Amicus Curiae Brief — Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency

See Comi,US

FILED

|

No. 00-1167 NOV 13 200

OFFICE OF THE CLERK |

In The

Supreme Court of the United States

+

TAHOE SIERRA PRESERVATION COUNCIL, INC., et al.,

Petitioners,

V.

TAHOE REGIONAL PLANNING AGENCY, et al.,

Respondents.

+

On Writ Of Certiorari To The

United States Court Of Appeals

For The Ninth Circuit

S

BRIEF AMICUS CURIAE OF

NATIONAL AUDUBON SOCIETY,

NATURAL RESOURCES DEFENSE COUNCIL,

NATIONAL WILDLIFE FEDERATION AND

SIERRA CLUB IN SUPPORT OF RESPONDENTS

.

JoHN D. ECHEVERRIA

Counsel of Record

ENVIRONMENTAL Po .icy PRojEcT

GEORGETOWN University Law CENTER

600 New Jersey Avenue, N.W.

Washington, D.C. 20001

(202) 662-9850

November 13, 2001

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...........-.:eeeeeeeeees ii

SUMMARY OF ARGUMENT. ..........:.00eeeceees 1

PEE ci dud dhanshebacaehév4suaevgnesiadedsin 2

I. The Court Should Reject the Proposal That it

Il.

Il.

Jettison the Well-Established Parcel as a

SE code, BeGdadisendunecakan tnneees

A. The Parcel as a Whole Rule Is an Essential

Component of Takings Doctrine.........

B. Physical Occupations v. Restrictions on

SS Lace adines cencnndceccesedepcencocess

C. The Futile Effort to Save the Segmentation

ADMTTIGER onc cccccccsevsvescocecevevcces

No Change in the Law is Required to Afford

Owners Appropriate Opportunities to Chal-

lenge Sham or Arbitrary Development Mor-

BERGER cccvccccceccccceccececcccceccecesececs

A. Existing Legal Remedies Are Adequate

SE EEE, coscvvccsesvcceseeesese

B. There is No Separate, Coherent Penn Cen-

fe RTT TTT TTT Tre

The “Political Process” Arguments for the

Proposed Rewrite of the Takings Clause Are

Incoherent in Theory and Wrong as a Matter

OE BEE ve cncncocecoscccccveccnévacvescceness

SD 6S wed cb encins cntnitece secccccecees

ii

TABLE OF AUTHORITIES

Page

Cases

Agins v. City of Tiburon, 447 U.S. 255 (1979) ...4, 5, 15, 16

Andrus v. Allard, 444 U.S. 51 (1979) ............085, 3,9

Bleck v. Hirsh, 256 U.S. 135 (1921). ....ccccccccccscess 4

Carpenter v. Tahoe Regional Planning Agency, 804

F.Supp. 1316 (D. Nev. 1992).........ecceeeeeeeeees 14

City of Monterey v. Del Monte Dunes Ltd., 526 U.S.

fA, Pe eee 8, 15

Concrete Pipe & Products of California, Inc. v. Con-

struction Laborers Pension Trust, 508 U.S. 602

CRUGED ss ccvcccscansdessectacectuqunseebeneene 3, 4, 24

District Intown Properties Limited Partnership v. Dis-

trict of Columbia, 198 F.3d 874 (D.C. Cir. 1999),

cert. Genied, $31 US. 812 (2000)... ccccccecsvccses 20

Dolan v. City of Tigard, 512 U.S. 374 (1994)...... 3, 5, 8

Eastern Enterprises v. Apfel, 524 U.S. 498 (1998) ...14, 15

First English Evangelical Luthern Church v. County of

Los Angeles, 482 U.S. 304 (1987)........ 10, 21, 28, 29

Kelly v. Tahoe Regional Planning Agency, 855 P.2d

BERT CEU BOGE oc cc ccccvevctéicdcdatsonaeeeneanie 13

Lockary v. Kayfetz, 917 F.2d 1150 (9th Cir. 1990)...... 17

Loretto v. Tele-prompter Manhattan CATV Corp., 458

CRE. GRD: GREE « 0 ce weccccsacvndessennmeenneel 7, 8, 21

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

REGS CRITE oc occ vccccdasenesvsuensapepeaseueus passim

iii

TABLE OF AUTHORITIES - Continued

seen 17

Nectow v. City of Cambridge, 277 U.S. 183 (1928) ..... 16

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

Ect ebeebaserssesenseeccecocececceccess 8

Palazzolo v. Rhode Island, 121 S.Ct. 2448 (2001) ... 5, 22, 23

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

Se Ee Be SE occcccvecccosccccestceccces passim

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) ..... 4

Preseault v. ICC, 494 U.S. 1 (1990)..............0055- 16

Q.L. Const. Co. Inc. v. Gallo, 649 F. Supp. 1331

(D.R.1. 1986), aff'd, 836 F.2d 1340 (1st Cir. 1987) .... 17

San HF Gas & Electric Co. v. City of San Diego,

i i acevcesteccccescsscocccoscccess 16

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

8 EE SPUPT TTT TT eT TTT TTTT TTT Tee 14

sii Pi ib eesesesecdeeedeet csoceceeeess 13

Tahoe Sierra Preservation Council, Inc. v. Tahoe

a Planning Agency, 938 F.2d 153 (9th Cir.

EE ELLA LE 28

Tampa-Hillsborough County Expressway Authority v.

A.G.W.S. Corp., 640 So.2d 541 (Fla. 1994).......... 18

United States v. Carolene Products Co., 304 U.S. 144

MEPS eth Rohesbbsoebdecdocsocesvcccceces 25

iv

TABLE OF AUTHORITIES - Continued

Page

United States v. Central Eureka Mining Co., 357 U.S.

BD Ge cc cccccecdcconcccceseuccoscosccccceceuce 8

United States v. Riverside Bayview Homes, 474 U.S.

