Amicus Curiae Brief — Monterey v. Del Monte Dunes at Monterey, Ltd.

Supreme Court, U. S.

2 me et a!

100

JUN 5 1993

No. 97-1235 | CLERK

In the Supreme Court of the Gnited States

OcTOBER TERM, 1997

CiTy OF MONTEREY, PETITIONER

U.

DEL MONTE DUNES AT MONTEREY, LTD., ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

IN PART

SETH P. WAXMAN

Solicitor General

Counsel of Record

Lois J. SCHIFFER

Assistant Attorney General

EDWIN S. KNEEDLER

Deputy Solicitor General

MALCOLM L. STEWART

Assistant to the Solicitor

General

DAVID C. SHILTON

TIMOTHY J. DOWLING

NINA MENDELSON

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

The brief for the United States will address the

following questions:

1. Whether the “rough proportionality” standard set

forth in Dolan v. City of Tigard, 512 U.S. 374 (1994), which

was established to review a permit condition that required

the permittee to dedicate property to the public, applies to

a restriction on the use of land that does not entail a

dedication.

2. Whether the court of appeals erred in sustaining the

jury verdict in this case on the ground that a reasonable

jury could have credited respondents’ evidence and dis-

credited that proffered by the City, and could on that basis

have concluded that the City’s regulatory action bore an

insufficient nexus to a legitimate governmental purpose.

3. Whether a land-use restriction that does not sub-

stantially advance a legitimate public purpose can be

deemed, on that basis alone, to effect a taking of property

requiring the payment of just compensation.

(1)

TABLE OF CONTENTS

r (eee eee

The court of appeals applied incorrect legal stand-

ards in affirming the district court’s judgment on

respondents’ takings claim:

A. The “rough proportionality” test announced

by this Court in Dolan v. City of Tigard is

inapplicable to land-use restrictions not involv-

ing compelled dedications of property .............

B. The court of appeals erred in holding that the

existence of conflicting evidence before muni-

cipal regulators provided a basis for finding

that a taking had occurred . . ..

C. A determination that land-use regulation fails

substantially to advance a legitimate govern-

mental interest does not provide a sufficient

basis for concluding that a compensable taking

of property has occurred . . ..

— p

TABLE OF AUTHORITIES

Cases:

Agins v. City of Tiburon, 447 U.S. 255 (1980) ..........

Allentown Mack Sales and Serv., Inc. v. NLRB,

e x

Arcadia Dev. Corp. v. City of Bloomington,

552 N.W.2d 281 (Minn. Ct. App. 1996)

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

Athens Community Hosp., Inc. v. Shalala, 21 F.3d

9

Babbitt v. Sweet Home Chapter of Communities,

e —

Bennett v. Spear, 117 S. Ct. 1154 (1997) .

(III)

Cases—Continued: Page

Clajon Prod. Corp. v. Petera, 70 F.3d 1566 (10th

CO, GEE —ñ—ñꝛů————— 14

Concrete Pipe & Prods. of Cal., Inc. v. Construc-

tion Laborers Pension Trust for S. Cal., 508 U.S.

1. ͤ ũ —— — 17, 24

Del Monte Dunes v. City of Monterey, 920 F 2d

Ye ee 2, 3, 4. 5

Dolan v. City of Tigard, 512 U.S. 374 (1994) ..... 7, 8, 10,

12, 13, 22, 25

FCC v. Beach Communications, Inc., 508 U.S. 307

—KAK— 7 17

FDIC v. Meyer, 510 U.S. 471 (1994) .. 30

First English Evangelical Lutheran Church v.

Los Angeles County, 482 U.S. 304 (1987) .......... 27, 28-29

Goss v. City of Little Rock, 90 F.3d 306 (8th Cir.

—, — . 14

Harris v. City of Wichita, 862 F. Supp. 287 (D.

Kan. 1994), aff d. 74 F.3d 1249 (10th Cir. 1996) ....... 14

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

— A 26

Home Builders Ass'n v. City of Scottsdale, 930

P.2d 993 (Ariz.), cert. denied, 117 S. Ct. 2512

—K＋Hͤ p / ˖ 14

INS v. Elias-Zacarias, 502 U.S. 478 (1992) ........... 18

Jacobs v. United States, 290 U.S. 13 (1933) ............ 28

Kaiser Aetna v. United States, 444 U.S. 164

— . 12

Keystone Bituminous Coa! Ass'n v. DeBenedictis,

GD BBE, Soe ee 5m . 22

Kirby Forest Indus., Inc. v. United States, 467 U.S.

1 — A 27

Landgate, Inc. v. California Coastal Comm'n,

No. 8059847, 1998 WL 214431 (Cal. Apr. 3, 1998) ..... 14

Lehman v. Nakshian, 453 U.S. 156 (1981) .............. 2

Loretto v. Teleprompter Manhattan CATV Corp.,

GB UE, Ga Ga sarentttnennesnainiin 10, 11, 13, 25

V

Cases Continued: Page

Loveladies Harbor, Inc. v. United States, 15 Cl.

ccc 22

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

1 — ů —— —-— — 24, 25, 26, 29

Lynch v. United States, 292 U.S. 571 (1934) ........... 30

Markman v. Westview Instruments, Inc., 517 US.

0 ͤ —ͤ ———— . 20

Marshall v. Board of County Comm'rs for John-

son County, 912 F. Supp. 1456 (D. Wyo. 1996) ....... 14

McCarthy v. City of Leawood, 894 P.2d 836

Oe ab r eee 14

Minnesota v. Clover Leaf Creamery Co., 449

rr 18

Monell v. New York City Dep't. of Social Servs.,

. ——K, — 29

NLRB v. Curtin Matheson Scientific, Inc., 494

. e 17

Nectow v. City of Cambridge, 277 U.S. 183

— ᷑—— Xe eee uns 21, 23

New Port Largo, Inc. v. Monroe County, 95 F.3d

1084 (11th Cir. 1996), cert. denied, 117 S. Ct. 2514

— — 14

Nollan v. California Coastal Comm'n, 483 U.S.

SE GD —ůů — 8, 11, 13, 22, 24, 25

Novicki v. Cook, 946 F.2d 938 (D.C. Cir. 1991) ....... 19

Papasan v. Allain, 478 U.S. 265 (1986) .................. 30

Penn Cent. Transp. Co. v. New York City, 438 U.S.

—— T 21

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393

— —„V—̃ — 24, 25, 26

Ruckelshaus v. Monsanto Co., 467 U.S. 986

3 ——ñ— — —-— . 27, 28

Schillinger v. United States, 155 U.S. 163 (1894) 28

Simpson v. North Platte, 292 N.W.2d 297 (Neb.

2 — — — —„—: 13

VI

Cases—Continued: Page

Suitum v. Tahoe Reg! Planning Agency, 117 S. Ct.

20 —ñ———————————— 5

Thompson v. Consolidated Gas Util. Corp., 300 U.S.

1... . 26

United States v. Carolene Prods. Co., 304 U.S.

2 ͤ— 18

United States v. Hopkins, 427 U.S. 123 (1976) 30

United States v. Reynolds, 397 U.S. 14 (1970) ........ 2

United States v. Riverside Bayview Homes, Inc,,

1 22

Unity Real Estate Co. v. Hudson, 889 F. Supp.

II? . 14

United States v. Varig Airlines, 467 U.S. 797

9 —— —A2— 27

Village of Euclid v. Ambler Realty Co., 272 US.

—8 — — i 12. 22, 23

Whitehead Oil Co. v. City of Lincoln, 515 N. W. 2d

E. ͤ ͤ . 22

Will v. Michigan Dep't of State Police, 491 U.S. 58

. 8 29

Williamson County Reg Planning Comm'n v.

