Amicus Curiae Brief — District Intown Properties Ltd. Partnership v. District of Columbia

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(B/ | UL O 7 2000

No. 99-1663

Jn the Supreme Court of the United States

DISTRICT INTOWN PROPERTIES LIMITED

PARTNERSHIP, ET AL., PETITIONERS,

i

DISTRICT OF COLUMBIA, ET AL., RESPONDENTS

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the District of Columbia Circuit

BRIEF OF THE NATIONAL ASSOCIATION OF

HOME BUILDERS AND AMERICAN FARM

BUREAU FEDERATION AS AMICI CURIAE IN

SUPPORT OF PETITIONERS

DUANE J. DESIDERIO TIMOTHY S. BISHOP

National Association of Counsel of Record

Home Builders JEFFREY W. SARLES

1201 15" Street, N.W. STEFFEN N. JOHNSON

Washington, DC 20005 Mayer, Brown & Platt

202) 822-0200 190 South LaSalle St.

Chicago, IL. 60603

JOHN J. RADEMACHER (312) 782-0600

American Farm Bureau

Federation

225 Touhy Avenue

Park Ridge, IL. 60068

(847) 685-8600

Counsel for amici curiae

i

QUESTIONS PRESENTED

1. When analyzing a governmental regulation of property

for Takings Clause purposes, how should courts determine the

relevant unit of property in a case where a landowner owns

several geographically contiguous parcels, only some of

which are burdened by the regulation?

2. Does a governmental regulation of property that

requires a landowner to leave eight contiguous lots in a

completely undeveloped state as a grass lawn deny “all

economically beneficial or productive use of land” within the

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

1003 (1992)?

i

TABLE OF CONTENTS

Page '

QUESTIONS PRESENTED 2.065.006.0546. SG. i

INTEREST OF THE AMICI CURIAE pee aires ec eee 1

STATEMENT GP THER Ste os x ke ki cen ina sncesss 3

SUMMARY OF ARGUMENT .................0005: 4 |

REASONS FOR GRANTING THE PETITION ......... 5

I. THE DENOMINATOR PROBLEM REQUIRES

THIS COURT’S IMMEDIATE ATTENTION .... 5

ll. THE DECISION BELOW CONFLICTS WITH

THE MANDATE OF THE TAKINGS CLAUSE

AND LEADS TO ABSURD CONSEQUENCES .. 7

A. The Practical Ramifications Of The Court Of

Appeals’ Approach To The Denominator

Problem Show That It Is In Error ............ 8

B. The Court Of Appeals’ Decision Cannot Be

Reconciled With The Purposes Of The Takings

PP ee a rae 8

Il. ON ANY DENOMINATOR THEORY, THE |

DISTRICT TOOK PETITIONERS’ PROPERTY .. 12

IV. THIS COURT SHOULD MAKE CLEAR THAT

DE MINIMIS OR SPECULATIVE USES ARE !

NOT ENOUGH TO DEFEAT A TAKINGS :

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CONCTARBI occ ccuctsnnedncceuctrseeeusrereces 17

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ill

TABLE OF AUTHORITIES

Cases:

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

American Sav. & Loan Ass'n v. Marin County,

G35 F.20 364 (Sth Cir. 1961) ... 0650s

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

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

Babbitt v. Youpee, 519 U.S. 234 (1997) ......

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

2 edi. era ir arenes

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

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

First English Evangelical Lutheran Church v.

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

Florida Rock Indus. v. United States, 791 F.2d 893

a ee a eter

Keystone Bituminous Coal Ass'n v. DeBenedictis,

Pa Re ROUTE a's ss cas os ae RAS

Loretto v. Teleprompter Manhattan CATV Corp.,

Oe Side WEP CREED oo bs kc cs esc ewenees

iV

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

Sh SOEs 5 ic tno ewer rex ceo sdesues 12, 13

Lucas v. South Carolina Coastal Council,

ee St SPUD a Paw ace nck ccs eieen ss passim

MacDonald, Sommer & Frates v. Yolo County,

i | Ra er ins iy bape l

Machipongo Land & Coal Co. v. Department of Envil.

