# Amicus Curiae Brief — RCK Properties, Inc. v. United States, 120 S. Ct. 373 (1999) (No. 99-286)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1999

## Text

No. 99 - 286

In the ——
Supreme Court of the United States

FOREST PROPERTIES, INC.
(now known as RCK Properties, Inc.),
Petitioner,
v.
UNITED STATES,
Respondent.

On Petition for Writ of Certiorari to the United
States Court of Appeals for the Federal Circuit

BRIEF OF AMICI CURLZ ATLANTIC LEGAL
FOUNDATION AND NEW ENGLAND LEGAL
FOUNDATION IN SUPPORT OF PETITIONER

Counsel for Amici Curia MICHAEL E. MALAMUT,
Counsel of Record
New England Legal Foundation
150 Lincoln Street
Boston, MA 02111
Telephone: (617) 695-3660
Facsimile: (617) 695-3656

MARTIN S. KAUFMAN

Atlantic Legal Foundation

205 East 42nd Street, Ninth Floor
New York, NY 10017
Telephone: (212) 573-1960
Facsimile: (212) 573-1959

QUESTIONS PRESENTED

May government deny a Clean Water Act § 404 permit
thereby taking a parcel of real property and avoiding the
payment of just compensation by claiming that the
parcel is not the relevant parcel but rather part of a
larger parcel when in fact it was a separate parcel
acquired at a different time and by a different method,
is under different ownership, is located in a different
political jurisdiction and is subject to an entirely
different permit process?

May a property purchaser be denied just compensation
because of notice of a preexisting governmental permit
scheme, especially one that does not indicate the
property owner has any reason to believe its permit
application would not be granted or that, if not, just
compensation would not be paid?

TABLE OF CONTENTS
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I. THIS CASE INVOLVES AN IMPORTANT QUESTION
OF UNSETTLED FEDERAL CONSTITUTIONAL
LAW THAT SHOULD BE RESOLVED BY THIS
COUT oo cs vic vine 0500 eee 4

Il. By TREATING FOREST PROPERTIES MORE
HARSHLY THAN ITS RELATED PREDECESSOR IN
TITLE IN REGARD TO ITS’ PROPERTY
DEVELOPMENT RIGHTS, THE COURT OF
APPEALS FAILED TO TAKE INTO ACCOUNT
ADVERSE PUBLIC POLICY IMPLICATIONS ......... 13

CZ © ek v. vv i adekeses eee ee 19

TABLE OF AUTHORITIES
CASES
Andrus v. Allard, 444 U.S. 51 (1979) 2.0.0... 0000. 11
Bowen v. Campbell, 344 Mass. 24, 181 N.E.2d 342 (1962) 18
City of Monterey v. Del Monte Dunes, Lid.,

EE 14
Deltona Corp. v. United States, 657 F.2d 1184
CE fossa te CGiv eet ecyediwedicuce 10

First English Evangelical Lutheran Church y.
County of Los Angeles, 482 U.S. 304 (1987)... .. 10, 11

Florida Rock Indus., Inc. v. United States,
18 F.3d 1560 (Fed. Cir. 1994), cert. denied,
EN a ra ee eee 8, 10

Forest Properties, Inc. v. United States, 177 F.3d 1360 (Fed.
Cir. 1999), petition for cert. filed, 68 U.S.L.W. 3137

(U.S. Aug. 17, 1999) (No. 99-286) ............ 14, 16
Iglehart v. Iglehart, 204 U.S. 478 (1907) ............. 18
Keystone Bituminous Coal Assn. v. DeBenedictis,

ek Cs ons 5c oo SSA MME. ba-0% ae
Lopes v. City of Peabody, 507 U.S. 981 (1993) ......... 14
Lopes v. City of Peabody, No. SJC-08030 (Mass.),

28 MASS. LAW. WKLY. 2959 (1999) .............. 15
Lopes v. City of Peabody, 417 Mass. 299,

i PPPOE. pc cbccccceuvececeeees 14, 15
Loretto v. Teleprompter Manhattan CATV Corp.,

EE Ee eee ee 5, 6
Loveladies Harbor, Inc. v. United States, 28 F.3d 1171

ado os kas 6 deb oes 7, 10, 11, 12, 13

Lucas v. South Carolina Coastal Council, 505 U.S. 1003

RU Sito ri ses desneeeeies eee 5, 6, 7, 8, 9, 14, 19
Nollan v. California Coastal Comm'n, 483 U.S. 825
SPT cdo cheé den Nah ue Eeaeee aes enee 5, 10, 14

Penn Central Transp. Co. v. New York City,
gk | err Pe reer ey reer ee eee 10

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922)5, 8, 9

Steinbergh v. City of Cambridge, 413 Mass. 736, 604
N.E.2d 1269 (1992), cert. denied, 508 U.S. 909 (1993) 15

