Amicus Curiae Brief — Good v. United States, 120 S. Ct. 1554 (2000) (No. 99-881)

No. 99-881 DEC 28 1999

In the

Supreme Court of the United States

,

vy

LLOYD A. GOOD, JR..

Petitioner,

Vv.

UNITED STATES,

Respondent.

y

—

On Petition for Writ of Certiorari to the United States

Court of Appeals for the Federal Circuit

a

ol

BRIEF AMICUS CURIAE OF PACIFIC LEGAL

FOUNDATION AND AMERICAN FOREST & PAPER

ASSOCIATION IN SUPPORT OF PETITIONER

,N

vv

JAMES S. BURLING

Counsel of Record

Pacific Legal Foundation

10360 Old Placerville Road,

Suite 100

Sacramento, California 95827

Telephone: (916) 362-2833

Facsimile: (916) 362-2932

Counsel for Amici Curiae

Pacific Legal Foundation and

American Forest & Paper

Association

QUESTIONS PRESENTED

1. Whether the Federal Circuit erred in holding--

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

1003 (1992), and in conflict with the decisions of many other

federal courts of appeals and state appellate courts--that a

government regulation depriving a Property owner of all

economically viable use of his land does not result in a per se or

categorical taking under Lucas unless the property owner can

also prove “reasonable, investment-backed expectations.”

2. Whether the Federal Circuit erred in holding that a

property owner who is denied federal permission to develop his

Property because of the presence of endangered species lacks a

reasonable expectation of developing the property--even though

he purchased it prior to enactment of the Endangered Species

Act and the listing of the Species in question--because he should

have been aware that the “growing consciousness of and

Sensitivity toward environmental issues” would ultimately

change “the regulatory climate” so as to bar his planned

development.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ...........20ccccecceeee i

TABLE OF AUTHORITIES ...............cccsec0. ili

INTEREST OF AMICI CURIAE .................... 1

STATEMENT OF THE CASE .........0.ccccecceee. 2

REASONS FOR GRANTING THE WRIT ............. 6

I. SUMMARY AND INTRODUCTION ........... 6

Il. PROPERTY DOES NOT CHANGE FORM

WHEN NEW REGULATIONS ARE

ADOPTED OR WHEN WE CAN

ANTICIPATE THE ADOPTION OF NEW

REGULATIONS AND THEN THE

OWNERSHIP IS SUBSEQUENTLY

TRAIT ois eee ibandeb eae ek eek 7

A. The History and Structure of the

Constitution Is Antithetical to a Theory

That Government Can Acquire the Right to

Use and Develop Property Without Paying

suet CRI 6 vi ce ie 1]

B. The Opinion of the Circuit Court, That

Government Can Acquire Development

Rights in Property Merely by Adopting

Regulations and Waiting for the Land to be

Transferred to a New Owner, Is in Conflict

with Opinions of This Court ............... 14

1. This Court Has Enforced

Constitutional Limitations on the

Ability of Governments to Take

Property Without Compensation ........ 14

ee

ili

TABLE OF CONTENTS—Continued

2. This Court Has Not Countenanced

Government Defining Property Anew

ee 14

3. The Doctrine of Investment-Backed

Expectations Does Not Grant

Government License to Take Riparian

2... BRR E esate eee 16

C. There Is Great Conflict Among the Lower

Courts on the Question of Whether the

Government Acquires a Property Interest

upon a Third Party’s Acquisition of

vis: coke acaties, se, Ee aE 18

va tees: anasay., RS PA Ci 19

TABLE OF AUTHORITIES

Page

Cases

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

655 N.Y.S.2d 877, 678 N.E.2d 489,

cert. denied, 118 S. Ct. 264 (1997) ................. 1

Bell v. City of Virginia Beach, 255 Va. 395,

498 S.E.2d 414, cert. denied,

EER Gs She ECM 35 wine dnihe din Cwccu cack. 1, 18

Carson Harbor Village Ltd. v. C ity of Carson,

oF POO OC PO os oo 18

Claridge v. New Hampshire Wetlands Board,

Wo Mae ae? GA. CN) sk ee 18

Cottonwood Farms v. Board of County

Commissioners of the C ounty of Jefferson,

FOF PG RRM PN oo soins vin cone 19

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

Monterey, 95 F.3d 1422 (9th Cir. 1996),

aff'd, 118 S. Ct. 1359 cog, Ce Pe OG TREC IE 18

Fletcher v. Peck, 10 U.S. 87 ROM soni ies dukes bias was 14

Forest Properties, Inc. v. United States, 177 F.3d

1360 (Fed. Cir.), cert. denied, oP

PPP ek rebervay te agenvatceriades es 1

Gazza v. New York Department of Environmental

Conservation, 89 N.Y.2d 603, 657 N.Y.S.2d

555, 679 N.E.2d 1035, cert. denied, 118 S. Ct.