BD Greece cccccccnsctcedoqcotcossonencesveccocse 9

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

GIP o cvcesccccunds coccevcvecsackscessceéeensteses 17

STATUTES

BD Was BIR no ccctvccccccccvenccadenseessonsdose 28

BB CREE © BB c ccacccccndnoccccsunscetéoccotoncce 28

ARTICLES

Darryl J. Levinson, “Making Government Pay:

Markets, Politics, and the Allocation of Consti-

tutional Costs,” 67 U.Chi.L.Rev. 345 (2000)......... 27

Richard Epstein, “Property, Speech, and Politics of

Distrust,” 59 U.Chi.L.Rev. 41 (1992)..........22008- 21

Jerold Kayden, “Land Use Regulations, Ratio-

nality, and Judicial Review: the RSVP in the

Nollan Invitation,” 23 Urban Lawyer 301 (1991) .... 17

Richard Lazarus, “Putting the Correct ‘Spin’ on

Lucas,” 45 Stanford L.Rev. 1411 (1993)............. 21

Mancur Olson, The Logic of Collective Action (1965) .... 25

Thomas E. Roberts, “Moratoria as Categorical

Regulatory Takings: What First English and

Lucas Say and Don’t Say,” 31 Envtl.L.Rep 11037

GREED cb cvebcccccsccvntecdeccasubdadedeebsacs dddes 11

v

TABLE OF AUTHORITIES - Continued

MISCELLANEOUS

Page

Statement by Office of Management and Budget,

October 3, 2001, www.whitehouse.gov/omb/

legislative /sap/107-1/HR2624..............

Tahoe Outlook, July-August, 1983 Vol. 4. No. 4

BRIEF AMICUS CURIAE IN

SUPPORT OF RESPONDENTS

The amici curiae, national conservation organizations

representing citizens in California, Nevada and across the

country, urge the Court to affirm the judgment of the

Court of Appeals.?

+

SUMMARY OF ARGUMENT

The Court should reject the proposal that it jettison

the parcel as a whole rule in taking cases involving

regulatory use restrictions. This established rule is essen-

tial to a balanced, workable doctrine of regulatory tak-

ings. Applying the parcel as a whole rule in this case,

TRPA’s moratorium, which only deferred development

and did not eliminate all economic value, did not effect a

Lucas-type taking.

This case calls for no basic change in the law because

the Constitution already affords property owners appro-

priate remedies for ostensibly temporary moratoria

which are in fact indefinite or permanent, as well as for

arbitrary or otherwise invalid moratoria. This case

involves no claim under Penn Central, and the Court

should not speculate about how Penn Central (which does

not actually support a distinct taking claim) might be

applied in some other case.

1 Counsel for the parties have consented to the filing of this

brief. No counsel for a party in this case authored this brief in

whole or in part, and no person or entity, other than amici and

their counsel, made a monetary contribution to the brief’s

preparation or submission. See Rule 37.

Finally, the Court should reject many of the asser-

tions by petitioners and their amici about the economic

and political implications of proposals to expand regula-

tory takings doctrine. Property owners do not need

expanded protection under the Takings Clause to counter

political powerlessness; extensive takings liability would

not make government decision-making more economi-

cally rational; and expanded takings liability would not

simply impose a modest condition on the pursuit of

important public objectives.

o

ARGUMENT

I. The Court Should Reject the Proposal That it Jet-

tison the Well-Established Parcel as a Whole Rule.

Petitioners and their amici mount a radical assault on

the rule that a taking claim based on a regulatory use

restriction must be analyzed in relation to the “parcel as a

whole.” Under conventional takings analysis, a mor-

atorium is generally not viewed as a taking because it

lasts only a few years (or less) and has no affect on the

owner’s use of the property outside the moratorium

period. Borrowing from the Court’s approach to taking

claims based on physical occupations, petitioners and their

amici contend that a moratorium should be analyzed in

isolation without regard to the uses the owner has made

of the property and can make of the property during the

rest of his ownership. As they frankly acknowledge,

according to their reasoning, the parcel as a whole rule

should be discarded for all regulatory taking challenges

based on use restrictions.

Even petitioners and their amici recognize that the

trajectory of this argument takes them straight off a cliff.

Accordingly, they advance various ad hoc proposals for

possibly softening the consequences of the argument,

such as a one-year-might-still-be-OK exception, see Brief

of Institute for Justice, at 30, or an exception for “quite

short” pauses in permitting, see Brief for Petitioners, at

49. In fact, the position of petitioners and their amici on

the parcel issue is so fundamentally wrong that nothing

can save it.

A. The Parcel as a Whole Rule Is an Essential

Component of Takings Doctrine.

It would be difficult to overstate how central the

parcel as a whole rule is to takings jurisprudence and

what an extraordinary change in.the law petitioners and

their amici propose. As they acknowledge, it would com-

pel the rejection of longstanding Court precedent.

The Court has articulated and applied the parcel as a

whole rule many times. The Court has applied it in

rejecting proposals to segment a single landholding into

separate parcels geographically. See Penn Central Transpor-

tation Co. v. City of New York, 438 U.S. 104, 130-31 (1978);

Dolan v. City of Tigard, 512 U.S. 374, 385 n.6 (1994). The

Court also has rejected efforts to divide property into

individual sticks based on the separately identifiable

legal interests that make up property. See Andrus v. Allard,

444 U.S. 51, 65-66 (1979); Concrete Pipe & Products of

California, Inc. v. Construction Laborers Pension Trust, 508

U.S. 602, 643-44 (1993). Finally, the Court has rejected

efforts to segment property in the temporal dimension as

well. See Block v. Hirsh, 256 U.S. 135, 156 (1921); Agins v.

City of Tiburon, 447 U.S. 255, 263 n.9 (1979).

The parcel as a whole rule is necessary to prevent

takings doctrine from literally destroying government's

capacity to function. As Justice Holmes famously

remarked: “Government hardly could go on if to some

extent values incident to property could not be dimin-

ished without paying for every such change in the law.”

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413 (1922). If

every taking claim had to be evaluated in relation to the

affected interest or portion of the property, then regula-

tion would “always” result in a taking. Concrete Pipe, 508

U.S. at 643. Jettisoning the parcel as a whole rule would,

in effect, collapse the police power into the eminent

domain power.