United States v. General Motors, 323 U.S. 373 (1945) ... 11

Williamson County Regional Planning Comm'n v. Hamilton

Bank of Johnson City, 473 U.S. 172 (1985) ........ 17
CONSTITUTION
Ce. CS. GI Ws oo ve isc se ehesece vis 5, 14, 19
UE, CRIES. MIE. FEET a0 oc cc cc cessse cas tecoxesaes 5
RULES
Ce 6 tne on én chs b4een can esae cede 14
OTHER AUTHORITIES

John E. Fee, Comment, Unearthing the Denominator in
Regulatory Takings, 61 U. CHI. L. REV. 1535 (1994) . 10

Robert S. Freilich and Elizabeth A. Gavrin, Takings After
Lucas, in David L. Callies, ed. AFTER LUCAS: LAND USE
REGULATION AND THE TAKING OP PROPERTY WITHOUT
COMPENSATION (American Bar Ass’n Section of Urban,

State and Local Government Law 1993) ........... 11
Gregg Easterbrook, Suburban Myth, NEW REPUBLIC,
Died, ES eee Gr os oe es ed ob eteakevevisbe ceed 18

a

JOHN LOCKE, OF Civ GOVERNMENT (1690) ........... 12

JENNIFER N EDELSKY, PRIVATE PROPERTY AND THE LIMITS OF
AMERICAN CONSTITUTIONA LISM: THE MADISONIAN
FRAMEWORK AND ITS LEGACY AEE Cees 5

Margaret Jane Radin, The Liberal Conception of Property:
Cross Currents in the Jurisprudence of Takings,
88 COLUM. L. REV. 1667 (1988) ................. 1]

Rose, Mahon Reconstructed: Why the Takings Issue is
Still a Muddle, 57 §. CAL. L. REV. 56] See 9

Max Weber, Politics as a Vocation, in H. H. Gerth and C.
Wright Mills, eds., FRom MAx WEBER, ESSAYS IN
SOCIOLOGY 78 (Galaxy ed. SWUM vabeuecescs cane. 12

No. 99 - 286

In the
Supreme Court of the United States

FOREST PROPERTIES, INC.
(now known as RCK Properties, Inc.),
Petitioner,
v.
UNITED STATES,
Respondent.

On Petition for Writ of Certiorari to the United
States Court of Appeals for the Federal Circuit

BRIEF OF AMICI CURIA. ATLANTIC LEGAL
FOUNDATION AND NEW ENGLAND LEGAL
FOUNDATION IN SUPPORT OF PETITIONER

INTEREST OF AMICI CURL&

Atlantic Legal Foundation (“ALF”) is a not-for-profit public
interest legal foundation whose mandate includes the advocacy
in the courts of principles of private enterprise and the
mechanism of the market economy, protection of private
property rights against unnecessary governmental intrusion,
limited and responsible government, opposition to unnecessary
interference by government with individual rights, and
vindication of constitutional rights and protections. ALF
receives financial support from individuals, business ;
enterprises, and philanthropic foundations. ALF’s board of
directors and legal advisory committee consist of legal scholars,
corporate legal officers, business executives, retired public

officials and judges, and prominent scientists.

In pursuit of its mandate, ALF has frequently appeared
before this Court and inferior federal courts, as well as state
courts in many jurisdictions, both as counsel for a party in
interest, as counsel for amici curia, and itself as amicus curiae
in cases involving First, Fifth, and Fourteenth Amendment
rights; arbitrary and capricious exercise of power by local, state
and federal officials; violations of the principle of separation of
powers between the legislative and executive branches of State
and federal government; and appropriate standards for
admissibility of expert evidence. Of particular relevance to this
case, ALF (then named “Mid-Atlantic Legal Foundation”)
submitted an amicus curia brief in Keystone Bituminous Coal
Association v. DeBenedictis, 480 U.S. 470 (1987), in support of
the petitioner in that case.

The New England Legal Foundation (“NELF’), a non-
profit, public interest law firm, was incorporated in 1977. Its
membership consists of individuals, businesses, and others who
believe in promoting balanced economic growth for New
England, protecting the free enterprise system, and defending
economic rights. NELF’s more than 130 members and
supporters include a cross-section of large and small businesses
from all parts of New England and the United States. NELF has
regularly appeared in state and federal court, as party or counsel,
in Cases raising issues of general economic Significance to the
business community. See, e.g., UNUM Life Ins. Co. v. Ward,
119 S. Ct. 1380 (1999): Lockheed Corp. v. Spink, 517 U.S. 882
(1996); BMW v. Gore, 517 U.S. 559 (1996); Reich v. Southern
New England Telecommunications Corp., 121 F.3d 58 (2d Cir.
1997); Cigna Health Plan of Louisiana v. Louisiana, 82 F.3d
642 (Sth Cir. 1996); Georgine v. Amchem Products, Inc., 83
F.3d 610 (3d Cir. 1996); Conservation Law Foundation v.
Department of the Air Force, 79 F.3d 1250 (Ist Cir. 1996):