OMUOMTD < ohcccnus ciwhe Tce eee eee ery |

PR deine tpi eeaNe i oe 14-15

Vv

TABLE OF AUTHORITIES—Continued

Page

Hunziker vy. lowa, 519 N.W.2d 367 (lowa 1994),

cert. denied, 514 U.S. 1003 RIS A ahi ng 18

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

CEA): 95+. .0blh av eda eek Vide: ok 17-18

Karam v. State of New Jersey Department of

Environmental Protection, 705 A.2d 1221

(N.J. Super. 1998), aff'd by adopting appellate

opinion, 723 A.2d 943 CRE SI 5s 555 sig 18

Kim v. City of New York, 659 N.Y.S.2d 145,

681 N.E.2d 312, cert. denied, 118 S. Ct. 588

APD) aia Sah Rae ae Mace te 1,18

Lucas v. South Carolina Coastal Council,

505 U.S. 1003 PURE Nisessa city on ek 15-16

Nollan v. California Coastal Commission,

483 U.S. 825 seed GER OC OCT CTT 1, 15

Penn Central T, ransportation Company v. C ity of

New York, 438 U.S. 104 hc at pstc kipme eoiuel 17

Preseault v. United States, 100 F.3d. 1525

COE CRE INES fis G5 veined eniandy cole 19

Store Safe Redlands Associates v. United States,

35 Fed. Cl. 726 Eo 08a Vereen hee inetie 75 13

Suitum v. Tahoe Regional Planning Agency,

520 U.S. 725 SPDR)» sits s waa neaS ceadieuurke ©.

Terrett v. Taylor, 13 U.S. 43 Lig BBA somatic 13

United States vy. Riverside Bayview Homes, Inc.,

474 U.S. 121 tt PEP PR e ee Poon apenas vy 4,8

vi

TABLE OF AUTHORITIES—Continued

Page

Vatalaro v. Department of Environmental

Regulation, 601 So. 2d 1223, reh ’g denied,

Of) Ge: SES Toe ie 18-19

Zabel v. Tabb, 430 F.2d 199 (5th Cir. SOONE Opie oomeen 3

Statutes

16 U.S.C. § 1531, et. OG nS 5 Kha Dai Meh i as el 4

SP USL. $08 0B Rae ae 3

SIM 2... iasestetebeed enya ee 3

Rules

supetane Const Rake 87 BA oS oo o's heed des ce a 2

UNO STD o.oo. vwhs cea cua een eee 1

Miscellaneous

Bernard H. Siegan, Property and Freedom: The

Constitution, the Courts, and Land-Use

Kegeation (1997)... Ce ee ae 12-13

Dennis J. Coyle, Property Rights and the

Constitution: Shaping Society T. hrough Land

ae Rabel (UI 5 8 ee as 2 12

Frank I. Michelman, Property as a Constitutional

Right, 38 Wash. & Lee. L. Rev. 1097 | ee 17

Frank I. Michelman, Property, Utility, and

Fairness: Comments on the Ethical

Foundations of “Just Compensation” Law,

SO Harv. L. Rev. 1165 (1967) o.oo kos 17

Vii

TABLE OF AUTHORITIES—Continued

Henry V. Jaffa, What Were the “Original

Intentions” of the Framers of the Constitution

of the United States?, 10 Univ. of Puget Sound

stiri ugg LE OP Cee Pe a ee 12

Jack N. Rakove, Original Meanings: Politics and

Ideas in the Making of the Constitution 41

hitae ee tbE ete te eee 12

John Locke, Two Treatises of Government (Peter

Laslett ed., 2d ed. 1967, amended | ae 11-12

Michael L. Rosen, Public and Private Ownership

Rights in Lands Under Navigable Waters: The

Governmental/Proprietary Distinction,

34 Univ. Fla. L. Rev. 561 cece CET TEER Pape 2-3

Richard Pipes, Property and Freedom cs Pe a 12

Steven J. Eagle, The 1997 Regulatory Takings

Quartet: Retreating from the Rule of Law,

42 N.Y.L. Sch. L. Rev. 345 Sern oes 604 6 16

The Federalist No. 10 (James Madison) (Bantam

WR FH ivi aceasta a 13

William B. Stoebuck, A General T, heory of

Eminent Domain, 47 Wash. L. Rev. 553 (1972) ... 12-13

1

INTEREST OF AMIC! CURIAE!

Pacific Legal Foundation is a nonprofit public interest legal

foundation that specializes in defending property rights and

other individual liberties. Since its inception 26 years ago, PLF

has had extensive litigation experience in cases involving

individuals adversely affected by government regulation of

private property.

Attorneys for Pacific Legal Foundation have represented

other property owners before this Court when regulatory

agencies have taken rights in property without the payment of

just compensation, see, e.g., Suitum v. Tahoe Regional

Planning Agency, 520 U.S. 725 (1997), and Nollan y.

California Coastal Commission, 483 U.S. 825 (1987), and have

participated as amicus curiae in almost all of the major Takings

Clause cases before this Court in the past 20 years. Pacific

Legal Foundation has represented two clients in two petitions

for writ of certiorari in cases that involved nearly identical issues

to the one at bar. See Kim v. City of New York, 659 N.Y.S.2d

145, 681 N.E.2d 312, cert. denied, 118 S. Ct. 588 (1997);

Bell v. City of Virginia Beach, 255 Va. 395, 498 S.E.2d 414,

cert. denied, 119 S. Ct. 73 (1998). It has also filed amicus

curiae briefs in support of petitioners in three other cases that

have been submitted to this Court with issues identical to the

present ones. See Basile v. Town of Southampton, 89 N.Y.2d

974, 655 N.Y.S.2d 877, 678 N.E.2d 489, cert. denied, 118 S.

