Amicus Curiae Brief — Palazzolo v. Rhode Island

JAN 3 200

ee : No. 99-2047 JAN 3 poi

In The | CE RK

Supreme Court of the United-States

+

ANTHONY PALAZZOLO,

. Petitioner,

RHODE ISLAND ex rel. PAUL J. TAVARES,

General Treasurer, and COASTAL RESOURCES

MANAGEMENT COUNCIL,

Respondents.

———____——_--—— @ — -— -— ——- —-—

On Writ Of Certiorari To The

Supreme Court Of Rhode Island

— ¢ —

BRIEF OF STATES OF CALIFORNIA, ALASKA,

COLORADO, CONNECTICUT, GEORGIA, HAWAIL

MAINE, MASSACHUSETTS, MONTANA, NEVADA,

NEW HAMPSHIRE, NEW JERSEY, NEW YORK, OHIO,

OKLAHOMA, SOUTH DAKOTA, VERMONT AND

WASHINGTON, THE DISTRICT OF COLUMBIA AND

THE UNITED STATES VIRGIN ISLANDS AS AMICI

CURIAE IN SUPPORT OF RESPONDENTS

— e ————

Biui. LockYER

Attorney General of the

State of California

RicHARD M. FRANK

Chief Assistant Attorney General

J]. MarrHew Roprigurz

Senior Assistant Attorney General

JoserpH Barsieri

Deputy Attorney General

Counsel of Record

1515 Clay Street, Suite 2000

Oakland, California 94612-1413

Telephone: (510) 622-2139

Attorneys for State of California

[Additional Counsel Listed On Inside Cover]

Ear I.

Miki

FRANKII

Bruce M. BoretHo,

Attorney General of the

State of Alaska

Ken SALAZAR,

Attorney General of the

State of Colorado

RicHARD BLUMENTHAL,

Attorney General of the

State of Connecticut

THursert E. Baker,

Attorney General of the

State of Georgia

ANZAL

Attorney General of the

State of Hawaii

ANDREW KETTERER,

Attorney General of the

State of Maine

THomas F. Reity,

Attorney General of the

State of Massachusetts

McGratH,

Attorney General of the

State of Montana

Sur Der

Attorney General of the

State of Nevada

Para,

Pour T. McLAuGHUN,

Attorney General of the

State of New Hampshire

JOHN J. Farmer, Jr.,

Attorney General of the

State of New Jersey

Evior Spirzer,

Attorney General of the

State of New York

Betry D. MontGomery,

Attorney General of the

State of Ohio

W.A. Drew EDMONDSON,

Attorney General of the

State of Oklahoma

Mark W. Barnett,

Attorney General of the

State of South Dakota

WittiaAmM H. Sorrett,

Attorney General of the

State of Vermont

CrHristine O. GreGorre,

Attorney General of the

State of Washington

Rosert R. Ricssy,

Corporation Counsel

District of Columbia

Iver A. SrRipiRON,

Attorney General of the

United States

Virgin Islands

[BEST AVAILABLE COPY

TABLE OF CONTENTS

Page

INTERESTS OF AMICI CURIAE ............-00055: 1

SUMMARY OF ARGUMENT............-6600005055 5

ARGUMENT ..o cc ccc cccccccccccccccccccccccssccces 7

Il.

Ill.

IV.

THE WRIT SHOULD BE DISMISSED

BECAUSE THE TRIAL COURT’S JUDG-

MENT WOULD NOT BE AFFECTED BY

THE COURT’S RESOLUTION OF PAL-

AZZOLO’S PETITION .......---- eee eee

A TAKING CLAIM IS NOT RIPE WHERE

THE APPLICANT HAS NEITHER ESTAB-

LISHED THE BOUNDARIES OF THE PROP-

ERTY NOR APPLIED FOR THE PROJECT

UPON WHICH HE BASES HIS CLAIM....

A. Palazzolo Failed to Establish That He

Owned the Property That He Alleged

Ee

B. Palazzolo Failed to Submit a Meaningful

Application .........6.00ceceeeeeeeeees

THE COURT SHOULD RETAIN THE RIPE-

NESS DOCTRINE’S REAPPLICATION

REQUIREMENT ..........- 00-0 eeeeeee eee:

A LANDOWNER MUST DEMONSTRATE

THAT A REGULATION HAS RENDERED

PROPERTY “VALUELESS” IN ORDER TO

ESTABLISH THAT THERE HAS BEEN A

PER SE TAKING ...........-0 eee eeeeeees

THE RHODE ISLAND COURT PROPERLY

FOUND THAT REASONABLE INVEST-

MENT-ACKED EXPECTATIONS AND

BACKGROUND PRINCIPLES OF RHODE

ISLAND LAW BARRED PALAZZOLO’S

TAKING CLAIM ........---- es eeee eee eees

11

14

16

ii

TABLE OF AUTHORITIES

Page

Cases:

Agripost, Inc. v. Miami-Dade County, 195 F.3d 1225

(11th Cir. 1999). cert. denied, 121 S.Ct. 51 (2000) .... 17

Alden v. Maine, 527 U.S. 706 (1999)................. 3, 5

Alegria v. Keeney, 687 A.2d 1249 (R.I. 1997).......... 17

Allen v. Allen, 19 R.I. 114, 32 A. 166 (R.I. 1895)....... 9

Andrus v. Allard, 444 U.S. 51 (1979) ................. 21

Assembly of God Church v. Vallone, 89 R.I. 1, 150

SRD Se CS PED ed cbcncdducandiadadeiddddnabes 19

Avenal v. United States, 100 F.3d 933 (Fed. Cir.

Seeonccksnepnecasustedseusedesdasdeusbualsdaac 24

Basile v. Town of Southhampton, 89 N.Y.2d 974, 678

N.E.2d 489, 655 N.Y.S.2d 877 (N.Y.App.), cert.

GeEa, GE WA. GE Gee ic ccc cccccccccccocecevccs 26

Board of Supervisors of Prince William County v.

Omni Homes, Inc., 253 Va. 59, 481 S.E.2d 460 (Va.

1997), cert. denied, 522 U.S. 813 (1997).......... 17, 23

Butner v. United States, 440 U.S. 48, 55 (1979)......... 3

Cavin v. United States, 956 F.2d 1131 (Fed.Cir. 1992) .... 10

CEEED v. California Coastal Zone Conservation

Comm'n, 43 Cal.App.3d 306, 118 Cal. Rptr. 315

GS GEPER esscecccsessccccencsesesecsnnseses 27

Chioffi v. City of Winooski, 165 Vt. 37, 676 A.2d 786

Gee BOOED cnccccecccvdccowencceceudesecénekenésces 18

City of Bakersfield v. Miller, 64 Cal.2d 93, 48

Cal.Rptr. 889, 410 P.2d 393 (Cal. 1966), cert.