Resources, 719 A.2d 19 (Pa. Commw. Ct. 1998) ...... 13

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

DP CUTE Se ok haw ks SRAM OTE ER eae 1,10

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

ee | Re | BOR reer ee Reo ee Ce Tere er 13

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

POO CTITED bin cc tidewdn ce Aber eae 11

Pennell v. City of San Jose, 485 U.S. 1 (1988) ............ l

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) .... 11

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

CEE RS a eee 6

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

CUP 66 0 EET AA 1,10

Suitum v. Tahoe Regional Planning Agency, 520 U.S. 725

CE AA EN er eee tees 1,2, 6

NOE ie ea 9

Vv

United States v. Pewee Coal Co., 341 U.S. 114(1951) .... 10

United States v. Security Indus. Bank, 459 U.S. 70

CME spe SOC 5 Cha Ooh ee eee aaa ke 11

Webb's Fabulous Pharmacies, Inc. v. Beckwith,

GOP US. SIS Cte besa s ieee Been eee 16

Williamson County Regional Planning Comm'n v.

Hamilton Bank, 473 U.S. 172 (1985) ..........0.005- l

Miscellaneous:

2 J. AUSTIN, LECTURES ON JURISPRUDENCE

(eet OE GL BETS) oak nda bch as oc tencenns 14

UAE AS BO TEE so. 3. és cut escd tee 9

Pa IRE FR Si. 0k bce sce kncs ance Puree 9

Fee, Unearthing the Denominator in Regulatory

Taking Claims, 61 U. Chi. L. Rev. 1535 (1994) ...... 13

J. LEwis, A TREATISE ON THE LAW OF EMINENT

ERAGE SIC POe. das ok 5 Fi es Be RR a 8

Rose, Mahon Reconstructed: Why the Takings

Issue is Still a Muddle, 57 S. Cal. L. Rev. 561 (1984) -..... 15

McConnell, Contract Rights and Property Rights,

POLE. A. Rawk. BeOS RECARO 9

Michelman, Property, Utility, and Fairness: Comments

on the Ethical Foundations of ‘Just Compensation’

Law, SO tS. 1 RAV. VIGO CISST) 6 OA 10

vi

J. NEDELSKY, PRIVATE PROPERTY AND THE LIMITS OF

AMERICAN CONSTITUTIONALISM (1990) ............. 9

W. Shakespeare, The Tragedy of Hamlet, Prince of

Dene, GRIEG. 6s 6. ccikscsieksetiwesee 8

Tedrowe, Conceptual Severance and Takings in the

Federal Circuit, 85 Cornell L. Rev. 586 (2000) ....... 13

!

INTEREST OF THE AMICI CURIAE /

The National Association of Home Builders (NAHB)

represents over 190,000 builder and associate members

throughout the United States. Its members include not only

people and firms that construct and supply single family homes,

condominiums, and apartments, but also commercial and

industrial builders, remodelers, and land developers. It is the voice

of the American shelter industry.

The NAHB, whose members are highly dependent on land

use decisions made by government bodies, has appeared before

this Court as amicus curiae or a party in many prior regulatory

takings cases. Cases in which the NAHB has participated include

Agins v. City of Tiburon, 447 U.S. 255 (1980); San Diego Gas &

Electric Co. v. City of San Diego, 450 U.S. 621 (1981);

Williamson County Regional Planning Comm ‘nv. Hamilton Bank,

473 U.S. 172 (1985); MacDonald, Sommer & Frates v. Yolo

County, 477 U.S. 340 (1986); First English Evangelical Lutheran

Church v. Los Angeles County, 482 U.S. 304 (1987); Nollan v.

California Coastal Comm'n, 483 U.S. 825 (1987); Pennell v. City

of San Jose, 485 U.S. 1 (1988); Lucas v. South Carolina Coastal

Council, 505 U.S. 1003 (1992); Dolan v. City of Tigard, 512 U.S.