Hamilton Bank, 473 U.S. 172 (1985) .. 5, 25

Yee v. City of Escondido, 503 U.S. 519 (1992) .......... 22

Constitution, statutes and regulation:

U.S. Const.:

Amend. V (Just Compensation Clause 1, 5, 11, 15,

26, 28, 29

. . . 2, 18

1 ͤv2— 30

Amend. XIV:

Due Process Clause . 5, 17, 19, 23. 24

Equal Protection Clause .. . 5, 18, 19

Administrative Procedure Act, 5 U.S.C. 551 et seq.:

© CEE 0...—ñññ ᷑ —— 30

L 17

1 ͤ 17

VII

Statutes and regulation Continued: Page

Endangered Species Act of 1973, 16 U.S.C. 1533........ 1,3

e ... 3

r 3

W I italic iinnmrercecenssttiiinmmiainianiiiiin 3

§ 10(a(1)(B), 16 U.S.C. 153 0α⁸⁰ B) . 4

Federal Tort Claims Act, 28 U.S.C. 2680(a) .............. 27

Tucker Act, 28 U.S.C. 1491 (a)(1) .........c.ccccceseeeeseeeeees 28

r 2, 5, 7, 18, 29

50 C. F. R.

/ / 3

i 4

ere 3, 18

x 4

e 4

Frank Michelman, Takings, 1987, 88 Colum. L. Rev.

.. 13

In the Supreme Court of the United States

OcTOBER TERM, 1997

No. 97-1235

CITY OF MONTEREY, PETITION <2

v.

DEL MONTE DUNES AT MONTEREY, LTD., ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

IN PART

INTEREST OF THE UNITED STATES

This case concerns a challenge under the Just Com-

pensation Clause of the Fifth Amendment to a city’s denial

of a development permit. The permit denial was based in

part on the city’s conclusion that the development would

damage habitat of the Smith’s Blue Butterfly, a species

listed as endangered under the Endangered Species Act of

1973 (ESA). Although the permit was not denied under the

authority of the ESA, the United States has an interest in

ensuring that local land-use officials have the flexibility to

take reasonable measures under state and local law to

protect endangered species.

More generally, this case raises important issues re-

garding the circumstances under which government

(1)

2

action may give rise to liability under the Just Compen-

sation Clause. The federal government administers many

programs that restrict the use of private property in order

to protect human health, public safety, the environment,

and other vital interests. The United States has an

interest in the sound development of takings jurispru-

dence in cases that may affect its ability to implement

those programs consistent with constitutional protections

for private property.

STATEMENT

1. The property at issue in this case consists of 37.6

oceanfront acres in Monterey, California. See Del Monte

Dunes v. City of Monterey, 920 F.2d 1496, 1499 (9th Cir.

1990) (Del Monte D. The property’s native flora includes

! The United States has no direct interest in whether respondents

have a statutory or constitutional right to jury trial in this inverse

condemnation action. The statute under which respondents’ suit was

brought is not available to challenge the exercise of federal regulatory

authority, since it applies only to persons acting “under color of any

statute, ordinance, regulation, custom, or usage, of any State or Terri-

tory or the District of Columbia.“ 42 U.S.C. 1983. And Aikt has long

been settled that the Seventh Amendment right to trial by jury does

not apply in actions against the Federal Government.” Lehman v.

Nakshian , 453 U.S. 156, 160 (1981); see also United States v. Reynolds,

397 U.S. 14, 18 (1970) (no constitutional right to jury in eminent domain

proceedings). The United States has a substantial interest in continued

recognition of the principle that no Seventh Amendment right to jury

trial exists either in suits against the United States or its agencies, or

in eminent domain actions brought by the federal government.

Neither respondents nor the court of appeals, however, has called that

principle into question. See Resp. C.A. Br. 17 (“The City is correct that

there is no constitutional right to jury trial in a direct condemnation

action brought by the United States.“) ;] Pet. App. 8 Because the

decision in this case is unlikely to affect the manner in which either

eminent domain or inverse condemnation actions involving the federal

government are tried, the United States takes no position on the

question whether the instant suit was properly submitted to a jury.

3

buckwheat, the natural habitat of the Smith’s Blue Butter-

fly (ibid.), a species listed as endangered under Section 4

of the ESA, 16 U.S.C. 1533. See 50 C.F.R. 17.11; 41 Fed.

Reg. 22,041 (1976).

In 1981, Ponderosa Homes, the previous owner of the

site, sought a permit from petitioner City of Monterey to

build a 344-unit residential complex on the property. Pet.

App. 3; Del Monte I, 920 F.2d at 1502. After denying

several development proposals, in 1984 the City Council

approved a site plan for 190 residential units, subject to the

requirement that Ponderosa satisfy 15 conditions within

18 months. Id. at 1502-1503. In late 1984, respondents pur-

chased the property for approximately $3.7 million. Re-

spondents continued to pursue final approval of the permit

application for the 190-unit proposal by seeking to satisfy

the conditions the City Council had specified. Jd. at 1504-

1506; Pet. App. 3.”

Pursuant to Section 7 of the ESA, 16 U.S.C. 1536, the United

States Fish and Wildlife Service (FWS) prepared a biological opinion,

dated March 22, 1985, concerning the anticipated effects of respondents’

proposed development on the Smith’s Blue Butterfly. J.A. 66-83; see

generally Bennett v. Spear, 117 S. Ct. 1154, 1159 (1997) (describing

preparation of biological opinions). The biological opinion was pre-

pared for the Veterans Administration’s Loan Guaranty Division in

connection with proposed federal home loan guaranties for veterans

wishing to purchase condominiums within the development. See J.A.

66-68. The FWS concluded that the project could be expected to destroy

the butterfly’s habitat at the site of the development, but the agency

was “unable to conclude that loss of the * * site will threaten the

survival and recovery of the species as a whole.” J.A. 78. The FWS

expressed the view that respondents’ proposed restoration plan for the

site “has little chance for long term success.” Ibid. The FWS also

anticipated that some “takings” (see 16 U.S.C. 1538, 1539; Babbitt v.

Sweet Home Chapter of Communities, 515 U.S. 687, 699 (1995)) of the

butterfly would occur, but that “given the present circumstances,

numerical losses will be small and of little consequence to the species as

a whole.” J. A. 81. In addition, the FWS “recommend{ed],” without

purporting to require, that “the project be redesigned to preserve at

4

In June 1986, the City denied respondents’ permit appli-

cation for the proposed development. A resolution adopted

by the City Council gave six reasons for its denial of the

application. See Del Monte I, 920 F.2d at 1504-1505. The

resolution explained that the project was expected to

have significant adverse environmental impacts, including

injury to the habitat of the Smith’s Blue Butterfly. Ibid.

The City also expressed concern that the design for the

project did not provide adequate access to and from the

property. Jd. at 1504.

least the larger colonies of host buckwheat in the east corner of the

property.” J.A. 81-82. See also J.A. 150-152 (FWS letter, in response to

inquiry from Sierra Club, reiterating views previously stated in

biological opinion).

If respondents’ development were proposed today, it might be ad-

dressed differently under the ESA. First, in the biological opinion

issued by the FWS in 1985 concerning respondents’ property, the

discussion of the FWS’s misgivings about the proposed restoration plan

followed immediately after the explanation of the FWS’s conclusion

that the development would not be likely to jeopardize the continued

existence of the butterfly. Under regulations issued in 1986 (see 51 Fed.

Reg. 19,926) to govern the Section 7 consultation process, such

advisory, non-binding recommendations would be included in a

separately entitled section of the document and would be clearly

identified as advisory. See 50 C. F. R. 402. 140).

Second, the FWS’s stated expectation that development of the prop-

erty would “take” butterflies might lead the developer itself to seek a

permit from the FWS under Section 10(aX1)(B) of the ESA, 16 U.S.C.