denied, S04 US. SOB (1966) ........cccccccccccccess 27

TABLE OF AUTHORITIES - Continued

Page

City of Riviera Beach v. Taylor, 659 So.2d 1174

(Fla. App. 1995) ......cccccccccccccccccccccsccscces 12

City of Virginia Beach v. Bell, 255 Va. 395, 498 S.E.2d

414 (Va.), cert. denied, 525 U.S. 826 (1998) ......... 24

Concrete Pipe and Prods., Inc. v. Construction

Laborers Pension Trust, 508 U.S. 602 (1993)...... 17, 23

County of St. Clair v. Lovingston, 90 U.S. 46 (1874) .... 11

Creppel v. United States, 41 F.3d 627 (Fed.Cir. 1994) .... 25

Del Monte Dunes, Ltd. v. City of Monterey, 95 F.3d

1422 (9th Cir. 1996), aff'd on other grounds, 526

CG, GP GIRDER cccccccccccccccsccccsceccocccccccss 18

District Intown Properties Ltd. v. District of Colum-

bia, 198 F.3d 874 (D.C.Cir. 1999), cert. denied, 121

ee f —_ a rrrrrrrrir rere Tere 17

Eastern Enterprises v. Apfel, 524 U.S. 498 (1998) ....... 3

Executive 100 v. Martin County, 922 F.2d 1536 (11th

Cir.), cert. denied, 502 U.S. 810 (1991).............. 15

FIC Homes of Blackstone, Inc. v. Conservation

Comm'n, 41 Mass.App.Ct., 681 N.E.2d 61

(Mass.App. 1997) ........--.0e cece e eee eeeeeeeeees 17

Gazza v. New York State Department of Environmen-

tal Conservation, 89 N.Y.2d 603, 679 N.E.2d 1035,

657 N.Y.S.2d 555 (N.Y.App.), cert. denied, 522

CID. GED CITGO) 2 ccccccccccccccccccccccccccccesces 25

Gerhard v. Bridge Commn'rs, 15 R.I. 334, 5 A. 199

PRE, BIBER. ccccccccccccccccccccccccccccccecccccess 21

Gilbert v. City of Cambridge, 932 F.2d 51 (1st Cir.

1991), cert. denied, 502 U.S. 866 (1992)............. 11

iv

TABLE OF AUTHORITIES - Continued

Page

Grand River Dam Authority v. Grand-Hydro, 335

Se Se CP aubddddinencnccencencaeeceddceccses 19

Gregory v. Ashcroft, 501 U.S. 452 (1991)............... 3

Grundy Center v. Marion, 231 lowa 425, 1 N.W.2d

I a 27

Hay v. City of Hanover, 436 N.W.2d 800 (Minn.App.

Se 606085600800600sh00dedednceceedecoesesaseces 15

Herb v. Pitcairn, 324 U.S. 117 (1945)................ 7,8

Indianapolis v. Miller, 168 Ind. 285, 80 N.E. 626

Se CE SEKeSdéccdkncedccadeusccenenecesecheséan 27

Jackvony v. Powel, 67 R.I. 218, 21 A.2d 554 (R.I.

PPUNNShGRRhedsdaqekndcdnekesneonccsetseesancesess 29

Jewett v. Deerhorn Enterprises, Inc., 281 Or. 469, 575

Ee EE D SE scvconvnwnesdesguekesunenbeceen 28

Keystone Bituminous Coal Assn. v. DeBenedictis, 480

Sh Gl I cedAdcudonnvckesusacoueodenesecs 17, 19

Lake Country Estates v. Tahoe Regional Planning

ey Se We GE SE edcecewesontdcccsissocss 3

Landgate v. California Coastal Comm'n, 17 Cal.4th

1006, 73 yon 841, 953 P.2d 1188 (Cal.),

cert. denied, 525 U.S. 876 (1998) ................ 10, 16

Landmark Land Co. v. Buchanan, 874 F.2d 717 (10th

SD MEE Gtbbundunddnceobssaccandsuncsadesoleseds 15

Lechuza Villas West v. California Coastal Comm'n, 60

Cal.App.4th 218, 70 Cal.Rptr.2d 399 (1997), cert.

Gomiem, TED US. GED GROG... oc cccccccccccesccecss 10

Long Beach Equities, Inc. v. County of Ventura, 231

Cal.App.3d 1016, 282 Cal.Rptr. 877 (Cal.App.

1991), cert. denied, 505 U.S. 1219 (1992)............ 15

Vv

TABLE OF AUTHORITIES - Continued

Page

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

BED GIR s cc cccccccccccccessocceccssesesesss passim

MacDonald, Sommer & Frates v. County of Yolo, 477

CD, SED CITED 0 cccccscccccccccccccccccecces 9, 11, 15

McCuskey v. Canyon County Comm'rs, 128 Ida. 213,

912 P.2d 100 (Ida. 1996) ............ cece eee e ee eeee 17

Metropolitan Washington Airports Authority v. Citi-

zens for the Abatement of Aircraft Noise, 501 U.S.

BED GIGS. co cccccccccccccccescscccccsccsscsocsceccs 9

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

SD ooo ccnccccccdecccctesdcocucceceseesssecceses 24

Olson v. United States, 292 U.S. 246 (1934)........ 20, 23

Outdoor Graphics v. City of Burlington, 103 F.3d 690

Wits Cle. BODE. wc cccccccccscccccscesccccccsccceces 26

Pace Resources, Inc. v. Shrewsbury Township, 808

F.2d 1023 (3d Cir.), cert. denied, 482 U.S. 906

PP rrrrerrrrrr rrr rr tt ttt tt 15

Penn Central Transportation Co. v. New York City,

438 U.S. 104 (1978).............. 6, 18, 21, 22, 23, 24

People v. Donovan, 57 Cal.2d 346, 19 Cal.Rptr. 473,

369 P.2d 1 (Cal. 1962) .......cccccccccccccsccceces 20

People v. New York Edison Co., 144 N.Y.S. 707, 159

A.D. 786 (N.Y.App.Div. 1913) ..... 6... 6 cece eee ees 27

Phillips Petroleum Co. v. Mississippi, 484 U.S. 469

PPPPPPPrrrrrrrrrrrrrrrrrtrritit Tritt ire 9

Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) ...4, 23

Smith v. Town of Wolfeboro, 136 N.H. 337, 615 A.2d

1252 CIN.B. 1992) nc ccccccccccccccccccccccccccese 10

vi

TABLE OF AUTHORITIES - Continued

Page

Southern Pacific Transpr. Co. v. Los Angeles, 922 F.2d

498 (9th Cir. 1990), cert. denied, 502 U.S. 943

SUPE ca cevcccenevnccececancneveceseceusancesess 12, 13

Southview Assoc., Ltd. v. Bongartz, 980 F.2d 84 (2d

Cir. 1992), cert. denied, 507 U.S. 987 (1993) ........ 15

Starr v. Commn'r, 226 Conn. 358, 627 A.2d 1296

Sh: SEED uudedendunéceusdneedébodncees eekureace 27

State v. McKee, 73 Conn. 18, 46 A. 409 (Conn. 1900) .... 27

Stern v. Halligan, 158 F.3d 729 (3d Cir. 1998) ........ 17

United States ex rel. Tennessee Valley Authority v.

PURIST, STEP Wa Be CHO ccccccccusccescescces 21

United States v. 50 Acres of Land, 469 U.S. 24 (1984) .... 19

United States v. Dow, 357 U.S. 17 (1958) .......... 10, 24

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

SN Ce GE 8 eS Kc n cede dcbdacasccsecustesseacees 15

Williams v. City of Central, 907 P.2d 701 (Colo.App.

SOUS cdedecentcsscisccvbcecsesndccsenessduuadacs 23

Williamson Planning Comm'n v. Hamilton Bank, 473

a Ge GED cn vecccncceccues pesecenes 9, 12, 14, 15

Wilson v. Loew's, Inc., 355 U.S. 597 (1958)............. 7

Wooten v. South Carolina Coastal Council, 333 S.C.