374 (1994); Suitum v. Tahoe Regional Planning Agency, 520 US.

725 (1997); and City of Monterey v. Del Monte Dunes, Ltd., 526

U.S. 687 (1999).

The American Farm Bureau Federation (“AFBF’”’) was

established in 1920 to protect, promote, and represent the

business, economic, social, and educational interests of American

farmers and ranchers. AFBF has member organizations in all 50

states and Puerto Rico, representing more than 4.9 million

member families. AFBF’s farmer and rancher members own or

lease significant amounts of land, on which they depend for their

livelihoods and upon which all Americans rely for food and other

“ This brief was not written in whole or in part by counsel for a

party and no one other than NAHB and AFBF made a monetary

contribution to its preparation. The written consents of the parties

to the filing of this brief have been filed with the Clerk.

2

basic necessities. Because that land is subject to increasingly

onerous government regulation, AFBF and its members are vitally

interested in the legal rules establishing the availability of

compensation under the Takings Clause when regulation goes too

far. Accordingly, AFBF has participated as an amicus in this

Court in support of property rights in Lucas, Dolan, Suitum, and

Del Monte Dunes, among other cases.

Tuis case presents an issue of great importance to NAHB’s

and AFBF’s members. How the relevant parcel is defined for

purposes of takings analysis will often determine whether or not

an NAHB or AFBF member whose investment-backed

expectations in property have been interfered with by government

regulation may obtain just compensation. Absent a clear rule on

this issue, NAHB and AFBF members in different jurisdictions

face inconsistent treatment under what is supposed to be a

uniform national Takings Clause. And absent an approach that

requires compensation in the circumstances of this case, home

builders and farmers throughout the Nation run a substantial risk

that government will use the indirect tool of regulation to obtain

land for public amenities, rather than follow the constitutionality

prescribed method of paying for those amenities. The Takings

Clause is intended precisely to prevent what occurred in this case

and what home builders and farmers endure over and over again:

a government body forcing one landowner to bear all the cost of

providing a public good, when “‘in all fairness and justice,” that

- cost “should be borne by the public as a whole.” Armstrong v.

United States, 364 U.S. 40, 49 (1960).

The NAHB and AFBF believe that they can illuminate the

need for immediate review of the issues presented in the petition

and the harmful consequences of leaving the so-called

“denominator problem” unaddressed. If requiring eight out of a

developer’s nine lots to lie economically fallow in perpetuity as

a “historic landmark” is not a taking, then virtually no home

builder or farmer is safe from huge, uncompensated regulatory

burdens in the name of the public good. That is not what the

Framers of the Bill of Rights contemplated.

3

STATEMENT OF THE CASE __,

The critical facts in this case are few but telling. The District

of Columbia granted petitioner District Intown Properties Limited

Partnership permission to subdivide its eight-acre Cathedral

Mansions property into nine contiguous lots.” One of those lots

contains a 1920s rental building. The other eight are grass lawn.

After subdivision, the District taxed the eight lawn lots “at a

higher rate, * * * reflecting [its] assessment that these lots are

vacant developable land.” Pet. App. 12a. The District’s

Department of Consumer and Regulatory Affairs (DCRA)

subsequently granted zoning approval for petitioner to build one

single-family townhouse on each of the eight lots maintained as

lawn. Petitioner still had to obtain building permits for its

townhouse project, however, and that is where things went awry.

Pet. App. la, 3a, 29a-30a.

Residents in the Woodley Park neighborhood petitioned to

have the Cathedral Mansions building and contiguous lots

designated as a historic landmark. Petitioner did not object to the

designation of the building, but vigorously protested the

designation of the eight lawn lots. Despite the oddity of the notion

that eight acres of lawn in a residential neighborhood—lawn with

no historical associations except its proximity to a 1920s

apartment building—could properly be termed a historic

landmark (as opposed to, say, a desirable site for open space, see

Pet. App. 26a), the District’s Historic Preservation Review Board

granted the neighbors’ petition. Based on the historic landmark

designation, the District denied petitioner a building permit and

stated that “any construction destroying the lawn” would be

incompatible with the historic landmark designation, effectively

requiring that the lawn be maintained as such in perpetuity. Pet.

