Amicus Curiae Brief — Suitum v. Tahoe Regional Planning Agency

(n¥ | Jan 9 1997

No. 96-243 ~~~ cue

——

In The -

Supreme Court of the United States

October Term, 1996

+

BERNADINE SUITUM,

Petitioner,

TAHOE REGIONAL PLANNING AGENCY,

Respondent.

+

On Writ Of Certiorari To The

United States Court Of Appeals

For The Ninth Circuit

+

BRIEF OF AMICI CURIAE PETE WILSON,

GOVERNOR OF THE STATE OF CALIFORNIA, JAMES

M. STROCK, SECRETARY OF THE CALIFORNIA

ENVIRONMENTAL PROTECTION AGENCY,

DOUGLAS P. WHEELER, SECRETARY OF THE

CALIFORNIA RESOURCES AGENCY ON THE

MERITS IN SUPPORT OF TAHOE REGIONAL

PLANNING AGENCY

+

MicuHaet A. MANTELL

* Counsel for Amicus Curiae

California Resources Agency

1416 Ninth Street, Suite 1311

Sacramento, CA 95814

(916) 653-5656

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

TABLE OF CONTENTS

INTEREST OF AMICI

SUMMARY OF ARGUMENT

ARGUMENT

I.

LAKE TAHOE IS A UNIQUE AND FRAGILE

PUBLIC RESOURCE, THE ENVIRONMENTAL

AND ECONOMIC VIABILITY OF WHICH IS

DIRECTLY THREATENED BY ILL-CONSID-

ERED DEVELOPMENT OF FRAGILE LANDS

IN THE TAHOE BASIN

A. The Unique Nature of Lake Tahoe

B. Development of Environmentally Sensitive

Lands is Steadily Polluting Lake Tahoe ..

C. California Has Undertaken a Number of

Important Fiscal and Regulatory Steps to

Halt and Reverse the Continuing Pollution

of Lake Tahoe

UNDER WELL-SETTLED PRINCIPLES OF

TAKINGS JURISPRUDENCE, THIS CASE

MUST BE ANALYZED UNDER THE MULTI-

FACTORED ANALYSIS IDENTIFIED BY THE

COURT IN PENN CENTRAL TRANSPORTA-

TION CO. v. NEW YORK CITY

TRANSFER OF DEVELOPMENT RIGHTS

(TDR) AND RELATED PROGRAMS ARE A

WELL-RECOGNIZED ELEMENT OF MOD-

ERN LAND USE PLANNING, CALIFORNIA

AND ELSEWHERE. SUCH PROGRAMS ARE

A RELEVANT FACTOR IN GAUGING

WHETHER A REGULATION EFFECTS A

TAKING OF PRIVATE PROPERTY

TABLE OF CONTENTS - Continued

Page

TDR Measures of the oe Contained in

TRPA’s Regional Plan and Analogous Pro-

grams Are a Well-Established and Recog-

nized Element of Land Use Planning by

the State of California, Its Political Subdi-

visions, and Other Jurisdictions Through-

out the Unnited Gaatee. ...causevessaueees 12

1. The Nature and Function of TDR Pro-

grams Generally .............++++055 12

2. The TDR Program at Lake Tahoe, and

California’s Role in Implementing It... 14

3. Other TDR Programs Operated By the

State of California and its Political

ee 16

4. The State of California Has Develo

A Number of Analogous, Market-Ori-

ented Initiatives. These Systems, Like

TDR Programs, Foster Flexible, Non-

Prescriptive Methods Which In Turn

Both Promote Public Objectives and

Private Economic Opportunities ..... 18

Regulatory Systems Such as TRPA’s TDR

Program Confer Economic Value on Pri-

vate Property. Accordingly, Such Pro-

grams Are Fully Relevant to the

Constitutional Question of Whether Pri-

vate Property Has Been Unconstitu-

tionally “Taken” Under the Fifth

AsmeRGMAGGR 2000s rcoscccsedeseeseeseses 22

TABLE OF CONTENTS - Continued

Page

C. The Court Should Not, Through the

Extreme Interpretation of the Takings

Clause Advanced by Petitioner, Under-

mine the Important Advances Exem-

plified by TRPA’s TDR Program. State and

Local Governments Should Instead Be

Encouraged to Continue to Develop Such

“Win-Win” Regulatory Solutions ........

IV. ASSESSMENT IN THIS CASE OF THE

“CHARACTER OF TRPA’S REGULATORY

ACTION” AND PETITIONER’S “REASON-

ABLE INVESTMENT-BACKED EXPECTA-

TIONS” FURTHER CONFIRMS THAT NO

COMPENSABLE TAKING CAN BE DEMON-

STRATED IN THIS CASE ...................

A. Under Longstanding California Property

Law, Private Landowners Possess No

Right to Pollute Publicly-Owned Water-

ways Such as Lake Tahoe...............

B. Even Long-Accepted Used of Private

Property Can Be Proscribed Through Gov-

ernment Regulation When Scientific

Advances, Newly-Obtained Knowledge

and the Like Demonstrate the Nuisance-

Like Nature of Such Private Conduct....

C. Government Has Relatively Broad Authority

Under the Takings Clause to Protect Unique

Public Resources Such as Lake Tahoe From

23

25

25

27

iv

TABLE OF AUTHORITIES

Page

Cases

Associated Home Builders v. City of Livermore, 18

Cal.3d 582, 135 Cal.Rptr. 41, 557 P.2d 473 (1976) .... 29

Concrete Pipe & Prod. v. Const. Laborers Pension

Trust, __ U.S. __, 113 S.Ct. 2264 (1993).......... 10

Dolan v. City of Tigard, __ U.S. __, 114 $.Ct. 2309 .... 10

Fogerty v. State of California, 187 Cal.App.3d 224,

231 Cal.Rptr. 810 (1986)... 2... 2.66. cece eee eee eee 7

Hudson County Water Co. v. McCarter, 209 U.S. 349

GI cc ccccectcccsccedesvovaseussdonccapeeeoeesees 2

BIDE. oc cccccccccccccccsessoccvcesececseecenseesoes 29

Kelly v. Tahoe Regional Planning Agency, 109 Nev.

638, 855 P.2d 1027 (1993) ......... 2. cece eeeees 5, 6, 8

Keystone Bituminous Coal Assn. v. DeBenedictis, 480

GB. DO CITED ccccccccccccdcccccosceccsecceses 11, 28

Lucas v. South Carolina Coastal Council, 505 U.S.