G50, SIO S.B.28 716 GC. 199)... ccccccvecesccess 26

Zeman v. City of Minneapolis, 552 N.W.2d 548

Ph Uintdcd eenduedngnegkehedsnwedeueenes atid 17

——

Vii

TABLE OF AUTHORITIES - Continued

Page

CONSTITUTIONAL PROVISIONS:

U.S. Constitution

WM, Raman, ...o oo ccccccccccccecesceceseces 19, 21

STATUTES:

Cal. Pub. Resources Code § 30010............550055 13

R.I. Gen. Laws 46-6-1 (1956) ....- 6. eee ener e eee ees 21

OrHeR AUTHORITIES:

Appraisal Institute, “Real Estate Valuation in Liti-

gation” (2d.Ed. 1995) .........e eee eee erence eens 20

Interagency Land Acquisition Conference, “Uniform

Appraisal Standards For Federal Land Acquisi-

tions” (1992) ....... cece cece cece eee eeeeeneeenees 20

Office of Technology Assessment, U.S. Congress,

Wetlands: Their Use and Regulation (1984) .......... 28

INTERESTS OF AMICI CURIAE

This is not a case about ethereal concepts of property.

It concerns a speculator who, without providing the regu-

latory agency the opportunity to review his actual devel-

opment plan, seeks to have the taxpayers of Rhode Island

compensate him because he has been frustrated in his

pursuit of a use that, if permitted, would pollute the

town’s water supply. The expanded conception of the

taking doctrine being posed here threatens not only the

treasuries of the States, but their distinct interests in

developing real property and land use rules that strike an

appropriate balance between public needs and private

rights. The Rhode Island Supreme Court’s decision pre-

serves those interests, and its decision should be

affirmed.

Between 1959 and 1969 Anthony Palazzolo and his

corporation acquired the property that is the subject of

this taking claim for a total of $13,000, which Palazzolo

concedes was the fair market value of the property at the

time of acquisition. Decision, R.]. Sup.Ct. No. 88-0297, at

1-2; Trial Exh. E at 3. In the mid-1960’s and early 1970's,

Rhode Island rejected Palazzolo’s applications to fill this

intertidal salt marsh, and Palazzolo did not pursue a

taking claim following the last denial. Having waived

any taking claim based on the first round of administra-

tive decisions, Palazzolo then made identical applications

in the 1980's.

Palazzolo insisted during the 1985 administrative

process that he wished to fill a portion of the property for

a “beach facility,” and his attorney even objected during

the hearing to any consideration of residential use. See

pp. 11-12 infra. As Palazzolo later admitted, however, he

always intended to use the fill for residential development.

See pp. 11-12 n.3 infra. Palazzolo thus prevented the

agency from defining the residential uses that it might

have permitted had it known that Palazzolo wished to

develop the entire parcel for this quite different purpose.

At trial, Palazzolo dispensed with the beach facility

proposal and claimed that he was entitled to compensa-

tion for his lost opportunity to develop 74 residential

units. The State produced evidence which showed that

most of the fill proposed by Palazzolo would be depos-

ited on State-owned tidelands below the mean high tide

line. See p. 9 infra. At the conclusion of trial, the trial

court rejected Palazzolo’s taking claim, finding that his

residential project would create a public nuisance and

that, even with the permit denial, the property was worth

$200,000 because the State would have approved limited

residential use had he only applied. The Rhode Island

Supreme Court affirmed.

Retaining as much value as it does, Palazzolo’s prop-

erty is still worth more than fifteen times what he paid

for it. There has never been a regulatory taking in these

circumstances. But Palazzolo contends that a taking nev-

ertheless has occurred because he was entitled to a “rea-

sonable return” of $3.1 million - an amount more than 200

times the fair market value of his initial investment. No one

has ever strayed so far from the original meaning of the

Fifth Amendment.

Given the implications of Palazzolo’s extraordinary

arguments, the States’ concerns here are not surprising.

Some of these concerns are practical. This case invites an

enormous expansion of the ripeness doctrine and even

more takings litigation. If applicants are no longer

required to apply for the uses on which they base their

taking claims, it is not hyperbole to suggest that virtually

every applicant challenging a permit denial will append a

taking claim based on the loss of some use never consid-

ered by the agency.

The States also are concerned with the potential lia-

bility threatened by Palazzolo’s extravagant construction

of the taking doctrine. The Court in Lucas v. South Caro-

lina Coastal Council, 505 U.S. 1003 (1992) was clear: regula-

tion categorically denies all economically viable use only

when it renders property “valueless.” Palazzolo’s view

that there has been a per se taking under Lucas unless

government regulation allows a reasonable return to a

speculative enterprise would threaten to deplete the

States’ resources by creating “new and unforeseen claims

in vast amounts.” Eastern Enterprises v. Apfel, 524 U.S. 498,

542 (1998) (Kennedy, J., concurring in part and dissenting

in part).

But this latest threatened expansion of the taking

doctrine also touches important concerns of federalism.

In much of its recent jurisprudence this Court has empha-

sized the benefits of decentralized government and

acknowledged the sovereignty of the States. See, e.g.,

Alden v. Maine, 527 U.S. 706 (1999); Gregory v. Ashcroft, 501

U.S. 452, 458 (1991). The state interests implicated by this

case — state real property law and state land use regula-

tion -— are matters of peculiar state concern. See Lake

Country Estates v. Tahoe Regional Planning Agency, 440 U.S.

391, 402 (1979); Butner v. United States, 440 U.S. 48, 55

(1979). State law always has been understood to define

property interests, and accordingly, a landowner’s expec-

tations. E.g., Ruckelshaus v. Monsanto Co., 467 U.S. 986,

1001 (1984). But Palazzolo’s view federalizes property

law - rather than allow state law to define expectations, it

assumes that there is a natural law of property with an

inherent expectation of use to which the States must

conform their rules of property.

These concerns are more than philosophical. It is

sometimes easy to take for granted the extraordinary

responsibility that State and local governments bear in

regulating a society as large, complex and diverse as

ours, a responsibility that is weighted with the obligation

of conserving resources for future generations. When the

federal judiciary is asked to create an artificial conception

of “property” in which landowners are to be guaranteed

a return on investment and a permit denial is presumed

to conscript private property into public use, the balance

of the system is threatened. Rather than engage in the

sensitive accommodation of private and public interests

demanded by modern land use regulation, agencies will

begin to make decisions to avoid the exorbitant expense

of defending taking claims and the threat of liability if

they take any misstep along the way.

In the end, the Palazzolo view reflects a not-so-subtle

shift from the narrow restraints of Lucas to a regime in

which property is redefined in a way that “singles out”

the public interest to bear the risks of unfounded private

expectations. This level of intrusion into state property

law and land use decisionmaking is unjustified. After all,

the regulatory system is the product of a political process

in which landowners are well-represented, and this polit-

ical process already provides a powerful restraint against

excessive regulation. Moreover, the Court has informed

state courts and legislators of the need for vigilance in

these matters, and this Court has been “unwilling to

assume the States will refuse to honor the Constitution or

obey the binding laws of the United States.” Alden, 527

U.S. at 755.

There is no constitutional imperative to justify Pal-

azzolo’s proposed redefinition of state property rules and

recalibration of the delicate land use process. The deci-

sion reached here by the Rhode Island Supreme Court

was the end product of its evaluation of several factors:

state real property law, the expectations created by over a

century of land use restrictions on fill activities, the enor-

mous harms threatened by the proposed project, and the

equitable considerations presented by an applicant who

refuses to say what he is doing and expects the public to

pay for his speculative lost profits. The Court should not

overrule the Rhode Island court’s evaluation, much less

relax the ripeness doctrine and expose public agencies to

liability for every permit denial that frustrates a land-

owner’s profit expectations.

The judgment below should be affirmed.