153%a)(1)B), to allow incidental take of the butterfly according to the

terms of an approved conservation plan. See Sweet Home, 515 U.S. at

700-701, 707-708. We have been informed by the Department of the

Interior that although the incidental take permit provision was added

to the ESA in 1982, it was little used until after 1994, when the FWS

and the National Marine Fisheries Service (which has ESA responsibil-

ity for marine species) issued the “no surprises” policy to provide

greater certainty to holders of incidental take permits. That policy

was subsequently codified by regulation. See 63 Fed. Reg. 8859 (1998).

5

2. Respondents filed suit in federal district court pur-

suant to 42 U.S.C. 1983. They alleged, inter alia, that the

permit denial violated their rights under the Just Com-

pensation Clause of the Fifth Amendment and the Equal

Protection and Due Process Clauses of the Fourteenth

Amendment. The district court dismissed the takings

claim as unripe (see Williamson County Regional Plan-

ning Comm’n v. Hamilton Bank, 473 U.S. 172 (1985);

Suitum v. Tahoe Regional Planning Agency, 117 S. Ct.

1659, 1664-1667 (1997)), and it dismissed the remaining

claims as both unripe and inadequately stated. See Del

Monte I, 920 F.2d at 1499.

The court of appeals reversed and remanded for further

proceedings. Del Monte I, 920 F.2d at 1509. The court

concluded that further participation by respondents in

the permit application process would be futile, thereby

satisfying the “final decision” prong of the Williamson

County ripeness doctrine. Jd. at 1501-1506. The court

acknowledged that a takings claim is ordinarily unripe

under Williamson County until the property owner has

also sought, and been denied, an opportunity to obtain just

compensation. Jbid. It held, however, that respondents’

claim nevertheless was ripe because, under California law,

no mechanism for seeking compensation for a regulatory

taking had been available at the time respondents’ permit

application was finally denied. Jd. at 1506-1507. The court

also reversed the district court’s dismissal of respondents’

due process and equal protection claims, concluding that

the evidence was sufficient to raise a triable issue as to

whether the denial of respondents’ permit application was

arbitrary and irrational. Jd. at 1508-1509.

In 1991, after the case was remanded to the district

court, the State of California purchased the property

from respondents for $4.5 million, $800,000 more than

respondents had paid for the site in 1984. Pet. App. 21.

The case thereafter proceeded to trial in the district

6

court. The court determined that it would decide re-

spondents’ substantive due process claim, but that the

takings and equal protection claims would be tried to a

jury. Id. at 3, 32-34.

On the takings claim, the court instructed the jury that

it should find for respondents if the permit denial either (1)

deprived respondents of “all economically viable use of the

property” or (2) “did not substantially advance a legitimate

public purpose.” J.A. 303. The court explained that

“(ijn order to find that the plaintiff has been denied all

economically viable use of the property, there must be a

showing that after the action of the City that is being

challenged here, the property is left with no remaining

significant value.” J.A. 304. The court also stated that

At he regulatory actions of the City or any agency sub-

stantially advance[{] a legitimate public purpose if the

action bears a reasonable relationship to that objective.”

Ibid. The jury found in favor of respondents on both their

takings and equal protection claims, and it awarded re-

spondents $1,450,000. Pet. App. 3.

After trial, the district court ruled for petitioner on the

substantive due process claim, finding that the permit was

denied “for valid regulatory reasons.” Pet. App. 41. The

court concluded that “the quantity of time and money

invested by the [city staff] * is demonstrative of

conduct which is not arbitrary and irrational, but was

for valid purposes.” Id. at 41-42. The court found that the

evidence before the City was in conflict, and that “there

were differences of opinion” regarding the effect of the

proposed development on the Smith’s Blue Butterfly and

its habitat. Jd. at 42. The court concluded that “the City

Council was not acting arbitrar[il]y and irrationally in

[denying the permit], it was acting for valid regulatory

reasons and not attempting to forestall all reasonable

development.” Id. at 43. With respect to the takings and

equal protection claims, however, the court entered judg-

7

ment on the jury’s verdict and denied petitioner’s motions

for judgment as a matter of law and for a new trial. Id. at

3-4.

3. The court of appeals affirmed. Pet. App. 1-29.

A. The court first held that 42 U.S.C. 1983 afforded

respondents a right to jury trial on their takings claim.

The court determined that respondents’ inverse condem-

nation suit was analogous to various forms of actions at

law, including eminent domain actions brought by the

government, suits for trespass, and actions to recover

damages for conversion of personal property. Pet. App. 8

9. The court stated as well that respondents “seek| |

compensatory or ‘legal’ damages.” Id. at 9. The court of

appeals also concluded that both theories of liability—

denial of economically viable use and failure to substan-

tially advance a legitimate purpose—presented essentially

factual issues appropriate for jury resolution. Id. at 10-15.

B. The court of appeals also held that a reasonable jury

could have found for respondents on both theories of

takings liability. The court stated that “[e]ven if the City

had a legitimate interest in denying [respondents’] devel-

opment application, its action must be ‘roughly pro-

portional’ to furthering that interest.” Pet. App. 16 (citing

Dolan v. City of Tigard, 512 U.S. 374, 391 (1994)). It

observed that respondents had presented evidence calling

into question each of the six reasons (see p. 4, supra) given

to support petitioner’s denial of their permit application.

Pet. App. 17-19. Asserting that “(t]he jury was entitled

to credit [respondents’] experts, and discredit the City’s

testimony,” id. at 18, the court held (id. at 19-20) that a

rational juror could have concluded that the denial of

respondents’ permit application lacked a sufficient nexus

with the City’s stated objectives.

The court of appeals likewise held that the jury rea-

sonably could have found that petitioner had deprived

respondents of all economically viable use of the property.

8

The court rejected petitioner’s argument that the subse-

quent sale of the property to the State for $4.5 million—

$800,000 more than respondents had paid for the land—

necessarily established that some economically viable

use remained. Pet. App. 21-23. The court also rejected

petitioner’s contention that because respondents had failed

to submit an application proposing a less extensive

development, the jury could not reasonably have found a

denial of all economically viable use. The court stated

that the evidence, viewed in the light most favorable to

respondents, supported a finding that any further develop-

ment application would have been futile. Id. at 26.°

SUMMARY OF ARGUMENT

A. The “rough proportionality” standard announced

by this Court in Dolan v. City of Tigard, 512 U.S. 374, 391

(1994), is inapplicable to the instant case. That standard

applies only where a governmental body's approval of pri-

vate development is conditioned on a dedication of prop-

erty; it does not apply to regulation that simply restricts

the owner’s use of his own land. Both Dolan and its pre-

decessor, Nollan v. California Coastal Comm un, 483 U.S.

825 (1987), rest on the premise that a permanent physical

occupation of real property is different in kind from

other forms of land-use regulation. The court of appeals

therefore erred in holding that the denial of respondents’

permit application must be “roughly proportional” to the

City’s various environmental and other concerns.

B. The court of appeals also erred in holding that the

existence of conflicting evidence as to the likely effects of

respondents’ development proposal provided a basis for

’ The court of appeals also rejected petitioner’s challenge to the

amount of damages awarded by the jury. Pet. App. 27-29. Because the

court affirmed the damages award on the takings claim, it declined to

address petitioner’s challenges to the jury’s verdict on the equal pro-

tection claim. Id. at 6.

affirming the jury’s determination that a taking had oc-

curred. The jury was instructed that it could find for

respondents on their takings claim if it concluded that

the permit denial bore no reasonable relationship to a

legitimate governmental objective. In affirming the

district court’s denial of petitioner’s motion for judgment

notwithstanding the verdict, the court of appeals empha-

sized that the record contained conflicting evidence re-

garding the validity of the City’s environmental concerns.

