Private parties can enjoin a nuisance without compensa-

tion; the state as their representative has the same

power.® Quite simply, no other test is available to deter-

mine when state action requires compensation and when

it does not, as this Court itself has acknowledged. See

Penn Central Transportation Co. v. City of New York, 438 U.S.

104 (1978). Indeed, any test, however delicately phrased,

which seeks to answer the police power question by

asking whether the restriction in question serves some

legitimate state interest collapses the fundamental dis-

tinction between public use and police power that orga-

nizes this entire branch of law.

* For one illustration of the point, see Hadacheck v. Sebas-

tian, 239 U.S. 394 (1915), where the Court allowed the state to

enjoin the operation of a brickyard even though the neighbors

came to the nuisance only after its operation was established.

That is the identical result reached in the coming to the nui-

sance Cases in the private law, where the injunction is similarly

allowed. See, e.g., Sturges v. Bridgman, 11 Ch. D 852 (1878);

Ensign v. Walls, 323 Mich. 49, 34 N.W.2d 549 (1948); Restatement

(Second) of Torts, § 840 C, D.

“ 21

B. The anti-nuisance approach to the police

power allows for a coherent analysis of the

BMA that supports the anti-erosion provisions

of the statute but invalidates the building pro-

hibition.

The power of this general approach is revealed by a

closer analysis of the BMA. First, the BMA prevents any

landowner along the beach from “armoring” the beach-

front property. BMA § 250(5). That restriction should be

sustained, and indeed is not challenged here. The normal

ebb and flow of the tides are allowed to do their work.

The beach will sometimes expand, at other times it will

contract. But the construction of massive bulwarks on the

beach will starve it of mew sand and cause material

physical damages to the beach and its long term health.

In this limited respect, therefore, the BMA enjoins a nui-

sance that private landowners could commit against their

neighbors, and, more importantly, against the public at

large.’ The prohibition of this kind of activity is appropri-

ate by a simple test: the state is allowed to enjoin the

activities that, should they result in harm, would entitle it

* It is this test which explains the weakness of this Court's

decision in Keystone Bituminous Coal Ass'n v. DeBenedictis, 480

U.S. 470 (1985). There the Court did not recognize that the

police power limitation, associated as it is with the lew of

nuisance, protects only strangers to the transaction. Since the

landowners in Keystone sought to recover the support easement

that they conveyed away, they should have been required to

pay compensation to repurchase the same interest that they

released. If private parties are not bound by their own consent,

then the system of private property is always subject to

destruction at the whim of the state.

22

to compensation as owner of the beach after the harm is

done.

South Carolina in this case wishes to go further, and

to prevent the construction of any ordinary single family

dwelling on the property in question. But although the

South Carolina Supreme Court speaks of the object of the

Statute as the prevention of “serious public harm,” Lucas,

404 S.E.2d, at 898, the phrase is simply conclusory. The

total ban on real estate development cannot be sustained

by the arguments that justify the anti-armoring provi-

sions. There is no showing that the construction of a

house on a beachfront lot will incresse the level of ero-

sion of the beach, or that it will effect the stability of the

land on which neighbors have constructed their own

houses. At most South Carolina shows that it wants to

restrain the construction on that property very much. The

test that allows compensation above fails here, for if this

were a private beach, its landowner could not stop con-

struction unrelated to the erosion risk.

South Carolina’s own stated purposes are vintage

public use arguments, wholly irrelevant to the more diffi-

cult task of regulation without compensation. Thus if the

state wished to take land for a highway on the ground

that it would benefit tourism and the leisure of its own

citizenry, certainly it would have to pay compensation. If

it wanted to take the soil from an adjacent landowner to

nourish the beach for the benefit of tourism and the

leisure of its own citizenry, it would still have to pay

compensation. If it wants to obtain a restrictive covenant

over private land for the benefit of tourism and its own

citizenry it again has to pay. There is no enormous gulf

between the justifications that are required of the state

23

when it occupies property and that are required of it

when it restricts, in whole or in part, the use of that

property by a private landowner. Tourism and local lei-

sure, which fail in the former case, also fail in the latter.

The arguments just advanced differ in important

ways from those put forward by Lucas. Lucas argues that

as long as the taking is total, the question of justification

need not be considered at all. Yet no balanced theory of

takings could be that protective of private property

against the legitimate claims of the state. If the sole use of

the landowner’s property is as a brickyard, as was the

case in Hadacheck v. Sebastian, 239 U.S. 394 (1915), it seems

odd to say that the question of whether the state must

compensate in order to enjoin a nuisance depends on

whether the landowner can salvage some small value

from the alternative use of his own land. As long as there

is no overbreadth in the regulation, as long as some less

restrictive alternative is not available to the state, then the

total wipe-out is fully justified but only in a nuisance case,

just as if the private neighbors had been able to obtain an

ordinary injunction to the same effect, without the pay-

ment of compensation.

The proper analysis of the justification question thus

mirrors that of the initial takings question. There is no

magic in a total (as opposed to a partial) restriction on

use; if the anti-nuisance justification supports the injunc-

tion, then so be it. If it does not, then the state must pay

for what it takes. The reason why Lucas is entitled to the

compensation awarded by the trial judge is simple. The

state did not remotely offer any anti-nuisance justification

for prohibiting the construction of the ordinary single

family home.

24

IV. THE REQUIREMENT THAT SOUTH CAROLINA

PAY JUST COMPENSATION IN THIS CASE FUR-

THERS AND DOES NOT RETARD INSTITU-

TIONS OF SOUND GOVERNANCE.

The restoration of the trial court’s award of full com-

pensation to Lucas will continue the reversal in the law of

takings that was begun in Nollan v. California Coastal

Commission, 483 U.S. 825 (1987), and First English Evan-

gelical Lutheran Church v. County of Los Angeles, 482 U.S.