dt) PPPPTTTTITITITITITITTTI ITT TL Tree passim

New State Ice Co. v. Liebmann, 285 U.S. 262 (1932) .... 23

Ojavan Investors, Inc. v. California Coastal Commis-

sion, 26 Cal.App.4th 516, __ Cal.Rptr.2d __

PPPPPPPPeTreriTrrerrriririirt iT rr Tree 17

Oregon ex rel. State Land Board v. Corvallis Sand &

Gravel Co., 429 U.S. 363 (1977)... 2.2... cece eens 24

Vv

TABLE OF AUTHORITIES — Continued

Page

Penn Central Transportation Co. v. New York City,

gf GE A ER AEE eee ie passim

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) .... 10

People v. Gold Run Ditch & Mining Co., 66 Cal. 138,

Oe See SE hooks cpnens snedccccccccenscsccs 26, 27

People v. Truckee Lumber Co., 116 Cal. 397, 48 P. 394

PA nthenededsdéetcnceddséachececdsnesaccaccees 26

People ex rel. Younger v. County of El Dorado, 5

Cal.3d 480, 96 Cal.Rptr. 553 P.2d 1193 (1971)....... 5

People of California v. Tahoe Regional Planning

Agency, 766 F.2d 1308 (CA9 1985)...............6.. 5

Tahoe-Sierra Preservation Council v. State Water

Resources Control Bd., 210 Cal.App.3d 1421, 259

SD SUD GPE w esacccccccedencccceccescnesce< 6

Village of Euclid v. Ambler Realty Co., 272 U.S. 365

DP KGGUNEbANOEES pabbesduenéesessadessevessennt 27

Wolf v. Colorado, 338 U.S. 25, 47 (1949).............. 28

Woodruff v. North Bloomfield Gravel Mining Co., 18

Db. Pe ED act cbendescisececescocccsccasesees 26, 27

STATUTES AND AUTHORITIES

vi

TABLE OF AUTHORITIES —- Continued

Page

California Government Code § 66905................ 14

California Water Code

OD Gis c ccckciccvcvcccesensondesevncesovssscteusees 7

DA cccnccecchcondddvadsscuacntabugsianscenecsts 21

Pub.L. No. 96-551, 94 Stat. 3233 (1980)............. 5, 8

Rules of the Supreme Court of the United States

PI Gils dns cnciccvccncoceesctenceesdssecevescesecs 1

S.Rep. 91-510, 91st Cong., Ist Sess. (1969)............ 5

MISCELLANEOUS

1 E. Coke, Institutes, ch. 1, § 1 (Ist Am. ed. 1812).... 11

1988 Water Quality Management Plan for the Lake

Tahoe Region, Volume I ...............6-5550005: 6, 7

Ayer, “Water Quality Control at Lake Tahoe,” 1

Ecology Law Quarterly 3, 8 (1971)................. 7

California Department of Finance, Population Esti-

mates for California Cities and Counties (1996) ....... 2

California Department of Finance, Projected Total

Population of California Counties, 1990-2005

SIRE on ccccccsccdsbbsccvcconstesccesnesyiseseoces 2

David Callies, Preserving Paradise: Why Regulation

Won't Work (U. Hawaii Press 1994) ............... 13

Chicago Tribune, June 11, 1995. .............6055005. 19

Critical Viewshed Ordinance, Big Sur Coast Land

Use Plan, §§3.2.1, 3.2.2 3.2.3 (November 5, 1985) .... 17

Fresno Bee, September 17, 1994...............00005: 19

Se ed

Vii

TABLE OF AUTHORITIES - Continued

Page

Innovative Tools for Natural Resource Management

(California Resources Agency and California

Department of Fish and Game, June 1996)........ 20

Joseph DiMento (ed.), Wipeouts and Their Mitiga-

tion: The Changing Context for Land Use and Envi-

ronmental Law, (Lincoln Inst. of Land Policy

SPEg ee eh anddeddncakeccsesnducecevéucavecesse 13, 24

Kelley, Gold vs. Grain (1959) ........6.000cceeeees 26, 27

“Law and Economics Symposium: New Directions

in Environmental Policy,” 13 Columbia J. of

Be BY Cn caindcb checcicccévecévcccuces 24

Los Angeles Times, April 17, 1996.................. 19

Mark Twain, The Innocents Abroad (1966 Signet

ec licc dad CnGeabteeeedeess cecaccves 4

Mark Twain, Roughing It [Harper & Roe]............. 4

New York Times, February 27, 1996................. 19

Rick Pruetz, Putting Transfer of Development

Rights to Work in California (Solano Press

ch dedeockavceecescesceensinesne 12, 13, 16, 17,

Sohn and Cohen, From Smokestacks to Species:

Extending the Tradable Permit Approach From Air

Pollution to Habitat Conservation, 15 Stanford

Environmental L.J. 405 (1996).....................

Transfer of Development Credits Ordinance, Mon-

terey County Coastal Implementation Plan,

Title 20, Ch.20.156 (January 5, 1988) ..............

18

1

Amici respectfully files this brief in support of

respondent, pursuant to Rule 37.4 of the Rules of the

Supreme Court of the United States.

INTEREST OF AMICI

California’s interest in this case is multifaceted, and

can be summarized as follows:

1. Lake Tahoe is a national treasure which, by fortu-

nate geographic accident, happens to be located within

the borders of California and its sister State of Nevada.

While Congress has recognized Lake Tahoe’s unique

values and taken several steps toward its preservation,

principal responsibility for this natural resource lies with

those two states and the bistate agency they have created,

the Tahoe Regional Planning Agency (TRPA).

California entered into the bistate Tahoe Regional

Planning Compact with Nevada in 1968, and amended

that Compact in 1980, for the express purpose of address-

ing Lake Tahoe’s undisputed environmental decline.

Through the Compact, ratified by the Congress, Califor-

nia committed itself to an interstate program of coopera-

tive regional planning for the Lake Tahoe Basin. Over the

past decade, moreover, California taxpayers have spent

over $100 million in an effort to halt and reverse the

environmental deterioration of the Lake Tahoe Basin. The

State of California thus has an important stake in guaran-

teeing the continued viability of this unique and irre-

placeable resource, and in furthering the Compact’s vital

objectives.

2. While not a party in the Suitum case, California is

currently defending litigation — both in the Lake Tahoe

Basin and elsewhere - in which identical legal issues are

2

being advanced.' The Court’s decision in the present case

thus has the potential to directly affect pending litigation

to which California is a party. Accordingly, California has

a major interest in insuring that its legal and policy views

are presented to the Court.

3. California’s current population of over 32 million

people - as compared to approximately 20 million in 1970

- is expected to exceed 36 million residents by the end of

the century. (California Department of Finance, Population

Estimates for California Cities and Counties (1996); Califor-

nia Department of Finance, Projected Total Population of

California Counties, 1990-2005 (1991).)

At the same time, California possesses a finite

amount of land for its citizens to inhabit, and a wide

array of unique natural and cultural resources. As Justice

Oliver Wendell Holmes sagely observed nearly a century

ago, the public interest in its natural resources is “omni-

present wherever there is a State, and grows more press-

ing as population grows.”(Hudson County Water Co. v.

McCarter, 209 U.S. 349, 356 (1908).) Justice Holmes’ admo-

nition applies with particular force to California, its 58

counties and nearly 500 cities, which are struggling to

balance the economic needs of their citizens against their

fiduciary and sovereign obligation to preserve Califor-

nia’s natural and cultural resources for future genera-

tions.

In recent years, California’s state and local govern-

ments have embarked upon a series of important initia-

tives designed to strike that balance in an appropriate

and equitable manner. These measures, which include a

! See, e.g., Tahoe Sierra Preservation Council, et al. v. Tahoe

Regional Planning Agency, et al., Case Nos. CIV-N-84-257-ECR,

CIV-N-92-98-ECR (D. Nev.) (regulatory takings litigation

brought by Lake Tahoe property owners against TRPA,

California and Nevada challenging TRPA’s 1987 Regional Plan).

3

wide array of transfer of development rights (TDR) pro-

grams, conservation banking concepts, and Natural Com-

munities Conservation Planning (NCCP) initiatives, are

described in more detail below. A common theme of these

programs, however, is that they are designed to help

California and its political subdivisions shape develop-

ment patterns in a manner not possible solely through

traditional forms of regulation. As a result, market incen-

tives have been introduced into California’s resource

management process, thereby allowing property owners

to benefit from greater flexibility and enhanced economic

values. These California programs simultaneously pro-

mote important community objectives by avoiding land

use conflicts and furthering key natural resource objec-

tives.