+

SUMMARY OF ARGUMENT

1. The trial court’s judgment was based on the inde-

pendent ground that Palazzolo did not have a property

right to engage in the proposed use because the filling of

these particular wetlands would constitute a public

nuisance under Rhode Island common law. Because the

Court’s resolution of the questions presented will not

alter the trial court’s judgment, the writ should be dis-

missed as improvidently granted.

2. Palazzolo failed to meet even minimal ripeness

standards because he neither established that he owned

the property alleged to be taken nor did he apply for the

project upon which he bases his claim. Adherence to the

“reapplication requirement” remains necessary to insure

that an agency’s denial of a particular project is not

improperly construed as the denial of all use.

3. Whether an agency’s action deprives property of

all economically viable use under Lucas v. South Carolina

Coastal Council, 505 U.S. 1003 (1992) should be judged on

whether the agency’s action has rendered the property

“valueless.” In determining the impact of a regulation’s

impact on the value of property, an analysis of the prop-

erty’s fair market value before the alleged taking must

include all those restrictions on development that a rea-

sonable buyer would have considered.

4. Based on its assessment of Palazzolo’s reasonable

investment-backed expectations, the Rhode Island Court

properly rejected Palazzolo’s taking claim under the ad

hoc inquiry in Penn Central Transportation Co. v. New York

City, 438 U.S. 104, 123-125 (1978). Further, it makes little

difference when Palazzolo acquired the property, because

landowners in Rhode Island acquire property subject to

the right of the Legislature to declare public nuisances

such as the filling of these wetlands.

+

ARGUMENT

I. THE WRIT SHOULD BE DISMISSED BECAUSE

THE TRIAL COURT’S JUDGMENT WOULD NOT

BE AFFECTED BY THE COURT’S RESOLUTION OF

PALAZZOLO’S PETITION.

If a judgment below rests on an independent and

adequate state ground, the writ of certiorari should be

dismissed as improvidently granted. E.g., Wilson v.

Loew's, Inc., 355 U.S. 597 (1958). The Court exercises its

power “to correct wrong judgments, not to revise opin-

ions. We are not permitted to render an advisory opinion,

and if the same judgment would be rendered by the state

court after we corrected its views of federal laws, our

review would amount to nothing more than an advisory

opinion.” Herb v. Pitcairn, 324 U.S. 117, 125-126 (1945).

This case calls for the application of this principle.

As the trial court found, Palazzolo’s proposed filling

of 18 acres of salt marsh would have significant offsite

impacts. The proposed project would reduce existing salt

marsh in adjacent Winnapaug Pond, harm fish popula-

tions, and increase nitrate levels in the groundwater that

is the town’s sole source of drinking water. These serious

project impacts would constitute a public nuisance under

Rhode Island common law. The trial court thus concluded

that the State’s nuisance law prohibited Palazzolo’s tak-

ing claim. Decision, R.I. Sup.Ct. No. 88-0297, at 10-11; see

JA at 80-93 (testimony of Reis).

This conclusion would not be affected by the Court’s

resolution of the questions presented in Palazzolo’s peti-

tion for a writ of certiorari. None of the questions pre-

sented to this Court challenge the directive in Lucas that a

state’s common law of public nuisance serves as a back-

ground principle of real property law that limits the

permissible uses of property. Assuming arguendo that

this Court resolved all of the questions presented in

Palazzolo’s favor, the trial court on remand would need

to revise its written opinion, but its judgment would be

unaffected because its public nuisance determination

would continue to function as a complete defense to the

taking claim. This is not speculation. The trial court

already has said as much, finding that “even were this

Court to determine that the CRMC’s denial of the plain-

tiff’s application was a ‘total taking’ under Lucas, the

nuisance doctrine would prevent this Court from award-

ing the plaintiff compensation.” Decision at 11.

Because the same judgment would be rendered by

the state court after the Court corrected its views of

federal law, this Court’s present review would amount to

nothing more than an advisory opinion. See Herb, 324 U.S.

at 125-126. The writ therefore should be dismissed as

improvidently granted.

Il. A TAKING CLAIM IS NOT RIPE WHERE THE

APPLICANT HAS NEITHER ESTABLISHED THE

BOUNDARIES OF THE PROPERTY NOR APPLIED

FOR THE PROJECT UPON WHICH HE BASES HIS

CLAIM.

Under the “ripeness” doctrine, a claim that govern-

ment regulation effects a taking of property must be

dismissed unless the government entity charged with

implementing the regulation has reached a “final and

authoritative” decision regarding the application of the

regulation to the property at issue. MacDonald, Sommer &

Frates v. County of Yolo, 477 U.S. 340, 348 (1986); Williamson

Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 186, 190

n.11, 199-200 (1985). The Court’s cases “uniformly reflect

an insistence on knowing the nature and extent of permit-

ted development before adjudicating the constitutionality

of the regulations that purport to limit it.” MacDonald,

Sommer & Frates, 477 U.S. at 351. Although much of the

attention has focused on Palazzolo’s failure to resubmit

less ambitious development plans, Palazzolo’s taking

claim was unripe for other reasons.!

A. Palazzolo Failed to Establish That He Owned

the Property That He Alleged Was Taken.

During the administrative process and at trial, Rhode

Island demonstrated that most of the lands that Palazzolo

proposed to fill were below the mean high tide line, see,

e.g., Joint Appendix (JA) at 27 (CRMC decision), at 60-62

(testimony of Fugate), at 90 (stipulation of Palazzolo’s

attorney); Trial Exhs. T, U, V, AA (showing tidal eleva-

tions), and therefore were public trust lands belonging to

Rhode Island. Phillips Petroleum Co. v. Mississippi, 484 U.S.

469, 476 (1988); Allen v. Allen, 19 R.I. 114, 32 A. 166 (R.L.

1895). Finding the taking claim deficient on so many

other grounds, the lower courts never reached the owner-

ship issue, even though Rhode Island pressed it through-

out the lower court proceedings. Br. of Appellees,

1 Because it is jurisdictional, a ripeness argument may be

raised at any time. Metropolitan Washington Airports Authority v.

Citizens for the Abatement of Aircraft Noise, 501 U.S. 252, 265 n.13

(1991).

10

Palazzolo v. Rhode Island, R.1. Supr. Ct. No. 98-333A at 34.

Palazzolo’s taking claim is not ripe until this most basic

of ripeness issues - who owns what - is decided.

A taking claim cannot be predicated on the depriva-

tion of property unless the plaintiff can demonstrate

“undisputed ownership” of the property at the time of

the alleged taking. Cavin v. United States, 956 F.2d 1131,

1134 (Fed.Cir. 1992); see United States v. Dow, 357 U.S. 17,

20-21 (1958). It follows that an agency cannot make a final

decision on the scope, type, intensity and location of

approvable development if it does not know the bound-

aries of the property on which the development is to be

located. Likewise, it would be premature for a court to

adjudicate “how far” a regulation goes in its impact on

property without this information; as just one example, a

court could not begin to determine the economic impact

of a permit denial on the value of property without

knowing whether the affected property consisted of five,

ten or 20 acres.

The state courts have addressed this issue, and have

found that a taking claim is not ripe until the landowner

establishes the boundaries of the property that he pro-

poses to develop and upon which he bases his taking

claim. Lechuza Villas West v. California Coastal Comm’n, 60

Cal.App.4th 218, 70 Cal.Rptr.2d 399, 410-11 (1997), cert.

denied, 525 U.S. 868 (1998) (dismissing taking claim as

unripe where applicant had not established seaward tide-

lands boundary of property); see Landgate v. California

Coastal Comm'n, 17 Cal.4th 1006, 73 Cal.Rptr.2d 841, 953

P.2d 1188 (Cal.), cert. denied, 525 U.S. 876 (1998) (no final

decision until court first determined lot lines of property

proposed for development); Smith v. Town of Wolfeboro,

11

—

136 N.F.. 337, 615 A.2d 1252 (N.H. 1992) (no taking where

issue of lot legality had not been resolved).