Preseault v. United States, 66 F.3d 1167 (Fed. Cir. 1995);
Eastern Mountain Platform Tennis, Inc. v. Sherwin-Williams
Co., 40 F.3d 492 (1st Cir. 1994); B.F. Goodrich Co. v. Murtha,
958 F.2d 1192 (2d Cir. 1992); International Paper Co. v. Town
of Jay, 665 A.2d 998 (Me. 1995); O’Brien v. New England
Telephone & Telegraph Co., 422 Mass. 686, 664 N.E.2d 743
(1996).

Amici seek to bring to the Court’s attention their views, and
those of their supporters, concerning the scope of the takings
clause under the Fifth Amendment to the United States
Constitution. If the decision below is not reversed, government
agencies will be able to take private property with absolutely no
compensation in money or development rights, simply because
it is adjacent to other property under similar ownership.
Moreover, under the “coming to the regulation” theory
espoused by the Court of Appeals for the Federal Circuit below,
property owners unable to develop their own property when a
confiscatory regulation is passed will be forced to bring
litigation before the area is ready for development or to sell at
a steep discount. These issues are of significance to Amici as
well as to property owners generally. Amnici believe that this
brief may provide an additional perspective which may aid the
Court in determining whether to grant the petition for a writ of
certiorari.'

Pursuant to Supreme Court Rule 37.2, counsel for Amici
have secured written consent for the filing of this brief from
counsel for Petitioner and Respondent.

1 Pursuant to Supreme Court Rule 37.6, counsel for amici state that
counsel for neither Petitioner nor Respondent authored this brief in
whole or in part and no person or entity other than amici made a
monetary contribution to the preparation or submission of the brief.

3

STATEMENT OF THE CASE

Amici adopt the Statement of the Case contained in the Brief
of the Petitioner, Forest Properties, Inc., now known as RCK
Properties, Inc.

SUMMARY OF ARGUMENT

Amici argue that the issue of partial regulatory takings
needs to be addressed by this Court because of the lack of
consistency among the various state and federal courts that have
addressed this issue and the need to recognize partial regulatory
takings as significant infringements on property rights (pp.
4-13). Amici further contend that a purchaser of property
should not be penalized by prohibiting him or her from
challenging a regulation that pre-dated the purchase, because
such a theory distorts the incentives for the property’s
development (pp. 13-19).

ARGUMENT

I. THIS CASE INVOLVES AN IMPORTANT QUESTION OF
UNSETTLED FEDERAL CONSTITUTIONAL LAW THAT
SHOULD BE RESOLVED BY THIS COURT.

This Court should grant the petition for certiorari to clarify,
and if need be rectify, an issue that has bedeviled the courts as
a result of the takings jurisprudence of this Court in the last two
decades. That issue arises from the disparate treatment
accorded by this Court to partial physical takings and to partial
regulatory takings in the context of a regulation that effectively
prohibits all economically viable use of a distinct part of
petitioner’s property holdings.

It is clear from the Constitution itself that any interference
with property rights which constitutes a taking must, under the

Fifth and/or Fourteenth Amendments, be compensated.” Prior
to Justice Holmes’ opinion in Pennsylvania Coal Co. v. Mahon,
260 U.S. 393 (1922), however, this Court had applied the
Takings Clause only to “physical invasion” of property.’ In
Mahon, this Court held, for the first time, that excessive
regulation could constitute a “taking” requiring compensation.
However, this Court has held that losses resulting from “mere”
regulation are not compensable unless the regulations deprive
the property owner of “all economically beneficial or productive
use of land,” see Lucas v. South Carolina Coastal Council, 505
U.S. 1003, 1015 (1992); see also Nollan v. California Coastal
Comm'n, 483 U.S. 825, 834 (1987); Keystone Bituminous Coal
Assn. v. DeBenedictis, 480 U.S. 470, 495 (1987), presumably
because government regulation is considered part of the cost of
social order which all citizens must bear.* The way this Court’s
takings jurisprudence has developed creates anomalous results
that are not, we submit, supported by reason or Constitutional
principle.

Consider the following examples: There are two contiguous

2. The Fifth Amendment states: “nor shall private property be taken for
public use without just compensation.” U.S. Const. amend. V.

3. A “physical invasion” need not be a transfer of ownership, or even an
intrusion by the government itself. See Loretto v. Teleprompter
Manhattan CATV Corp., 458 U.S. 419 (1982) (holding that a regulation
that directly, and unconditionally imposes a permanent physical
occupation on an unwilling owner is a taking per se).

