Amicus Curiae Brief — Palazzolo v. Rhode Island

pV 22 am

No. 99-2047

In The

Supreme Court of the United States

®

ANTHONY PALAZZOLO,

Petitioner,

RHODE ISLAND ex rel. PAUL J. TAVARES,

General Treasurer, and

COASTAL RESOURCES MANAGEMENT COUNCIL,

Respondents.

o

On Writ Of Certiorari To

The Supreme Court Of Rhode Island

S

BRIEF AMICUS CURIAE OF DEFENDERS

OF PROPERTY RIGHTS

IN SUPPORT OF PETITIONER

*

Nancie G. MARZULLA

DEFENDERS OF PROPERTY RIGHTS

1350 Connecticut Ave., N.W., Suite 410

Washington, DC 20036

202-822-6770

Counsel of Record for Amicus Curiae

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

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

Amicus curiae will address the following question:

Whether a regulatory takings claim is categorically

barred whenever the enactment of the regulation pre-

dates the claimant's acquisition of the property?

TABLE OF CONTENTS

Page

QUESTION PRESENTED. ......:.0sesseeuseueeeee i

TABLE OF AUTHORITIES ....0cccccsevseeue eee iii

INTERESTS OF AMICUS CURIAE.................. 1

STATEMENT OF THE CASE AND SUMMARY OF

ARGUMENT .......00ss0re0s080008 00 nee 2

ARGUMENT . ......65000005088088 000 nnn 6

I. THE FACT THAT THERE ARE REGULATIONS

THAT REQUIRE A PROPERTY OWNER TO

OBTAIN A PERMIT PRIOR TO USING HIS

LAND DOES NOT MEAN, AS A MATTER OF

LAW, THAT THE GOVERNMENT'S REFUSAL

TO ISSUE A PERMIT IS NOT A TAKING

UNDER THE FIFTH AMENDMENT.......... 6

A. The Mere Existence of a Regulatory Regime

Does Not Entitle the Government To Take

All Economically Beneficial Use of Land

without Payment of Just Compensation... 6

B. The Mere Existence of a “Regulatory Cli-

mate” Does Not Dispose of the Takings

Issue in a Partial Takings Case........... 16

CONCLUSION ......0s05000e nee eee eileen 19

TABLE OF AUTHORITIES

Page

Cases

Agins v. City of Tiburon, 447 U.S. 255 (1980).......... 8

Armstrong v. United States, 364 U.S. 40 (1960)........ 11

Bennett v. Spear, 520 U.S. 154 (1997)...............55. 1

City of Monterey v. Del Monte Dunes at Monterey,

MEY GEUUD cc cccceccscccccccccccess 2, 15

Creppel v. United States, 41 F.3d 627 (Fed. Cir. 1994)..... 4

Dolan v. City of Tigard, 512 U.S. 374 (1994)........ 1, 14

First English Evangelical Lutheran Church of Glendale

v. County of Los Angeles, 482 U.S. 304 (1987) ...... 14

Florida Rock Industries, Inc. v. United States, 18 F.3d

1560 (Fed. Cir. 1994), cert. denied, 513 U.S. 1109

eee cere cc eeacectececcccescess 9

Fuller v. United States, 409 U.S. 488 (1973)........... 12

Good v. United States, 189 F.3d 1355 (Fed. Cir. 1999),

cert. denied, 120 S. Ct. 1554 (2000) ......... 4,5, 6, 7, 16

Hodel v. Irving, 481 U.S. 704 (1987)...............4.. 17

Keene Corp. v. United States, 508 U.S. 200 (1993) ...... l

Loveladies Harbor, Inc. v. United States, 28 F.3d 1171

eee rence cee ccsccecce: _ oe

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

ee cca escceececes. passim

Maritrans, Inc. v. United States, 40 Fed. Cl. 790

CCE ace ke sacencecescees: Ay wanes ae

Nollan v. California Coastal Comm'n, 483 U.S. 825

0 ae Piva bss eec 14, 15

iv

TABLE OF AUTHORITIES - Continued

Page

Palazzolo v. Coastal Resources Management Council,

C.A. No. 86-1496, 1995 WL 941370 (R.I. Super.

SO, Th, Ge vba cancavcesesnsendeusstseusensueneens 3

Palazzolo v. Coastal Resources Management Council,

No. 88-0297 (R.I. Super. Oct. 24, 1997) ............. 3

Palazzolo v. Rhode Island, 746 A.2d 707 (R.I. 2000),

cert. granted, 121 S. Ct. 296 (2000).. 2, 3, 4, 10, 13, 16

Palm Beach Isles Assoc. v. United States, 208 F.3d 1374

(Fed. Cir. 2000), aff'd on rehearing, No. 99-5030, 2000

WL 1665135 (Fed. Cir. Nov. 3, 2000), and rehearing

en banc denied, No. 99-5030, 2000 WL 1693725 (Fed.

ak Ge a BE 6 cc cu veccecnuceuseesakas 5, 6, 16, 17

Palm Beach Isles Assocs. v. United States, No.

99-5030, 2000 WL 1665135 (Fed. Cir. Nov. 3,

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

Penn Central Transp. Co. v. City of New York, 438

ak See EE odoudecacescescesuccseuey 2, 3, 5, 7, 16

Phillips v. Washington Legal Found., 524 U.S. 156

SPU occ cb cvndoeces veeceectcesseueeucecessetass 1, 17

Solid Waste Agency of Northern Cook County v. U.S.