The Court therefore should dismiss the taking claim

as unripe until the Rhode Island courts first decide

whether the State or Palazzolo owns the property alleged

to have been taken.?

B. Palazzolo Failed to Submit a Meaningful

Application.

The ripeness doctrine also requires that a claimant

submit a “meaningful application.” MacDonald, Sommer &

Frates, 477 U.S. at 353 n.8; see, e.g., Gilbert v. City of

Cambridge, 932 F.2d 51, 63 n.15 (1st Cir. 1991), cert. denied,

502 U.S. 866 (1992). As the Rhode Island court found,

Palazzolo never applied for the residential uses upon

which he now bases his taking claim. Palazzolo, 746 A.2d

at 714. Indeed, Palazzolo in both 1983 and 1985 failed to

disclose his actual reasons for seeking to fill the salt

marsh.* His failure to apply for the project upon which he

2 Palazzolo may contend that he had record title to these

lands and that Rhode Island did not acquire them through the

process of erosion. That argument would be erroneous because

riparian owners are subject to the gain and loss of title through

the processes of accretion and erosion. E.g., County of St. Clair v.

Lovingston, 90 U.S. 46 (1874). Moreover, any such argument only

would underscore the need for resolution of the title issue

before adjudicating the taking claim.

* At the August 18, 1983 administrative hearing, Palazzolo

testified under oath as follows:

Q: Do you propose to build on this property?

A: Not necessarily... .

12

bases his taking claim makes it unripe. Williamson Plan-

ning Comm'n, 473 U.S. at 189-90; see Southern Pacific

Transpr. Co. v. Los Angeles, 922 F.2d 498, 503-04 (9th Cir.

1990), cert. denied, 502 U.S. 943 (1991); City of Riviera Beach

v. Taylor, 659 So.2d 1174, 1180-81 (Fla.App. 1995).

Palazzolo says that none of this matters because

Rhode Island (in his estimation) would have denied any

project that he submitted. The ripeness doctrine, how-

ever, is not satisfied by having the landowner make

assumptions about the final decision that an agency

might have reached if the proper application had been

made. Public agencies seek to avoid making decisions

that result in the taking of property, and they need to

understand the consequences that their actions might

Q: Do you know whether or not it would pass a perk

test?

A: It is not necessary at this time. It would be

necessary if I said I wanted to build houses. I am not saying that.

Trial Exh. DD (transcript of 1983 hearing), pp. 20, 22; see Trial

Exh. I (1983 application of Palazzolo to CRMC, describing

proposed use of fill); Trial Exh. DD (transcript of 1985 hearing,

testimony of Palazzolo witness Grant) at 45; Trial Exh. I (1985

application of Palazzolo, stating “[t}here will be NO structures

on the property and no individual disposal systems”) (emphasis

in original).

At trial in 1997, Palazzolo told a much different story:

Q: Now, when you applied in 1983 to CRMC, what

did you make application for?

A: I made application to build houses, the house lots,

fill. I wanted to fill.

Q: And was that your intent at the time, was to do

residential development?

A: Yes, it was. Trial Testimony, Vol. 1, at 65.

13

have on a landowner’s actual intended use of property.

Moreover, many agencies have statutory (or implied)

authority to permit uses that might otherwise conflict

with the agency’s policies if such an approval is neces-

sary to avoid a taking. See, e.g., Cal. Pub. Resources Code,

§ 30010; Southern Pacific Transpr. Co, 922 F.2d at 503 n.5.

Agencies cannot exercise this authority, however, if pro-

ject proponents do not say what they really want.

Had Palazzolo applied for a residential use, he would

have been required to ‘undertake an environmental

review and obtain approvals for septic systems that

would have enabled the regulatory agency to determine

the costs and impacts of the proposed use and the conse-

quences of a permit denial. JA at 50-57 (testimony of

Chateauneuf); at 63-67 (testimony of Fugate). Once this

application was complete, the agency could have consid-

ered the possibility of an alternative residential project on

the upland portions of the site. See JA at 70. Palazzolo’s

application for a beach facility, however, gave the agency

no reason to consider residential use. JA at 63-65. Indeed,

at the 1985 hearing, Palazzolo’s attorney successfully

objected to questions about possible residential uses. Trial

Exh. DD (transcript of 1985 hearing) at 67.

In addition, Palazzolo’s taking claim is based on the

denial of use of the entire parcel but his beach facility

application proposed to fill only about 11.4 acres. Trial

Exh. I (Palazzolo’s profile of proposed fill). It cannot be

assumed that, because an agency denies use on one por-

tion of a parcel, it necessarily would have denied use of

the entire parcel. Here, the 11.4 acres that Palazzolo pro-

posed to fill were exclusively wetlands and excluded the

14

upland portions of the property. Trial Exh. I (1985 appli-

cation of Palazzolo) at 2 (“[t]here will be no filling of the

existing high areas”). Had Palazzolo applied to develop

the entire parcel for a residential use, the record suggests

that the Rhode Island agency might have approved up to

four houses on upland portions of the property that had

been excluded from the 1985 application. Trial Testimony,

Vol. 1, at 209-211 (testimony of Fugate). Although Rhode

Island finally had a chance to present evidence regarding

the possibility of residential use at trial, the ripeness

doctrine demands that this opportunity be provided dur-

ing the administrative process where the agency is in a

position to properly review and approve an alternative

development that might avoid a taking claim. E.g., Wil-

liamson Planning Comm'n.

Palazzolo’s taking claim is not ripe because he never

submitted a meaningful application for the residential

use that now forms the basis of his taking claim.

III. THE COURT SHOULD RETAIN THE RIPENESS

DOCTRINE’S REAPPLICATION REQUIREMENT.

Because “rejection of exceedingly grandiose develop-

ment plans does not logically imply that less ambitious

plans will receive similarly unfavorable reviews,” the

ripeness doctrine has required that applicants refine their

projects and submit additional applications to demon-

strate that there has been a definitive action by the

agency indicating with some specificity what level of

15

development will be permitted. MacDonald, Sommer &

Frates, 477 U.S. at 351, 353.4

The reapplication requirement performs an indispen-

sable function: it insures that the denial of a particular

project will not be equated as the denial of all use of the

property. This promotes the rule that takings only occur

in the “extreme circumstances” where a permit is denied

and the effect of the denial is to prevent “economically

viable” use of the property. United States v. Riverside

Bayview Homes, Inc., 474 U.S. 121, 126, 127 (1975).

In fact, most permit denials are not final and authori-

tative decisions about the use to which property can be

put. Agencies may be required to deny projects where

projects fail to comply with informational requirements,

ignore zoning restrictions, or conflict with resource pro-

tection policies. Even sophisticated, well-conceived pro-

jects may necessitate denials until they can be adjusted to

meet reasonable land use and environmental concerns.