4. See JENNIFER NEDELSKY, PRIVATE PROPERTY AND THE LIMITS OF
AMERICAN CONSTITUTIONALISM: THE MADISONIAN FRAMEWORK AND ITS
LEGACY 233 (1990). We submit that this formulation begs the question:
Why should the landowner bear the cost of government regulation that,
presumably, benefits all, or at least a broad class of persons?

ne ae

properties, Whiteacre, which consists of five acres, and
Blackacre, which comprises 50 acres. The two parcels are
owned by different persons, who are not related to one another
in any way. In the first hypothetical, the state floods all of
Whiteacre and 10 of the 50 acres of Blackacre by building a
dam and reservoir; there is little doubt that under takings law,
the state would have to pay the owners of Whiteacre and
Blackacre for five acres and 10 acres, respectively, and,
assuming each acre is of equal value, the owner of Blackacre
would receive twice as much compensation as the owner of
i Whiteacre. In the second case, the state requires the owners of
Blackacre and Whiteacre to permit a utility company to lay fibre
optic cable across their land, preventing them from digging
foundations for buildings on all five acres of Whiteacre and ten
of Blackacre’s 50 acres. The owners of both properties would
probably be entitled to compensation. As the Court reiterated
in Lucas, regulations that result in permanent physical invasions
require compensation, “no matter how minute the intrusion, and
no matter how weighty the public purpose behind it.” Lucas,
supra, 505 U.S. at 1015; see also Loretto v. Teleprompter
Manhattan CATV Corp., 458 U.S. 419 (1982). A permanent
physical invasion is called a “categorical” taking.

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In a third example, the state enacts the Greenacres
Protection Law, which denies the landowner of all economically
beneficial use of land which is deemed “protected” under this
law. One of the areas “protected” encompasses all of Whiteacre
and 10 of Blackacre’s 50 acres. Under current takings
jurisprudence of this Court, the Greenacres statute
unquestionably has effected a compensable taking of Whiteacre,
because the law has deprived Whiteacre’s owner of “all

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economically beneficial or productive use of [its] land’”* and
therefore the state’s action is “compensable without case-
specific inquiry into the public interest advanced in support of
the restraint.” Lucas supra, 505 U.S. at 1015. Under this
Court’s jurisprudence, and that of the Federal Circuit, it is not
at all clear whether the owner of Blackacre is entitled to
compensation; under the Federal Circuit’s ruling in this case it
would not be, whereas under the Federal Circuit’s decision in
Loveladies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed.
Cir. 1994), the owner of Blackacre would be entitled to
compensation for the 10 acres on which it could not build.

If Blackacre is considered as a single unit, and if we assume
that each of the 50 acres.is of equal value, the loss of one-fifth
of the value of the property would not be considered a taking by
most jurisdictions, even though it is undeniable that Blackacre’s
owner has fewer rights and a thing of less value after the
enactment of the Greenacres law than before. If one considers
only the acreage affected by the Greenacres law, distinct from
the unaffected acres, takings law would compel the payment of
just compensation for the five acres, since 100 percent of the
five acres has been rendered economically useless.

Under current decisional law, the key issue in making the
determination whether there has been a compensable taking is
defining the appropriate unit of property against which to
conduct the takings inquiry. In determining whether a
regulation “denies all economically beneficial or productive use
of land,” one must make a comparison, in the form of a fraction,
by dividing the value of the property after the regulatory

5. We assume that the land has no substantial residual value for other,
albeit less profitable, purposes, such as use as farmland or a nature
reserve.

imposition (the numerator) by the value of the property before
the regulatory imposition (the denominator). While this
fractional analysis is easy to visualize, it provides little or no
guidance in making the often crucial determination of what unit
of property will furnish the denominator value in the
deprivation fraction.° In the third hypothetical, if the Blackacre
denominator is the value of the entire 50 acre parcel, there is no

taking, yet if it is the value of the ten affected acres, there is a
taking.’

This Court has recognized the existence and importance of

6. Justice Brandeis, in his dissent in Mahon, pointed out this
“denominator” problem with the diminution in value test. Mahon,
supra, 260 U.S. at 419 (Brandeis, J., dissenting, argued that the
denominator in that case should be “the value not of the coal alone, but
. .. the value of the whole property,” both above and below ground).