An adverse ruling in this case on the ability to use

TDRs and other market tools could seriously undermine

these nationally-recognized efforts by California and its

political subdivisions to incorporate increased flexibility

into their regulatory programs, while at the same time

providing long-term preservation of California’s excep-

tional environment and cultural resources.

Adoption of petitioner’s sweeping reformulation of

takings jurisprudence — that the Constitution requires

that each and every discrete parcel of private property be

allowed to be developed - is at fundamental variance

with these important California initiatives. Fortunately,

such a result is neither consistent with public policy nor

faithful to applicable legal principles.

SUMMARY OF ARGUMENT

ARGUMENT

The parties and their respective amici have thor-

oughly examined the question of ripeness and the man-

ner in which that procedurai doctrine applies to the

present litigation. California will therefore not address

4

that issue, focusing its attention instead on distinct legal

and policy questions raised by this important case.

LAKE TAHOE IS A UNIQUE AND FRAGILE PUBLIC

RESOURCE, THE ENVIRONMENTAL AND ECO-

NOMIC VIABILITY OF WHICH IS DIRECTLY

THREATENED BY ILL-CONSIDERED DEVELOPMENT

OF FRAGILE LANDS IN THE TAHOE BASIN.

A. The Unique Nature of Lake Tahoe.

Lake Tahoe is an exceptionally pure and beautiful

natural resource, the crown jewel of the Sierra Nevada

mountain range. An early visitor to Tahoe, Mark Twain,

described the lake as:

“a noble sheet of blue water lifted six thousand

__three hundred feet above the level of the sea

.. . With the shadows of the mountains brilliantly

photographed upon its still surface . . . the fairest

picture the whole earth affords.” (Roughing It [Har-

per & Roe], at p. 156.)?

2 Elsewhere, Mark Twain describes the waters of Italy’s

famous Lake Como as “a bedizened little courtier” compared to

Lake Tahoe:

“It certainly is clearer than a great many lakes, but

how dull its waters are compared with the wonderful

transparence of Lake Tahoe! . . . . People talk of the

transparent waters of the Mexican Bay of Acapulco,

but in my own experience they can not compare with

those I am speaking of. I have fished for trout in

Tahoe, and at a measured depth of eighty-four feet I

have seen them put their noses to the bait and I could

see their gills open and shut. I could hardly have seen

the trout themselves at that distance in the open

air... .™” (The Innocents Abroad [1966 Signet Classic

edition], at p. 146.)

5

The United States Senate more recently depicted Lake

Tahoe as:

“famed for its scenic beauty and pristine clari-

ty. ... Only two other sizable lakes in the world

are of comparable quality - Crater Lake in Ore-

gon, which is protected as part of the Crater

Lake National Park, and Lake Baikal in the

Soviet Union.” (S. Rep. 91-510, 91st Cong., Ist

Sess., pp. 3 and 4 (1969).)

State courts and legislatures have come to similar

conclusions. The Supreme Court of California, for exam-

ple, characterized the Lake Tahoe Basin as “an area of

unique and unsurpassed beauty... . ” (People ex rel.

Younger v. County of El Dorado, 5 Cal.3d 480, 485, 96

Cal.Rptr. 553, 487 P.2d 1193 (1971).) The Supreme Court of

Nevada recently explained that Lake Tahoe’s waters are

“extremely clear,” and characterized the lake as “a

national treasure.” (Kelly v. Tahoe Regional Planning

Agency, 109 Nev. 638, 641, 649, 855 P.2d 1027 (1993), cert.

denied, 510 U.S. 1041 (1994).) In adopting the 1980 Tahoe

Regional Planning Compact, the California and Nevada

legislatures found that “The region exhibits unique envi-

ronmental and ecological values which are irreplaceable.”

(Pub.L. No.96-551, 94 Stat. 3233 (1980).)

B. Development of Environmentally Sensitive Lands

is Steadily Polluting Lake Tahoe.

Lake Tahoe's allure, however, may ultimately be the

source of its demise. Pollution caused by poorly-directed

development is causing the lake to lose its world-renown

clarity. Reviewing the relevant evidence, for example, the

Supreme Court of Nevada concluded that the lake’s visi-

bility is declining by almost half a meter per year due, in

large part, to uncontrolled development. (Kelly, supra, 109

Nev. at 641, 644.) The U.S. Court of Appeals for the Ninth

Circuit likewise found that the lake’s water quality is

deteriorating at an “alarming rate” (People of California v.

Tahoe Regional Planning Agency, 766 F.2d 1308, 1316 (CA9

6

1985).) And a California appellate court concluded that

uncontrolled development such as that proposed by peti-

tioners threatens to turn “the lake from clear blue to

turbid brown.” (Tahoe-Sierra Preservation Council v. State

Water Resources Control Bd., 210 Cal.App.3d 1421, 1425,

259 Cal.Rptr. 132 (1989).) The federally-approved Califor-

nia/Nevada water quality management plan reported

that the lake’s clarity decreased by 20% from 1962 to

1988. (1988 Water Quality Management Plan for the Lake

Tahoe Region, Volume I, at p. 72 [“Water Quality Plan”].)

That plan was prepared and adopted by TRPA, certified

by California and Nevada, and approved by the federal

Environmental Protection Agency pursuant to section 208

of the federal Clean Water Act. (33 U.S.C. § 1288.)

The loss of Lake Tahoe’s water quality is caused by

two factors: inflows of polluting nutrients and sediments,

and the lake’s virtually permanent retention of these

pollutants. The nutrients (primarily nitrogen and phos-

phorus - see Water Quality Plan at p. 74) cause algae to

grow, while sediments both contain algae-feeding nutri-

ents and cause turbidity. (See Water Quality Plan at pp.

8-88, Tahoe-Sierra Preservation Council, supra, 210

Cal.App.3d at 1427-1429; and Kelly, supra, 109 Nev. at 641

for more detailed descriptions of this process.) Although

nutrients and sediments occur naturally, absent develop-

ment virtually none would enter the lake. (Water Quality

Plan at p. 63; Kelly at 641.) This is due, in significant part,

to the natural treatment capacity of stream environment

zones. (Water Quality Plan at pp. 60, 64 and 94.) Scientific

studies have found, for example, that these wetlands

remove almost 75 percent of dissolved nitrogen, 86 per-

cent of dissolved phosphates, and 94 percent of sedi-

ments which enter the wetlands. (Id. at p. 60.)

Development of these fragile areas, however, destroys

their purifying properties. (Ibid; Tahoe-Sierra Preservation

Council, supra, 210 Cal.App.3d at 1427-1428.)

Moreover, unlike most lakes, which can self-purify as

fresh water flows in and contaminated water flows out,

7

the amount of water which enters and leaves Lake Tahoe

is minuscule. If the lake were drained, it would take

approximately 700 years to be refilled. (See Ayer, “Water

Quality Control at Lake Tahoe,” 1 Ecology Law Quarterly

3, 8 (1971).) The 1988 Water Quality Plan thus concludes

that “[a]s a reasonable rule of thumb, one may employ

the approximation that sediments and nutrients dis-

charged to Lake Tahoe remain there forever, either sus-

pended in the water column or settled on the bottom.”

(Water Quality Plan at p. 74.)

The pollution of this exceptional lake harms Califor-

nia by threatening both the region’s beauty and its econ-

omy. It also directly impairs the State’s sovereign

interests, since California owns the two-thirds of the lake-

bed, together with the waters which lie within the state.