Army Corps of Engineers, 191 F.3d 845 (7th Cir.

1999), cert. granted, 120 S. Ct. 2003 (2000).......... 2

Suitum v. Tahoe Regional Planning Agency, 520 U.S.

Fe GeO vino 0ethacidcee een bhenseenenuenedesuene |

Vv

TABLE OF AUTHORITIES - Continued

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

se ee ey ee

Williamson County Regional Planning Comm'n v.

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

GED o oc ccnnncancccuadesuceusoucecescsecescess

CONSTITUTIONS

ee Ge GR We coc ch cccadecesSecues 3,

STATUTES

Water Pollution Prevention and Control Act, 33

U.S.C.A. §§ 1251-1387 (1986 & Supp. 2000).....

OTHER AUTHORITIES

<http:/ /www.epa.gov /owow / wetlands / facts /

PE oso cvcdccctossccecetsceesenananeses

<http://www.epa.gov /owow/ wetlands / facts /

PE ssh enssdsouccussvensvsccaseesecccess

James Madison, Property, 1 Nat’t Gazette 174

(1792) (reprinted in 4 Letrers aNpD OtHer Wait-

INGS OF JAMES Mapison 480 (1865))..............

Michael Grunwald, For Oil! Projects, Corps’ Answer

Is Almost Always “Yes”, THe WasHINGTON Post

GUE. BE Gs 0 co vccccvccncccsocescececescens

Michael Grunwald, Working to Please Hill Com-

manders, Tt WasHINGTON Post (Sept. 11, 2000) .

U.S. Army Corps of Engineers, Regulatory

Branch, Section 404 and Section 10/404 Permit

PSDs 6 cco nciceecsncscncceedesccseséeseeves

11, 12

17, 18

BRIEF AMICUS CURIAE OF

DEFENDERS OF PROPERTY RIGHTS

IN SUPPORT OF PETITIONER

Pursuant to Rule 37.3 of the Rules of this Court,

amicus curiae submits this brief in support of petitioner.!

Both parties have consented to the filing of this brief.

¢

INTERESTS OF AMICUS CURIAE

Defenders of Property Rights is the only national

legal defense foundation dedicated exclusively to protect-

ing private property rights. Based in Washington, D.C.,

Defenders was founded as a non-profit, public interest

- legal foundation in 1991. Its mission is to protect vigor-

ously those rights considered essential by the Framers of

the Constitution, and to promote a better understanding

of the relationship between private property rights and

individual liberty. Defenders of Property Rights engages

in litigation across the country on behalf of its members

and the public interest to prevent government incursion

into protections guaranteed by the Bill of Rights.

Defenders participated in Lucas v. South Carolina Coastal

Council, 505 U.S. 1003 (1992); Keene Corp. v. United States,

508 U.S. 200 (1993); Dolan v. City of Tigard, 512 U.S. 374

(1994); Bennett v. Spear, 520 U.S. 154 (1997); Suitum v.

Tahoe Regional Planning Agency, 520 U.S. 725 (1997); Phil-

lips v. Washington Legal Foundation, 524 U.S. 156 (1998);

' No counsel for either party authored this brief amicus

curiae, either in whole or in part. Furthermore, nor persons other

than amicus curiae contributed financially to the preparation of

this brief.

City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526

U.S. 687 (1999); and Solid Waste Agency of Northern Cook

County v. U.S. Army Corps of Engineers, 191 F.3d 845 (7th

Cir. 1999), cert. granted, 120 S. Ct. 2003 (2000), when they

were before this Court.

STATEMENT OF THE CASE AND

SUMMARY OF ARGUMENT

On the back of the rather unexceptional facts of this

case, the government seeks to establish a rule of law that

would in one fell swoop undo this Court’s venerable

regulatory takings jurisprudence. The court below, pur-

porting to benignly interpret and apply this Court’s hold-

ings in the landmark cases of Lucas v. South Carolina

Coastal Council, 505 U.S. 1003 (1992) and Penn Central

Transp. Co. v. City of New York, 438 U.S. 104 (1978), ren-

dered a decision that directly contravenes those decisions

and which, if not reversed by this Court, eviscerates the

Just Compensation Clause. See Palazzolo v. Rhode Island,

746 A.2d 707 (R.1. 2000), cert. granted, 121 S. Ct. 296 (2000)

(Pet. App. at A-1).

The relevant facts of this case can be summarized as

follows. In 1978, petitioner acquired a parcel of land that

was subject to the Rhode Island Inter-Tidal Wetlands

Protection Act, which regulates the filling of wetlands in

coastal wetlands. Palazzolo, 746 A.2d at 710, 715 (Pet.

App. at A-1). In 1985, petitioner filed for a permit allow-

ing him to fill 18 acres of his land in order to develop a

recreational beach facility. Id. at 711 (Pet. App. at A-1).

Without a wetland fill permit, he can make no economi-

cally beneficial use of his land. Petition for Writ of Cer-

tiorari at 18, Palazzolo v. Rhode Island, 746 A.2d 707 (R.I.

2000). Nevertheless, in 1986, respondent, the Coastal

Resources Management Council (“CRMC”) denied peti-

tioner’s permit application, whereupon petitioner sought

an administrative appeal, which was also denied, and

filed suit in state court seeking just compensation for the

taking of his property rights in violation of the Fifth

Amendment. Palazzolo, 746 A.2d at 711 (Pet. App. at A-1)

(citing Palazzolo v. Coastal Resources Management Council,

C.A. No. 86-1496, 1995 WL 941370 (R.I. Super. Jan. 5,

1995) (Pet. App. at A-31)).