The parcel as a whole rule also prevents judicial

intrusions into. the affairs of the other branches and inter-

ference by the federal courts with the independent func-

tioning of state and local governments. The parcel as a

whole rule, because it keeps regulatory takings doctrine

within a relatively narrow scope, implements the general

presumption in favor of the constitutionality of legisla-

tive action and reinforces the principle that matters of

social and, economic policy should generally be resolved

by the political branches. Absent the parcel as a whole

rule, litigants could invoke the Takings Clause to force

the courts to play the role of an imperial judiciary rou-

tinely resolving society’s most important economic and

social issues.

The parcel as a whole rule also has more practical

justifications. An owner completely prohibited from

exploiting a property’s economic value, see, e.g., Lucas,

suffers a qualitatively different type of interference with

his investment plans than an owner prohibited from

developing only a portion of a larger property, see, ¢.g.,

Dolan. Thus, a regulation which destroys the value of a

particular investment logically raises a more serious con-

stitutional issue than a regulation which simply dimin-

ishes the value of an investment by restricting the use of

a portion of the property.

In addition, the parcel as a whole rule allows for an

accurate accounting of both the negative and the positive

effects of regulation on property values. In evaluating a

taking claim, “the[ ] benefits [of regulation] must be con-

sidered along with any diminution in market value that

the [owners] might suffer.” Agins v. City of Tiburon, 447

U.S. at 262. In the rare case where a regulation eliminates

an entire property’s economically viable use, there are, of

course, no countervailing benefits to consider with

respect to the particular property. On the other hand, if a

regulation only restricts use of a portion of a property,

under the parcel as a whole rule the courts can weigh

both how the restrictions limit development oppor-

tunities and how they enhance the value of development

opportunities that remain. Thus, in Palazzolo v. Rhode

Island, 121 S.Ct. 2448 (2001), the Court’s application of the

parcel as whole was just and fair in part because the

beneficial effects of the wetlands restrictions on a portion

of the property (and on neighboring properties) went a

long way toward explaining why the developable portion

of the property increased in value so dramatically after

the restrictions were imposed.

The rule has the same virtues in the temporal dimen-

sion. There is all the difference in the world between a

regulation which blocks development permanently or

indefinitely, and a temporary moratorium which by its

express terms only lasts for a limited period. As an eco-

nomic matter, if a planning moratorium succeeds in its

purpose of helping to improve the quality of the commu-

nity as a whole, a moratorium should enhance property

values for development once it is lifted. Given that prop-

erty owners routinely hold property for lengthy periods

for eventual development or resale (in general and in the

Tahoe basin in particular), there is no reason to assume

that development moratoria necessarily have any adverse

economic impacts on property owners.

If anything, the argument for property “segmenta-

tion” is at its very weakest ebb in the context of temporal

restrictions. In the spatial dimension, there are at least

arguably relevant legal subdivisions of property interests

which could conceivably (but incorrectly in our view)

justify property segmentation. Cf. Lucas, 505 U.S. 1016

n.7. By contrast, time is a natural continuum which does

not lend itself to natural or easy legal subdivision.

Under the traditional parcel as a whole rule, the

TRPA moratorium - and temporary planning moratoria

in general - are clearly not facial takings under Lucas v.

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

moratorium did not eliminate development uses, it sim-

ply deferred them for a relatively brief period. As a

result, the moratorium did not strip the property of all

economic value, if it had any adverse economic effect at

all.?

B. Physical Occupations v. Restrictions on Use.

Contrary to the position of petitioners and their

amici, the fact that a physical occupation may, in a sense, be

deemed a taking of the affected portion does not support

discarding the parcel as a whole rule for taking claims

based on use restrictions.

In the leading Court precedent on physical-occupa-

tion takings, see Loretto v. Tele-prompter Manhattan CATV

Corp., 458 U.S. 419 (1982), the Court explicitly and repeat-

edly emphasized the distinction between physical occu-

pations and use restrictions. The Court said, on the one

hand, it “has often upheld substantial regulation of an

owner’s use of his own property.” Id. at 425. On the other

hand, the Court said next, “we have long considered

physical intrusion by government to be a property

restriction of an unusually serious character for the pur-

pose of the takings clause.” Id. The Court also cited.

several “recent cases confirm[ing] the distinction between

2 A telling statement in the TSPC monthly newsletter from

the early 1980’s suggests that many owners had little actual

interest in developing their properties during the period of the

moratorium. See Tahoe Outlook, July-August, 1983 Vol. 4. No. 4

(“The fact is that due to economic realities, the pressures to

build on these remaining single-family lots has nearly

evaporated. . . . If given the choice, it is now clear that most

property owners would much prefer to sell — particularly for a

full, fair cash price to a governmental entity that is ready and

willing to pay such a fair price for their lands.”)

a... physical occupation ... and a regulation that merely

restricts the use of property.” Id. at 428, citing United

States v. Causby, 328 U.S. 256 (1946); United States v. Cen-

tral Eureka Mining Co., 357 U.S. 155 (1958). See also id. at

427, 436, 441 (discussing the differences between physical

occupations and use restrictions).

The special status the Court has accorded physical

occupations reflects the importance of the property, lib-

erty as well as privacy interests threatened by an invasion

of a citizen’s personal physical space. As the Court said

in Loretto, “an owner suffers a special kind of injury when

a stranger directly invades and occupies an owner's prop-

erty.” Id. at 436 (emphasis in original). The Court contin-

ued: “such an invasion is qualitatively more severe than a

regulation of the use of property. ...” Id. (emphasis

added).

The distinctive character of physical occupations is

reflected in many aspects of the Court's taking jurispru-

dence. In Loretto, the Court established a special categori-

cal rule for all permanent physical occupations of private

property. By contrast, in Lucas the Court called for cate-

gorical treatment of use regulations only when the

restrictions eliminated all economically viable use of the

property, indicating that most use restrictions cannot be

equated with physical occupations. Similarly, in Dolan v.