(Fogerty v. State of California, 187 Cal.App.3d 224, 232, fn.

3, 231 Cal.Rptr. 810 (1986), cert. denied, 484 U.S. 821 (1987)

{lakebed]; California Water Code § 102 [waters]; Water

Quality Plan at p. 8 [approximately two-thirds of Lake

Tahoe located within California].)

C. California Has Undertaken a Number of Important

Fiscal and Regulatory Steps to Halt and Reverse the

Continuing Pollution of Lake Tahoe.

Alarmed by the permanent loss of its invaluable

resources, California spent or authorized for expenditure

well over $100 million (not including overhead costs)

from 1985 through mid-1996 for land acquisition, site

improvements, and other capital projects designed to pro-

tect the waters of Lake Tahoe from further degradation

and to help restore watersheds on the California side of

the Tahoe Basin. Considerably more than $40 million of

this total was for soil erosion control and water quality

projects, including construction of infrastructure,

revegetation, and various other site improvements, as

well as public acquisition of easements and other inter-

ests in land. Almost $68 million was spent or allocated to

acquire environmentally sensitive lands on the California

8

side of the basin - lands which, if developed, would have

caused increased erosion and degradation of the waters

of the lake. California spent over $5 million for other

resource protection and management programs and pro-

jects intended to benefit the water quality of Lake Tahoe.

Within the latter category is the California Tahoe Conser-

vancy’s “Land Coverage and Marketable Rights Pro-

gram” (described in greater detail below), under which

California purchases parcels of land in urgent need of

preservation, and restricts them from future develop-

ment, thereby generating ground coverage and other

marketable rights for sale to permit applicants. And in

November 1996, California voters approved the expendi-

ture of an additional $10 million for land purchases and

restoration to improve Lake Tahoe’s water quality.

These expenditures, while massive, are nonetheless

insufficient to fully remedy the environmental problems

currently facing Lake Tahoe. Public agencies must also

“regulate the uncontrolled development that would likely

ensure the permanent loss of Lake Tahoe to eutrophica-

tion in the near future...” (Kelly, supra, 109 Nev. at 644.)

The problem is exacerbated by the fact that many of these

environmentally sensitive lands in the Tahoe Basin are in

private ownership. California and Nevada therefore

entered into (and Congress ratified) the 1980 Tahoe

Regional Planning Compact to provide a regulatory coun-

terpart to taxpayer-funded public works and acquisition

programs of the type described above. The Compact

requires that TRPA develop a regional plan which “shall

provide for attaining and maintaining federal, state, or

local air and water quality standards, whichever are stric-

test... .” (Pub.L. No. 96-551, 94 Stat. 3233 (1980).) TRPA

has done so. It has developed a sophisticated land use

plan which steers development away from extremely

fragile lands and towards less sensitive lands which can

be developed without polluting Lake Tahoe.

9

Il.

UNDER WELL-SETTLED PRINCIPLES OF TAKINGS

JURISPRUDENCE, THIS CASE MUST BE ANALYZED

UNDER THE MULTI-FACTORED ANALYSIS IDENTI-

FIED BY THE COURT IN PENN CENTRAL TRANS-

PORTATION CO. v. NEW YORK CITY.

Petitioner and her amici insist that the result in this

case is controlled by the Court's recent decision in Lucas

v. South Carolina Coastal Council, 505 U.S. 1003 (1992). That

contention is manifestly incorrect.

In Lucas, the Court made two important clarifications

to takings jurisprudence. First, in the “extraordinary cir-

cumstance” where government regulation has deprived a

landowner of all economically viable use of the affected

property, there is a presumption that a compensable tak-

ing has occurred. (505 U.S. at 1017-18.) Second, that pre-

sumption is properly overcome, and government

regulation which totally eliminates economic use will be

sustained, in at least two related circumstances: a) when

the proposed use of private property contravenes tradi-

tional notions and limitations contained in state property

law; and b) where government's refusal to permit the

proposed use is necessary to forestall threats to the lives

or property of others. (505 U.S. at 1027-1030.)

Lucas, however, is simply inapplicable to the present

facts. That is because the relevant evidence in the record

below demonstrates that the TDRs applicable and avail-

able to the subject property, even viewed in isolation

from the parcel’s worth attributable to other factors, pro-

vide substantial economic value. Accordingly, both Lucas

and this Court’s other regulatory takings decisions indi-

cate that a very different analysis is compelled under the

Takings Clause.

The appropriate constitutional standard in litigation

such as the present case was instead provided by the

Court in its landmark decision, Penn Central Transporta-

tion Co. v. New York City, 438 U.S. 104 (1978), a precedent

10

curiously overlooked by petitioner. Penn Central instructs

that in the case of government regulation challenged

under the Takings Clause which reduces but does not

eliminate economic value, an “essentially ad hoc, factual

inquir[y]” is required. (438 at 124.) Factors noted by this

Court as being especially relevant to this ad hoc inquiry

are: 1) the economic impact of the regulation on the

property owner; 2) the extent to which the regulation

interferes with the property owner's distinct investment-

backed expectations; and 3) the character of the govern-

mental action. (Ibid.)

As the Court reaffirmed in Lucas, the Penn Central

analysis remains fully applicable to the vast majority of

regulatory takings cases, in which reduction rather than

elimination of economic value is involved. Such cases

warrant the judiciary’s indulging in the “usual assump-

tion that the legislature is simply ‘adjusting the benefits

and burdens of economic life’ . . . in a manner that

secures an ‘average reciprocity of advantage to everyone

concerned.’ ” (Lucas, 505 U.S. at 1017-1018 (citing Penn

Central, 438 U.S. 104, 124; and Pennsylvania Coal Co. v.

Mahon, 260 U.S. 393, 415 (1922).)

The Court’s most recent regulatory takings prece-

dents similarly reaffirm the continuing applicability of

the Penn Central standard to the vast majority of takings

cases (i.e., those dealing with “diminution” of use and

value rather than the “total taking” found to exist in

Lucas). (Dolan v. City of Tigard, __ U.S. __, 114 S.Ct. 2309,

2316 n.6; Concrete Pipe & Prod. v. Const. Laborers Pension

Trust, _.. U.S. __, 113 S.Ct. 2264, 2290-2292 (1993).)

It is the amici’s contention, however, that the TDR

system put in place by TPRA preserves substantial value

in petitioner's property and rights thereto. Therefore,

under the Court’s precedents, no taking has occurred

under the Fifth Amendment.

11

Ill.

TRANSFER OF DEVELOPMENT RIGHTS (TDR) AND

RELATED PROGRAMS ARE A WELL-RECOGNIZED

ELEMENT OF MODERN LAND USE PLANNING,

CALIFORNIA AND ELSEWHERE. SUCH PROGRAMS

ARE A RELEVANT FACTOR IN GAUGING WHETHER

A REGULATION EFFECTS A TAKING OF PRIVATE

PROPERTY.

When an agency such as TRPA has been directed by

federal and state law to plan for the conservation of a

unique and priceless treasure such as Lake Tahoe, the

legal mechanisms available to it are several. It may, rely-

ing on established background principles of state law of

property and nuisance, prohibit such harmful action

without compensation. (Lucas, supra, 505 U.S. at

1027-1030; Keystone Bituminous Coal Assn. v. DeBenedictis,

480 U.S. 479, 488-491 (1987).) Alternatively, it may reject

traditional “command and control” principles in favor of

a different, market-oriented approach. In providing mar-

ketable development rights transferable to less sensitive

lands in the Tahoe Basin, TRPA has taken the latter

course. And that course has already been approved by

this Court.