304 (1987). Yet there is every reason to welcome the shift,

not because it protects the provincial interests of property

owners against the welfare of the public at large, but

because the protection of property against depredations

from the state is the surest way to advance the general

public welfare.

In order to see why, it is important to remember a

truth that has been evident from Blackstone’s day,

namely, “the public good is in nothing more essentially

interested, than in the protection of every individual's

private rights...” 1 W. Blackstone, Commentaries 139

(1765). Within that calculus the welfare of all citizens of

the state has to be taken into account, not merely of those

who benefit from the restriction. Whether the land use

restrictions of South Carolina wipe out Mr. Lucas and

people similarly situated, or cause them substantial finan-

cial loss, or merely cause them smaller inconvenience,

those losses, great or small, count as much in the social

calculus as the gain to any other person. That each person

counts for one and only one is a cardinal principle of

political philosophy and constitutionai interpretation,

and the claims of landowners cannot simply be brushed

25

aside in some headlong rush to satisfy majority will no

matter how worthy the cause.

But how are these interests to be taken into account?

In effect, South Carolina claims that it has considered all

the interests, public and private, when it has passed

legislation, and that deference is afforded its considered

judgment. But if Lucas is in the minority, what guarantee

is there that the majority has considered his interest on a

par with its own? And what possibility does this Court

have of superintending the legislative process to deter-

mine whether his interest has been given its full deserved

weight in the social process? The very reason why we

have a constitution, why we have a takings clause, is

because we know fr6m history tha legislative majorities,

unless constrained by judicial power, can and will mis-

behave by favoring those who have political power over

those who do not. This Court cannot be a constant council

of revision to pass on the soundness of each and every

piece of legislation by examining it afresh on its merits.

But where property has been taken for public use, it can

require that the state pay full compensation so that it is

assured that individual interests sacrificed receive their

full measure of protection.

Over and over again this Court has recognized that

where statutes disproportionately affect on a select

group, they are constitutionally suspect because they

require private parties to bear in full the costs that should

in justice be borne by society as a whole. See, e.g.# United

States v. Armstrong, 364 U.S. 40, 49 (1960). The concern

here is not only with equity, but also with the preserva-

tion of the overall productive capacities of society as a

26

whole. if the South Carolina legislature need not compen-

sate Lucas and others similarly situated for their losses,

then it will ignore these costs in making the social cal-

culus. The implicit subsidy that this Court will confer on

State legislatures will have the same deleterious social

consequences in this context that other subsidies have in

other contexts. It will lead to excessive levels of the

subsidized activity, in this instance too much govern-

ment, for too little gain. The functional purpose of the

takings clause is to eliminate any potential divergence

between private and social costs, to knock out the sub-

sidy that induces the state to undertake projects that

impoverish the citizenry as a whole while benefitting

some select fraction of it.

No one, least of all Lucas who lives along the beach

and understands its fragile nature, disputes that there

should be public expenditures for the maintenance of

valuable and irreplaceable resources that are now in pub-

lic hands. Indeed South Carolina has already appropri-

ated by general bond issue $10,000,000 for the

maintenance and nourishment of the beach. Yet there is

no reason to believe that the draconian sanctions at work

on Lucas provide a public benefit remotely equivalent in

value to the loss that it causes. All environmental causes

are not of equal importance and of equal dignity. The one

way South Carolina could prove the importance that it

attaches to adding a restrictive covenant over the Lucas

land to its chain of beachfront properties is to pay for it.

That is what this Court should do by reversing the order

of the South Carolina Supreme Court and restoring the

judgment of the trial court below.

27

V. THE REMEDY AWARDED BY THE DISTRICT

COURT IS INCORRECT BECAUSE IT DENIES

THE STATE THE OPTION OF REPEALING THE

RESTRICTIONS IN QUESTION UPON PAYMENT

OF INTERIM DAMAGES UNDER THE FIRST

ENGLISH OPTION.

At the conclusion of the hearing, the trial judge,

having properly adjudged that the BMA worked a taking

ef Lucas’ property, ordered the state to pay full compen-

sation in exchange for a fee interest in the property. This

rule is in error because it forces South Carolina to make

enormous expenditures for interests in real property

which it may not wish to acquire once its constitutional

obligations are clear. Nor should this Court believe that

once it declares the restrictions in issue a taking that

South Carolina is committed to acquiring title to all of the

unbuilt coast. Quite the contrary, once it has become clear

that South Carolina has taken Lucas’ property, it should

be left the option to return it to him, paying him only the

damages for the interim taking under the First English

doctrine. At that point the state can reconsider whether it

wishes to go through with the taking contemplated under

the original BMA once its obligation to compensate has

been established. The solution proposed here surely ben-

efits both parties, for Lucas now enjoys the return of his

land, while South Carolina regains control over its bud-

get.

28

VI. CONCLUSION

The judgment of the South Carolina Supreme Court

should be reversed. Judgment should be entered that the

BMA works a taking of Lucas’ land, and the state should

have the option of either keeping the land and paying full

market value, or of removing the regulation and compen-

sating Lucas for his loss of interim use.

Respectfully submitted,

INSTITUTE FOR JUSTICE RicHARD A. Epstein

WituiamM H. Me itor III* 1111 East 60th Street

CLINT Bo.ick Chicago, IL 60637

JONATHAN W. Emorp (312) 702-9563

Scott G. BuLLock

1001 Pennsylvania Avenue,

N.W.

Suite 200 South

Washington, D.C. 20004

(202) 457-4240

*Counsel of Record

Date: December 30, 1991

Counsel for Amicus Curiae

Institute for Justice