Ct. 264 (1997); Gazza v. New York Department of

Environmental Conservation, 89 N.Y.2d 603, 657 N.Y.S.2d

555, 679 N.E.2d 1035, cert. denied, 118 S. Ct. 58 (1997), and

Forest Properties, Inc. v. United States, 177 F.3d 1360 (Fed.

Cir.), cert. denied, _ US. ___ (1999). Pacific Legal Foundation

' Pursuant to Supreme Court Rule 37.6, Amici Curiae Pacific Legal

Foundation and American Forest & Paper Association affirm that no

counsel] for any party in this case authored this brief in whole or in part:

and furthermore, that no person or entity has made a monetary contribu-

tion specifically for the preparation or submission of this brief.

2

attorneys are also currently representing Claude and Micheline

Lambert in a petition for certiorari before this Court in

Lambert v. City and C ounty of San Francisco, Supreme Court

Docket No. 99-697, another case in which an appellate court

denied a property owner relief for a regulatory taking. Because

of the Foundation’s experience in the field of regulatory takings,

it can add a unique perspective that will assist this Court’s

consideration of this case.

Amicus American Forest & Paper Association is the

national trade association of the forest, pulp, paper, paperboard

and wood products industry. American Forest & Paper

Association represents approximately 400 member companies

and related trade associations (whose memberships are in the

thousands) which grow, harvest, and process wood and wood

fiber; manufacture pulp, paper, and paperboard products from

both virgin and recycled fiber; and produce solid wood

products. With an annual payroll of approximately $46 billion,

this vital national industry accounts for over 8% of the total

United States manufacturing output, employs some 1.4 million

people, and ranks among the top ten manufacturing employers

in 46 states. Members own approximately 50 million acres of

private forest land throughout the United States.

Pursuant to Supreme Court Rule 37.2(a), written

permission from all parties for Pacific Legal Foundation and

American Forest & Paper Association to file this brief has been

lodged with the Clerk of this Court.

STATEMENT OF THE CASE

During the 19th century, when private individuals acquired

riparian wetlands from the State of Florida they acquired an

“absolute proprietary interest in the lands” while any land under

a navigable waterway was also “subject to a governmental duty

to protect the public rights of navigation and fishing.”

Michael L. Rosen, Public and Private Ownership Rights in

Lands Under Navigable Waters: The Governmental/

K

Proprietary Distinction, 34 Univ. Fla. L. Rev. 561, 585 (1982).

In other words, property owners had, under traditional state

law, the right to improve nonsubmerged wetlands. See id.

In 1899 Congress passed the Rivers and Harbors

Appropriation Act of 1899. Title 33 U.S.C. § 403 of that Act

prohibits the obstruction of navigable waterways unless the

Secretary of Army authorizes the work. In the early years, with

rare exceptions, the Secretary denied authorizations only when

the work would obstruct commerce. See Zabel v. Tabb,

430 F.2d 199, 207-08 (Sth Cir. 1970). In time, especially as

prompted by other statutory concerns, the Secretary denied

authorizations for ecological reasons. Jd. at 209. And in 1972

Congress adopted a version of the Clean Water Act that added

section 404, codified at 33 U.S.C. § 1344, giving the Secretary

further regulatory authority over “waters of the United States.”

At no time did Congress ever assert title to privately owned

wetlands or tidelands (except to the extent that a navigational

servitude has always existed for the protection of navigation).

In 1973 Lloyd Good and his late mother purchased 40

acres of property on Lower Sugarloaf Key in Florida. Opinion

of the United States Court of Appeals for the Federal Circuit,

reproduced in Petitioner’s Appendix at 2a. Thirty-two acres of

this parcel is wetland. Jd. The Goods were aware that they

would have to obtain state and federal permits to develop this

property, and they were aware that the process could be

cumbersome. /d. However, nothing in the existing regulatory

regime gave rise to an understanding that permits would not be

forthcoming, and certainly there is nothing in the record to

indicate that compensation would not be forthcoming if the

necessary permits were denied.

* The trial court found that the navigational servitude did not Cause a

denial of all economically viable uses in Petitioner’s property. Opinion

of the Court of Federal Claims reproduced in Petitioner’s Appendix

at 48a. ;

4

Later in 1973 Congress enacted the Endangered Species

Act, 16 U.S.C. § 1531, et seq. In 1975 the Corps expanded the

scope of its regulatory jurisdiction under the Clean Water Act.

See Opinion of the Federal Circuit Court, Pet. App. at 13a

(citing United States v. Riverside Bayview Homes, Inc.,

474 U.S. 121, 123-24 (1985)). In the late 1970’s the State of

Florida passed its own legislation that protected endangered

Species and the Florida Keys. See Opinion of the Federal Circuit

Court, Pet. App. at 14a.