The last time the Court examined TDRs (in 1978), it

held that “the [TDR] rights . . . undoubtedly mitigate

whatever financial burdens the law has imposed on

appellants and, for that reason, are to be taken into

account in considering the impact of regulation.” (Penn

Central, supra, 438 U.S. at 137.)

This observation is fully consistent with the Court's

emphasis in Lucas on the economic use of land. Economic

reality makes value, rather than use on site, the appropri-

ate test for a regulatory taking. As the Court noted in

Lucas, 505 U.S. at 1017: “ ‘[Flor what is the land but the

profits thereof[?]’” (quoting 1 E. Coke, Institutes, ch. 1,

§ 1 (Ist Am. ed. 1812)). Similarly, Justice Kennedy noted

in his concurring opinion in Lucas the relevance to the

12

regulatory takings inquiry of “significant market value

resale potential.” (505 U.S. at 1033-1034 (Kennedy, J.,

concurring.))

A. TDR Measures of the Type Contained in TRPA’s

Regional Plan and Analogous Programs Are a Well-

Established and Recognized Element of Land Use

Planning by the State of California, Its Political

Subdivisions, and Other Jurisdictions Throughout

the United States.

1. The Nature and Function of TDR Programs

Generally.

TDR programs have been used widely in California

and elsewhere in the United States for more than a gener-

ation. TDR systems have been employed by many differ-

ent levels and entities of government, including local,

state, and - as in the case of TRPA - regional planning

agencies. Such programs have been used to help protect a

range of significant resources: scenic shoreline areas;

fragile terrain at high risk from fire and flooding; zones

of endangered vegetation; freshwater aquifers; important

wetlands such as the Florida Everglades; agricultural

lands; and buildings of major historic or cultural impor-

tance. (See, e.g., Penn Central Transportation Co. v. New

York City, 438 U.S. 104 (1978); see generally, Rick Pruetz,

Putting Transfer of Development Rights to Work in California,

Chaps. II and III (Solano Press 1993).)

The details of these various TDR programs vary

widely, both in their rules and procedures, and in the

roles which they play within the land-use planning pro-

cess. Such programs do, however, share at least two

underlying characteristics:

a) TDR programs allow for more effective land-use

planning. When certain sites or parcels are not

well suited for new development because of the

likely impact of development on a sensitive

resource, TDR programs provide a mechanism

13

for the planning body to protect that resource,

while allowing and encouraging the use of the

same increment of development on another site,

where it will not undermine the objectives of a

general or regional plan.

b) TDR programs provide an important, additional

option for landowners. Since transferable develop-

ment rights may be bought and sold, the rights

will tend to flow to those locations where they

will earn the highest economic return within the

framework of local or regional planning guide-

lines. In some cases, the transfer of development

rights may actually maximize the economic

return to the transferor, if the transferor’s

expected increment of development is worth

more at an eligible receiving site than it would

be worth in place. For a given parcel of land, a

transfer of development rights, at any given

time, may or may not maximize economic

return; as in the outright sale of land, the result

depends on market conditions and other factors.

But, whichever the case, TDRs unquestionably

provide a landowner with a new and significant

“avenue” to the marketplace, for the purpose of

realizing the economic value of land. (Pruetz,

supra; David Callies, Preserving Paradise: Why

Regulation Won't Work, pp. 96-98 (U. Hawaii

Press 1994); Joseph DiMento (ed.), Wipeouts and

Their Mitigation: The Changing Context for Land

Use and Environmental Law, pp. 67-81 (Lincoln

Inst. of Land Policy 1990); cf. Sohn and Cohen,

“From Smokestacks to Species: Extending the

Tradable Permit Approach From Air Pollution to

Habitat Conservation,” 15 Stanford Environ-

mental L.J. 405 (1996).) The existence of land use

options such as those reflected in TDR systems,

as an incident to the ownership of land, is

appropriately taken into account when the

14

impact of regulation on the land is being consid-

ered.

2. The TDR Program at Lake Tahoe, and Califor-

nia’s Role in Implementing It.

Under the Regional Plan adopted by the TRPA in

1987, several different types of TDRs have been recog-

nized at Lake Tahoe. Among them are: ground coverage

rights; residential building allocations; residential devel-

opment rights; commercial floor area rights; and tourist

accommodation units. (TRPA Code of Ordinances, Ch.

20.) Each of these transferable rights is a mechanism for

stabilizing one element of growth within the Tahoe Basin,

so as to assure that the development which does occur

will not exceed regional carrying capacities, or prevent

the attainment of the “environmental thresholds” set

forth in the bistate Compact. The transferable rights are

credited to parcels of land based on the presence of

structures or other development which is eligible to be

retired, or the potential for future development under

current TRPA ordinances. Any transferable right may be

used by the landowner who is credited with it on another

parcel which is eligible to receive an additional increment

of development; or may be sold to another party for use

on any eligible receiver parcel. Many transferable rights

have in fact been sold between private parties in this

fashion at Lake Tahoe, sometimes by individuals dealing

with each other at arms’ length, in other instances

through brokers or other intermediaries.

The California Tahoe Conservancy (Conservancy), a

land conservation agency of the State of California active

on the California side of the Tahoe Basin (Cal. Govt. Code

§ 66905 et seq.), operates a Land Coverage and Marketa-

ble Rights “bank.” That bank complements the TDR pro-

grams of the TRPA. Through the bank, the Conservancy

buys parcels of land which are of high priority for resto-

ration or protection, and which have been credited with

ground coverage and other transferable development

wee — - CC Ce

15

rights by TRPA. The Conservancy then sells transferable

development rights from the acquired parcels to members

of the public and other users, both public and private.

These sales are made at publicly-announced prices, set by

appraisal or other valuation study, or at public auction.

The acreage from which the rights have been drawn is

permanently retired, i.e., withdrawn from the pool of

developable parcels. When it is required under TRPA

guidelines, the Conservancy physically restores the land.

The Conservancy’s bank assists the operation of

TRPA’s TDR programs, and advances the resource protec-

tion goals of TRPA’s Regional Plan, by assuring that there

is an active market for TDRs within the Tahoe Basin. The

Conservancy program also helps landowners whose pro-

jects are otherwise consistent with TRPA and local ordi-

nances to meet permit conditions and requirements. The

Conservancy assists the private market, not only by act-

ing as a source of supply through its public sales of

coverage, commercial floor area, and other rights; but

also by carrying out these sales at publicly announced

prices, which provides a market benchmark for land-

owners who contemplate purchasing or selling such

rights in their own, private transactions. The overall

result has been to facilitate a large and varied mar-

ketplace for transferable rights.

In the nearly 10 years that the Conservancy “bank”

has been operating, the Conservancy has provided 73,106

square feet of transferable ground coverage rights for

private projects, in 210 separate transactions; and over

1,800 square feet of commercial floor area rights for com-

mercial projects. An additional 13 coverage transactions

have been completed between the Conservancy and pub-

lic agencies, involving a total of 41,012 square feet of

coverage rights. While the Conservancy is a large-scale

seller of coverage, it by no means monopolizes the mar-

ket for these rights; a large number of coverage transac-

tions have also occurred in the private market. For TDRs

16

other than coverage rights, there is an active private

market in place which is the main source of supply.

3. Other TDR Programs Operated By the State of

California and its Political Subdivisions.