In 1997, the state trial court rejected petitioner’s

claim for just compensation for the taking of his property

rights in violation of the Fifth Amendment. Id. (Pet. App.

at A-1) (citing Palazzolo v. Coastal Resources Management

Council, No. 88-0297 (R.I. Super. Oct. 24, 1997) (Pet. App.

at B-1)). The Supreme Court of Rhode Island affirmed,

holding that petitioner could not prevail under the Lucas

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

se takings test because “a regulatory takings claim may

not be maintained where the regulation predates the

acquisition of the property.” Palazzolo, 746 A.2d at 715-17

(Pet. App. at A-1). The court below further held that

petitioner could not establish a partial taking under the

Penn Central Transp. Co. v. City of New York, 438 U.S. 104

(1978), test because a property owner, as a matter of law,

lacks “reasonable investment-backed expectations”

whenever the regulation predates the acquisition of the

property. Palazzolo, 746 A.2d at 717 (Pet. App. at A-1).

The court below’s confusion over the proper role of

investment-backed expectations in the context of a cate-

gorical regulatory taking case derives from a recent deci-

sion of the U.S. Court of Appeals for the Federal Circuit,

Good v. United States, 189 F.3d 1355, 1361-62 (Fed. Cir.

1999), cert. denied, 120 S. Ct. 1554 (2000). In Geod, the court

held that:

For any regulatory takings claim to succeed, the

claimant must show that the government's regu-

latory restraint interfered with his investment-

backed expectations in a manner that requires

the government to compensate him. The

requirement of investment-backed expectations

“limits recovery to owners who can demonstrate

that they bought their property in reliance on

the non-existence of the challenged regula-

tion.” . . . Lucas did not mean to eliminate the

requirement for reasonable, investment-backed

expectations to establish a taking.

Id. at 1360-61 (quoting Creppel v. United States, 41 F.3d 627,

632 (Fed. Cir. 1994); citing Loveladies Harbor, Inc. v. United

States, 28 F.3d 1171 (Fed. Cir. 1994)).

Parroting Good, the court below likewise held that in

this case the petitioner “could not reasonably have

expected” that he could develop his land because the

mere existence of a regulatory scheme in place at the time

he acquired the land barred recovery. This was not a

factual conclusion reached as a result of an ad hoc factual

inquiry, but rather was a conclusion of law reached

because of the existence of the regulatory scheme. Pal-

azzolo, 746 A.2d at 717 (citing Good, 189 F.3d at 1361-62)

(Pet. App. at A-1).

Moreover, the court below further compounded that

error by holding that investment-backed expectations

were dispositive of both the categorical and partial tak-

ings issues: “Palazzolo’s lack of reasonable investment-

backed expectations is dispositive in this case, and we

need not consider the other factors of the Penn Central

test.” Id. (citing Good, 189 F.3d at 1363).

The case on which the court below relied, Good v.

United States, has since been severely limited by the Court

of Appeals for the Federal Circuit, destroying the under-

pinnings of the decision below. See Palm Beach Isles Assoc.

v. United States, 208 F.3d 1374 (Fed. Cir. 2000), aff'd on

rehearing, No. 99-5030, 2000 WL 1665135 (Fed. Cir. Nov. 3,

2000), and rehearing en banc denied, No. 99-5030, 2000 WL

1693725 at *3 (Fed. Cir. Nov. 13, 2000) (Gajarsa, J., dissent-

ing) (“The panel holds that in a categorical regulatory

taking, a property owner is entitled to recovery ‘without

regard to consideration of investment-backed expecta-

tions.’ ”)

As the Federal Circuit did in Palm Beach Isles, amicus

curiae urges this Court to reverse the court below’s mis-

reading of this Court’s decisions in Lucas v. South Carolina

Coastal Council, 505 U.S. 1003 (1992) and Penn Central

Transp. Co. v. City of New York, 438 U.S. 104 (1978). Other-

wise, a holding that the mere existence of a regulatory

regime is an absolute bar to a regulatory taking claim will

swallow the Just Compensation Clause since there is vir-

tually no piece of virgin land or property in this country

not subject to extensive government regulation and over-

sight.

ARGUMENT

I. THE FACT THAT THERE ARE REGULATIONS

THAT REQUIRE A PROPERTY OWNER TO

OBTAIN A PERMIT PRIOR TO USING HIS

LAND DOES NOT MEAN, AS A MATTER OF

LAW, THAT THE GOVERNMENT'S REFUSAL

TO ISSUE A PERMIT IS NOT A TAKING

UNDER THE FIFTH AMENDMENT.

A. The Mere Existence of a Regulatory Regime

Does Not Entitle the Government To Take All

Economically Beneficial Use of Land without

Payment of Just Compensation.

In Palm Beach Isles Assocs. v. United States, 208 F.3d

1374 (Fed. Cir. 2000), aff'd on rehearing, No. 99-5030, 2000

WL 1665135 at *6 (Fed. Cir. Nov. 3, 2000), the Federal

Circuit rejected the government’s argument that invest-

ment-backed expectations should be part of a categorical

takings analysis. The government sought rehearing on

that issue, arguing that the holding was inconsistent with

the Federal Circuit decision in Good v. United States, 189

F.3d 1355 (Fed. Cir. 1999), which, the government argued,

held that “ ‘reasonable investment-backed expectations

are elements of every regulatory takings case’ even if all

economically viable use of the property has been denied.”