Lloyd Good began the Odyssey of trying to develop his

property in 1980. /d. at 2a. At first, Good had no trouble with

the United States, having obtained a dredge and fill permit in

1983. Jd. at 3a. This permit was replaced with a new but

substantially similar permit in 1988. /d. at 3a, Sa. He obtained

all of his required state permits by 1984, id., and would have

been able to develop his land at that time but for an appeal

brought by the Florida Department of Community Affairs. /d.

at 4a. As so often happens in land development cases, and as

Set Out in detail in the opinions below, Good’s journey through

the regulatory maze turned from Byzantine to Kafkaesque. See

id. at 4a-7a, and Opinion of the Court of Federal Claims, Pet.

App. at 19a-41a. Problems with the federal, state, and local

permitting agencies put a halt to any thoughts of a quick

resolution.

Pursuant to the Endangered Species Act, and while Good

was in the throes of the permit process, the Lower Keys marsh

rabbit was listed as endangered in 1990 as was the silver rice rat

in 1991. Opinion of the Federal Circuit Court, Pet. App. at 6a-

7a.

The dredge and fill permit that Good obtained in 1988

expired on October 17, 1993. See id. at 7a and Opinion of the

Court of Federal Claims, Pet. App. at 24a. Prior to 1993 the

Fish and Wildlife Service had recommended modifications to the

1988 permit in order to protect the rabbit and rat but the Corps

A

2

failed to act on those recommendations before the permit

expired. See Opinion of the Federal Circuit Court, Pet. App.

at 7a and Opinion of the Court of Federal Claims, Pet. App.

at 24a. Good applied for a new scaled back permit in July of

1990. See Opinion of the Federal Circuit Court, Pet. App.

at 5a-6a. Almost four years later, and based on the Fish and

Wildlife Service’s recommendation, the Corps denied this permit

application in March of 1994. Jd. at 7a. The Corps also notified

Good that the 1988 permit had expired. /d.

This action followed.

Good argued that the Corps’ permit denial deprived him of

all economically viable use of his property. The trial court did

not agree, finding that 14 years of the permit process were not

enough and that Good might have been able to secure

permission to build a less intensive development. See Opinion

of the Court of Federal Claims, Pet. App. at 59a. The trial court

was also impressed by evidence that the property had some

value, id. at 68a-71la, and that the existence of transferable

development rights, under a state program, provided the

potential of enough value to obviate a taking.* Jd. at 74a.

The Federal Circuit found that it did not need to reach the

issue of whether the regulatory action deprived Good of all

economically viable use of his Property. See Opinion of the

Federal Circuit Court, Pet. App. at 9a. Instead it found that,

regardless of whether there had been a denial of economically

viable use, Good “could not have had a reasonable expectation

that he would obtain approval to fill ten acres of wetlands in

* The court concluded that this Court held in Suitum v. Tahoe Regional

Planning Agency, 520 U.S. 725, that “the value of TDRs is to be

considered to answer the threshold question of whether a taking has

occurred.” Opinion of the Court of Federal Claims, Pet. App. at 74a.

This Court, however, finding “we have no occasion to decide” the

relevance of TDRs to the existence of a taking, expressly declined to

reach that issue. 520 U.S. at 728.

6

order to develop the land.” Jd. at 12a. That is because the

court concluded that Good was “[s]urely . . . not oblivious” to

the trend of “rising environmental awareness translated into

ever-tightening land use regulations.” Jd. at 14a.

REASONS FOR GRANTING THE WRIT

I

SUMMARY AND INTRODUCTION

At bottom, this case is about whether there remains any

meaning to the concept of “background principles” to the law of

property. Are property rights as evanescent as the fog or are

the rights that are associated with the ownership of property

anchored in a more solid firmament? Pacific Legal Foundation

and American Forest & Paper Association are becoming

increasingly alarmed by a trend in some of the lower courts that

denies just compensation for regulatory takings simply because

of the fortuitous circumstance that the offending regulation is

adopted--but not necessarily applied--before the complaining

Owner acquired the affected property. In fact Pacific Legal

Foundation and American Forest & Paper Association believe

this trend represents the Single greatest threat to the established

principles of property Ownership in the nation.

As alarming as this trend is, we could not have imagined

how damaging it could possibly become until confronted with

the reductio ad absurdum extension of the doctrine in the

present case. Here, there is more than the mere happenstance

of a not-yet-applied regulation being adopted prior to the

acquisition of property that traps the owner. In the case of

Lloyd Good, the court below found that Mr. Good knew, or at

least “was not oblivious” to the “trend,” of “rising

environmental awareness” that might translate into the adoption

of “ever-tightening land use regulations.” /d. at 14a. According

to the court below, the knowledge that an offending regulation

might be adopted after the acquisition of the property means

7

that Mr. Good has no right to complain after that regulation is

ultimately adopted and applied. /d.

This case asks whether Lloyd Good is entitled to

compensation because the United States refused to give him a

permit to make economic use of his land. To answer this

question, one must first understand the nature of the

“background principles” of the property rights that attach to

Good’s property. Next, one should determine whether the

evolving scheme of regulatory constraints may have affected

those “background principles” to such an extent that he is not

entitled to compensation.