7. This is the result under the Federal Circuit’s current jurisprudence. To

date, the “total denial of economically beneficial use” test articulated
in Lucas is the only partial takings test adopted by this Court. Lucas,
supra, 505 U.S. at 1015-17. It is important to note, however, that
analytically there are at least two approaches to a partial takings
analysis. The first, and the one that this Court has thus far recognized,
requires that all economically beneficial use of the land be denied to the
Owner; in other words, the property must be rendered valueless by the
regulation. Lucas, supra, 505 U.S. at 1015. The second approach
permits compensation when less than one hundred percent of the value
of the land is destroyed. The Federal Circuit Court of Appeals found
that a taking had occurred when the value of land was reduced by
approximately sixty percent. Florida Rock Indus., Inc. v. United States,
18 F.3d 1560 (Fed. Cir. 1994), cert. denied, 513 U.S. 1109 (1995).
Under the Florida Rock partial takings analysis, the appropriate parcel
(the denominator) for the diminution in value fraction often will be
unimportant, because a partial taking will often be found even using the
whole extent of the owner’s contiguous holdings as the denominator.
Florida Rock, supra, 18 F.3d at 1572-1573.

the “denominator” issue, but has yet to provide any real
guidance in this area. See Lucas, supra, 505 U.S. at 1016 n.7.*
While the lower courts have been faced with several

8. In note 7, Justice Scalia acutely observed that:

Regrettably, the rhetorical force of our “deprivation of all
economically feasible use” rule is greater than its precision,
since the rule does not make clear the “property interest”
against which the loss of value is to be measured. When,
for example, a regulation requires a developer to leave 90%
of a rurai tract in its natural state, it is unclear whether we
would analyze the situation as one in which the owner has
been deprived of all economically beneficial use of the
burdened portion of the tract, or as one in which the owner
has suffered a mere diminution in value of the tract as a
whole. . . . Unsurprisingly, this uncertainty regarding the
composition of the denominator in our “deprivation”
fraction has produced inconsistent pronouncements by the
Court. Compare Pennsylvania Coal Co. v. Mahon, 260
U.S. 393, 414, 43 S. Ct. 158, 160, 67 L. Ed. 322 (1922)
(law restricting subsurface extraction of coal held to effect
a taking), with Keystone Bituminous Coal Assn. v.
DeBenedictis, 480 U.S. 470, 497-502, 107 S. Ct. 1232,
1248-1251, 94 L. Ed. 2d 472 (1987) (nearly identical law
held not to effect a taking); see also id., at 515-520, 107 S.
Ct., at 1257-1260 (Rehnquist, C.J., dissenting); Rose,
Mahon Reconstructec': Why the Takings Issue is Still a
Muddle, 57 S. CAL. L. REV. 561, 566-569 (1984).

Lucas, supra,505 U.S. at 1016 n.7.

We submit that the “deprivation of all economically feasible use” rule
should be abandoned as a separate category of regulatory takings, and
that all takings, whether “physical invasions” or regulatory impositions,
be compensated so that society will understand that there are costs to it
if it expects to enjoy the benefits of superimposing the collective will
on that of the property owner. Common good should be paid for out of
the common purse, not out of the purses of individual property owners.

“denominator problem cases,” they have been inconsistent in
their ad hoc determinations not only on the facts, but in
fundamental approach. Even within the Court of Appeals for
the Federal Circuit, there is inconsistency. Compare Loveladies
Harbor, Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1994)
(stating that compensation was required where the denial of the
fill permit destroyed all the value of one discrete portion of a
large parcel—an 11.5-acre wetland that was part of a 250-acre
building development) and Florida Rock Indus., Inc. v. United
States, 18 F.3d 1560 (Fed. Cir. 1994), cert. denied, 513 U.S.
1109 (1995) (finding that a compensable taking had occurred
where the denial of a fill permit effectively prohibited limestone
mining on the land, thereby reducing the value of the land by
approximately sixty percent), with Deltona Corp. v. United
States, 657 F.2d 1184 (Ct. Cl. 1981), cert. denied, 455 U.S.
1017 (1982) (where the court refused to engage in horizontal
severance’ and thus found no taking in the denial of two of three

9. “Horizontal severance” refers to division of land into separate parcels
or areas; it is also referred to as horizontal segmentation. The term
“horizontal” is used in contrast to “vertical,” “temporal,” and
“functional” divisions of the various interests in land. See, e.g., John
E. Fee, Comment, Unearthing the Denominator in Regulatory Takings,
61 U. Cui. L. REv. 1535 (1994). Dividing a parcel into air rights,
surface rights, and subsurface rights is an example of a vertical
division. See, e.g., Penn Central Transp. Co. v. New York City, 438
U.S. 104, 124 (1978) (refusing to permit vertical severance of
property). Dividing property interests into life estates and future estates
is an example of a temporal division, and dividing a property so as to
include easements, rights of way, and servitudes is an example of a
functional division. Fee, supra, at 1537 and n.10. This Court has
recognized both the functional severance of property rights, see Nollan,
supra, 483 U.S. 825 (1987) (holding that granting a building permit to
landowners on the condition that they in return give a public access
easement across their property constitutes a taking); and temporal
severance of property rights, see First English Evangelical Lutheran