Contrary to the court of appeals’ analysis, however, the

existence of conflicting evidence would not authorize the

jury to determine for itself whether the proposed develop-

ment would have had unacceptable environmental or other

consequences; rather, it would compel the conclusion

that the City had a rational basis for denying the permit

application. Moreover, under established principles,

the determination whether legislative or administrative

bodies have acted reasonably is a question of law subject to

de novo review in the court of appeals, not a question of

fact subject to deferential review.

C. This Court has stated in dictum that land-use

regulation may effect a taking if it does not substantially

advance a legitimate governmental purpose. We believe,

however, that that dictum is ultimately irreconcilable

‘th the principles underlying this Court's regulatory

takings jurisprudence. The fundamental justification for

treating land-use regulation as a taking is, and has always

been, that certain forms of regulation have (for the owner)

the same practical consequences as a direct appropriation.

Requiring compensation in such cases ensures that the

costs of legitimate public programs will not be unfairly

concentrated on discrete individuals. That justification

does not apply to land-use restrictions that are objection-

able only because they bear no reasonable relationship to a

legitimate public purpose. Such restrictions violate

principles of substantive due process, but they do not

10

effect a taking, and they do not trigger a constitutional

obligation to provide compensation for losses suffered

during the period that the restrictions remain in effect.

ARGUMENT

THE COURT OF A’’PEALS APPLIED INCORRECT

LEGAL STANDARDS IN AFFIRMING THE DIS-

TRICT COURT’S JUDGMENT ON RESPONDENTS’

TAKINGS CLAIM

A. The “Rough Proportionality” Test Announced By

This Court In Dolan v. City Of Tigard Is Inappli-

cable To Land-Use Restrictions Not Involving Com-

pelled Dedications Of Property

The court of appeals in this case “assume(d] that the

City’s stated interests of protecting the environment and

health and safety of its citizens were legitimate.” Pet.

App. 16. It stated, however, that “[e]ven if the City had a

legitimate interest in denying [respondents’] development

application, its action must be ‘roughly proportional’ to

furthering that interest.” bid. (citing Dolan v. City

of Tigard, 512 U.S. 374, 391 (1994)). The court of appeals

erred in invoking the “rough proportionality” standard in

this case. This Court’s decisions make clear that the

“rough proportionality” standard applies only where land-

use regulation involves a compelled dedication of real

property.

1. The Court’s identification of the distinct nature

of compelled dedications finds its roots in Loretto v.

Teleprompter Manhattan CATV Corp., 458 U.S. 419,

426 (1982), in which the Court analyzed the relevant

precedents and “conclude(d] that a permanent physical

occupation authorized by government is a taking without

Indeed. because the jury was not instructed to apply a “rough p.

portionality” standard (see J.A. 302-305), it does not appear that such a

basis for a taking claim was properly before the court of appeals.

11

regard to the publie interests that it may serve.“ The

Court observed that Jin such a case, the property owner

entertains a historically rooted expectation of compensa-

tion, and the character of the invasion is qualitatively

more intrusive than perhaps any other category of

property regulation.” Id. at 441. The Court emphasized,

however, that its holding was “very narrow,” and that

it lid] not * * * question the equally substantial

authority upholding a State’s broad power to impose appro-

priate restrictions upon an owner's use of his property.”

Ibid.

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

825 (1987), the California Coastal Commission conditioned

approval of new beachfront construction on the land-

owner’s agreement to provide a public easement across the

property. Id. at 828-829. Relying principally on Loretto,

the Court began its analysis by observing that such an

easement requirement, if imposed unilaterally by the

State, would have effected a taking of property requiring

the payment of just compensation. Id. at 831. It then

addressed the question whether the requirement of public

access could nonetheless be made a condition of a permit

for further development. The Court held that where a

permit denial would advance a legitimate government pur-

pose and would not itself constitute a taking, the permit

may be conditioned on a dedication of property that serves

the same purpose. Id. at 835-837. Where such a permit

condition fails to advance the same purpose as the denial,

however, “the lack of nexus between the condition and the

original purpose of the building restriction converts that

purpose to something other than what it was.” Id. at 837.

The purpose becomes the acquisition of an easement with-

out the payment of compensation, an impermissible result

under the Just Compensation Clause. bid.

Finally, in Dolan, the Court further clarified the nature

of the showing that a regulatory body must make in order

12

to require the dedication of land as a condition of a dev elop-

ment permit. The landowner in that case applied for a

municipal permit to expand her plumbing and electric

supply store. As a condition of the permit, the City of

Tigard required her to dedicate a portion of her property

to the city for use as a public greenway and pathway for

bicycles and pedestrians. 512 U.S. at 379-380. The Court

observed that without question, had the city simply

required petitioner to dedicate a strip of land * * * for

public use, rather than conditioning the grant of her

permit to redevelop her property on such a dedication, a

taking would have occurred.” Id. at 384. It held that to

avoid takings liability, the City was required to show that

the extent of the required dedication was roughly pro-

portional to the expected adverse impact of the proposed

development. Id. at 388-391.

The Dolan Court acknowledged that “the authority of

state and local governments to engage in land use planning

has been sustained against constitutional challenge as

long ago as * Village of Euclid v. Ambler Realty Co.,

272 U.S. 365 (1926).” 512 U.S. at 384. The Court distin-

guished zoning and other land-use restrictions from the

dedication requirement imposed by the City of Tigard,

explaining that “the conditions imposed were not simply a

limitation on the use petitioner might make of her own

parcel, but a requirement that she deed portions of the

property to the city.” Id. at 385. The Court emphasized

that such public access requirements deprive the owner

“of the right to exclude others, ‘one of the most essential

sticks in the bundle of rights that are commonly

characterized as property. Id. at 384 (quoting Kaiser

Aetna v. United States, 444 U.S. 164, 176 (1979)).°

> The Court in Dolan also relied in part on “the well-settled doctrine

of ‘unconstitutional conditions. 512 U.S. at 38. As its name suggests,

that doctrine applies only where the government makes available a

13

2. Thus, Dolan, like Nollan, rests on the view that

compelled dedications of property to the public warrant

closer judicial scrutiny than do restrictions on the

owner's use of her land, even where the dedications are

made a condition of other development rather than imposed

unilaterally by governmental authorities, as in Loretto.

The Court in Nollan observed that judicial scrutiny of

land-use regulation should be particularly searching

“where the actual conveyance of property is made a

condition to the lifting of a land-use restriction, since in

that context there is heightened risk that the purpose is

avoidance of the compensation requirement, rather than

the stated police-power objective.” 483 U.S. at 841.°

Similarly, Dolan derived its proportionality test from the

analysis used by some state courts to determine whether a

dedication “is merely being used as an excuse for taking

property simply because at that particular moment the

landowner is asking the city for some license or permit.”

Dolan, 512 U.S. at 390 (quoting Simpson v. North Platte,

292 N.W.2d 297, 301 (Neb. 1980)). With respect to land-use

regulation that does not involve a compelled dedication,

however, neither Nollan nor Dolan purports to curtail

the “broad power” of governmental bodies “to impose

appropriate restrictions upon an owner's use of his pro-

perty.” Loretto, 458 U.S. at 441.

discretionary benefit, subject to a condition that the Constitution would

prohibit the government from imposing unilaterally. It has no appli-

cation to an outright denial of a land-use permit.

See also Frank Michelman, Takings, 1987, 88 Colum. L. Rev.

1600, 1608-1609 (1988) (Nollan is limited to government-compelled per-

manent occupations of property, a reading that “fully explain{s] the

opinion and its result, without, implausibly, turning Nollan into Loch-

ner redivivus.”).