Lloyd Good’s petition focused on the lower courts’

misunderstanding of the relevance and meaning of this Court’s

“reasonable investment backed expectations” test in the context

of a climate of “ever-tightening land use regulations.” This

amicus brief will focus on the conflict the decision below creates

with established understandings of the “background principles”

of property. Amici will demonstrate that the Circuit Court’s

opinion is inconsistent with the principles embodied in the

Constitution whereby the Framers understood that the role of

government is to protect private property, rather than acquire it

without compensation. In this light, the opinion is also in

conflict with opinions of this Court and several lower courts as

well.

PROPERTY DOES NOT CHANGE FORM WHEN

NEW REGULATIONS ARE ADOPTED OR WHEN

WE CAN ANTICIPATE THE ADOPTION OF NEW

REGULATIONS AND THEN THE OWNERSHIP IS

SUBSEQUENTLY TRANSFERRED

Central to the decisions of the courts that have ruled that

third party purchasers cannot maintain a takings claim is the

thesis that property is a highly mutable commodity. Under this

theory, the alteration of property is a two step process. First, a

regulatory restriction is adopted (or, in this case, contemplated).

That restriction may flow from many sources. Here, for

example, a restriction might derive from the adoption of the

Rivers and Harbors Appropriation Act of 1899, the Clean Water

Act, or the Endangered Species Act. Such a restriction may

remove certain development rights from the property--or at least

make them subject to a permitting requirement. But the

adoption of the restriction itself does not alter the original

owner's rights to the property or the development rights. An

Owner could recover just compensation if the owner Can prove

in a facial or as-applied challenge that a regulatory taking has

occurred.

The second step that completes the alteration of the

property is the acquisition by a third party after the regulation

is adopted (or contemplated). If the original owner could not

bring a facial takings challenge,‘ and if the Original owner could

not bring an as-applied challenge (due perhaps to the lack of

financial resources to pursue an application, the lack of desire to

develop the property, or the premature demise of the owner),

then the restricted development rights devolve to the

government upon the moment the remainder of the property is

transferred to a third party. Here, the third party is Lloyd Good

who purchased the property. Because Good bought his

property when regulatory restrictions were already foreseeable

he cannot now argue that his development rights have been

“taken.”

Mr. Good’s “investment-backed expectations.” That analysis is

lacking. If the original owner had legitimate expectations and

* With respect to wetlands regulations, this Court has observed that the

mere existence of a permitting requirement does not give rise to a

taking can be alleged. United States v. Riverside Bayview Homes, Inc.,

474 US. at 126.

9

Mr. Good did not, than where did the expectations go and

when? The court surely is not Suggesting that the expectations

disappear the moment regulations are adopted or contemplated.

But the alternative, that expectations disappear upon sale, is

equally dissatisfying.

If one instead focuses on where the development rights

have gone, it is clear that they now belong to the government.

The original owner has sold all rights to the property and lacks

the requisite legal interest to file an application to develop the

property; the original owner cannot ripen a takings claim and

has no property interest left to vindicate. The new owner can

apply for permission to develop. But if permission is denied

based upon the application of a regulatory restriction that is in

place at the time of acquisition, the new owner cannot receive

any compensation for the lost development rights. Thus, the

court’s focus on Good’s apparent lack of “investment-backed

€xpectations” is only a focus on the mechanism of how Good

is found to have no compensable development rights. But the

result of the court’s decision is a rule that interests in property

are transformed when regulated property changes hands. The

“bundle of sticks” that make up property is split into two: those

interests that are restricted by the regulation devolve to the

government and the new owner keeps whatever is left. This

alteration of the property, of course, may be inchoate at the time

of the property transfer and may not be apparent until permit

applications are denied.

In the case of Lloyd Good, the situation is more surreal.

The denial of his application was not based solely upon regula-

tory restrictions in place at the time he purchased his property,

but on restrictions that followed from the Endangered Species

Act, which was adopted several months after he purchased the

Property. And what is more, the listing of the Lower Keys

marsh rabbit and the silver rice rat did not occur until nearly two

decades after the purchase.

10

What exactly does this imply? If the past is any guide to

the future, anyone purchasing property today is capable of

understanding that newer and more onerous land-use

restrictions may be adopted in the future. Thus, the

transformation of property in this nation is complete and total.

Because we all are “not oblivious” to the “rising tide” of land-

use regulation, we can all anticipate that governments will adopt

far more sweeping and onerous land-use restrictions in the

future (especially now that the restraint of just compensation has

apparently been removed). In fact, most Property owned today

was acquired at a time when future regulations, whether they be

environmental, zoning, or social, could be anticipated by those

who were “not oblivious” to their Surroundings. Thus, the

result of the court’s reasoning is that all right to use property is

not truly a right possessed by individuals but instead is held by

the government. Sometimes the government may give an

“owner” the “right” or, more accurately, the “privilege” to

develop property; other times the government may deny

permission. And because the government holds the

development rights, and especially because the putative owner

of the property should have known this, there can be no

complaint for just compensation.