City of Tigard, 512 U.S. 374 (1994) and Nollan v. California

Coastal Commission, 483 U.S. 825 (1987) , the Court articu-

lated distinctive tests for evaluating takings claims based

on permit conditions involving physical occupations of

private property. In City of Monterey v. Del Monte Dunes

Ltd., 526 U.S. 687 (1999), the Court held that Dolan and

Nollan do not apply to a claim based on a use restriction.

Against this backdrop, it is logical that a different

“parcel rule” applies to physical occupations than to use

restrictions. Given the “special” nature of the injury an

owner suffers in the case of a physical occupation, and

because any physical invasion literally affects an owner's

privacy interests in the property as a whole, a physical

occupation of a portion of a property can result in a

-taking. By contrast, because a regulatory use restriction

rises to the level of a taking only in “extreme circum-

stances,” United States v. Riverside Bayview Homes, 474 US.

121, 126 (1985), and does not invade the property in the

same fashion, it is essential to differentiate between

actual takings and those regulatory use restrictions which

must be “borne to secure the advantage of living and

doing business in a civilized society.” Andrus v. Allard,

444 U.S. 51, 67 (1979). The parcel as a whole rule serves

that crucial function.

C. The Futile Effort to Save the Segmentation

Argument.

Even petitioners and their amici recognize that their

argument leads to the unsupportable conclusion that

every restriction on the use of property, no matter how

minute in space or time, represents a taking. Their (reluc-

tant and half hearted) efforts to save themselves from the

consequences of their extreme legal position are unprin-

cipled, impractical, and beyond the courts’ competence

and authority to administer.

The primary proposal is that the Court decree that a

moratorium of no more than one year will be acceptable.

This proposal obviously undercuts the entire argument

10

for treating temporary moratoria as takings in the first

place; the Court’s physical occupations precedents allow

for no similar exception. For petitioners and their amici to

acknowledge that some short-term moratoria may be per-

missible under the Takings Clause simply reinforces the

conclusion that their effort to equate use restrictions with

physical occupations will not wash. Furthermore, given

the myriad array of planning challenges local govern-

ments face, this Court, which has limited land use exper-

tise, is hardly in a position to set an appropriate

maximum period for a moratorium that will suit all cases.

Another, more amorphous proposal is that the Court

declare that a temporal restriction will not effect a takings

so long as it is “quite short.” This standard would

improperly invite the courts to second guess the policy

and technical judgments of local elected officials and land

use planners, and would involve the Court in attempting

to devise what essentially amounts to a legislative solu-

tion. In addition, it would generate an increased volume

of litigation based on an uncertain legal test, imposing

new legal burdens on local governments and greater legal

uncertainty for regulators and the regulated alike.®

3 This possible exception draws some support from the

Court’s indication in First English Evangelical Luthern Church v.

County of Los Angeles, 482 U.S. 304 (1987) that “normal delays”

would not result in takings, see id. at 321. But, to be frank, this

language is too ambiguous to support any fixed conclusion. It

can be contended, of course, that “normal delays,” such as to

make “changes in zoning ordinances,” are certainly broad

enough to encompass development moratoria. But the larger

point is that the Court seems to be describing an exception to a

rule which the majority opinion does not actually articulate.

One scholar has recently suggested that this portion of the First

11

Most importantly, however, this standard, like the

proposed one-year exception, squarely contradicts the

argument that temporary use restrictions are indis-

tinguishable from physical occupations. In fact, short-

term temporal restrictions on development are not tak-

ings because the parcel as a whole rule applies in takings

cases based on use restrictions. Short term restrictions

generally do not so severely burden the parcel as a whole

that they amount to takings.

Il. No Change in the Law is Required to Afford

Owners Appropriate Opportunities to Challenge

Sham or Arbitrary Development Moratoria.

Under existing law development moratoria of finite

duration will rarely if ever raise a serious issue under the

Takings Clause. The question presented by this case,

therefore, is whether the Court should alter the legal

status quo. In addressing this question the Court may

wish to focus on whether existing constitutional and

other legal remedies deal adequately with the types of

legal concerns which the use of moratoria is likely to

raise.

English opinion may represent a kind of judicial pentimento. See

Thomas E. Roberts, “Moratoria as Categorical Regulatory

: What First English and Lucas Say and Don’t Say,” 31

Enotl.L.Rep. 11037, 11041 (2001). This explanation has at least

the ring of factual authenticity.

12

A. Existing Legal Remedies Are Adequate and

Appropriate.

At the outset, one might ask, where is the beef?

Petitioners and their amici have made no compelling case

for dramatic judicial innovation. They have presented no

persuasive evidence that this valuable planning tool cre-

ates economic injury or other unfairness, either in this

case or in general. In addition, a number of state legisla-

tures have enacted laws limiting the permissible duration

of planning moratoria, see, ¢.g., Montana Code Ann.

§ 76-2-306 (authorizing moratoria lasting up to 30

months), strongly suggesting that this issue is being ade-

quately handled through the ordinary give and take of

politics. As discussed in section III, there is no reason to

believe that developers and other landowners are disad-

vantaged in the political process; if anything, the oppo-

site is more likely to be the case.

As a constitutional matter, the use of planning mor-

atoria appears to raise two potential types of legal con-

cerns. The first is that a regulatory restriction, though

labeled a temporary moratorium, might, in fact, be indis-

tinguishable from a permanent or indefinite restriction.

The second is that a moratorium, whatever its duration,

might be enacted for some arbitrary or otherwise invalid

reason. Existing law is adequate to address both types of

concerns.

“Permanent” Moratoria. The first concern matches, of

course, petitioners’ version of this case, at least as refor-

mulated for presentation in this Court. According to peti-

tioners, TRPA enacted a prohibition on development in

the early 1980’s which, under the cover of different laws

a

13

and plans, has remained in force for several decades and

continues in force today. They contend that TRPA’s regu-

latory restrictions are legally indistinguishable from those

at issue in Lucas and, therefore, there was a taking in this

case.