App. 3a-4a, 29a-30a. As Judge Williams observed, “upper

Petitioners include two general partners, but for the sake of

simplicity we refer throughout only to the petitioner partnership.

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4

Northwest Washington[ians thereby] secured some parkland on

the cheap.” Pet. App. 26a-27a.

Understandably, petitioner believed that since eight of its nine

lots had been involuntarily converted into green space of no

conceivable economic value, it had suffered a Lucas total wipe-

out as to those eight lots and was entitled to just compensation.

That claim—tejected by the district court and District of

Columbia Circuit for reasons cogently summarized in the

Petition—squarely raises a pure question of law that has

perplexed lower courts, leaving one of the most important issues

in takings law in total disarray: what is the relevant parcel (the

“denominator’) for purposes of determining if government

regulation has worked a taking for which compensation is due?

That question is in urgent need of this Court’s attention.

As Judge Williams’ thorough and incisive concurrence points

out, the view of Chief Judge Edwards and Judge Rogers that the

relevant parcel in this case was all nine lots taken together makes

no sense as a matter of constitutional interpretation or of

economics and has the effect of “obliterating takings law.” Pet.

App. 27a. It “elevates formal concepts over economic reality” and

“strip[s] the Takings Clause of its potential” to fulfil the Framers

purposes. Pet. App. 17a.

SUMMARY OF ARGUMENT

The “denominator problem” has percolated long enough in the

state courts and lower federal courts and has wreaked enough

havoc. It is time for this Court to bring coherence to a currently

splintered doctrine that invites government to “game” the Takings

Clause to achieve public goals at no cost—precisely the result the

Framers of the Bill of Rights sought to avoid. This case presents

clean facts and no extraneous issues and is the perfect vehicle for

this Court to begin to address a question of critical practical

importance to the amici and their members, and every other

American landowner concerned about excessive, uncompensated

land-use regulation.

5

Amici agree with petitioner that the correct analysis of the

parcel for purposes of applying the Takings Clause is to look

solely to the portion of the property that has been subjected to

regulation. This Court should hear this case to establish that clear,

easily applied, and constitutionally correct principle.

Even if those courts like the Federal Circuit that have applied

a multi-factor test to determine the appropriate parcel are correct,

the court of appeals here certainly erred in its understanding of the

multi-factor test and in its choice and weighting of factors. If a

multi-factor test is to be used to determine the denominator of the

takings equation, this Court’s guidance is urgently required to

identify the relevant factors and their interrelationship.

Finally, the court of appeals’ alternative holding that the eight

lots condemned to remain lawn had economic use that precluded

a successful takings claim itself warrants this Court’s review.

Lower courts need to be instructed that defendants’ or courts’

abilities to imagine hypothetical, speculative, or insignificant

“economic” uses for land may not stand in the way of just

compensation. “(T]he very barest thread of value, yielded by

some thoroughly bucolic use,” is not enough to defeat a total

takings claim. Pet. App. 28a.

REASONS FOR GRANTING THE PETITION

I. THE DENOMINATOR PROBLEM REQUIRES THIS

COURT’S IMMEDIATE ATTENTION.

The petition amply demonstrates that federal and state courts

are in hopeless disarray over how to deal with the “denominator

problem” identified but not resolved in Keystone Bituminous Coal

Ass'n v. DeBenedictis, 480 U.S. 470, 497 (1987), and Lucas v.

South Carolina Coastal Council, 505 U.S. 1003, 1016 n.7 (1992).

The voluminous academic literature, a small part of which is

surveyed in the Petition, is in as much disarray as the judicial

decisions and provides no clear direction. The time is now ripe for

the Court to provide some guidance, because the conflicts are

deep-seated and involve complex issues that lower courts and

6

commentators have been unable to resolve with any consistency.