In California, other state and local agencies have

similarly made use of transfer of development rights over

the past 20 years. At the state level, the California Coastal

Commission has for many years overseen a “transferable

development credit” (TDC) program in portions of the

Los Angeles County coastal zone, encompassing Malibu

and part of the Santa Monica Mountains. The Commis-

sion instituted this TDC program as a means of address-

ing the cumulative impact of new residential units and

land divisions within the coastal zone. |

Under the TDC program, permit applicants in the

designated receiver areas, located nearest to roads and

other infrastructure, have been able to obtain develop-

ment approvals on the condition that they obtain TDCs.

The TDC procedure results in the permanent retirement

of existing but as-yet-undeveloped lots in nearby moun-

tainous areas. At the same time, the availability of an

immediate economic return has provided a strong incen-

tive for many lot owners in the sending areas to relin-

quish their development rights.

Since its formal adoption in 1979, the Commission’s

TDC program has resulted in the permanent retirement of

well in excess of 500 parcels, making it one of the most

active TDR programs in the nation. The Coastal Commis-

sion program has been supported, over many years, by

the California Coastal Conservancy, anot..er state agency

which operated a TDC bank similar in concept to the

Tahoe Conservancy program described above. (Pruetz,

supra, pp. 53-55.) A California appellate court recently

characterized the Santa Monica Mountains/Malibu TDC

programs as “a well-established mechanism by which the

Commission, as well as other local governmental entities,

attempts to balance a private property owner’s ability to

17

obtain development permits with the state’s interest in

protecting natural resources from unbridled develop-

ment.” (Ojavan Investors, Inc. v. California Coastal Commis-

sion, 26 Cal.App.4th 516, 520-521, n. 3, __ Cal.Rptr.2d

—_.. — _n.3 (1994) (citing numerous prior federal and

state court decisions on the legal efficacy of TDR pro-

grams).)

A similar program is in place which protects one of

our nation’s most scenic routes - Highway One along

California’s coast. All areas visible from Highway One

and its major public viewing areas are defined in Mon-

terey County’s local coastal plan as the Big Sur Critical

Viewshed. No development whatsoever is allowed with

the Critical Viewshed. (Critical Viewshed Ordinance, Big

Sur Coast Land Use Plan, §§ 3.2.1, 3.2.2, 3.2.3 (November

5, 1985).) Through innovative transferable development

programs by state and local governments, owners of

buildable lots within the Critical Viewshed can qualify

their property and receive development credits that can

be used anywhere else in the County. (Transfer of Devel-

opment Credits Ordinance, Monterey County Coastal

Implementation Plan, Title 20, Ch. 20.156 (January 5,

1988).)

A key point, however, is that most TDR programs in

California and elsewhere are operating at the local gov-

ernment level. One planning expert recently surveyed

California's local jurisdictions and determined that over

two dozen different TDR programs have been developed

in the 1980’s and 90’s and are currently in effect. (Pruetz,

Putting Transfer of Development Rights to Work in California,

supra, at pp. 41-82.) This wide array of TDR programs

allow California’s local communities to achieve a variety

of land use goals (including preservation of natural areas,

hillsides, historic landmarks and agricultural land, as

well as promoting new housing and redevelopment).

They simultaneously preserve landowner profits, make

local regulatory programs more flexible and generally

18

promote “win-win” solutions for the private and public

sectors alike. (Ibid.)°

TDR and TDC programs enable state and local gov-

ernments in California to shape development patterns in

a mamner not possible through traditional, prescriptive

regulatory formulas. By introducing market incentives to

the process of land use regulation, private landowners

gain greater flexibility and economic value. Simul-

taneously, community goals such as avoiding nuisance-

type land use conflicts and furthering key natural

resource objectives are advanced. In communities

throughout California, TDR-type programs have created

opportunities for exchanges between private parties that

have maximized the common welfare and eliminated

issues of economic conflict.

4. The State of California Has Developed A

Number of Analogous, Market-Oriented Initia-

tives. These Systems, Like TDR Programs, Fos-

ter Flexible, Non-Prescriptive Methods Which

In Turn Both Promote Public Objectives and

Private Economic Opportunities.

In recent years C#lifornia has developed a number of

market-oriented resource initiatives analogous to TDR

programs and which are designed to promote similar

public/private partnerships. California is concerned that

a broad decision by this Court casting doubt on the

3 This is not to suggest that TDR programs are unique to

California. To the contrary, such programs operate across the

nation. Prominent examples of successful TDR programs

operating in other states include: New York City’s historic

landmarks preservation ordinance; Collier County, Florida's

program to preserve open space and ecologically sensitive

coastal areas; and the New Jersey Pinelands TDR program,

designed to preserve significant environmental and agricultural

areas within a wetlands and forest preserve located in that state.

See Pruetz, supra, at pp. 29-39.

19

constitutional efficacy of TRPA’s TDR program could

undercut these other state resource initiatives.

Some of the more significant such programs currently

administered by California include the following:

- California’s Natural Communities Conservation

Planning (NCCP) Program. The NCCP program is

designed to promote a more proactive, less

intrusive, and more market-oriented approach

to traditional command and control species pre-

servation. (See Calif. Fish & Game Code § 2800

et seq.) California’s widely-praised NCCP initia-

tive is predicated on the concept of facilitating

development in certain areas in exchange for

preserving other undeveloped properties as spe-

cies habitat. (See, e.g., New York Times, Febru-

ary 27, 1996; Chicago Tribune, June 11, 1995; Los

Angeles Times, April 17, 1996.)

- Conservation Banks. Presently in California,

there are in existence or in the process of being

created 39 conservation banks composed of

thousands of acres of wildlife habitat - land

worth at least $40 million - in 12 California

counties. These include three conservation

banks in Northern California, ten in Central Cal-

ifornia and 26 in Southern California. One

prominent example is ARCO’s award-winning,

6,000 acre Coles Levee Ecosystem Reserve in

Kern County. (1994 Innovations in State and

Local Government Award Winner: Granted by

the Ford Foundation and the John F. Kennedy

School of Government, Harvard University; see

Fresno Bee, September 17, 1994.) There a divi-

sion of ARCO is facilitating its continuing oil

and gas operations by selling credits to other

landowners in the Southern San Joaquin County,

and helping to implement the Metropolitan Bak-

ersfield Habitat Conservation Plan. In turn,

20

Kern County is using (and other local govern-

ments are designing) TDR programs in support

of their local habitat preservation efforts where

actual habitat values are assigned parcels and

then sold as development rights. (See Draft

Kern County Valley Floor Habitat Conservation

Plan Program (Alternatives Subcommittee

Report, April 14, 1994); Implementation /Man-

agement Agreement by and among the U.S. Fish

and Wildlife Service, California Department of

Fish and Game, City of Bakersfield and County

of Kern (August 15, 1994); Kern County Ordi-

nance No. G-5998 (August 9, 1993); for a general

overview of California’s conservation banking

initiatives and related measures, see Innovative

Tools for Natural Resource Management (California

Resources Agency and California Department of

Fish and Game, June 1996).)4

- Wetlands Mitigation Banking Programs. An

example of these programs is the wetlands mit-

igation banking program administered by Cali-

fornia’s Department of Fish and Game in the

Sacramento-San Joaquin Valley. (See Calif. Fish

& Game Code § 1775 et seq.) This state legisla-

tion encourages partnerships to make land-

owner incentive programs and cooperative

planning efforts the primary ‘cus of wetlands

conservation and restoration. Such wetlands

* Conservation banking is not only for wealthy oil company

landowners. In San Diego County, the Boys and Girls Clubs of

East County Foundation are helping to finance their continuing

programs for area youth by creating the two-phase San Vicente

Conservation Bank on a 1,500-acre former cattle ranch. In

western Placer County, a private entrepreneur has created

Wildlands, Inc., a 315-acre preserve of wetland and riparian

habitat funded by the sale of credits for the mitigation of

Sacramento area development projects.