Petitioners are entirely correct that an ostensibly tem-

porary measure might, in fact, be so long lasting or indefi-

nite in duration that it is a taking under Lucas. The courts

are well equipped to look behind labels to find the sub-

stance of things. Thus, owners would certainly be entitled

to allege, and courts might well find a taking, if a mea-

sure labeled as a “moratorium” actually were intended to

last indefinitely, or if the government enacted a contin-

uous series of short-term moratoria, effectively creating a

single, permanent prohibition on development.

The problem for petitioners is that their characteriza-

tions of this case do not match the actual facts. In the

early 1980’s TRPA enacted a moratorium which (with

several short, good-faith extensions) lasted less than three

years, followed in 1984 by the enactment of a new

regional plan (immediately enjoined by federal court),

and in 1987 by the enactment of another regional plan.

The 1987 plan differed from the prior 1984 plan and

differed even more from the complete prohibition on

development during the moratorium. See Tahoe Sierra Pre-

servation Council, Inc. v. Tahoe Regional Planning Agency,

911 F.2d 1331, 1333 (9th Cir. 1990). In place of the prior,

flat prohibition on development, the 1987 plan (much like

the 1984 plan) provided a series of flexible alternatives

for landowners, including the opportunity to develop

certain lots, see, e.g., Kelly v. Tahoe Regional Planning

14

Agency, 855 P.2d 1027 (Nev. 1993); to sell transferable

development rights, see, e.g., Suitum v. Tahoe Regional

Planning Agency, 520 U.S. 725 (1997); and to sell the fee to

the government, see, ¢.g., Carpenter v. Tahoe Regional Plan-

ning Agency, 804 F.Supp. 1316 (D. Nev. 1992). To be sure,

various aspects of the 1987 plan were or might be subject

to a possible claim under the Takings Clause or to some

other legal challenge. The point for the purpose of this

takings case, however, is that the 1987 plan (and the 1984

plan) cannot remotely be described, in substance, as a

simple extension of the earlier moratorium.‘

“Arbitrary” Moratoria. The second type of legal con-

cern which a planning moratorium might raise is that,

quite apart from its duration, it is somehow arbitrary or

otherwise invalid. For example, a moratorium might be

designed to address a nonexistent or trivial planning

concern, local officials might have no intention of using

the moratorium period to address the problem, or gov-

ernment officials might be motivated by improper animus

toward some individual or group. This type of concern

can raise a potential constitutional issue, but one that

logically falls under due process (or possibly equal pro-

tection), not takings. Cf. Eastern Enterprises v. Apfel, 524

U.S. 498 (1998).

The Court has suggested on occasion that a govern-

ment action “effects a taking” if it “does not substantially

* The district court resolved the question whether the 1987

plan represented a new regulatory regime or was a mere

continuation of the prior moratorium in the context of

addressing TRPA’s statute of limitations defense, and this Court

declined to grant certiorari on the statute of limitations issue.

15

advance legitimate state interests.” Agins v. City of

Tiburon, 447 U.S. at 260. An arbitrary or unreasonable

moratorium, it might be said, should be held to be a

taking because it fails to advance a legitimate govern-

ment interest. The petitioners do not, of course, rely on

this argument; indeed they positively disavowed this the-

ory, apparently recognizing that TRPA’s efforts to save

Lake Tahoe unquestionably advanced a legitimate public

interest. See Plaintiffs’ Motion in Limine and for Order

Precluding Admission of Anticipated Testimony and Doc-

uments, filed October 29, 1998. The larger point, however,

is whether this test can apply in any takings case.

Today there is a real question whether this ostensible

takings test exists at all. The Court has never explicitly

applied this test to support the conclusion that a regula-

tory use restriction effects a taking. Cf. City of Monterey v.

Del Monte Dunes Ltd., 526 U.S. 687 (1999) (upholding a

jury verdict based in part on the Agins test, where the

municipality waived any objection to the jury instruc-

tions). In recent decisions, seven justices have either

stated, or joined in opinions stating, that the legitimacy of

this ostensible takings test is, at a minimum, an open

question..See Del Monte Dunes Ltd., 526 U.S. at 732 n.2

(Scalia, J. concurring in part and concurring in the judg-

ment); see id. at 753 n.12 (Souter, J., dissenting, joined by

Justices O’Connor, Breyer, and Ginsburg); Eastern Enter-

prises v. Apfel, 524 U.S. 498, 545 (1998) (Kennedy, J. con-

curring in the judgment and dissenting in part).

In fact, this ostensible takings test does not involve a

takings question. The Takings Clause, at bottom, is con-

cerned, not with whether a governmental action can go

16

forward, but with whether the public must pay compen-

sation as a condition of the government action. See Pre-

seault v. ICC, 494 U.S. 1, 11-12 (1990). Thus, a viable

taking claim presupposes that, apart from the absence of

compensation, the government action serves a legitimate

purpose and should be permitted to proceed. In Chief

Justice Rhenquist’s words, the Takings Clause “is de-

signed . . . to secure compensation in the event of other-

wise proper interference amounting to a taking.” First

English, 482 U.S. at 315 (emphasis added). If the govern-

ment action is arbitrary or otherwise invalid, and should

not proceed at all, it may well violate some provision of

the Constitution, but it does not violate the Takings

Clause. See San Diego Gas & Electric Co. v. City of San

Diego, 450 U.S. 621, 656 n.23 (1981) (Brennan, J., dissent-

ing), distinguishing a claim that an otherwise valid gov-

ernment action effects a taking from the “different

case .. . where police power regulation is not enacted in

furtherance of the public health, safety, morals, or general

welfare.” In the latter situation Justice Brennan said, “the

government entity may not be forced to pay just compen-

sation under the Fifth Amendment,” but the owner may

“nonetheless have a damage cause of action under 42

U.S.C. 1983 for a Fourteenth Amendment due process

violation.” Id.

The conclusion that the “substantially advance” test

is not a legitimate takings test is also supported by the

historical record, which shows that the Agins Court intro-

duced this test into takings doctrine as a result of a

mistaken muddling of due process and takings concepts.