Petition for Rehearing and Petition for Rehearing En Banc

at 3, Palm Beach Isies Assocs. v. United States, 208 F.3d 1374

(Fed. Cir. 2000) (quoting Good, 189 F.3d at 1361).

In its decision on rehearing in Palm Beach Isles, the

Federal Circuit made plain that Good did not hold that

expectations are part of every regulatory takings case,

explaining that Good itself did not involve a categorical

takings analysis under Lucas, a limited class of cases:

For our purposes, the single most important fact

in the [Good] case is that the case did not

involve a categorical taking. The trial court

expressly found that “[clontrary to plaintiff's

contention, the ESA [Endangered Species Act,

on which the final permit denial by the Corps of

Engineers was based] does not require that his

property be left in its natural state.”®

Palm Beach Isles Assocs. v. United States, No. 99-5030, 2000

WL 1665135 at *6 (Fed. Cir. Nov. 3, 2000) (quoting Good v

United States, 39 Fed. Cl. 81, 84 (1997)).

In Palm Beach Isles, the Federal Circuit also explained

why expectations should play no role in a categorical

takings analysis:

A purchaser who pays a substantial price for a

parcel can be assumed to have expectations that

the parcel can be used for some lawful purpose

When government seizes the entire estate for

- Of course, investment-backed expectations remain an

appropriate element of analysis in partial takings cases such as

Good or Penn Central, but this is not such a case: rather. it is a

categorical takings case by government in Lucas, not Penn

Central or Good.

* The Federal Circuit also stated: “Further, the U.S. Fish

and Wildlife Service (FWS) restrictions on development

imposed pursuant to the ESA do not deprive plaintiff's property

of all economic value. The property retains value both for

development or for the sale of transferable development

rights.” Palm Beach Isles Assocs. v. United States, No. 99-5030.

2000 WL 1665135 at *6 (Fed. Cir. Nov. 3, 2000) (quoting Good v

United States, 39 Fed. Cl. 81, 84 (1997))

government purposes, whether by physical

occupation or categorical regulatory taking, it Is

not necessary to explore what those expecta-

tions may have been. The purchaser may have

had no particular expectations regarding imme-

diate use, but only purchased for long-term

investment. Or the purchaser's expectations

may have been wholly unrealistic, and she may

have paid more than the property is worth. It

matters not. The Government is not obligated to

pay for her expectations, but only to pay for the

property interest taken.

Palm Beach Isles, 2000 WL 1665135 at °9.

In Lucas v. South Carolina Coastal Council, 505 US.

1003 (1992), this Court established a bright line test tor

the narrow class of categorical takings, where the owner

was deprived of all economically beneficial use. Drawing

upon Agins v. City of Tiburon, 447 U.S. 255, 260 (1980),

which stated in dictum that if a zoning ordinance denies

the property owner all “economically viable use” of his

property then an unconstitutional taking has occurred,

the Lucas Court plainly did not include investment-

backed expectations as part of the categorical takings

analysis:+

4 Some have suggested that the categorical rule of Lucas

might induce a speculative investment in property the

purchaser knows cannot be used. Palm Beach Isles Assocs.

United States, No. 99-5030, 2000 WL 1693725 at *6 (Fed. Cir. Nov

13, 2000) (Gajarsa, J., dissenting). However, if the property had

no use at the time of purchase, government action could not

cause the loss (or take) of use. Thus, the Just Compensation

Clause would not be implemented in the first instance.

Had the court intended to make analysis of a

categorical regulatory taking different from the

categorical physical taking, for example regard-

ing the question of investment-backed expecta-

tions, surely somewhere in the opinion there

would be a hint of it. There is not. The Court

well understood that, in takings law involving a

“physical” taking of land by the government,

the reason the owner acquired the land in the

first instance is of no concern that is, the

owner's investment-backed expectations, or lack

of them, are not a consideration. In light of the

Court's repeated juxtaposition of physical tak-

ings with “categorical” regulatory takings, and

the Court's repeated unqualified statements that

the latter deserve the same compensation with-

out more, we can only conclude that the Court's

purpose was to convey that principle that, when

there is a physical taking of land, or a regulatory

taking that constitutes a total wipeout, invest-

ment-backed expectations play no role.

Palm Beach Isles, 2000 WL 1665135 at *8; see also Florida

Rock Industries, Inc. v. United States, 18 F3d 1560, 1564-65

(Fed. Cir. 1994), cert. denied, 513 U.S. 1109 (1995) (“The

recent Supreme Court decision in Lucas .. . teaches that

[i]t a regulation categorically prohibits all economically

beneficial use of land destroying its economic value for

private ownership the regulation has an effect equivalent

to a permanent physical occupation. There is, without

more, a compensable taxing.”)