Yet, once the developer has addressed the outstanding

issues and the agency is in a position to make a final use

4 Following the lead of Williamson and MacDonald, the

lower courts repeatedly have dismissed claims as unripe where

applicants failed to modify their projects in any meaningful way

following initial rejection of their plans. See, e.g., Southview

Assoc., Ltd. v. Bongartz, 980 F.2d 84, 95-98 (2d Cir. 1992), cert.

denied, 507 U.S. 987 (1993); Executive 100 v. Martin County, 922

F.2d 1536, 1541 (11th Cir.), cert. denied, 502 U.S. 810 (1991);

Landmark Land Co. v. Buchanan, 874 F.2d 717, 721 (10th Cir. 1989);

Pace Resources, Inc. v. Shrewsbury Township, 808 F.2d 1023, 1029

(3d Cir.), cert. denied, 482 U.S. 906 (1988); Long Beach Equities, Inc,

v. County of Ventura, 231 Cal.App.3d 1016, 282 Cal.Rptr. 877, 886

(Cal.App. 1991), cert. denied, 505 U.S. 1219 (1992); Hay v. City of

Hanover, 436 N.W.2d 800, 804-05 (Minn.App. 1991).

16

determination, development is usually approved. Thus,

by demanding that applicants stick with the process, the

reapplication requirement avoids taking claims and helps

insure that an interim permit denial is not wrongly

assumed to be a denial of all use.

Compliance with the reapplication requirement may

prove frustrating at times, but the requirement neverthe-

less encourages compromise by all parties at the adminis-

trative level and deters unproductive litigation. And,

while there may be occasional lapses, agencies have little

incentive to abuse the reapplication requirement. Where

agencies deny applications for reasons that, from an

objective standpoint, are pretextual and in bad faith, that

conduct by itself may be a constitutional violation. See

Landgate, 953 P.2d at 1199, 1203. Short of that, the appli-

cant should retain the burden of demonstrating that the

agency has made a final and authoritative decision.

Palazzolo’s claim that he was denied all use of the

property, rejected as a factual matter by the State courts,

is unripe under any conception of the ripeness doctrine.

IV. A LANDOWNER MUST DEMONSTRATE THAT A

REGULATION HAS RENDERED PROPERTY

“VALUELESS” IN ORDER TO ESTABLISH THAT

THERE HAS BEEN A PER SE TAKING.

Palazzolo contends that he may establish a categori-

cal (or “per se”) regulatory taking even if the property

retains significant value following the agency’s decision.

Palazzolo’s view represents an unwarranted departure

from Lucas and numerous cases following it, and the

Court should reject it.

17

In order to establish a per se regulatory taking, the

claimant must establish that there has been a final deter-

mination that both prohibits all use and that destroys the

property’s value. This follows from Lucas, where the

Court accepted that there had been a per se taking

because the South Carolina statute flatly prohibited all

use and left the property “valueless.” Lucas, 505 U.S. at

1015-19 & n.8. Acknowledging the stringency of this

approach, the Court recognized that per se takings would

be “relatively rare” and “extraordinary.” Id. at 1016, 1017.

Throughout its taking jurisprudence, the Court has

analyzed a taking claim on the basis of the regulation’s

impact on the walue of the affected property. E.g., Concrete

Pipe and Prods., Inc. v. Construction Laborers Pension Trust,

508 U.S. 602, 645 (1993); Keystone Bituminous Coal Assn. v.

DeBenedictis, 480 U.S. 470, 497 (1987). With rare exception,

the lower courts applying Lucas have required that a

person claiming a per se regulatory taking demonstrate

that the government action effectively destroyed the

value of the property. See, e.g., District Intown Properties

Ltd. v. District of Columbia, 198 F.3d 874, 882 (D.C.Cir.

1999), cert. denied, 121 S.Ct. 34 (2000); Agripost, Inc. v.

Miami-Dade County, 195 F.3d 1225, 1231 (11th Cir. 1999),

cert. denied, 121 S.Ct. 51 (2000).5 Implicitly recognizing

5 Other cases include Stern v. Halligan, 158 F.3d 729, 734-35

n.7 (3d Cir. 1998); FIC Homes of Blackstone, Inc. v. Conservation

Comm'n, 41 Mass.App.Ct. 681, 673 N.E.2d 61, 67 (Mass.App.

1997); Board of Supervisors of Prince William County v. Omni

Homes, Inc., 253 Va. 59, 481 S.E.2d 460, 464 (Va. 1997), cert. denied,

522 U.S. 813 (1997); Alegria v. Keeney, 687 A.2d 1249, 1253 (R.1.

1997); McCuskey v. Canyon County Comm'rs, 128 Ida. 213, 912

P.2d 100, 103 n.2 (Ida. 1996); Zeman v. City of Minneapolis, 552

18

that he cannot challenge the Rhode Island’s factual find-

ing that the property is still worth $200,000, Palazzolo

poses a number of approaches to avoid it. These raise a

number of problems.

Initially, Palazzolo’s contention that he lost 93.7% of

the value of the property based on his “allegation” that

his property was worth $3.1 million is erroneous. Pet. Br.

at 38-40. Palazzolo forgets that a trial was held on this

issue, and the Rhode Island court rejected Palazzolo’s

claim that the property was worth $3.1 million as “spec-

ulative.” Palazzolo, 746 A.2d at 715 & n.7. Palazzolo’s

entire claim of deprivation is therefore premised on an

allegation that was rejected as factually untrue by the

lower courts.®

In addition, Palazzolo’s allegation that the property

is worth $3.1 million is based on a serious misconception

of how the value of property should be computed when

quantifying the impact of regulation, whether under the

per se test in Lucas or the ad hoc inquiry in Penn Central.

Palazzolo’s computation of the value of the property

before the alleged taking improperly assumed that he

N.W.2d 548, 553 n.4 (Minn. 1996); Chioffi v. City of Winooski, 165

Vt. 37, 676 A.2d 786, 790 (Vt. 1996). One exception is Del Monte

Dunes, Ltd. v. City of Monterey, 95 F.3d 1422, 1433 (9th Cir. 1996),

aff'd on other grounds, 526 U.S. 687 (1999). The Court did not

address this aspect of the Ninth Circuit’s decision. Del Monte

Dunes, Ltd., 526 U.S. at 704.

6 At trial, Rhode Island demonstrated that, because of

substantial infrastructure costs ignored by Palazzolo’s

appraiser, the entire parcel was worth only $55,000 even if fully

developed as a residential project. JA at 101, 104 (testimony of

Andolfo); see Joint Lodging No. 1, Items 9 and 10.

19

would have been entitled to develop all 74 units without

any significant development restrictions. Palazzolo, 746

A.2d at 715 & n.7. Palazzolo’s misconception of how

value is determined is not unusual and merits consider-

ation by the Court.

In determining compensation claims under the Fifth

Amendment, the Court typically has measured depriva-

tion by the regulation’s impact on a property’s fair mar-

ket value. See Keystone Bituminous Coal Assn., 480 U.S. at

497 (taking determined by considering a property’s value

before and after taking); United States v. 50 Acres of Land,

469 U.S. 24, 25-26 (1984). Fair market value is typically

defined as:

the amount of money which a purchaser willing

but not obliged to buy the property would pay

to an owner willing but not obliged to sell it,

taking into consideration all uses to which the

land was adapted and might in reason be

applied. Assembly of God Church v. Vallone, 89 R.1.

1, 150 A.2d 11, (R.I. 1959), citing 4 Nichols,

Eminent Domain (3d ed.), § 12.2 [1], p. 32; see,

e.g., Grand River Dam Authority v. Grand-Hydro,

335 U.S. 359, 367-368 (1948) (applying Oklahoma

law).

The Court long ago rejected the idea that fair market

value is determined by the landowner’s idealized view of

the uses to which property might theoretically be put. In

determining fair market value between willing buyers

and sellers:

{[T]here should be taken into account all consid-

erations that fairly might be brought forward

and reasonably be given substantial weight in

such bargaining . . . Elements affecting value

20

that depend upon events or combinations of

occurrences which, while within the realm of

possibility, are not fairly shown to be reasonably

probable, should be excluded from consider-

ation... Olson v. United States, 292 U.S. 246, 257

(1934).