The precedent which the Agins Court cited to support this

ostensible takings test, Nectow v. City of Cambridge, 277

17

U.S. 183 (1928), was unambiguously decided under the

Due Process Clause, as was the leading precedent upon

which the Nectow court relied, Village of Euclid v. Ambler

Realty Co., 272 U.S. 365 (1926). See generally Jerold

Kayden, “Land Use Regulations, Rationality, and Judicial

Review: the RSVP in the Nollan Invitation,” 23 Urban

Lawyer 301, 314-16 (1991).

As discussed, the conclusion that the “substantially

advance” test is not a legitimate takings test does not

mean that an owner cannot bring a constitutional chal-

lenge to an arbitrary or otherwise invalid moratorium. In

fact, if property owners resort to the Due Process Clause,

they will find entirely hospitable legal ground. See, e.g.,

Lockary v. Kayfetz, 917 F.2d 1150 (9th Cir. 1990) (material

issues of fact existed as to whether moratorium on new

water hookups violated substantive due process when

there was evidence that no water shortage existed); Q.L.

Const. Co., Inc. v. Gallo, 649 F. Supp. 1331 (D.R.I. 1986),

aff'd, 836 F.2d 1340 (1st Cir. 1987) (finding due process

violation where city imposed moratorium on sewer

hookups but made no effort to remedy problem giving

rise to moratorium); Mitchell v. Kemp, 575 N.Y.S.2d 337

(N.Y.App. Div. 1991) (holding that moratorium effected

an apparent due process violation when municipality

gave no satisfactory reason for five-year delay in enacting

zoning ordinance). In short, there is no need to stretch

takings jurisprudence beyond its logical limits to address

every type of unreasonable burden moratoria place on

land owners.°

5 The length of a moratorium may or may not be an issue in

a challenge brought under the Due Process Clause. An

18

Stepping back, it is instructive to consider why advo-

cates might seek to shoehorn due process issues into

takings doctrine. According to their viewpoint, tradi-

tional review under the Due Process Clause is too defer-

ential, and reframing substantive due process questions

as taking issues, they hope, provides an opportunity for

more searching judicial review of regulatory statutes.

These criticisms of the Court’s substantive due process

doctrine may, or may not, provide fair ground for debate.

But it is a question properly addressed in a Due Process

case. The proper response cannot be to invent a searching

facsimile of substantive due process review under the

Takings Clause, where it does not and will not fit.

In addition, advocates for land owners have an

incentive to seek to expand takings doctrine in this fash-

ion because it would give owners the option of obtaining

relatively generous “just compensation” awards (based

on estimated market value for sale or rental), even if they

have suffered no actual economic injury. Cf. Tampa-Hills-

borough County Expressway Authority v. A.G.W.S. Corp., 640

So.2d 541 (Fla. 1994) (rejecting plaintiffs’ effort to recast a

due process issue as a taking issue in order to avoid

conferring windfalls on undeserving owners). This poten-

tial problem is a very real issue in a case involving a

moratorium, where many landowners who sell or

develop their property after the end of the moratorium

excessively long moratorium would likely be strong evidence

that the government is not acting reasonably to advance a

legitimate governmental interest. On the other hand, even a

very short moratorium would constitute a due process violation

if it had no legitimate justification to begin with.

19

may suffer no economic injury whatsoever. By contrast,

confining actual due process claims to the Due Process

Clause would require claimants to show their actual dam-

ages, if any. A judicial innovation designed to confer

private windfalls at public expense has absolutely noth-

ing to recommend it as a matter of constitutional princi-

ple.

B. There is No Separate, Coherent Penn Central

Taking Test.

As discussed in Section I, unless the Court were to

take the revolutionary step of jettisoning the parcel as a

whole rule, petitioners’ Lucas claim must fail. Because the

Lucas claim is the only claim that petitioners have pur-

sued in this case, it would be inappropriate for the Court

to consider how a possible claim under Penn Central

might have fared in this case. However, if a Penn Central

claim were at issue in titis case, it would be important to

address the problematic nature of such a claim. The fac-

tors originally enumerated in Penn Central remain central

to regulatory takings doctrine. But, especially in light of

subsequent evolutionary developments in the Court’s

takings jurisprudence, there is today no coherent, inde-

pendent Penn Central “test” to apply.

In Penn Central, one of the Court's first efforts to put

some flesh on the bones of regulatory takings doctrine,

the Court said: “The economic impact of the regulation

on the claimant and, particularly, the extent to which the

regulation has interfered with distinct investment-backed

expectations are, of course, relevant considerations. So,

too, is the character of the governmental action.” Id. at

20

124. While this language is sometimes said to have estab-

lished a distinct Penn Central “test,” it is doubtful that the

Penn Central Court actually intended for this language to

lay the foundation for a determinative test. The Court

observed that defining a regulatory taking was “a prob-

lem of considerable difficulty,” id. at 123, and acknowl-

edged that it had no “ ‘set formula’ for determining when

‘justice and fairness’ require” payment of compensation.

Id at 124. The Court simply offered these three factors as

having “particular significance” in what were, at the

time, “essentially ad hoc, factual inquiries.” Id.

Over the subsequent twenty-five years, the Court has

significantly refirea its treatment of the Penn Central

factors, converting several of them into determinative

tests. This process of refinement has, in effect, superseded

the Penn Central factors; indeed, no litigant before the

Court has ever successfully invoked the Penn Central test,

except when some special feature (total economic loss,

pvsical occupation) justified categorical treatment of the

claim. See District Intown Properties Limited Partnership v.

District of Columbia, 198 F.3d 874, 886 (D.C. Cir. 1999), cert.

denied, 531 U.S. 812 (2000) (Williams, J., concurring)

(offering the same reading of Supreme Court precedent).

When a constitutional test supposedly exists, but is never

used to support a finding of a constitutional infringe-

ment, decade after decade, the question naturally arises

whether the test really does exist.