7 With the exception of the court of appeals in the instant case,

virtually every lower federal court to consider the issue has held that

Dolan’s “rough proportionality” test is inapplicable to land-use

14

Nor would it make any sense to transplant the Dolan

approach to the quite different setting of ordinary land-use

regulation. The court of appeals made no real effort to

explain how a court (let alone a jury) should determine

whether denial of a development permit is “roughly

proportional” to a municipality’s environmental and other

concerns. Especially where the government acts in

response to cumulative risks posed by the use of property

by more than one owner, it would often be difficult or

impossible to quantify with any precision the marginal

risk posed by a specific project. In other situations,

regulation of the development of a single parcel may serve

a variety of purposes, such as alleviating traffic conges-

tion, protecting against flooding or mudslides, ensuring

compliance with clean water standards, preserving habitat

restrictions not involving compelled dedications of property. See, ¢.g.,

New Port Largo, Inc. v. Monroe County, 95 F.3d 1084, 1088 (11th Cir.

1996) (Dolan and Nollan are irrelevant to a takings challenge to a land-

use restriction that does not compel a dedication of property for public

use), cert. denied, 117 S. Ct. 2514 (1997); Goss v. City of Little Rock, 90

F.3d 306, 308-310 (8th Cir. 1996) (while Dolan’s rough proportionality

test applies to a permit condition that compels a dedication of property,

permit denials and other traditional land-use regulation warrant a

more deferential standard of review); Clajon Prod. Corp. v. Petera, 70

F.3d 1566, 1579 (10th Cir. 1995) (“the ‘essential nexus’ and ‘rough

proportionality’ tests [from Nollan and Dolan] are properly limited to

the context of development exactions”); Marshall v. Board of County

Comm'rs for Johnson County, 912 F. Supp. 1456, 1472-1474 (D. Wyo.

1996); Harris v. City of Wichita, 862 F. Supp. 287, 293-294 (D. Kan.

1994), aff'd, 74 F.3d 1249 (10th Cir. 1996) (Table). But see Unity Real

Estate Co. v. Hudson, 889 F. Supp. 818, 840 (W.D. Pa. 1995). State

court decisions are largely in accord with the prevailing view in the

federal courts. See, e. ., Landgate, Inc. v. California Coastal Comm'n,

No, 8059847, 1998 WL 214431, at *10 (Cal. Apr. 30, 1998); Home

Builders Ass'n v. City of Scottsdale , 930 P.2d 993, 1000 (Ariz.) (in banc),

cert. denied, 117 S. Ct. 2512 (1997); McCarthy v. City of Leawood, 894

P.2d 836, 845 (Kan. 1995); Arcadia Dev. Corp. v. City of Bloomington,

552 N.W.2d 281, 286 (Minn. Ct. App. 1996).

15

for endangered species, and promoting (through density

and other limitations) the amenities necessary for the

community that will remain after the developer completes

its work. It would be equally impossible in such a situa-

tion to ascertain whether each of numerous (and often

overlapping) restrictions was roughly proportional to

cumulative harms on a single parcel.

Because the court of appeals did not attempt to explain

how a rough proportionality standard could be sensibly

implemented by land-use agencies or courts in this quite

different setting, the practical import of the court’s

analysis is not altogether clear. It threatens, however, to

be quite disruptive of long-accepted practices in land-use

regulation. There is no justification in Fifth Amendment

jurisprudence for imposing such a limitation on the flexi-

bility of local governments in addressing health, safety,

and environmental concerns. The evident purpose of

Nollan and Dolan was to ensure that development re-

strictions involving compelled dedications of property are

subjected to closer judicial scrutiny than other land-use

regulation. Invocation of the “rough proportionality”

standard to the instant case therefore stands the rea-

soning of Nollan and Dolan on its head.

B. The Court Of Appeals Erred In Holding That The

Existence Of Conflicting Evidence Before Municipal

Regulators Provided A Basis For Finding That A

Taking Had Occurred

The district court instructed the jury that it could find

for respondents on their takings claim if the permit denial

“did not substantially advance a legitimate public pur-

pose.” J. A. 303. The court explained that It he regula-

tory actions of the City or any agency substantially

advanceſ] a legitimate public purpose if the action bears a

reasonable relationship to that objective.” J. A. 304. In

affirming the district court’s denial of petitioner’s motion

16

for judgment notwithstanding the verdict, the court of

appeals emphasized that the record contained conflicting

evidence regarding the validity of the City’s environ-

mental concerns. See Pet. App. 17-20. The court of

appeals reasoned that “(t]he jury was entitled to credit

[respondents’] experts, and discredit the City’s testi-

mony.” Id. at 18. It then concluded (id. at 19-20):

In light of the evidence proffered by [respondents], the

City has incorrectly argued that no rational juror

could conclude that the City’s denial of [respondents’]

application lacked a sufficient nexus with its stated

objectives. Significant evidence supports [respond-

ents'] claim that the City’s actions were dispro-

portional to both the nature and extent of the impact of

the proposed development.

That approach fundamentally misconceives the roles of

both trial and appellate courts in reviewing the reason-

ableness of governmental action. Review for rationality

does not entail resolution of credibility disputes or re-

weighing of the evidence that was before the governmental

body that issued the challenged decision. Moreover, the

ultimate determination as to the rationality of the

challenged decision is a determination of law subject to de

novo review. The court of appeals itself therefore should

have determined, as a matter of law, whether denial of

respondents’ permit application was reasonable in light of

the evidence before the City at the time of its decision.“

As we explain in Part C, infra, whether land-use regulation rea-

sonably furthers legitimate governmental purposes should be deemed

irrelevant to the determination whether a taking has occurred—as

distinguished from whether the taking, if one occurred, was for a

“public use.” For the reasons stated in this Part, however, the court

of appeals’ disposition of this case was erroneous even assuming

(consistent with the jury instructions given by the district court) that

such an inquiry is properly a part of the taking analysis.

17

1. In a variety of contexts, courts are called upon to

assess the rationality of regulatory measures adopted

either by the federal government, or by the States or their

political subdivisions. Pursuant to the Administrative

Procedure Act, a reviewing court may determine whether

agency action is “arbitrary [or] capricious,” 5 U.S.C.

706(2)(A), or “unsupported by substantial evidence,” 5

U.S.C. 706(2(E). In resolving challenges to economic

regulation based upon the Due Process Clause of the Fifth

or Fourteenth Amendment, a court must ask whether

“the legislature has acted in an arbitrary or irrational

way.” Concrete Pipe & Prods. of Cal., Inc. v. Construction

Laborers Pension Trust for S. Cal., 508 U.S. 602, 637

(1993). The court’s review under the Equal Protection

Clause is similariy deferential: “In areas of social and

economic policy, a statutory classification that neither

proceeds along suspect lines nor infringes fundamental

constitutional rights must be upheld against equal

protection challenge if there is any reasonably conceivable

state of facts that could provide a rational basis for the

classification.” FCC v. Beach Communications, Inc., 508

U.S. 307, 313 (1993).

The hallmark of any form of rationality or reason-

ableness review is that a legislative or administrative

determination may not be overturned simply because the

court reweighs the relevant evidence and concludes that a

different decision would have been preferable. See, ¢.g.,

NLRB v. Curtin Matheson Scientific, Inc., 494 U.S. 775,

787 (1990) (rule adopted by the National Labor Relations

Board may be upheld as rational even if Members of the

Court would have preferred a different rule); Allentown

Mack Sales and Serv., Inc. v. NLRB, 118 S. Ct. 818, 829

(1998) (“substantial evidence” standard “gives the agency

the benefit of the doubt, since it requires not the degree

of evidence which satisfies the cowrt that the requisite

fact exists, but merely the degree that could satisfy a

18

reasonable factfinder”); INS v. Elias-Zacarias, 502 U.S.