Why the government should obtain a windfall just because

the property’s original owner did not bring a ripened takings

claim has never been explained. It is true that the subsequent

purchaser may have acquired the regulated property at a

discount. But why should this matter? The new owner is

assuming certain expenses, risks, and transaction costs in

pursuing the permit process and takings claim. The question

here is not whether any just compensation damages are fairly

allocated between the original owner and the Subsequent

purchaser, but whether the government will have to pay any

damages at all to anyone at all. Under the Federal Circuit’s rule,

the answer is no. Because the owner at the time the regulatory

1]

scheme was adopted (or, in this case, contemplated) was not the

same person who made the permit applications, the government

gets the benefits of a regulatory taking with none of the costs.

The notion represented by the court’s decision that the

right to use and develop property is not a fixed and solid right,

but instead is something that can easily devolve to the govern-

ment (if it has not already devolved) upon the transfer of

property is a notion that should trouble this Court. For one

thing, it would seem to be a notion that was rejected a long time

ago in the beginning days of the republic. The debate is not new

between those who have theorized that rights derive from the

State and those who suggest that rights are inherently possessed

by individuals. What is new for this Court is the expression of

the first theory by the Federal Circuit Court of Appeals in the

otherwise innocuous realm of environmental regulation. The

remainder of this brief will demonstrate that the theory of the

Federal Circuit’s opinion is contrary to the history and structure

of the Constitution, the opinions of this Court, and the opinions

of other lower courts.

A. The History and Structure of the Constitution

Is Antithetical to a Theory That Government

Can Acquire the Right to Use and Develop

Property Without Paying Just Compensation

John Locke wrote that property, in the fullest

understanding of the meaning of that word, is a right inherently

possessed by individuals and that individuals Only give up certain

rights to government in order to better protect their property:

[Man] seeks out, and is willing to joyn in Society

with others who are already united, or have a mind to

unite for the mutual Preservation of their Lives,

Liberties and Estates, which | call by the general

Name, Property.

12

The great and chief end therefore, of Mens

uniting into Commonwealths, and putting themselves

under Government, is the Preservation of their

Property.

John Locke, Two Treatises of Government, The Second Treatise

§ 123 (Peter Laslett ed., 2d ed. 1967, amended 1970)

(emphasis, spelling, and punctuation in original). As many legal

scholars have noted, Locke’s idea that government is instituted

to protect property, rather than the government being the source

of property, deeply influenced the Framers, especially James

Madison, as they drafted the Constitution. See, e.g., Bernard H.

Siegan, Property and Freedom: The Constitution, the Courts,

and Land-Use Regulation 14-19 (1997) (discusses Locke’s

influence); Dennis J. Coyle, Property Rights and the

Constitution: Shaping Society Through Land Use Regulation

228-30 (1993) (same); Henry V. Jaffa, What Were the

“Original Intentions” of the Framers of the Constitution of the

United States?, 10 Univ. of Puget Sound L. Rev. 351, 378-80

(1987) (same); see also Jack N. Rakove, Original Meanings:

Politics and Ideas in the Making of the Constitution 41, 314-15

(1996) (discusses Madison’s growing concern over usurpation

of property by local governments); William B. Stoebuck, A

General Theory of Eminent Domain, 47 Wash. L. Rev. 553,

554-55, 578-79 (1972) (discusses precursors to adoption of

Lockean view in federal constitution).°

The structure of the original constitution was designed to

protect property from, among other things, popular agitation for

“an abolition of debts, for an equal division of property, or for

* It would be, of course, quite superficial to suggest that only John

Locke influenced the Framers’ views of the relationship between

government and property and the role of property in society. Space, and

respect for this Court’s time and patience, does not permit amici to

embark upon an exhaustive explication of the historical and

philosophical understandings of property. For a fuller recent treatment

of the subject see Richard Pipes, Property and Freedom (1999).

13

any other improper or wicked project.” The Federalist No. 10

(James Madison) (Bantam ed., 1982). Later the Fifth

Amendment added an even more explicit protection of private

property.

The difficulty posed by the decision below is that all the

words about the role of government to protect property would

be hollow formalisms if government truly possessed the right to

use and develop privately owned property that the government

has neither purchased nor condemned. The Framers’

conception of property would be equally meaningless if the

government could acquire those critical rights upon the mere

adoption (or, as in this case, upon the mere contemplation) of a

regulation followed by the transfer of the underlying property to

a new owner.

A lower federal court posed the dilemma this way:

Under such logic, [ governn-ent] . . . could pass a law

that stated that no one could build on their property.

After all property had passed hands once, the right to

build on one’s property would be lost to everyone.

Store Safe Redlands Associates v. United States, 35 Fed. Cl.

726, 735 (1996). Such a scheme for government acquisition of

Property is inconsistent with the Framers’ vision of the

relationship between property owners and their government.

The Framers contemplated only one way by which the federal

government could acquire private property against the will of

the owner--through the use of the condemnation power. See

Stoebuck, supra, at 576-77; Siegan, supra, at 27. Only this

Court can restore the balance.