Upon careful analysis, it is clear that the Penn Central

multi-factor analysis has little, if any, contemporary rele-

vance. The Penn Central “test” has been thought to

involve two distinct factors, in addition to the traditional

21

inquiry into economic impact: “character” and “invest-

ment expectations.” In fact, neither factor helps demar-

cate a separate, coherent test for a regulatory taking.®

In mentioning the “character “ of the government

action, the Penn Central Court clearly was referring to

whether a “physical occupation by government” was

involved. See 438 U.S. at 124. Four years later in Loretto,

however, the Court established a categorical taking rule

for permanent physical occupations, robbing the charac-

ter factor of most if not all of its meaning as a single

factor in the multi-factor balancing test. Some lower

courts have attempted to breathe new life into the “char-

acter” factor by interpreting it as referring to the value or

importance of the public goal served by the regulation.

This reinterpretation of the “character” factor is ulti-

mately nonsensical. As the Court made crystal clear in

First English, regulatory takings doctrine flows from and

is governed by the same basic principles which govern

exercises of the power of eminent domain generally. See

482 U.S. at 314. When the government seizes property by

eminent domain, say for a road, it cannot be argued that

the government has no obligation to pay compensation

because the road addresses a “serious” or “important”

6 Academics from all ideological perspectives have

criticized the Penn Central test. Compare Richard Lazarus,

“Putting the Correct ‘Spin’ on Lucas,” 45 Stanford L.Rev. 1411,

1429 (1993) (referring to “the unprincipled vagaries of the

multifaceted balancing test prescribed by Penn Central”) with

Richard Epstein, “Property, Speech, and Politics of Distrust,” 59

U.Chi.L.Rev. 41 (1992) (asserting that “the Supreme Court has

positively gloried in its inability to articulate clear rules to

govern this area,” citing Penn Central).

22

public transportation problem. Similarly, in the regula-

tory takings context, it would make no sense to conclude

that the importance of the police power objective being

pursued should weigh against a finding of a compensable

taking.”

The “expectations” factor also does not demarcate a

distinctive Penn Central test. In Palazzolo v. Rhode Island,

121 S.Ct. 2448 (2001), the Court ruled that an owner’s

preacquisition notice of a restriction does not automat-

ically bar a taking claim. But a majority of the Court

indicated equally clear agreement that preacquisition

notice, and an owner’s investment expectations generally,

are a relevant factor in takings analysis. See id. at 2465; id.

at 2471 n.6; id. at 2477 & n.3. Furthermore, the Court

apparently recognized that investment expectations

should be relevant in a Lucas case specifically, at least in

some circumstances. See id. at 2457, citing Lucas, 505 U.S.

at 1035 (Kennedy, J., concurring) (stating that an owner’s

“investment expectations” are relevant in evaluating a

Lucas “total taking” claim); see also id. 2477 (Breyer, J,

dissenting).

7 The argument that there should be no finding of a taking

because the government is pursuing a legitimate and important

public purpose is simply the mirror image of the argument that

there should be a finding of a taking because a government action

fails to advance a legitimate government interest. See pp. 14-17,

supra. The conclusion that a “substantially advance” claim does

not involve a taking issue supports and reinforces the

conclusion that “character,” defined as the value or importance

of the government's action, is not a relevant factor in takings

analysis.

23

Real world examples confirm the intuitively compel-

ling conclusion that investment expectations must be rele-

vant in some Lucas-type cases.. For example, following

the Court’s decision in Palazzolo, could Mr. Palazzolo

have sold off his restricted wetland acres to a new corpo-

ration and could the corporation then have sued under

Lucas, thereby allowing Mr. Palazzolo to profit from a

claim on which he otherwise might well not have pre-

vailed? The idea seems preposterous. If that were the law,

every owner could manufacture a claim with respect to

any regulated sliver of his property.

This extreme result would achieve indirectly pre-

cisely what petitioners seek in this case — the elimination

of the parcel as a whole rule. If a purchaser’s pre-acquisi-

tion notice could be completely disregarded in a Lucas-

type claim, then any owner could evade the parcel as a

whole rule by subdividing the property into usable and

unusable portions or interests. But assuming the Court is

unwilling to take the radical step of jettisoning the parcel

as a whole rule, the Court must reject a position on

expectations which would allow owners to achieve the

same end through the back door. Because, under this

analysis, investment expectations must be at least a

potentially relevant factor in a Lucas-type case, the expec-

tations factor does not serve to demarcate a distinctive,

separate Penn Central test either.

In sum, the “character” factor (as recently rein-

terpreted, to focus on the value or importance of the

government action) is essentially meaningless in all tak-

ings cases, and the “investment expectations” factor is

potentially meaningful in all takings cases. As a result,

while all of the Penn Central “factors” remain relevant in

24

takings analysis, there is no coherent, independent Penn

Central test left to apply.®

Ill. The “Political Process” Arguments for the Pro-

posed Rewrite of the Takings Clause Are Incoher-

ent in Theory and Wrong as a Matter of Fact.

Scattered among the legal arguments by petitioners

and their amici for a more “robust” law of regulatory

takings are a series of assertions and assumptions, many

rooted in a simplistic law and economics analysis,

designed to support the conclusion that a more expansive

rule of takings liability would represent a positive

reform. Because many of these assertions and assump-

tions are demonstrably wrong, or at least highly problem-

atic, a brief response may be helpful to the Court.

Judicial Protection for Minority Interests. One pervasive

theme in the briefs of petitioners and their amici is that

property owners, because they may be relatively few in

number, lack the political power to protect their interests

in the political process. According to this view, the Court

should place its interpretive thumb on the scales of jus-

tice on behalf of property owners in much the same way

as the Court in the past extended protection for racial

8 The conclusion that Penn Central does not provide a

separate, coherent takings test does not, of course, directly

answer whether a regulatory use restriction which does not fall

under the “categorical” Lucas rule may still result in a taking

under some circumstances. But cf. Concrete Pipe, 508 U.S. at 645

(“our cases have long established that mere diminution in the

value of property, however serious, is insufficient to

demonstrate a taking”).

25

minorities and other disfavored groups. Cf. United States

v. Carolene Products Co., 304 U.S. 144, 149 n.2 (1938).