10

fill permit requests because other “wetland necks” were
considered part of the denominator). One of the principal flaws
with the “denominator” analysis is that the denominator can be
manipulated by the government agency or the court to achieve
a particular fraction and thus reach a “no takings” conclusion,
even if the result is inconsistent with prior decisions or
decisions of other tribunals, or economically unrealistic. See,
e.g., Andrus v. Allard, 444 U.S. 51 (1979), in which the Court’s
assignment oj “value” to the few remaining sticks in the
owner’s bundle of rights left the owner with purely illusory
power to possess, use, or dispose of the property.'° For a
description of the subtlety of land use planners in devising
methods to prevent development without incurring the
obligation to pay compensation, see Robert S. Freilich and
Elizabeth A. Gavrin, Takings After Lucas, in David L. Callies,
ed., AFTER LUCAS: LAND USE REGULATION AND THE TAKING OP
PROPERTY WITHOUT COMPENSATION (American Bar Ass’n
Section of Urban, State and Local Government Law 1993).

We believe that the Federal Circuit used the correct
approach in Loveladies, and that this Court should formally
adopt that analytical model. The Federal Circuit noted that it
was not deciding “whether the Government can lawfully
prevent a property owner from filling or otherwise injuring or

Church v. County of Los Angeles, 482 U.S. 304 (1987) (requiring that
compensation be paid for the “temporary” taking of property that
occurs between the time the regulation goes in effect and the time it is
struck down by a court). The broader term “conceptual severance” has
been applied to all of the different types of severance collectively. See
Margaret Jane Radin, The Liberal Conception of Property: Cross
Currents in the Jurisprudence of Takings, 88 COLUM. L. REV. 1667,
1676 (1988).

10. See United States v. General Motors, 323 U.S. 373, 377-378 (1945).

11

destroying vital wetlands,” for the existence of substantial
governmental interests in environmental conservation and
preservation are undeniable, but, rather, it was deciding
whether, “when the Government fulfills its obligation to
preserve and protect the public interest, may the cost of
obtaining that benefit fall solely upon the affected property
owner, or is it to be shared by the community at large.” In
resolving this question of “fundamental public policy,” the court
noted that it had to “balance the legitimate claims of the society
to constrain individual actions that threaten the larger
community with . . . the rights of the individual and our
commitment to private property as a bulwark for the protection
of those rights.” Loveladies, 28 F.3d at 1174-75. The
Loveladies court’s emphasis was on the fundamental
importance to liberty and democracy of the balance between
individual rights, including property rights, and collective
interest of society."

The Federal Circuit noted that the three criteria used in
making the regulatory takings determination were whether: (1)
there was a denial of economically viable use of the property as
a result of the regulatory imposition; (2) the property owner had
distinct investment-backed expectations; and (3) in the balance

11. Even this formulation is imperfect, because it assumes that a
bureaucratic agency truly represents the interests of the community, a
fact not lightly to be assumed given the complex, subtle and sometimes
opaque interactions of the legislative branch, elected members of the
executive branch, and the “permanent government.”

For the central importance of private property to the creation and
preservation of democracy in the inevitable tension between the
individual and government, see JOHN LOCKE, OF CIVIL GOVERNMENT Ff
135, 138 (1690); Max Weber, Politics as a Vocation, in H. H. Gerth
and C. Wright Mills, eds., FROM MAX WEBER, ESSAYS IN SOCIOLOGY 78
(Galaxy ed. 1958).

12

between the property owner’s right to own and use the property
without unwarranted governmental interference on the one
hand, and on the other, the public interest asserted by the
Government in support of the regulatory imposition, the liberty
interest of the property owner should prevail. Loveladies, 28
F.3d. at 1177-78.

Historically the Takings Clause was designed to protect
private citizens from governmental interference with property
rights. That original purpose of the clause has, we submit, been
lost or seriously diminished in the interests of expanding the
regulatory state.

We urge that this Court redress the balance, and at least
permit the property owner initially to shape the denominator
inquiry, within the bounds of realism.

This Court should grant certiorari in this case and explicitly
recognize the appropriateness of horizontal severance in certain
cases, including this one. If, for example, the property in issue
is divided under state or local law into separate lots for tax,
zoning, or other purposes, it is reasonable for the court to permit
the owner to treat each lot separately in the calculation of
economic impact of the regulation or law that has limited the
owner’s rights in the property.

Il. By TREATING FOREST PROPERTIES MORE HARSHLY
THAN ITS RELATED PREDECESSOR IN TITLE IN REGARD
TO ITS PROPERTY DEVELOPMENT RIGHTS, THE COURT
OF APPEALS FAILED TO TAKE INTO ACCOUNT ADVERSE
PUBLIC POLICY IMPLICATIONS.