:

+

:

;

:

21

mitigation banking programs have been a cen-

tral tenet of California Governor Pete Wilson’s

California Wetlands Conservation Policy

(August 23, 1993).

- Water Banking, Transfer and Marketing Pro-

grams. California has recently adopted pioneer-

ing initiatives relating to waterbanking, transfer

and marketing. The general objective of these

programs is to promote more efficient use of

California’s finite water supplies and more reg-

ulatory flexibility for California’s water rights

system. (See, e.g., Calif. Water Code § 470 et seq.

(Water Transfer Act of 1986).) Among the vital

elements of the Wilson Administration’s current

waterpolicy are water marketing and transfers.

California’s State Water Bank, for example, has

demonstrated the value of water transfers since

the bank’s initiation in 1991, when 800,000 acre

feet were marketed. Following its successful

first two pilot years, the bank was made a per-

manent feature of California’s water supply sys-

tem. As recently as 1995, over 200,000 acre feet

of water were transferred from willing sellers to

willing buyers to help alleviate the impact of the

record drought conditions.

Important regulatory reform efforts such as those

summarized above provide value in uses other than

development of specific property. For example, land con-

servation banks provide a mechanism that assigns a mon-

etary value to habitat, which in turn allows a landowner

to obtain a financial return for conserving rather than

developing his or her land. This in turn allows the private

and public sectors to harness market forces to improve

significantly upon traditional command and control

methods of protecting and restoring wildlife habitat.

22

TDRs, pollution credits, conservation and mitigation

banking are emerging as sophisticated resource manage-

ment tools built on several foundations. In contrast, pro-

ject-by-project mitigation of adverse environmental

effects often involves lengthy regulatory processes and

significant costs for private landowners seeking project

approvals. The above-described regulatory reform initia-

tives greatly ease such burdens, often reducing compli-

ance with environmental requirements to a single

transaction. They additionally give landowners the cer-

tainty of having complied with legally-mandated mitiga-

tion requirements. Most importantly, these tools often

allow landowners to recoup a higher value for their land

than would otherwise be possible. (See below.) The avail-

ability of credits (whether termed development, conser-

vation, habitat or pollution) makes the protection of

habitat or wetland an economic asset that can be bought

or sold by any third party.

B. Regulatory Systems Such as TRPA’s TDR Program

Confer Economic Value on Private Property. Accord-

ingly, Such Programs Are Fully Relevant to the

Constitutional Question of Whether Private Prop-

erty Has Been Unconstitutionally “Taken” Under

the Fifth Amendment.

A feature common to many of the market-oriented

programs identified above is the fact that they provide

economic value to affected private property interests.

That is especially true with respect to TRPA’s TDR pro-

gram, both generally and as applied to petitioner’s par-

cel. The factual evidence cited by the courts below

underscores the point.

Accordingly, such , -ograms - and, specifically, their

economic impact on the affected property - are fully

relevant to the “ad hoc, factual inquiry” mandated by

Penn Central and this Court’s related regulatory takings

decisions. Ignoring their direct bearing on the takings

23

inquiry, as petitioner and her amici urge the Court to do,

would flatly contravene those established precedents.

Cc. The Court Should Not, Through the Extreme Inter-

pretation of the Takings Clause Advanced by Peti-

tioner, Undermine the Important Advances

Exemplified by TRPA’s TDR Program. State and

Local Governments Should Instead Be Encouraged

to Continue to Develop Such “Win-Win” Regula-

tory Solutions.

Less intrusive and more market-oriented regulatory

systems such as the TDR program developed by TRPA

have many salutary features, as noted above. Given the

expanded opportunities they afford private and public

sectors alike, such programs constitute sound public pol-

icy. It would therefore be especially unfortunate if an

unsupported and extreme construction of the Takings

Clause were allowed to undermine those programs. Yet

that is precisely the result advocated by petitioner and

her amici in this case.

As noted above, the vast majority of such non-tradi-

tional forms of resource management and regulation are

being formulated at the state and local government level.

That is not surprising. As Justice Brandeis sagely noted

over a half century ago:

“There must be power in the States and the

Nation to remold, through experimentation, our

economic practices and institutions to meet

changing social and economic needs.

“To stay experimentation in things social and

economic is a grave responsibility. Denial of the

right to experiment may be fraught with serious

consequences to the Nation. It is one of the happy

incidents of the federal system that a single coura-

geous State may, if its citizens choose, serve as a

laboratory; and try novel social and economic experi-

ments...” (New State Ice Co. v. Liebmann, 285

24

U.S. 262, 311 (1932) (Brandeis, J., dissenting)

(emphasis added).)

The critical, federalism-based themes advanced by Justice

Brandeis in 1932 apply with equal force today.

Justice Kennedy identified a related concern in his

concurring opinion in Lucas, one dealing directly with

regulatory takings principles. There Justice Kennedy

opined on “the exercise of regulatory power in a complex

and interdependent society.” (505 U.S. at 1035 (Kennedy,

J., concurring.)) Focusing on the proper scope of the

police power in the face of newfound resource demands,

he observed: “The State should not be prevented from

enacting new regulatory initiatives in response to chang-

ing conditions, and courts must consider all reasonable

expectations whatever their source.” (Jbid.)

That states such as California have the power and

responsibility to evolve their respective laws governing

real property within their jurisdictions is apparent from a

consistent line of Supreme Court precedents. (See, e.g.,

Oregon ex rel. State Land Board v. Corvallis Sand & Gravel

Co., 429 U.S. 363, 379 (1977) (“Whether as rules of prop-

erty, it would now be safe to change these doctrines . . . is

for the several States themselves to determine”); Lucas,

supra, 505 U.S. at 1017, n.7.)

Petitioner contends that programs such as TRPA’s

TDR system are simply irrelevant to the constitutional

inquiry before this Court. That argument is legally insup-

portable, for the reasons set forth above. Additionally,

however, acceptance of petitioner’s theory would seri-

ously compromise important regulatory programs such

as TRPA’s, in favor of the more traditional “command

and control” systems that afford private and public inter-

ests alike with fewer options and opportunities. (See

generally, “Law and Economics Symposium: New Direc-

tions in Environmental Policy,” 13 Columbia J. of Env.

Law 153 (1988); Joseph DiMento (ed.), Wipeouts and Their

— ——

25

Mitigation: The Changing Context for Land Use and Environ-

mental Law (Lincoln Inst. of Land Policy 1990).) This

Court should not countenance such a result.

IV.

ASSESSMENT IN THIS CASE OF THE “CHARACTER

OF TRPA’S REGULATORY ACTION” AND PETI-

TIONER’S “REASONABLE INVESTMENT-BACKED

EXPECTATIONS” FURTHER CONFIRMS THAT NO

COMPENSABLE TAKING CAN BE DEMONSTRATED

IN THIS CASE.

The economic impact of TRPA’s regulatory program

and the means of assessing that i have been a

central focus of this litigation. California has addressed

those points above, and they have been thoroughly

analyzed by the parties and other amici.

Nevertheless, reference to the two other specific cri-

teria identified by the Court in Penn Central as relevant to

the regulatory takings inquiry further demonstrate the

lack of merit to petitioner’s legal claim. It is to those

standards that California now briefly turns.