The state courts look at this the same way. See People v.

Donovan, 57 Cal.2d 346, 19 Cal.Rptr. 473, 369 P.2d 1, 8

(Cal. 1962) (“the trier of fact is entitled to and should

consider those facts which a buyer would take into con-

sideration in arriving at a fair market value,” including

zoning restrictions); see also Appraisal Institute, “Real

Estate Valuation in Litigation” (2d.Ed. 1995), at 135

(potential purchasers in market place consider added risk

of permit denial in determining price that they are will-

ing to pay); Interagency Land Acquisition Conference, “Uni-

form Appraisal Standards For Federal Land Acquisitions”

(1992), at A-23, found at http://www.usdoj.gov/enrd/

land-ack/.

Therefore, the value of property “before” an alleged

taking must take into account the existing restrictions on

use of the property and all other pertinent matters on

development potential that a buyer would consider. See

Olson, 292 U.S. at 257. In determining the fair market

value of the Palazzolo property in 1978, for example, it

must be assumed that a reasonable buyer would take into

account, inter alia, zoning, septic requirements, infrastruc-

ture costs, public trust claims, existing state and federal

wetlands regulations, and the State’s previous denial of

development applications in the 1960's. Although a rea-

sonable buyer in this situation would not assume that the

agency would unlawfully “take” the property, she would

21

assume that the permit process for intensive residential

use would be difficult and that, because of these various

problems, it would be speculative how much develop-

ment the agency might actually approve. Consequently,

when the agency denied the permit in 1985 — the time of

the action giving rise to the alleged taking - there would

be little diminution in value because the market had

already accounted for the possibility of that permit deci-

sion.”

The Court also should reject Palazzolo’s claim that

government regulation causes a per se taking unless the

landowner receives a “reasonable return” on his invest-

ment. Pet. Br. at 42, 44. There is no authority and no

constitutional policy that requires that the regulatory tak-

ing doctrine guarantee a profitable investment. The futil-

ity of Palazzolo’s position is underscored by the Court's

repeated admonitions that regulation legitimately may

cause a substantial diminution in value and that the Fifth

Amendment does not guarantee a profitable return.

Andrus v. Allard, 444 U.S. 51, 66 (1979); Penn Central, 438

U.S. at 131; see United States ex rel. Tennessee Valley Author-

ity v. Powelson, 319 U.S. 266, 285 (1943).

? Considering Palazzolo’s original purchase price and that

Rhode Island law has imposed restrictions on the filling of

tidelands and wetlands since before 1960, see Gerhard v. Bridge

Comm'rs, 15 R.I. 334, 5 A. 199 (R.1. 1886); R.I. Gen. Laws 46-6-1

(1956), it is doubtful that this property ever had much more than

speculative value.

22

Under any value standard, the evidence in this case

demonstrated that Palazzolo failed to establish that there

had been a per se taking of the property.®

V. THE RHODE ISLAND COURT PROPERLY FOUND

THAT REASONABLE INVESTMENT-BACKED

EXPECTATIONS AND BACKGROUND PRINCI-

PLES OF RHODE ISLAND LAW BARRED PAL-

AZZOLO’S TAKING CLAIM.

The Rhode Island Court took existing regulation into

account in two ways when evaluating Palazzolo’s taking

claim: it found that when Palazzolo became the owner of

the property in 1978, the right to fill wetlands was not

part of the title that he acquired, id. at 716, and that,

under the Penn Central test, Palazzolo lacked reasonable,

investment-backed expectations that he could fill the

property for a 74-unit subdivision, id. at 717. Palazzolo

contends, however, that a court evaluating a taking claim

should ignore the regulations in existence when the land-

owner acquired the property. Palazzolo’s approach

should be rejected.

The idea that there is no taking when a landowner

knowingly purchases property subject to developmental

§ Because at trial Palazzolo failed to establish any

diminution in value resulting from the permit denial, see pp. 1-2,

15-16 supra, he likewise faiied to establish a taking even under

the Penn Central formulation of the takings doctrine. It bears

emphasis that diminution in value should be measured by the

regulation’s impact on the entire parcel (such as the 20 acres in

this case), not some partial segment.

23

restrictions is the flipside to the taking doctrine’s pro-

scription against singling out landowners to bear societal

burdens - landowners, not society at large, must bear the

consequences of their own actions. “The public may not

by any means confiscate the benefits, or be required to

bear the burden, of the owner’s bargain.” Olson, 294 U.S.

at 255. Although courts have not always agreed on the

doctrinal category in which to place it, they have found

that pre-existing regulations may bar a taking claim for a

variety of reasons.

Reasonable, Investment-Backed Expectations. Existing

regulations always have played a role in defining a land-

owner’s reasonable investment-backed expectations in

the three-part ad hoc inquiry of Penn Central, 438 U.S. at

124. The Court has applied this concept a number of

times since, and has found that expectations are decisive

particularly where the property interest involves a well-

regulated enterprise and the landowner purchased the

property with actual notice of the challenged regulation.

Ruckelshaus, 467 U.S. at 1005, 1008-09; Concrete Pipe and

Prods., Inc., 508 U.S. at 646. The lower courts likewise

have found a landowner’s lack of reasonable expectations

to be dispositive in the Penn Central inquiry. See, e.g.,

District Intown Properties Ltd., 198 F.3d at 884; Williams v.

City of Central, 907 P.2d 701, 707 (Colo.App. 1995); Omni

Homes, Inc., 481 S.E.2d at 465-66.

Here, if Palazzolo’s representations and applications

in the 1980’s are taken at face value, he did not even

intend to engage in residential development when he

became the record owner of the property in 1978. See pp.

11-12 n.3, supra. Moreover, a reasonable buyer would

have known or should have known in 1978 (and most

24

likely in 1959) that there was little chance that he would

obtain approval to fill wetlands for 74 residential units, in

light of existing state and federal wetlands restrictions,

public trust limitations and septic requirements. E.g., JA

at 63-67 (testimony of Fugate); see p. 21 n.7, supra. The

original purchase price reflected these uncertainties. In

these circumstances, the Rhode Island court's straightfor-

ward application of the expectations principle disposes of

Palazzolo’s taking claim under Penn Central.

The Notice Defense. Numerous courts have found that

taking claims are barred where a landowner had actual

notice or assumed the risk that property would be subject

to the regulation upon which the taking claim was based.

See, e. g., Avenal v. United States, 100 F.3d 933, 937-38 (Fed.

Cir. 1996); City of Virginia Beach v. Bell, 255 Va. 395, 498

S.E.2d 414, 417-19 (Va.), cert. denied, 525 U.S. 826 (1998);

Alegria, 687 A.2d at 1254-55. This approach presents the

fairness issue in its most basic form: if a landowner knew

or should have known that his uses of the property

would be restricted when he voluntarily acquired it, the

public should not subsidize the risk that he undertook.

See Dow, 357 U.S. at 27 (not inequitable to deny recovery

where purchaser acquired property with “full notice” of

condemnation proceedings). A reasonable buyer in 1978

would have known that the Rhode Island agency would

not have approved the residential project upon which

Palazzolo predicates his taking claim.®

* Palazzolo’s reliance on Nollan v. California Coastal

Comm'n, 483 U.S. 825, 833 n.2 (1987), is misplaced. Nollan

involved an excessive exaction, which is the physical taking of

an already defined property interest (the right to exclude

25

Expectations and Value. Reasonable investment-backed

expectations inhere in the value of the property itself. See

Lucas, 505 U.S. at 1034 (Kennedy, J., concurring); Creppel

v. United States, 41 F.3d 627, 632 (Fed.Cir. 1994). In this

sense, preexisting regulations do not act as a defense to a

taking claim, but are factored into the value of property

because the value of the property at the time of acquisi-

tion will reflect the existing regulatory climate. See pp.