The Lucas Court's takings analysis was explicitly

grounded on stable “background principles” of property

law:

Where the State seeks to sustain regulation that

deprives land of all economically beneficial use,

we think it may resist compensation only if the

logically antecedent inquiry into the nature of

the owner's estate shows that the proscribed use

interests were not part of his title to begin

with We believe similar treatment must be

accorded confiscatory regulations, i.e, regula-

tions that prohibit all economically beneficial

use land: Any limitation so severe cannot be

newly legislated or decreed (without compensa-

tion), but must inhere in the title itself, in the

restrictions that background principles of the

State's law of property and nuisance already

place upon land ownership

The court below erroneously interpreted “back-

ground principles of State’s law of property” to mean

the regulatory climate that existed when [the land-

owner] acquired the subject property Palazzolo, 746

A.2d at 717 (Pet. App. at A-1 However, this Court

actually was reterring to the traditional real property law

of titles and regulatory schemes that affect use, but gener-

ally do not result in a categorical takings. See Lucas, 505

U.S. at 1029-31. In so doing, the court below destroyed

the delicate balance described so eloquently by Justice

Holmes: “Government hardly could go on if to some

extent values incident to property could not be dimin-

ished without paying for every change in the general

law.” Pennsylvania Coal Co. v. Mahon, 260 US. 393. 413

1922). The holding below effectively states that all exis-

ting regulatory schemes are conclusively, presumed to

go too tar’ as a matter ot law, and that the owner has no

1]

remedy under the Constitution because of this expecta-

tion

However, the right to own and enjoy one’s property

is one of the fundamental rights on which our system of

law is based and is a potent component of the back-

ground principles of the States’ laws of property. James

Madison wrote: “[A]s a man is said to have a right to his

property, he may be equally said to havi a property in his

rights.” James Madison, Property, 1 Nar: Gazern 174

(1792) (reprinted in 4 Lerrers anv Orner Writincs oF Taates

Maptson 480 (1865)). These rights, and more particularly

property rights, derive from equitable concepts rooted in

common law and in the principles of equity that are

retlected in the Just Compensation Clause of the Fifth

Amendment. In Lucas v. South Carolina Coastal Counc:

305 U.S. 1003 (1992), the Court explicitly recognized that

the Just Compensation Clause helps define a property

owner s understanding of his or her rights in property

In the case of land, however. we think that the

notion pressed by the council that title is some-

how held subject to the “implied limitation” that

the State may subsequently eliminate all eco-

nomically valuable use is inconsistent with the

historical compact recorded in the Just ( ompen-

sation Clause that has become part of our consti-

tutional culture

ld. at 1028 (emphasis supplied}

[he historical compact recorded in the Just ¢ ompen-

sation Clause is in essence an understanding that govern-

ments power will be constrained by principles of

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

While a government can, under certain circumstances

12

take” private property for public use, any such taking is

void unless it provides for fair payment in return. U.S

Const. amend. V; see also Fuller v. United States, 409 U.S

488, 490 (1973) (citation omitted) (“The constitutional

requirement of just compensation derives as much con-

tent from the basic equitable principles of fairness as it

does from technical concepts of property law.”)

In this case, the mere existence of a regulatory per-

mitting scheme in place at the time petitioner acquired

land neither outright eliminated his ability to use his land

nor negated the background principals of property law

and the right to just compensation for a taking that is part

of every property owner s property estate Rather, the

regulations in place simply required that he obtain a

permit to use his land. As this Court has repeatedly held,

mere assertion” of regulatory authoritv over a parcel ot

property does not affect an owner s rights under the Just

Compensation Clause. See LIntted States v. Riverside

Bayorew Homes, Inc., 474 US. 121, 127 (1985). Moreover,

until petitioner applied tor and was denied a permit to

fill his wetland, his claim tor just compensation was not

ripe for judicial review. See Williamson County Regional

Nonnine Comm nv. Hamilton Bank of Johnson City, 473 U.S

186 (1985). A fortiort, since petitioner's right to use

property was not taken until he was denied a permit, the

mere existence of the permitting requirement did not

destroy his expectations with respect to use of his prop-

erty

Indeed, it the mere existence of regulations affecting

the use of land destroved all mght to just compensation

under the Fitth Amendment, then this Court would not

have been able to state as it did in 1992 that it is an

13

“extraordinary circumstance when no productive or eco-

nomically beneficial use of land is permitted... . ” Lucas,

505 U.S. at 1017. In 1992, when this statement was made,

there were literally hundreds of thousands of regulations

attecting the use of privately owned land in this country

that, under the court below’s view, would have destroyed

any landowner’s hope of ever being compensated for the

taking of his property rights. Indeed, the government

made the argument in the Lucas case, and which this

Court specifically rejected, that the “regulatory climate”

was such that David Lucas should have foreseen the

enactment of the Beachfront Management Act pursuant to

which he was denied a permit to build his two proposed

houses. Jd. at 1028 (“[W]e think that the notion pressed by

the Council that title is somehow held subject to the

“implied limitation” that the state may subsequently

eliminate all economically viable use is inconsistent with

the historical compact recorded in the Takings Clause that

has become part of our constitutional culture.”).

Finally, the court below made much of the fact that

“|petitioner] was unable to cite a single case in which a

court has ordered compensation for a regulatory taking

when the claimant became the owner of the property after

the regulation became eftective.” Palazzolo, 746 A.2d at

716 (Pet. App. at A-1) (emphasis in original). However,

there are numerous decisions where courts have held that

the existence of even a strict regulatory regime concern-

ing the use of private property does not preclude a court

trom finding that a property owner reasonably expects to

exercise the right to use its property. For example, in

Maritrans, Inc. v. United States, 40 Fed. Cl. 790, 790-92

(1998), the owner of a fleet of oil barges sought just

14

compensation because of a regulation requiring transfor-

mation of its single-hulled vessels into double-hulled ves-

sels. The government argued that the plaintiff had no

reasonable investment-backed expectations regarding the

use of its ships because the maritime industry is per-

vasively or heavily regulated. Id. at 794. The court

pointed out that there are several industries subject to

heavy regulation, such as the banking industry, in which

takings claims have been considered, but held that “we

are not aware of a blanket no-takings rule with respect to

regulated industries; or that one may never prevail on a

takings claim if participating in a heavily regulated

industry.” Id. at 797. Moreover, the court specifically

rejected the government's argument, stating that “[mlJere

participation in a regulated industry does not preclude a

finding that a compensable taking has occurred.” Id. at

801.