A. Under Longstanding California Property Law, Pri-

vate Landowners Possess No Right to Pollute Pub-

licly-Owned Waterways Such as Lake Tahoe.

California has previously described how the distur-

bance of environmentally-fragile lots in the Lake Tahoe

Basin produces a scientifically-documented, causal and

deleterious effect on the lake’s water quality. The poten-

tial development of the petitioner’s lot and the cumula-

tive impacts of developing similarly-situated parce!s

would seriously impair water quality. It is for that reason

that TRPA, along with other state and federal officials,

have taken steps to restrict such development.

The authority to take police power measures of this

type to forestall water pollution is a longstanding princi-

ple of California property law. The landmark California

a eS ee

26

case on this point is the century-old decision in People v.

Truckee Lumber Co., 116 Cal. 397, 48 P. 394 (1897). There

the California Supreme Court upheld an injunction, on

public nuisance grounds, barring the continued operation

of a private sawmill that polluted the Truckee River.

The same principle was at the heart of California’s

first major environmental battle - the fight by California

farmers and urban dwellers to halt the downstream

flooding and destruction triggered by hydraulic mining

in the Sierra Nevadas. In People v. Gold Run Ditch &

Mining Co., 66 Cal. 138, 4 P. 1152 (1884), the California

Supreme Court sustained a permanent injunction against

a hydraulic mining company whose extractive activities

had triggered this widespread pollution. A federal court

came to the identical conclusion in the same year, in a

similar factual setting. (Woodruff v. North Bloomfield Gravel

Mining Co., 18 F. 753 (1884); for a general account of the

legal and political battles over hydraulic mining in nine-

teenth century California, see Kelley, Gold v. Grain (1959).)

The essential point is that it is a well-settled and

longstanding principle of California property and nui-

sance law that private parties such as petitioner have no

right under California law to utilize their upland prop-

erty in a manner which pollutes public waterways.

Accordingly, private property owners in the Tahoe Basin

simply have no reasonable, investment-backed expecta-

tion that they are free under the U.S. Constitution to do

so. (Lucas, supra; Penn Central, supra, 438 U.S. at 124.)

27

B. Even Long-Accepted Use of Private Property Can Be

Proscribed Through Government Regulation When

Scientific Advances, Newly-Obtained Knowledge

and the Like Demonstrate the Nuisance-Like

Nature of Such Private Conduct.

Petitioner nonetheless maintains that her desire to

build a private residence on her upland parcel represents

a traditional,well-established land use that perforce can-

not be proscribed consistent with constitutional princi-

ples. Again, petitioner is mistaken, especially given the

unique circumstances of the present case.

First, land uses which are fully in one context

can be absolutely inappropriate in another. As this Court

so aptly noted in Village of Euclid v. Ambler Realty Co., 272

U.S. 365, 388 (1926), “A nuisance may be merely a right

thing in the wrong place, — like a pig in the parlor instead

of the barnyard.”

Such is he case here. Residential development which

is to be permitted and even fostered in certain circum-

stances can and must be precluded in others. One exam-

ple suggested by the Court’s Lucas decision aptly

demonstrates the latter situation: a private structure pro-

posed to be built astride an earthquake fault. Construc-

tion of a private residence in a location that will pollute

or obstruct adjacent, publicly-owned waterways, as in

this case, is another.

Second, California’s legal history is replete with

examples of state property law being invoked to preclude

private activities previously considered to be reasonable

and appropriate land uses. The above-described state and

federa! court decisions in People v. Gold Run Ditch &

Mining Co. and Woodruff, respectively, spelled the end of

the gold mining industry - an activity that had previ-

ously formed the centerpiece of California’s economy.

(See generally, Gold v. Grain, supra.) Similarly, 100 years

ago the California Supreme Court enjoined otherwise

legal timbering operations when the destructive effects of

that activity in a particular location became apparent.

28

Finally, it is not dispositive that the causal relation-

ship between development on stream environment zones

in the Tahoe Basin and the pollution of Lake Tahoe only

became known relatively recently. In retrospect, it cer-

tainly would have been preferable if the scientific knowl-

edge demonstrating that linkage had been discerned

before any development had occurred in stream environ-

ment zone. The fact that it was not, however, cannot

compel regulators to compound the problem by allowing

the same, deleterious acts to be repeated over and over

again. As this Court noted in Lucas, supra, “changed

circumstances or new knowledge may make what was

previously permissible no longer so.” (505 U.S. at 1031

(citing the Restatement (Second) of Torts); see also, id. at

1035 (Kennedy, J., concurring).) And the quotation

employed a half century ago by Justice Rutledge in Wolf

v. Colorado, 338 U.S. 25, 47 (1949) remains apt: “ ‘Wisdom

too often never comes, and so one ought not to reject it

merely becomes it comes late.’ ”

C. Government Has Relatively Broad Authority Under

the Takings Clause to Protect Unique Public

Resources Such as Lake Tahoe From Injury or

Destruction.

A final, necessary factor that must be considered

under Penn Central is the character of the governmental

action being challenged under the Takings Clause. (Key-

stone, supra, 480 U.S. 470, 488-493.) In this instance, both

the nature of the environmental threat TRPA is confront-

ing and the unique character of the public resource being

protected tip the constitutional inquiry heavily in TRPA’s

favor. Government has relatively greater authority under

the Takings Clause to regulate under the police power to

address threats to unique and irreplaceable public

resources than is the case with respect to more common-

place types of property. (See, e.g., Lucas, supra, 505 US. at

1035) (Kennedy, J., concurring) (“Coastal property may

present such unique concerns for a fragile land system

29

that the State can go further in regulating its develop-

ment and use than the common law of nuisance might

otherwise permit”); Hunziker v. State of lowa, 519 N.W.2d

367 (lowa 1994) (state restriction on development of pri-

vately-owned Indian burial site held valid; no right under

Takings Clause to develop such property under long-

standing principles of state law); cf. Associated Home

Builders v. City of Livermore, 18 Cal.3d 582, 617, 135

Cal.Rptr. 41, 61, 557 P.2d 473, __ (1976) (Mosk, J., dissent-

ing) (“Limitations on growth may be justified in resort

communities, beach and lake and mountain sites, and

other rural and recreational areas; such restrictions are

generally designed to preserve nature’s environment for

the benefit of all mankind. They fulfill our fiduciary

obligatior. to posterity. As Thomas Jefferson wrote, the

earth belongs to the living, but in usufruct”).)

It is perhaps stating the obvious that Lake Tahoe

constitutes the prototypical public asset which allows -

indeed, demands ~ heightened efforts to protect the lake's

unique and imperiled resources. The Takings Clause pre-

sents no constitutional bar to such salutary efforts by

TRPA and others.5

> For the above stated reasons, TRPA’s restrictions om the

subject property would pass constitutional muster under the

“state property /nuisance law exception” to the “total takings”

presumption. as articulated by the Court in Lucas. Inasmuch as

the same result obtaims under the distinct (and far more

relevant) Penn Central multifactored analysis, however, it is

unnecessary for the Court to address the constitutionality of the

TRPA regulations wnder the Lucas standard.

30

CONCLUSION

As to the issues discussed herein, the decision of the

U.S. Court of Appeals for the Ninth Circuit should be

affirmed.

Dated: January 9, 1997

Respectfully submitted,

Counsel for Amicus Curiae

Micuaet A. MANTELL

“Counsel of Record