The Court of Appeals found that Forest Properties’
investment-backed expectations were not reasonable because
the Army Corps’ Clean Water Act regulations were in effect
when Forest Properties purchased the option to acquire the lake-

13

bottom property. Forest Properties, Inc. v. United States, 177
F.3d 1360, 1366-67 (Fed. Cir. 1999), petition for cert. filed, 68
U.S.L.W. 3137 (U.S. Aug. 17, 1999) (No. 99-286).

This “coming to the regulation” theory—that a purchaser on
notice of a regulation cannot contest the validity of the
regulation—has been disparaged by this Court in Nollan, supra,
483 U.S. at 833 n.2, which indicated that property owners’
rights should not be altered “because they acquired the land
well after the [regulatory] commission had begun to implement
its policy.” Jd. In City of Monterey v. Del Monte Dunes, Ltd.,
119 S. Ct. 1624 (1999), this Court recently upheld a verdict in
a regulatory takings case in favor of a developer who purchased
the property in question towards the end of the regulatory
application process without comment on the issue of “coming
to the regulation.”

Certainly, it is circular to insist that a purchaser loses all
right to challenge a regulation simply because he or she is aware
at the time of purchase that the regulation may be found valid.
Nevertheless, as this Court has not issued a direct condemnation
of the theory, several courts, as cited by Forest Properties in its
Brief, Petititoner’s Brief at 23, have adopted the “coming to the
regulation” theory, contrary to the clear implications of this
Court’s holdings in Nollan, supra, and Lucas, supra.

The Massachusetts Supreme Judicial Court, on the other
hand, rejected the “coming to the regulation” theory for zoning
challenges in Lopes v. City of Peabody, 417 Mass. 299, 629
N.E.2d 1312 (1994), thus creating a conflict on an important
Fifth Amendment Takings issue between the Court of Appeals
for the Federal Circuit and at least one state court of last resort.
See Sup. CT. R. 10 (a). Lopes was decided in light of Lucas,
supra, on remand from this Court. Lopes v. City of Peabody,

14

507 U.S. 981 (1993); Lopes, supra, 417 Mass. at 300 n.2. The
Massachusetts court held:

[T]he validity of the ordinance is before us, and [the
property owner], a purchaser of land subject to the
restriction at the time of his purchase, has every right
to challenge the continued application of the
restriction. We see no reason to permit challenges to
the validity of a zoning enactment only by those
landowners who owned land when the zoning
provision first affected it. A rule that a purchaser of
real estate takes subject to all existing zoning
provisions without any right to challenge any of them
would threaten the free transferability of real estate,
ignore the possible effect of changed circumstances,
and tend to press owners to bring actions challenging
any zoning provision of doubtful validity before
selling their property. Moreover, such a rule of law
would in time lead to a crazy-quilt pattern of the
enforceability of a zoning law intended to have
uniform applicability.

Lopes, supra, 417 Mass. at 302-03 (citations omitted).'”

The absurdity of denying relief to a purchaser that “comes
to the regulation” is demonstrated in this case, where Forest

12. The confusion and consequent need for clarification in this area is clear
in light of the Massachusetts Supreme Judicial Court’s reservation of
the applicability of the “coming to the regulation” theory to takings
claims. See Lopes, supra, 417 Mass. at 302-03 n.7; Steinbergh v. City
of Cambridge, 413 Mass. 736, 742-43, 604 N.E.2d 1269 (1992), cert.
denied, 508 U.S. 909 (1993). Oral argument on the temporary takings
issue in the Lopes case is scheduled for September 13, 1999. Lopes v.
City of Peabody, No. SJC-08030 (Mass.), 28 MASS. LAW. WKLY. 2959
(1999).

15

Properties purchased the option to develop the lake-bottom
property from a related company, Big Bear Properties, Inc.
Forest Properties, supra, 177 F.3d at 1362. If “coming to the
regulation” were a reason to deny Forest Properties the ri ght to
develop the lake-bottom property, then the common owners of
both companies could have structured the deal in such a way
that Big Bear Properties retained ownership of the option
through the development stage. The transfer from Big Bear
Properties to Forest Properties was a convenience for the
ultimate investors who preferred shifting ownership of the
option and the adjacent upland from their real estate holding
company to their real estate development company because they
were ready to develop the land. See id.

A developer with a skillful attorney could eviscerate the
effect of the “coming to the regulation” theory for land in
corporate ownership through legal fictions including mergers,
consolidations, stock transfers, formation of subsidiaries, and
corporate divisions. All that would have been required in this
case would have been for Big Bear Properties to have formed
a new real estate holding company and transferred all its assets
aside from the subdivision in question to the new company.
Instead of using Forest Properties as their real estate
development company, the investors would use Big Bear
Properties as their development company for this one
subdivision and the new company as their future holding
company. The investors in a real estate company that only
owned one proposed subdivision could similarly evade the
“coming to the regulation” theory by transferring their stock to
a new purchaser, rather than transferring the real estate. The
“coming to the regulation” theory would thus invite litigation
over the form of the transaction, the nature of the transfers, and
the effect of partial transfers (for instance a new investor buying
out the partner of a continuing investor). The theory would also

16

disadvantage individual property owners and developers, who
would not be able to take advantage of such sophisticated
transactions to protect their development rights in their

property.