Indeed, land use is the quintessential “heavily regu-

lated industry” because zoning has been in effect in most

cities for many decades. Yet this Court has never sug-

gested that the mere existence of a zoning regulatory

scheme is an absolute bar to a taking claim. To the con-

trary, in Nollan v. California Coastal Comm'n, 483 U.S. 825

(1987), a coastal zoning permitting scheme was in place

when the Nollans decided to replace their beachfront

home. Furthermore, in First English Evangelical Lutheran

Church of Glendale v. County of Los Angeles, 482 U.S. 304

(1987), floodplain zoning was in place when the First

English Church was denied the right temporarily to

rebuild. Similarly, in Dolan v. City of Tigard, 512 U.S. 374

(1994), a building permit requirement was in place when

Florence Dolan was denied a permit that she later

15

claimed was an unconstitutional exaction. Finally, zoning

and subdivision requirements were in place when a prop-

erty owner was denied a permit in City of Monterey v. Del

Monte Dunes at Monterey, Ltd., 526 U.S. 687 (1999). In none

of these cases did this Court even suggest that the mere

existence of zoning laws defeated a takings claim. Nor

did the Court consider whether the zoning scheme (as

compared with the particular permit condition or land

use limitation) was or was not in effect at the time of

purchase. Indeed, in Nollan, this Court explicitly rejected

this argument:

Nor are the Nollans’ rights altered because they

acquired the land well after the Commission

had begun to implement its policy. So long as

the Commission could not have deprived the

prior owners of the easement without compen-

sating them, the prior owners must be under-

stood to have transferred their full property

rights in conveying the lot.

Nollan, 483 U.S. at 833-34 n_2.

Similarly, the petitioner in this case reasonably

expected that he would be able to use his property to

construct a residential development despite the existence

of the Rhode Island Inter-Tidal Wetlands Protection Act.

The mere fact that the property's use was regulated does

not preclude a finding that a compensable taking has

occurred.

16

B. The Mere Existence of a “Regulatory Climate”

Does Not Dispose of the Takings Issue in a

Partial Takings Case.

Citing the Federal Circuit's decision in Good v. United

States, 189 F.3d 1355 (Fed. Cir. 1999), cert. denied, 120 S. Ct.

1554 (2000), the court below also rejected petitioner's

partial taking claim for relief on the ground that peti-

tioner’s expectation that he could use his property was

unreasonable as a matter of law because “there were

already regulations in place limiting Palazzolo’s ability to

fill the wetlands for development.” Palazzolo, 746 A.2d at

717 (Pet. App. at A-1). The court below further misap-

plied the rule of Penn Central Transp. Co. v. City of New

York, 438 U.S. 104, 124 (1978), which requires that a court

“engagle] in . . . essentially ad hoc factual inquiries.” The

Court in Penn Central identified three factors commonly

considered in the course of these ad hoc inquiries: “|t]he

economic impact of the regulation on the claimant... ,

the extent to which the regulation has interfered with

distinct investment-backed expectations [and] .. . the

character of the governmental action.” Id. (citations omit-

ted). This Court has never held, nor should it, that a

“reasonable expectations” factor eliminates the need to

examine the facts of the particular case, and can serve as

an absolute bar to a partial takings claim.

Moreover, the Federal Circuit Court of Appeals in

Palm Beach Isles has rejected the court below’s erroneous

reading of Good on this issue of partial takings:

The existence of a regulatory regime does not

per se preclude all investment-backed expecta-

tions for development. The difficulty with the

17

third point is that it involves a disputed ques-

tion of fact - what uses are left for the tract after

the permit denial - and the case was decided on

summary judgment.

Palm Beach Isles, 2000 WL 1665135 at *11; see also Hodel v.

Irving, 481 U.S. 704 (1987) (finding taking of right to

devise unconstitutional even though potential heirs cer-

tainly had no particular expectation regarding inheri-

tance); Phillips v. Washington Legal Foundation, 524 U:S.

156 (1998), (holding the owner of the principal entitled to

just compensation for the taking of his interest even

though he had no expectation that he would ever earn

any interest on his money).

Indeed, even if petitioner in this case, as a matter of

fact, could not establish that his expectations were rea-

sonable with respect to use of his property, there is no

basis whatsoever for this Court establishing that, as a

matter of law, no property owner can have reasonable

expectations to use his or her property if there is a

regulatory regime in place. For example, since 1972, there

has been a federal wetlands regulatory regime in effect

for the entire United States, affecting millions of land-

owners and many millions of acres of private land. See

Water Pollution Prevention and Control Act, 33 U.S.C.A.