14

B. The Opinion of the Circuit Court, That

Government Can Acquire Development

Rights in Property Merely by Adopting

Regulations and Waiting for the Land to be

Transferred to a New Owner, Is in Conflict

with Opinions of This Court

1. This Court Has Enforced Constitutional

Limitations on the Ability of Governments

to Take Property Without Compensation

In its early years this Court came down Strongly against

uncompensated usurpations of private property by government.

In Fletcher v. Peck, 10 U.S. 87 (1810), this Court examined

Georgia’s attempt to reacquire the title to millions of acres of

land that had been purchased by good faith purchasers from

others who had acquired the land from Georgia through

Corruption. Justice Marshall found the “act of transferring the

property of an individual to the public” was both oppressive and

a violation of the Contracts Clause. Georgia could not “pass[]

a law whereby the estate of the plaintiff in the premises so

purchased could be constitutionally and legally impaired and

rendered null and void.” 10 U.S. at 139. In 7, errett v. Taylor,

13 U.S. 43, 50-51 (1815), Justice Story wrote that Virginia’s

attempt to take property of the Episcopal Church was “utterly

inconsistent with a great and fundamental principle of a

republican government, the right of the citizens to the free

enjoyment of their property regally acquired.”

Amici submit that the federal government cannot do

indirectly what Georgia and Virginia could not do directly.

2. This Court Has Not Countenanced

Government Defining Property

Anew in Order to Take It

In more modern times this Court has again returned to the

understanding that government cannot alter the. meaning of

property in order to divest it from private owners. In Hughes v.

15

State of Washington, 389 U.S. 290, 296-97 (1967), Justice

Stewart, concurring, noted that “a State cannot be permitted to

defeat the constitutional prohibition against taking property

without due process of law by the simple device of asserting

retroactively that the property it has taken never existed at all.”

A retroactive assertion that property did not exist is no different

from the court below holding that the development rights in

Lloyd Good’s property vanished (or were divested to the federal

government) upon his acquisition of the property.

Nowhere did this Court more clearly demonstrate the

fallacy of the Federal Circuit’s holding in Good than in Nollan v.

California Coastal Commission, 483 U.S. 825, where this

Court wrote:

Nor are the Nollans’ rights altered because they

acquired the land well after the Commission had

begun to implement its policy. So long as the

Commission could not have deprived the prior

owners of the easement without compensating them,

the prior owners must be understood to have

transferred their full property rights in conveying the

lot.

Id. at 833 n.2.

More recently still, in Lucas v. South Carolina Coastal

Council, 505 U.S. 1003, 1014 (1992), this Court again returned

to the idea that “the government’s power to redefine the range

of interests included in the ownership of property was

necessarily constrained by constitutional limits.” This Court

held that the proper focus must be upon the “background

principles” of property: “Any limitation so severe cannot be

newly legislated or decreed (without compensation), but must

inhere in the title itself, in the restrictions that background

principles of the State’s law of property and nuisance already

place upon land ownership.” Lucas, 505 U.S. at 1029. This

16

implies the existence of principles that do not whimsically

change every time newly regulated property changes hands.

In a recently published article, Professor Steven J. Eagle is

highly critical of the notion that just compensation is not

available when the application of a regulation takes private

property just because the owner purchased the land Subject to

an existing regulatory scheme. See Steven J. Eagle, The 1997

Regulatory Takings Quartet: Retreating from the Rule of Law,

42 N.Y.L. Sch. L. Rev. 345, 376 (1998). One of Professor

Eagle’s principal criticisms is that this doctrine artfully rewrites

this Court’s holding in Lucas. Focusing on several holdings

from New York that reached the Same conclusion as the Federal

Circuit in this case, Eagle suggests that the right to bring an

inverse condemnation claim must be transferable with the

property. Otherwise, the court

Converts an important component of the fee simple--

the right to use one’s land--into a personal right that

has to be exercised during life or else vanishes.

Id. at 368.

The opinion of the court below Strays from the principle

that government cannot rewrite the definition of property in

order to suit its own needs. In Short, the adoption of a land-use

or environmental regulation cannot destroy the right to use or

develop property without compensation either before or after

the property is acquired by a third party. This Court should take

review in order to ensure that the lower courts no longer

countenance the alteration of “background principles” through

a post-regulatory transfer of property.

3. The Doctrine of Investment-Backed

Expectations Does Not Grant Government

License to Take Riparian Property

To be fair, of course, the court below did not overtly say

that it was redefining the nature of newly regulated property

17

with every subsequent transference of that property. As noted

earlier, the court couched its holding in terms of Mr. Good’s

“reasonable investment-backed expectations.” In this regard the

court was relying on this Court’s opinion in Penn Central

Transportation Company v. City of New York, 438 U.S. 104,

124 (1978), where it was noted that an analysis of reasonable

investment backed expectations is one factor that a court may

look to in determining whether there has been a regulatory

taking. This Court, at 438 U.S. at 128, credited the derivation

of this test to Frank I. Michelman, Property, Utility, and

Fairness: Comments on the Ethical Foundations of “Just

Compensation” Law, 80 Harv. L. Rev. 1165, 1229-34 (1967).