478, 481 n.1 (1992) (to reverse decision agency under sub-

stantial evidence test, court “must find that the evidence

not only supports that conclusion, but compels it”); United

States v. Carolene Prods. Co., 304 U.S. 144, 154 (1938) (ju-

dicial inquiry in substantive due process challenge “must

be restricted to the issue whether any state of facts either

known or which reasonably could be assumed affords

support for” the legislative judgment, and “neither the

finding of a court arrived at by weighing the evidence, nor

the verdict of a jury can be substituted for” the legislative

determination); Minnesota v. Clover Leaf Creamery Co.,

449 U.S. 456, 464 (1981) (Where there was evidence before

the legislature reasonably supporting the classification,

litigants may not procure invalidation of the legislation

{under the Equal Protection Clause] merely by tendering

evidence in court that the legislature was mistaken.”).

The court of appeals’ analysis cannot be reconciled with

those principles. The court held that the jury’s verdict in

this case could legitimately be based on a decision “to

credit [respondents’] experts, and discredit the City’s

testimony.” Pet. App. 18. Under established administra-

tive law principles, however, the existence of conflicting

evidence does not entitle the reviewing court to decide

for itself on which side the evidence preponderates; its role

is limited to determining whether the agency could rea-

sonably have chosen the course that it did. Even assuming

that respondents’ takings claim was properly submitted to

the jury, nothing in the Seventh Amendment or in 42

U.S.C. 1983 gives the jury a more sweeping power than a

court might have exereised.“

Application of the foregoing principles in this case is complicated

somewhat by the fact that the evidence placed before the jury was not

limited to the administrative record underlying the City’s decision to

deny the development permit, but included the testimony of expert wit-

19

2. The court of appeals’ analysis is subject to a second,

and related, criticism. Whether a court’s review is based

upon the APA or upon the Due Process or Equal Pro-

tection Clause, the question whether an agency decision is

arbitrary, unreasonable, or unsupported by substantial

evidence is a question of law subject to de novo review.

See, e. g., Athens Community Hosp., Inc. v. Shalala, 21

F.3d 1176, 1178 (D.C. Cir. 1994) (“Upon the issue whether

an administrative regulation is lawful, we do not defer to

the judgment of the district court”; rather, the court of

appeals determinels]! de novo whether the ayency’s

decision was arbitrary or capricious.”); Novicki v. Cook,

946 F.2d 938, 941 (D.C. Cir. 1991) (We do not defer to a

district court’s review of an agency adjudication any more

than the Supreme Court defers to a court of appeals’

review of such a decision.”); Smolen v. Chater, 80 F.3d

1273, 1279 (9th Cir. 1996) (“We review the district court|‘|s

decision de novo and therefore must independently deter-

mine whether the [agency’s} decision (1) is free of legal

error and (2) is supported by substantial evidence.”).

The district court instructed the jury that t he regu-

latory actions of the city or any agency substantially

advancel] a legitimate public purpose if the action bears a

reasonable relationship to that objective.” Pet. App. 13. If

nesses introduced by both parties. The fact remains, however, that the

question placed before the jury was whether the City’s decision bore a

reasonable relationship to a legitimate governmental objective. The

experts who testified at trial had previously expressed their views to

the City Council during the permit application process; the purpose of

their testimony was simply to explicate for the jury the nature of the

evidence that was before the Council at the time it made its decision.

The use of live testimony to supplement the documentary record in

that respect did not authorize the jury to reject the City’s decision as

unreasonable simply because it found the evidence supporting re-

spondents’ permit application to be more persuasive than the evidence

on the other side.

20

the district court had itself determined that the permit

denial lacked a “reasonable relationship” to the City’s en-

vironmental concerns, and had ruled in respondents’ favor

on that basis, its decision would have been subject to de

novo review in the court of appeals. There is no logical

basis for reviewing a comparable jury verdict under a

more deferential standard. The court of appeals, however,

sustained the jury’s verdict based on its determina-

tion that As lignificant evidence supports [respondents’]

claim,” and that a “rational juror could conclude that the

City’s denial of [respondents'] application lacked a suffi-

cient nexus with its stated objectives.” Id. at 20. In so

holding, the court of appeals abdicated its responsibility to

determine, as a matter of law, whether the City’s denial of

respondents’ permit application satisfied the (deferential)

standard embodied in the jury instructions.”

10 As we explain above, see note 1, supra, the United States takes

no position on the question whether the liability issues in this case were

properly submitted to the jury. We do note, however, that it would be

anomalous to submit to a jury a determination of the sort that would

be subject to de novo review in the court of appeals. Determinations re-

garding the reasonableness of decisions made by governmental bodies

are, moreover, routinely entrusted to federal judges. (Indeed, the dis-

trict court in the instant case reserved for itself the question whether

the City’s denial of respondents’ permit application violated principles

of substantive due process. See Pet. App. 41-42.) And because such

determinations do not properly entail che resolution of credibility

disputes or the reweighing of evidence considered by the governmental

body whose decision is under review, they do not implicate the

traditional strengths of juries. Thus, assuming (contrary to our posi-

tion, see Part C, infra) that takings liability can correctly be premised

on a finding that land-use regulation does not reasonably relate to

legitimate state interests, the essentially legal character of the reason-

ableness inquiry, and the greater experience of judges at undertaking

such an analysis, would weigh against submission of that issue to a

jury. Cf. Markman v. Westview Instruments, Inc., 517 U.S. 370, 388

(1996).

21

C. A Determination That Land-Use Regulation Fails

Substantially To Advance A Legitimate Govern-

mental Interest Does Not Provide A Sufficient Basis

For Concluding That A Compensable Taking Of

Property Has Occurred

The jury in the instant case was instructed that re-

spondents could establish a compensable taking if they

proved “that the City’s decision to reject [respondents’]

190 unit development proposal did not substantially al.

vance a legitimate public purpose.“ J.A. 303. That

instruction is consistent with this Court’s statement in

Agins v. City of Tiburon, 447 U.S. 255 (1980), that

[t]he application of a general zoning law to particular

property effects a taking if the ordinance does not

substantially advance legitimate state interests, see

Nectow v. Cambridge, 277 U.S. 183, 188 (1928), or

denies an owner economically viable use of his land, see

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

104, 138, n. 36 (1978).

447 U.S. at 260. We believe, however, that the language

quoted above may properly be regarded as dictum, and

that it is unfounded insofar as it suggests that land-use

regulation may be deemed a taking that requires the

payment of just compensation if it fails substantially to

further a legitimate governmental objective."

1 The Agins Court's articulation of the governing constitutional

standard may properly be characterized as dictum, since the Court

concluded that the challenged zoning ordinances did “substantially

advance legitimate governmental goals.” 447 U.S. at 261. The land-

owners in Agins did not seriously contend that the challenged zoning

restriction failed to advance a legitimate state interest. See Br. for

Appellants 17 n.5 (No. 79-602) (“that the City of Tiburon may take

private property for public use, and that open space is one species of

such legislatively declared public use, cannot be the subject of rational

debate in the case at bench”). It is also of significance to the issue

1. The Agins Court did not identify any basis in the

Just Compensation Clause itself, or in that Clause’s back-

ground or subsequent application, for the statement

quoted above. Instead, it simply relied on this Court's

statement in Nectow that a restriction on private develop-

ment adopted as part of a municipal zoning plan generally

“eannot be imposed if it does not bear a substantial re-

lation to the public health, safety, morals, or general

welfare.” 277 U.S. at 188 (citing Village of Euclid v.

Ambler Realty Co., 272 U.S. 365, 395 (1926)). Nectow, how-

ever, did not involve a claim under the Just Compensation

discussed in Part B, supra, that the Court reached its conclusion on

this point solely by reference to the applicable state law and local

ordinances, without consideration of factual issues of the sort the jury

was allowed to consider in this case.