8-21 supra.'°

Pre-existing Regulations and Background Principles.

Numerous courts since Lucas have found, as did the

Rhode Island court, that regulations which exist at the

others). In a regulatory taking case, the property interest at

stake (a landowner’s right to engage in a particular

developmental use) is not static and is subject to constant

redefinition (e.g., a change in zoning where no rights have

vested). This type of property interest cannot be defined until

the landowner is denied a use and a court determines the

owner’s entitlement to engage in the use, measured in part by

the landowner’s expectations at the time of acquisition.

10 The facts in Gazza v. New York State Department of

Environmental Conservation, 89 N.Y.2d 603, 679 N.E.2d 1035, 657

N.Y.S.2d 555 (N.Y.App.), cert. denied, 522 U.S. 813 (1997)

illustrate this. Gazza paid $100,000 for a parcel of property, 65%

of which was subject to wetlands restrictions at the time of

purchase; this represented a substantial discount over the

$360,000 that Gazza claimed that the property would have been

worth without restrictions. Id. at 1036. The trial court found

that, following the denial of the variance, the property was still

worth $80,000, which meant that denial caused only a 20%

diminution in the “before” value of the property. Thus, while

the Gazza court properly found for other reasons that there was

no taking, such a modest diminution in value would not

independently result in a regulatory taking.

26

time of acquisition are part of the landowner’s title and

therefore form part of the background principles that

define the landowner’s ability to use property. See, e.g.,

Outdoor Graphics v. City of Burlington, 103 F.3d 690, 694

(8th Cir. 1996); Wooten v. South Carolina Coastal Council,

333 S.C. 469, 510 S.E.2d 716, 717-718 (S.C. 1999); Basile v.

Town of Southhampton, 89 N.Y.2d 974, 678 N.E.2d 489, 491,

655 N.Y.S.2d 877 (N.Y.App.), cert. denied, 522 U.S. 907

(1997).

Palazzolo contends, however, that the Court in Lucas

did not intend to include pre-existing regulations as part

of the antecedent inquiry into a claimant’s property inter-

ests. Despite the attention that Palazzolo gives this issue,

it has little application in practice because, as a defense to

a per se taking claim under Lucas, it comes into play only

in those rare circumstances where an applicant has met

the narrow test for establishing a denial of all economi-

cally viable use. Indeed, the Court need not reach this

issue if it finds that there was no per se taking or resolves

the taking claim against Palazzolo on some other ground.

Here, the Rhode Island Supreme Court properly

found that existing regulations formed part of the back-

ground principles defining Palazzolo’s property, and

Rhode Island and other amici curiae have demonstrated

the correctness of that holding. The States support those

arguments, and offer this additional consideration.

The background principles issue has been framed in

a way that focuses on the change in ownership - that is,

whether the wetlands regulations that were adopted after

Palazzolo’s corporation acquired the property but before

27

Palazzolo himself acquired it form “background princi-

ples” of Palazzolo’s ownership but not that of his corpo-

ration. But the change in ownership makes little

difference in this case. The wetlands regulations chal-

lenged by Palazzolo formed background principles defin-

ing his property interest because, no matter when he

acquired the property, Palazzolo’s property interest is

held subject to the Legislature’s authority to declare pub-

lic nuisances such as destruction of wetlands.

Legislatures have the inherent authority to declare

acts injurious to the public to be a public nuisance, even if

the acts were not nuisances at common law. See City of

Bakersfield v. Miller, 64 Cal.2d 93, 48 Cal.Rptr. 889, 410

P.2d 393, 397 (Cal. 1966), cert. denied, 384 U.S. 988 (1966);

Starr v. Commn’r, 226 Conn. 358, 627 A.2d 1296 (Conn.

1992); Grundy Center v. Marion, 231 lowa 425, 1 N.W.2d

677 (lowa 1942); People v. New York Edison Co., 144 N.Y.S.

707, 159 A.D. 786, 789 (N.Y.App.Div. 1913). Legislatures

may exercise this authority subject to a state court deter-

mination whether the legislature’s declaration was

unfounded or arbitrary. Indianapolis v. Miller, 168 Ind.

285, 80 N.E. 626, 627 (Ind. 1907); State v. McKee, 73 Conn.

18, 46 A. 409, 412 (Conn. 1900). As one court observed -

before Lucas was decided - contemporary environmental

legislation “represents an exercise by government of this

traditional power to regulate activities in the nature of

nuisances.” CEEED v. California Coastal Zone Conservation

Comm'n, 43 Cal.App.3d 306, 118 Cal. Rptr. 315, 324

(Cal.App. 1974); see Lucas, 505 U.S. at 1035 (recognizing

“unique concerns” presented by development of “fragile”

coastal land system and suggesting that expectations

28

regarding their regulation is not necessarily confined to

traditional nuisance law) (Kennedy, J., concurring).

Background principles restricting harmful uses of

property are not limited to only those uses prohibited by

the common law public nuisance doctrine as it existed at

the time of a particular State’s admission. Lucas, 505 U.S.

at 1030 (“changed circumstances or new knowledge may

make what was previously permissible no longer so”).

Human knowledge of what constitutes harmful activity

has developed dramatically. Many activities now almost

universally understood to cause public harm - the

destruction of wetlands comes to mind —- were not recog-

nized as such in the not so distant past.

Rhode Island’s system of wetlands regulation is an

exercise of its traditional power to regulate public nui-

sances. The destruction of wetlands causes numerous

public and private harms through increased flooding and

erosion, the reduction and pollution of available water

supply, and the lost commercial and recreational oppor-

tunities caused by the degradation of fish and wildlife

habitat. E.g., Office of Technology Assessment, U.S. Con-

gress, Wetlands: Their Use and Regulation (1984). If the

operation of a pig farm may constitute a public nuisance,

e.g., Jewett v. Deerhorn Enterprises, Inc., 281 Or. 469, 575

P.2d 164 (Or. 1978), then certainly it is not unreasonable

for a legislature to conclude that it is proper to impose

restrictions on the filling of wetlands to avoid these insid-

ious impacts. Further, that the trial court found that Pal-

azzolo’s project would constitute a common law

nuisance, see pp. 7-8 supra, confirms that the Rhode Island

legislation against wetlands destruction is the type of

traditional nuisance regulation found acceptable to the

29

Court in Lucas. See also Jackvony v. Powel, 67 R.I. 218, 21

A.2d 554 (R.I. 1941) (enjoining activity that interferes with

constitutional protection of tidelands).

Therefore, assuming arguendo that he even owns the

property, Palazzolo’s title is qualified by the possibility

that the Legislature might forbid or restrict uses in an

exercise of its traditional authority to declare public nui-

sances. This background principle of Rhode Island law

prohibited the wholesale destruction of wetlands pro-

posed by Palazzolo, regardless of when he acquired the

property. Therefore, Rhode Island did not engage in a

taking, even assuming that Palazzolo could overcome the

numerous other problems with his constitutional claim.

The judgment below should be affirmed.

Respectfully submitted,

Brit Lockyer

Attorney General of the

State of California

RicHarRD M. FRANK

Chief Assistant Attorney General

J. MattHew RopriQuez

Senior Assistant Attorney General

JosePH BARBIERI

Deputy Attorney General

Counsel of Record

Attorneys for State of California

January 2001