In addition to its potential for spawning legal fictions and
litigation, the “coming to the regulation” theory loses its
superficial substantive appeal when its underlying premises are
examined in light of economic principles. The theory is
contrary to sound public policy because it would produce
unwarranted distortions in property ownership and development
patterns.

For example, a property owner’s claim that a regulation
constitutes a taking is not ripe until the property owner is denied
the right to develop. Williamson County Regional Planning
Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186,
195 (1985). Thus, the owners of undeveloped property under
a “coming to the regulation” regime are in a Catch-22 when a
regulation restricting development is passed. The property
owners cannot challenge the regulation until they are ready to
develop the property and are denied a development permit, even
if the regulation would clearly constitute a taking. An owner
without adequate capital to develop immediately after the
regulation is adopted is in a difficult position. The owner may
not want or be able to face the time, expense, uncertainty, and
exasperation of challenging the regulation. In such case, the
value of the property to the owner is effectively reduced to zero.
Nevertheless, he cannot sell at a modest discount to someone
else willing to take on the challenge, because the purchaser
would not retain the same right to challenge the regulation.
Instead, the owner must sell to someone else at a steep discount
to cover the purchaser’s loss of rights under the “coming to the
regulation” theory or retain the property until such time as he or
she is finally able to raise the capital to develop the property

17

2

alone. This disincentive to sell at a fair price under the “coming
to the regulation” theory is thus in the nature of a long-
disfavored restraint on alienation of property. See Bowen vy.
Campbell, 344 Mass. 24, 26, 181 N.E.2d 342 (1962). See also
Iglehart v. Iglehart, 204 U.S. 478, 484 (1907).

On the other hand, an owner with adequate capital at the
time the regulation is passed may have an incentive to seek to
develop the property immediately, so as to receive the benefits
of the regulatory challenge (the recognition of his or her
development rights) when he or she is capable of exercising
those rights and before future uncertainties take their toll on the
owner’s ability to develop the property. An owner mi ght prefer
to hold property thinking that in the long run the surrounding
area will grow and development of the property will be
warranted. At that time, assuming the area has grown,
ordinarily the owner could then develop the property or sell the
property to a developer who would retain whatever
development rights the original owner had. If the “coming to
the regulation” theory were applied, however, the property
might well be developed prematurely because it is the only way
for the owner to realize the benefits of a developed property
(i.e., higher value per square foot), as a subsequent purchaser
(without the right to challenge the regulation) would not have
the same development rights as the original owner. Since the
surrounding area will not by then have grown out to the
development, the price for the developed property will be lower
than it would be in the future and may thus not be the best
investment for the owner, nor the best use of the property at the
time. This incentive for premature development would thus
unnecessarily contribute to the suburban “sprawl” of
leapfrogged development that has been decried recently. See,
e.g., Gregg Easterbrook, Suburban Myth, NEW REPUBLIC, Mar.
15, 1999, at 18.

18

Under this Court’s decision in Lucas, supra, a complete
regulatory denial of any economically beneficial or productive
use of property, such as the loss of the use of the lake-bottom
land at issue here, should constitute a categorical taking
regardless of whether the property remains in the hands of the
same owner who held the property when the regulation was
passed. The “coming to the regulation” theory would promote
legal fictions, encourage litigation, constitute a restraint on
alienation, and stimulate premature development leading to
unnecessary “sprawl.” The policies behind the Fifth
Amendment’s protection of property ownership would be
vitiated if original owners are prohibited from challenging
regulations until they are ready to develop while subsequent
owners are prevented from challenging the regulation when the
property is ready to be developed. The issue presented
addresses an important aspect of property rights which this
Court should resolve to bring fairness to property development
decisions nationwide.

19

ee

enc

Saabiers

CONCLUSION

For the reasons stated above, the petition for a writ of
certiorari should be granted.

Respectfully submitted,

ATLANTIC LEGAL FOUNDATION
and

NEW ENGLAND LEGAL
FOUNDATION,

By their attorneys,

Counsel for Amici Curie Michael E. Malafnut

Counsel of Record

New England Legal Foundation
150 Lincoln Street

Boston, MA 02111

Telephone: (617) 695-3660
Facsimile: (617) 695-3656

anrks, A Havas
Martin S. Kaufman AE

Atlantic Legal Foundation

205 East 42nd Street, Ninth Floor
New York, NY 10017
Telephone: (212) 573-1960
Facsimile: (212) 573-1959

Dated: September 15, 1999

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386005_1043%3A2. Public record. Not legal advice.