§§ 1251-1387 (1986 & Supp. 2000); see also Michael Grun-

wald, Working to Please Hill Commanders, Tut WASHINGTON

Post at Al (Sept. 11, 2000) (“The [Corps] controls 12,000

miles of waterways, 8,500 miles of levees, 4,400 recreation

sites, 300 deep-draft ports everyone in someone'’s district,

someone's state.”). Under the federal wetlands regulatory

program, land deemed jurisdictional wetland cannot be

filled (that is to say, used by the property owner) without

18

a Section 404 wetland permit. 33 U.S.C. § 1344 (1986 &

Supp. 2000). However, the mere fact that a property

owner must obtain a permit does not mean he or she has

no expectations that the property cannot be used, since

more than 95% of all Section 404 permits applications are

granted each year. See <http://www.epa.gov/owow/

wetlands/facts/fact18.html> (attached as Exhibit A).

Not only does the mere enactment of a regulatory

regime not preclude a finding that a property owner can

reasonably expect to use his land, but the administration

of the regulatory regime may even contribute to the prop-

erty owner’s expectations. For example, information from

the U.S. Army Corps of Engineers’ Regulatory Branch in

Washington, D.C. indicates that, from fiscal year 1994 to

1998, of the 44,249 Section 404 individual permit applica-

tions the Corps of Engineers received, only 1,186 were

denied. See U.S. Army Corps of Engineers, Regulatory

Branch, Section 404 and Section 10/404 Permit Activities

(hereinafter “Corps Permit Activities Table”) (attached as

Exhibit B); see also <http://www.epa.gov/owow/wet-

lands/facts/fact5.html> (attached as Exhibit C). Those

statistics evidence a Corps permitting trend that can be

traced back at least as far as 1980. Between fiscal years

1980 and 1985, approximately 43,750 of the 55,565 indi-

vidual permit applications received were approved and

only 1,945 were denied. See Corps Permit Activities Table

(attached as Exhibit B). Moreover, the U.S. Army Corps of

Engineers statistics indicate that only 2,340 of the 54,900

individual permit applications received between fiscal

years 1985 and 1990 were denied. Id. Remarkably, the

Environmental Protection Agency has vetoed only eleven

permit application approvals in the entire history of the

19

Corps of Engineers’ administration of the permit pro-

gram. See <http://www.epa.gov /owow/ wetlands / facts /

fact5.html> (attached as Exhibit C). It has been reported

that even last year the Corps “denied less than half as

many applications to fill wetlands as it did in 1992.” See

Michael Grunwald, For Oil Projects, Corps’ Answer Is

Almost Always “Yes”, Tut WasHINGTON Post at Al (Sept. 13,

2000) (“A review of the [Corps’] work in Alaska and

around the country shows that its $117 million regulatory

program is mostly just a permitting program, allowing

well over 99 percent of developers’ requests to drain,

dredge and fill wetlands... ”).

In light of these statistics regarding just one federal

program, a constitutional holding that a property owner

cannot reasonably expect to use his or her land simply

because it is subject to a permitting scheme is unwar-

ranted.

CONCLUSION

For all of the foregoing reasons, amicus curiae urges

this Court to reverse the decision below.

Respectfully submitted,

Nancie G. MARZULLA

DEFENDERS OF PROPERTY RIGHTS

1350 Connecticut Ave., N.W., Suite 410

Washington, D.C. 20036

202-822-6770

Counsel for Amicus Curiae

Dated: November 22, 2000

App. 1

U.S. ARMY CORPS OF ENGINEERS

REGULATORY BRANCH

SECTION 404 AND 10/404

PERMIT ACTIVITIES

Individual Permit

| Applications Received

Individual Permits Issued’

j Individual Permits Denied

Individual Permits Withdrawn

General Permits Authorized

‘Applications received during the fiscal year.

"Includes Letter Permits

App. 2

U.S. ARMY CORPS OF ENGINEERS

REGULATORY BRANCH

SECTION 404 AND 10/404

PERMIT ACTIVITIES

—_— en

|___ Section 404 and Sections 10/404 1994 | 1995 | 1997 | 1998 |

| Individual Permit Applications Received! 9080 8923 | 9115 8095 9036

Individual Permits Issued’ 4134 | 4693 |5028 | 4755 4931

| Individual Permits Denied 358 284 | 219 167 1s8 |

| Individual Permits Withdrawn 4184 | 5093 14117 | 4100 3841 |

|

| General Permits Authorized 39619 51672 | 55268 | 60219 64520

' Applications received during the fiscal year.

"Includes Letter Permits

App. 3

U.S. ARMY CORPS OF ENGINEERS

REGULATORY BRANCH |

SECTION 404 AND 10/404

PERMIT ACTIVITIES

Applications Received'

| Individual Permits Issued?

Individual Permits Denied

Individual Permits Withdrawn

General Permits Authorized

‘Applications received during the fiscal year.

"Includes Letter Permits

App. 4

U.S. Environmental Protection Agency

What About Takings?

The Issue: When does a government action affecting pri-

vate property amount to a “taking,” and what are the

takings implications of wetland regulation?

The Fifth Amendment to the Constitution of the United

States of America

No person shall .: . be deprived of . . . property without

due process of law, nor shall private property be taken

for public use, without just compensation.

Legal Background

The concept of takings comes from the Fifth Amendment

(see box below), which prohibits the taking of private

property by the government for a public use without

payment of just compensation. This fact sheet briefly

explores the issue of takings as it relates to wetlands

regulation.

The Supreme Court and lower courts have established a

body of law used to determine when government actions

affecting use of private property amount to a “taking” of

the property by the government. When private property

is “taken” by the government, the property owner must

be fairly compensated.

App. 5

Initially, the courts recognized takings claims based on

government actions that resulted in a physical seizure or

occupation of private property. The courts subsequently

ruled that, in certain limited circumstances, government

regulation affecting private property also may amount to

a taking.