But Michelman cautions that expectations are not the exclusive

way of defining property for he later said that there

seems to be little historical or philosophical basis for

a conclusion that constitutional property rights are

exclusively reliance-based or expectation-based, that

they are purely derivative and in no way direct, and

that what counts as constitutionally protected

property can at any moment be fully told by deciding

what entitlements can from time to time be inferred

from official standing law.

Frank I. Michelman, Property as a Constitutional Right,

38 Wash. & Lee L. Rev. 1097, 1103 (1981). Michelman finds

unsatisfactory the result of a pure expectations theory that,

when combined with a denial of compensation to riparian

owners, would force those riparian owners to discount the value

of their property. /d. at 1106. Instead, Michelman believes

there “must be some kind of direct right of property under the

Constitution” and cites Kaiser Aetna v. United States, 444 U.S.

164 (1979), as a paradigmatic example where the rights of

18

riparian owners were protected despite expectations. Jd. The

Corps could no more take Kaiser-Aetna’s property without

paying for it then it can take Lloyd Good’s.

Cc. There Is Great Conflict Among the Lower

Courts on the Question of Whether the

Government Acquires a Property Interest upon a

Third Party’s Acquisition of Regulated Property

To be sure, several states in recent years have adopted the

same rule followed by the Federal Circuit below. These states

include New York, see, €.g., Kim v. City of New York,

659 N.Y.S.2d 145, 681 N.E.2d 312, cert, denied, 118 S. Ct.

588 (1997); Virginia, see Bell y. City of Virginia Beach.

255 Va. 395, 498 S.E.2d 414, cert, denied, 119 S. Ct. 73

(1998); lowa, see Hunziker v. lowa, 519 N.W.2d 367 (lowa

1994), cert. denied, 514 U.S. 1003 (1995); and New

Hampshire, Claridge v. New Hampshire Wetlands Board,

485 A.2d 287 (N.H. 1984). Amici find this to be a most

disturbing trend.

But other states and the Ninth Circuit have rejected this

tule. For example, New Jersey recently held in Karam v. State

of New Jersey Department of Environmental Protection,

705 A.2d 1221 (N.J. Super. 1998), aff'd by adopting appellate

opinion, 723 A.2d 943 (N.J. 1999), that the right of a property

owner to fair compensation when his property is zoned into

inutility by changes in the zoning law passes to the next owner

despite the latter’s knowledge. The Ninth Circuit in Carson

Harbor Village Lid. v. City of Carson, 37 F.3d 468 (9th Cir.

1994), found that an as-applied but not a facial takings challenge

can be brought by a purchaser of regulated property. Likewise,

in Del Monte Dunes at Monterey, Lid. v. City of Monterey,

95 F.3d 1422 (9th Cir. 1996), aff'd, 118 S. Ct. 1359 (1999), the

Ninth Circuit allowed a landowner’s takings claims to proceed

despite the fact that land was purchased with knowledge of

permitting requirements. In Florida the court in Vatalaro v.

Department of Environmental Regulation, 601 So. 2d 1223,

19

1229, reh’g denied, 613 So. 2d 3 (Fla. 1992), held that even

though Vatalaro acquired property after a regulatory scheme

was adopted, she could still pursue an as-applied takings claim.

The court reasoned that no taking occurred until after the state

denied Vatalaro’s permit application when the state determined

her property was suitable only for limited passive recreational

use. See also Cottonwood Farms v. Board of County

Commissioners of the County of Jefferson, 763 P.2d 551, 555

(Colo. 1988) (“The majority of courts have held that the fact of

prior purchase with knowledge of applicable zoning regulations

does not preclude a property owner from Challenging the

validity of the regulations on constitutional grounds, but does

constitute a factor.”).

Despite earlier indications to the contrary in Preseault v.

United States, 100 F.3d. 1525 (Fed. Cir. 1996) (subsequent

owners can pursue regulatory taking claim against federal

government even though challenged regulation that allegedly

took property was adopted long before acquisition by current

owners), the Federal Circuit in Good has clearly joined New

York, New Hampshire, Virginia, and Iowa. Its holding is in

conflict with the Ninth Circuit, and the courts of New Jersey,

Florida, and Colorado. It is time for this Court to resolve this

conflict.

Ill

CONCLUSION

Lloyd Good lost his property because he was not oblivious

to the potential that more onerous land-use regulations might be

adopted after his purchase. This rule is contrary to the United

States Constitution, opinions of this Court, and the holdings of

at least four other inferior tribunals. It represents, however, a

trend that has been adopted in four states and that poses the

most significant threat to well-established understandings of the

20

place of property rights in this Nation. It is respectfully

submitted that this Court grant the petition for writ of certiorari.

DATED: December, 1999.

Respectfully submitted,

JAMES S. BURLING

Counsel of Record

Pacific Lega! Foundation

10360 Old Placerville Road.

Suite 100

Sacramento, California 95827

Telephone: (916) 362-2833

Facsimile: (916) 362-2932

Counsel for Amici Curiae

Pacific Legal Foundation and

American Forest & Paper

Association

eo