This Court has quoted the Agins passage in some subsequent

opinions. See United States v. Riverside Bayview Homes, Inc., 474

U.S. 121, 126 (1985); Keystone Bituminous Coal Ass'n v. DeBenedictis,

480 U.S. 470, 485 (1987); Nollan, 483 U.S. at 834 & n.3, 841; Yee v. City

of Escondido, 503 U.S. 519, 534 (1992); Dolan, 512 U.S. . . In no

case, however, has the Court found a compensable te basel on its

conclusion that land-use regulation did not substae’ uly advance a

legitimate state interest. Indeed, eight years after this Court's decision

in Agins, the Claims Court stated that “no court has ever found that a

taking has occurred solely because a legitimate state interest was not

substantially advanced.” Loveladies Harbor, Inc. v. United States, 15

Cl. Ct. 381, 390 (1988). We are aware of only one subsequent decision in

which a court has entered an award of just compensation on that basis.

See Whitehead Oil Co. v. City of Lincoln, 515 N.W.2d 401, 408-412 (Neb.

1994).

Nollan and Dolan are not to the contrary. As we explain above (see

pp. 11-15, supra), both those cases rest on the proposition that compelled

dedications of property require a greater justification than do regula-

tory measures that simply restrict the owner's use of land. Because the

analysis articulated in those cases requires a comparison between the

compelled dedication and the anticipated effects of proposed develop-

ment, that test has no application to cases that do not involve a dedica-

tion requirement.

Clause. Rather, the plaintiff in that case contended that

the zoning regime “deprived him of his property without

due process of law in contravention of the Fourteenth

Amendment.” Id. at 185. In setting forth the legal princi-

ples governing its review, the Nectow Court observed that

a court should not set aside the determination of public

officers in such a matter unless it is clear that their

action “has no foundation in reason and is a mere

arbitrary or irrational exercise of power having no

substantial relation to the public health, the public

morals, the public safety or the public welfare in its

proper sense.”

Id. at 187-188 (quoting Euclid, 272 U.S. at 395).

Thus, the Nectow Court’s use of the word “substantial”

cannot properly be read to suggest that a more stringent

means-ends inquiry is appropriate when land-use regu-

lation is challenged under the Just Compensation Clause

than when it is alleged to effect a denial of substantive due

process. That is so both because Nectow did not involve a

claim under the Just Compensation Clause, and because

the Nectow Court used the phrase “substantial relation”

in contradistinction to “a mere arbitrary or irrational

exercise of power.“ Because the Agins Court's use of

the phrase “substantially advance” was supported only by

citation to Nectow, Agins should not be read to have ap

proved a new, and more demanding, standard governing the

adjudication of takings claims. Rather, read in its proper

context, Agins simply suggests that land-use regulation

so arbitrary or irrational as to constitute a violation of

substantive due process principles may be found, on that

2 Compare J.A. 304 (district court instructed the jury in this case

that “(t]he regulatory actions of the city or any agency substantially

advanceſ] a legitimate public purpose if the action bears a reasonable

relationship to that objective”).

24

basis, to effect a taking of property as well.” In our view,

however, that suggestion is incorrect.

2. Although the passage in Agins quoted above has

been repeated in several of this Court’s subsequent de

cisions, it is ultimately irreconcilable with the principles

underlying the Court’s regulatory takings jurisprudence.

As this Court recognized in Lucas v. South Carolina

Coastal Council, 505 U.S. 1008, 1028 n.15 (1992), “early

constitutional theorists did not believe the Takings

Clause embraced regulations of property at all.” Rather,

until the Court’s decision in Pennsylvania Coal Co. v.

Mahon, 260 U.S. 393 (1922), “it was generally thought that

the Takings Clause reached only a ‘direct appropriation’ of

property, or the functional equivalent of a ‘practical ouster

of [the owner's] possession.’” Lucas, 505 U.S. at 1014 (ei-

tations omitted). This Court has since concluded, how-

Relying on Agins’s use of the phrase “substantially advance,” the

Court in Nollan suggested that takings analysis might involve a more

searching means-ends inquiry than is properly undertaken pursuant to

the Due Process Clause. The Court stated that “there is no reason to

believe (and the language of our cases gives some reason to disbelieve)

that so long as the regulation of property is at issue the standards

for takings challenges, due process challenges, and equal protection

challenges are identical.” 483 U.S. at 835 n.3. The Court has more

recently reiterated, however, that where “due process arguments are

unavailing, ‘it would be surprising indeed to discover’ the challenged

statute nonetheless violated the Takings Clause.” Concrete Pipe, 508

U.S. at 641.

In any event, our argument is not that takings and due process

challenges to land-use regulation are governed by “identical” stan-

dards. A regulation that deprives the owner of all economically

beneficial use of land may constitute a taking even where it satisfies

due process review. Our point is simply that where land-use regula-

tion satisfies due process standards, it may not be deemed a taking, re.

quiring the payment of compensation, based on a purportedly insuffi-

cient nexus between the governmental interest to be furthered and the

means employed to advance that interest.

ever, that even where an owner is not divested of title to or

possession of real property, land-use regulation may effect

a taking if it trenches too severely upon the prerogatives

that have traditionally accompanied ownership. See id.

at 1014-1019. Thus, regulation that entails a permanent

physical occupation of real property, see Dolan, 512 U.S.

at 384; Nollan, 483 U.S. at 831-832; Loretto, 458 U.S. at 426,

434-435, 441, or that deprives the owner of all economically

beneficial use of the land, see Lucas, 505 U.S. at 1015-1016,

t the payment of just compensation even

— die an involve a “direct appropriation” of the

property involved.

But while a direct appropriation is not a sine qua non of

a compensable taking, it remains the point of reference

for determining whether there is a taking requiring the

payment of compensation. That point of reference is evi-

dent in Mahon itself, the Court’s seminal decision con-

cerning the application of the Just Compensation Clause

to regulation of the use of real property. In Mahon, the

Court explained that t lo make it commercially impracti-

cable to mine certain coal has very nearly the same effect

for constitutional purposes as appropriating or destroying

it.” 260 U.S. at 414. In Loretto, the Court observed that

a permanent physical occupation “is perhaps the most

serious form of invasion of an owner’s property interests,”

one that “forever denies the owner any power to control

the use of the property” that is occupied. 458 U.S. at 435,

436. In Williamson County Regional Planning Com-

mission v. Hamilton Bank of Johnson City, 473 U.S. 172,

185 (1985), the Court recognized that “government regu-

lation may be so restrictive that it denies a property

owner all reasonable beneficial use of its property, and

thus has the same effect as an appropriation of the

property for public use.” See also id. at 199 (in deter-

mining whether regulatory measures go “too far,” the

court’s task is “to distinguish the point at which regu-

lation becomes so onerous that it has the same effect as an

appropriation of the property through eminent domain or

physical possession”). And the Lucas Court noted that

“total deprivation of beneficial use is, from the landowner’s

point of view, the equivalent of a physical appropriation.”

505 U.S. at 1017.

The Court’s regulatory takings jurisprudence thus re-

flects a determination that certain forms of land-use

regulation are, from the owner's perspective, sufficiently

similar to the direct appropriation of property as to

trigger the Fifth Amendment requirement that just com-

pensation be paid. By contrast, regulation that involves

neither a physical occupation nor a denial of all economi-

cally beneficial use, and is objectionable only because it

fails to advance a legitimate governmental interest, cannot

plausibly be regarded as the functional equivalent of a

direct appropriation of land.

3. The purpose of the Just Compensation Clause is not

to protect property owners against regulation that serves

no legitimate governmental purpose. To the contrary,

the Clause by its terms “presupposes that [property] is

wanted for public use.” Mahon, 260 U.S. at 415; see also

Hawaii Housing Auth. v. Midkiff, 467 U.S. 229, 239-245

(1984)." The Just Compensation Clause “does not prohibit

The Court in Midkiff reiterated the established rule that “one

person’s property may not be taken for the benefit of another private

person without a justifying public purpose, even though compensation

be paid.” 467 U.S. at 241 (quoting Thompson v. Consolidated Gas Util.