This argument is based on a simplistic and flawed

premise. Property owners, simply because they often rep-

resent a minority interest, are not disadvantaged in the

political process. In fact, property owners find it rela-

tively easy to organize themselves into a cohesive and

effective political force, in part precisely because they are

relatively few in number, and also because they tend to

be relatively well heeled and have significant monetary

stakes in the issues. As a result, property owners and

allied groups, such as developers and resource com-

panies, represent highly effective political actors at the

local, state, and national levels. By contrast, because vir-

tually all citizens share an interest in protecting the

environment, environmental advocates are a relatively

difficult interest group to organize into an effective politi-

cal force. See generally Mancur Olson, The Logic of Collec-

tive Action (1965).

Many of the -mici supporting petitioners are in a

poor position to argue for an expansive reading of the

Takings Clause in order to protect property owners from

the allegedly unfair results of the political process. For

example, amicus American Farm Bureau Federation and

many of its supporters and allies succeeded just a few

weeks ago in persuading the House of Representatives to

pass major new farm legislation that would increase farm

subsidy levels by over $70 billion over 10 years. See

Statement by Office of Management and Budget, October

3, 2001, www.whitehouse.gov/omb/ legislative /

sap/107-1/HR2624. The real estate development indus-

try, which is also heavily represented in this case, has

26

successfully lobbied for favorable treatment under the tax

code and many other federal and state laws. Landowners

and developers are equally potent political forces at the

state and local level.

Turning to this case, petitioner Tahoe Sierra Reserva-

tion Council, which describes itself as “a members!.ir

organization representing approximately 2,000 dues-pzy-

ing members,” see Joint Appendix at 22, has been an

active and effective force, both through paid staff and

outside legal counsel, in every facet of the TRPA planning

process, as well as in proceedings before the state legisla-

tures of the Compact States relating to the Lake Tahoe

planning effort. While TRPA did not win every issue, it

had a great deal of input into the 1987 plan, which

contains many provisions that protect property owners’

economic interests. Thus, TSPC is hardly a poster child

for a revolution in takings law.

Internalizing Regulatory Costs. Another pervasive

argument in the amici briefs is the notion that an expan-

sive doctrine of regulatory takings is necessary and

appropriate to force government to “internalize” the costs

of its decisions. According to this view, regulatory activ-

ity inevitably generates costs, but government officials

have no natural incentive to control these costs so long as

they are laid off on third parties, such as property

owners. A broad takings compensation rule, the argu-

ment continues, would force government to take these

costs into account.

First, the premise of this argument is often wrong or

at least questionable, because land use controls, which

are designed to advance the welfare of the community as

27

a whole, often help increase property values. In the case

of a moratorium which simply defers development, there

is no @ priori reason to think that the restriction neces-

sarily has any adverse economic impact. Many owners in

the Tahoe basin apparently did as well or better finan-

cially on their property investments as they would have

fared in the absence of the moratorium.

Second, to the extent regulations of some kinds do

produce costs, the cost internalization argument suffers

from a fatal asymmetry. See Darryl J. Levinson, “Making

Government Pay: Markets, Politics, and the Allocation of

Constitutional Costs,” 67 U.Chi.L.Rev. 345, 349-50 (2000).

A full and accurate accounting would have to take into

account both the costs and benefits of government action.

But, unlike the situation with a private firm, which

derives profits from goods and services sold to the pub-

lic, government officials cannot tote up the direct benefits

of their actions on any public ledger. If all the “costs” of

government actions were internalized (through an

expanded regulatory takings doctrine), while the benefits

necessarily remained off budget, officials would system-

atically err in favor of property owners and against other

interests. The quality of our environment would be

undermined and, in economic terms, total social welfare

would not be maximized.

Takings Liability as a Mere Condition. Yet another recur-

ring argument is that the Court should have little concern

about embracing an expansive view of regulatory takings

doctrine because a finding of a taking does not result in a

judicial injunction preventing the government from act-

ing, but, instead, “merely” places a “condition” on the

action - payment of compensation.

28

This argument has it exactly backwards. As a result

of the Court’s First English ruling, if a local government

turns out to be wrong in its good faith belief that a

regulatory action is not a taking, the government is com-

pelled to pay compensation for the period the restriction

was in place. An assessment of financial liability - and

more importantly, the risk of financial liability whenever

government attempts to regulate - creates a far more

serious interference with the government’s decision-mak-

ing authority than the possibility of an injunction. This

is especially true given the general unavailability of

municipal liability insurance to cover regulatory takings

awards.?

There is also a heavy dose of cynicism underlying

this argument. Counsel for TSPC, who also served as

counsel for plaintiffs in the First English case before this

Court, argued for a mandatory compensation remedy in

First English on the ground that an injunctive remedy

would be relatively ineffectual, as compared to a compen-

sation remedy, in influencing local government laws and

polices. See First English, Brief for Petitioners, at 25-32.

% The impact of compensation awards at the state level is

more uncertain, mostly because it remains unclear whether state

governments are immune from financial liability under the

Takings Clause based on sovereign immunity. See Tahoe Sierra

Preservation Council v. Tahoe Regional Planning Agency, 938 F.2d

153 (9th Cir. 1991) (dismissing claims against California and

Nevada dismissed based on sovereign immunity). In the case of

the federal government, which has waived its sovereign

immunity against takings claims, see 28 U.S.C. § 1491, and which

pays takings awards out of the Judgment Fund, see 31 U.S.C.

§ 1304, takings awards could be described somewhat more

plausibly as imposing a “mere condition” on law making.

29

Given that their counsel succeeded in persuading the

Court on the need for a compensation remedy in order to

constrain local government authority, see 482 U.S. 304,

317, 321, it is surprising to discover TSPC now describing

compensation as a relatively mild remedy as compared to

the “judicial second guessing of governmental policies

and decisions through disruptive injunctions.” Brief for

Petitioners at 42.

¢

——

CONCLUSION

The Court should affirm the judgment of the Court of

Appeals.

Respectfully submitted,

Joun D. EcHEVERRIA

ENVIRONMENTAL Pouicy Proyect

GEORGETOWN UNtversiry Law CENTER

600 New Jersey Avenue, N.W.

Washington, D.C. 20001

(202) 662-9850

November 13, 2001