In reviewing these “regulatory” takings cases, the courts

generally apply a balancing test; they examine the charac-

ter of the government's action and its effect on the prop-

erty’s economic value. Government actions for the

purpose of protecting public health and safety, including

many types of actions for environmental protection, gen-

erally will not constitute takings. The courts also look at

the extent to which the government's action interferes

with the reasonable, investment-backed expectations of

the property owner.

In Lucas v. South Carolina Coastal Council (1992), the

U.S. Supreme Court ruled that a State regulation that

deprives a property owner of all economically beneficial

use of that property can be a taking. The court further

clarified, however, that a regulation is not a taking if it is

consistent with “restrictions that background principles

of the State’s law of property and nuisance already

placed upon ownership.” As an example of “background

principles,” the court referred to the right of government

to prevent flooding of others’ property.

Dolan v. City of Tigard (1994), a more recent Supreme

Court takings case, involved a requirement by the City of

Tigard in Oregon that, to prevent flooding and traffic

congestion, a business owner seeking to expand substan-

tially onto property adjacent to a floodplain create a

|

App. 6

public greenway and bike path from private land. The

Supreme Court ruled that the City’s requirement would

be a taking if the City did not show that there was a

Areasonable relationship@ between the creation of the

greenway and bike path and the impact of the develop-

ment. As compared to the facts in Dolan, the Clean Water

Act Section 404 program generally does not require prop-

erty owners to provide public access across or along their

property.

Current Status

The presence of wetlands does not mean that a property

owner cannot undertake any activity on the property. In

fact, wetlands regulation under Section 404 does not nec-

essarily even result in restricting the use of a site. Many

activities are either not regulated at all, explicitly

exempted from regulation, or authorized under general

permits.

Moreover, in situations where individual permits are

required, the Federal agencies can work with permit

applicants to design projects that meet the requirements

of the law and protect the environment and public safety,

while accomplishing the legitimate individual objectives

and protecting the property rights of the applicant. Over-

all, more than 95% of all projects receive Section 404

authorization.

App. 7

Wetlands Division homepage

Additional Questions? Call our Wetlands Hot-

line at 1-800-832-7828 or_send e-mail to wet-

lands.hotline@epamail.epa.gov.

QOWOW HOMEPAGE | EPA HOME |! SEARCH | COM-

MENTS | WHAT’S NEW

Environmental Protection Agency’s Office of Wetlands,

Oceans, Watersheds

URL: http://www.epa.gov/owow/wetlands/ facts /

fact18.html

Revised May 25, 1999

App. 8

U.S. Environmental Protection Agency

Facts about Wetlands

Over half (53) of the wetlands in the lower 48 States were

lost between the late 1700s and the mid-1980s. About 100

million acres of wetlands remain today in the lower 48

States, representing less than 5% of the land mass in the

continental United States.(See map.)

Source:Dahl and Johnson. Status and Trends of Wetlands

in the Conterminous United States. USFWS, 1989.

Twenty-two States have lost at least 50% of their original

wetlands. Seven of those twenty-two States — California,

Illinois, Indiana, lowa, Missouri, Kentucky, and Ohio -

have lost more than 80% of their Original wetlands.

Source: Mitch and Gosselink. Wetlands. 2nd edition. Van

Nostrand Reinhold, 1993.

App. 10

App. 9

From the mid-1970s to the mid-1980s, wetlands were lost

at an annual rate of 290,000 acres per year. Source: Dahl

and Johnson. Status and Trends of Wetlands in the Con-

terminous United States, mid-1970’s to mid-1980’s.

USFWS, 1991.

In Fiscal Year 1994, over 48,000 people applied to the

Army Corps of Engineers (Corps) for a Section 404 per-

mit. Eighty-two percent of these applications were cov-

ered by general permits in an average time of 16 days.

Less than ten percent of the applications were subject to

the more detailed individual evaluation — which took an

average of 127 days. Only 358, or 0.7 percent, of the

permits were denied. In the 22-year history of the Section

404 program, EPA has vetoed only 11 permits.

In short, almost all individuals who applied for a Section

404 permit in 1994 got their permits, and the average time

for a decision was 27 days.

In addition, general permits cover an estimated 50,000

activities that do not require the public to notify the

Corps at all.

Source: U.S. Army Corps of Engineers, U.S. Environmen-

tal Protection Agency.

Percentage of Wetlands Acreage Lost, 1780s-1980s

Is Current Wetlands Protection Adequate?

In a 1994 survey, 53% of the respondents said they felt

that more wetlands protection efforts were needed, 24%

said current efforts struck the right balance, 9% said these

efforts had gone too far, and 14% said they didn’t know.

BEST AVAILABLE COPY

App. 11

Source: “Times Mirror Magazines National Environmen-

tal Forum Survey.” 1994. Times Mirror Magazines/ Roper

Starch.

Too

Wetlands Division homepage

Additional Questions? Call our Wetlands Hot-

line at 1-800-832-7828 or send e-mail to wet-

lands. hotline@epamail.epa.gov.

OWOW HOMEPAGE | EPA HOME |! SEARCH | COM-

MENTS !| WHAT’S NEW

Environmental Protection Agency’s Office of Wetlands,

Oceans, Watersheds

BEST AVAILABLE COPY

App. 12

URL: http: / /www.epa.gov/owow/wetlands/ facts /

fact5.html

Revised May 25, 1999