The denominator problem will remain unresolved, and the

conflicts will only deepen, unless this Court intervenes.

In recent years, the Court has greatly clarified the law of

takings by addressing and resolving many outstanding questions

about the meaning of the Fifth Amendment and the litigation of

takings claims. See, e.g., City of Monterey v. Del Monte Dunes,

Ltd., 526 U.S. 687 (1999); Eastern Enters. v. Apfel, 524 U.S. 498

(1998); Phillips v. Washington Legal Found., 524 U.S. 156

(1998); Babbitt v. Youpee, 519 U.S. 234 (1997); Suitum v. Tahoe

Regional Planning Agency, 520 U.S. 725 (1997); Dolan v. City of

Tigard, 512 U.S. 374 (1994); Lucas, supra. A critical piece

missing from the puzzle is a solution to the denominator

problem—how to identify the relevant parcel for takings

purposes. The importance of defining the property in question at

the threshold of a takings inquiry makes that gap a huge one that

seriously mars the coherence of modern takings jurisprudence.

Permitting the issues presented in the Petition to percolate

longer in the lower courts will not illuminate or sharpen the

denominator question any further. At this point, state and lower

federal court decisions and the academic literature have identified

and minutely discussed every plausible solution to the

denominator problem (along with many solutions that are

thoroughly implausible). Which if any of these fully articulated

theories comports with the Takings Clause is a decision that only

this Court can effectively make.

Delaying resolution of the denominator question any longer

would cause great harm to home builders, farmers and ranchers,

and other landowners. As the Petition amply demonstrates, on this

issue of federal constitutional law involving important individual

rights, courts in different jurisdictions—and even within the same

jurisdiction—reach different conclusions as to whether

compensation is due. The Fifth Amendment's requirement that

private property not be taken for public use without the payment

of just compensation should not mean different things depending

7

on where in the United States an owner’s property is located.

Large-scale developers operating in more than one jurisdiction,

including many of the NAHB’s members, should not have to deal

with wildly different levels of constitutional protection for their

various properties. Farmers in one jurisdiction should not have a

different level of protection from neighbors in another.

In Lucas this Court noted that it is “unclear” what the proper

takings equation denominator would be where “a regulation

requires a developer to leave 90% of a rural tract in its natural

state.” 505 U.S. at 1016 n.7. This case provides the perfect

opportunity to dispel that uncertainty. The District of Columbia

has required petitioners to leave almost 90 percent of their original

property as a lawn—the entirety of eight of nine subdivided lots.

The only deviance from the Lucas Court’s hypothetical—the

tract’s urban rather than rural location—is wholly immaterial for

takings purposes. As set forth below and discussed in Judge

Williams’ opinion, we believe that it makes no legal or practical

sense for the District to remove petitioner’s right to build homes

on its lots without paying compensation. But whatever the

outcome, the importance of settling the widespread confusion

over the proper denominator is beyond dispute.

Il. THE DECISION BELOW CONFLICTS WITH THE

MANDATE OF THE TAKINGS CLAUSE AND LEADS

TO ABSURD CONSEQUENCES.

This Court held in Lucas that South Carolina’s Beachfront

Management Act, which precluded Mr. Lucas from building

single-family homes on two beachfront lots that he had purchased

prior to its enactment, effected a taking by depriving his property

of all economic value. But what if the government had restricted

development on only one of Lucas’s two beachfront lots? Based

on the court of appeals’ decision in this case, Mr. Lucas would

not have been entitled to any compensation. That cannot be right.

Destroying all the value of every single contiguous parcel of land

owned by a property owner cannot be the only way a taking

Occurs.

8

A. The Practical Ramifications Of The Court Of

Appeals’ Approach To The Denominator Problem

Show That It Is In Error.

If the District of Columbia had formally condemned

petitioner’s eight lots, it would have been obliged to compensate

petitioner. Yet, according to the court of appeals, petitioner gets

no compensation even though its eight lots are of no more value

to petitioner now than if they had been condemned outright.