Corp, 300 U.S. 55, 80 (1987)). The Court in Midkiff defined the “public

use” requirement in a manner that essentially duplicates the standard

applicable to substantive due process claims, observing that “where

the exercise of the eminent domain power is rationally related to a

oonce able public purpose, the Court has never held a compensated

taking to be proscribed by the Public Use Clause.” 467 U.S. at 241; see

also id. at 240 (“The ‘public use’ requirement is thus coterminous with

27

the taking of private property, but instead places a con-

dition on the exercise of that power. * * [It is designed

not to limit the governmental interference with property

rights per se, but rather to secure compensation in the

event of otherwise proper interference amounting to a

taking.” First English Evangelical Lutheran Church v.

Los Angeles County, 482 U.S. 304, 314-315 (1987).

Thus, the constitutional requirement that just compen-

sation be paid in order for a taking to be lawful is not

intended to prevent or deter the government from adopting

irrational regulatory schemes. Rather, the just com-

pensation requirement addresses the quite different

concern that the costs of legitimate public programs not

be concentrated unfairly on discrete individuals. See, e.g.,

Armstrong v. United States, 364 U.S. 40, 49 (1960) (just

compensation requirement “was designed to bar Govern-

ment from forcing some people alone to bear public

burdens which, in all fairness and justice, should be borne

by the public as a whole”); Kirby Forest Indus., Inc. v.

United States, 467 U.S. 1, 14 (1984)." In determining

the scope of a sovereign’s police powers.“ Ruckelshaus v. Monsanto

Co., 467 U.S. 986, 1014-1016 & n.18 (1984).

For that reason, the court of appeals erred, in the course of

analyzing the jury trial issue, in analogizing eminent domain and

inverse condemnation actions to suits based on trespass or conversion.

See Pet. App. 9. Those actions sound in tort, and any resulting money

judgment takes the form of damages to compensate for injury sus-

tained as the result of wrongful conduct. The Federal Tort Claims Act

specifically exempts the United States from monetary liability under

that Act based on “the execution of a statute or regulation, whether or

not such statute or regulation be valid.“ 28 U.S.C. 2680(a). As the

Court explained in United States v. Varig Airlines, 467 U.S. 797 (1984),

that provision was adopted because lit is neither desirable nor

intended that the constitutionality of legislation [or] the legality of

regulations * * * should be tested through the medium of a damage

suit for tort.” Id. at 809-810 (citation omitted).

28

whether particular regulatory measures effect a taking of

property, this Court has accordingly looked principally to

the nature of the burden placed upon individual land-

owners. Where the burden is functionally comparable to

that attendant upon a direct appropriation of property, the

Court has held that just compensation is required in order

for the regulation to be lawful. See pp. 24-26, supra. By

contrast, a claim that government regulation fails sub-

stantially to advance legitimate state interests has no

logical relevance to the question whether the burdens of

that regulation have been unfairly concentrated on parti

cular individuals.

4. For the foregoing reasons, land-use regulation that

bears no reasonable relationship to any valid governmental

purpose violates principles of substantive due process, but

it cannot be said (on that basis alone) to effect a com-

pensable taking of property. The significant practical

consequences of that distinction result from this Court’s

decision in First English, which recognizes a right to

The money judgment in an eminent domain or inverse condemnation

action, by contrast, is the payment of the compensation that satisfies

the condition necessary to render the governmental action le ul. In

other words, the payment of compensation results in a lawful cransac-

tion in which money is paid in exchange for the government's acquisi-

tion of a property interest. An inverse condemnation action therefore

is brought to obtain the compensation owed when the legislature is

deemed to have authorized the taking of property with compensation to

be paid in a judicial proceeding instituted by the property owner (such

as in a suit under the Tucker Act, 28 U.S.C. 1491(a)(1)), rather than to

have the governmental! action enjoined as unauthorized if it is found to

constitute a taking that requires the payment of compensation to be

lawful. See, e.g., Ruckelshaus v. Monsanto, 467 U.S. at 1016-1019. An

inverse condemnation action has historically sounded in contract, not

tort, with the obligation to pay in exchange for the acquisition of pro-

perty implied under the terms of the Fifth Amendment. See, .

Jacobs v. United States, 290 U.S. 13, 16 (1983); compare Schillinger v.

United States, 155 U.S. 168, 167-168 (1894).

compensation for temporary takings in the regulatory

context. 482 U.S. at 318-321. With respect to “the re-

latively rare situations where the government has

deprived a landowner of all economically beneficial uses,”

Lucas, 505 U.S. at 1018, the obligation to provide compen-

sation for temporary takings is a fairly manageable one.

The potential liability of the federal and state govern-

ments will be substantially increased, however, if a finding

that land-use restrictions are not reasonably related to a

legitimate governmental interest is deemed sufficient, by

itself, to trigger the temporary takings principle while the

restrictions were in effeet.“ Such a rule would effectively

compel the payment of money damages whenever a court

holds government land-use regulation to be irrational,

even if the economic loss to the owner is slight in com-

parison to the property’s remaining permissible uses.

Nothing in the text or purposes of the Just Compensation

Clause supports that result.“

16 The question whether irrational land-use regulation effects a

taking is likely, as a general matter, to be of greater practical signifi-

cance to federal and state governments than to municipalities such as

the petitioner in this case. A local government is a “person” subject to

suit for damages under 42 U.S.C. 1983. See, ¢.g., Monell v. New York

City Dep't of Social Serv., 436 U.S. 658 (1978). Where municipal policy-

making officials restrict the use of land in a manner that violates the

owner’s substantive due process rights, monetary relief will therefore

be available, regardless of whether the restriction is also deemed a

“taking” within the meaning of the Just Compensation Clause. A

State, by contrast, is not a “person” subject to suit under Section 1983,

see Will v. Michigan Dep't of State Police, 491 U.S. 58, 62-71 (1989),

and there is no federal statute generally authorizing suits for damages

against the United States in cases involving constitutional violations.

* This Court’s decision in First English cannot plausibly be con-

strued as establishing any overarching principle that retrospective

monetary relief must always be made available for losses suffered

as a result of unconstitutional government conduct. The Court has

recognized, for example, that At he rule that the United States may

30

CONCLUSION

The judgment of the court of appeals should be reversed,

and the case should be remanded for further proceedings.

Respectfully submitted.

SETH P. WAXMAN

Solicitor General

Lois J. SCHIFFER

Assistant Attorney General

EDWIN S. KNEEDLER

Deputy Solicitor General

MALCOLM L. STEWART

Assistant to the Solicitor

General

DAVID C. SHILTON

TIMOTHY J. DOWLING

NINA MENDELSON

Attorneys

JUNE 1998

not be sued without its consent is all embracing,” Lynch v. United

States, 292 U.S. 571, 581 (1934), and applies to suits “arising from some

violation of rights conferred upon the citizen by the Constitution,” id. at

582. See also, e.g., FDIC v. Meyer, 510 U.S. 471, 484-486 (1994); United

States v. Hopkins, 427 U.S. 123, 128 (1976). Even where sovereign

entities are not entirely immune from suit, the remedy provided upon

proof of a constitutional violation is often limited to prospective injunc-

tive relief. See, eg., Papasan v. Allain, 478 U.S. 265, 278 (1986)

(Eleventh Amendment bars federal court from awarding relief against

state officials that “is tantamount to an award of damages for a past

violation of federal law,” but does not preclude “relief that serves

directly to bring an end to a present violation of federal law”); 5 U.S.C.

702 (APA authorizes suits against federal agencies for “relief other

than money damages”).