Based on the impact to the property owner, condemnation is

condemnation whether it is traditional or inverse. To all intents

and purposes, the District has condemned petitioner’s eight lots

for use as parkland or greenspace. See, e.g., J.A. 320 (Historic

Preservation Review Board states that the lawn “contributes

significantly to the unique open space character of Connecticut

Avenue’’). The District should not be able to circumvent its

obligation to pay just compensation by relying on historic

preservation statutes to take the same land for the same park.

The decision below leads to absurd results. Suppose that

Smith owns eight acres of land subdivided into one acre lots,

adjacent to Jones’ 10 acres, similarly subdivided. Suppose that a

State agency designates 16 acres (eight lots each from Smith and

Jones) as a protected area to be left in its natural state. Smith and

Jones each have had eight acres of land rendered worthless and

left without economic use. But if the court of appeals is right,

Smith will get just compensation for the value of his eight acres,

while Jones will get nothing for the value of her eight acres next

door. If that is the law, one need not travel to Denmark to find

that “something is rotten.” W. Shakespeare, The Tragedy of

Hamlet, Prince of Denmark, act I sc. 4.

B. The Court Of Appeals’ Decision Cannot Be

Reconciled With The Purposes Of The Takings

Clause.

The Takings Clause protects private property against the

cavalier treatment that petitioner received at the hands of the

District of Columbia in this case. The Takings Clause does not

9

say: “Nor shall private property be taken for public use, without

just compensation, unless some economically useful property is

left with the property owner.” And such a qualifier cannot

reasonably be read into the Clause consistent with the Framers’

intentions. “[P]rotection of private property was a nearly

unanimous intention among the founding generation.”

McConnell, Contract Rights and Property Rights, 76 Cal. L. Rev.

267, 270 (1988). The Framers viewed the protection of property

nghts, and particularly rights in land, as “the first object of

government.” FEDERALIST No. 10, at 78 (Madison) (C. Rossiter

ed. 1961). That conviction rested on the Framers’ understanding

that private property constitutes “the clear, compelling, even

defining, instance of the limits that private rights place on

legitimate government.” J. NEDELSKY, PRIVATE PROPERTY AND

THE LIMITS OF AMERICAN CONSTITUTIONALISM 9 (1990). Indeed,

government “‘is instituted no less for protection of the property

than of the persons of individuals.” FEDERALIST NO. 54, supra, at

339 (Madison). Hence, the Takings Clause, a bulwark against

arbitrary rule that fosters respect for individuals and their property

rights, is fundamental to our constitutional order. As this Court

has emphasized, there is “no reason why the Takings Clause of

the Fifth Amendment, as much a part of the Bill of Rights as the

First Amendment or Fourth Amendment, should be relegated to

the status of a poor relation.” Dolan, 512 U.S. at 392.

Based on these principles, the District has taken petitioners’

property by preventing them from putting their eight lots to

profitable use. Ownership of property is a “bundle of rights”

(Dolan, 512 U.S. at 393) that includes “the right to possess, use

and dispose of it.” United States v. General Motors Corp., 323

U.S. 373, 377-378 (1945); see also J. LEwis, A TREATISE ON THE

LAW OF EMINENT DOMAIN § 55, at 43 (1888) (“The dullest

individual among the people knows and understands that his

property in anything is a bundle of rights,” including “the right to

use a thing in this way or that”). The court of appeals’ decision

treats the abrogation of one stick in that bundle of rights—the use

by petitioner of eight lots—as noncompensable. But abrogation

of the use stick destroys, in economic terms, the entire bundle.

10

What is the value of possession without use? And how can one

profitably dispose of property thai cannot be used? Thus, by

rendering petitioners’ property economically useless, the District

has taken it, triggering the just compensation obligation.

If the District had physically invaded petitioners’ eight lots,

the taking would be unquestionable and categorical. Lucas, 505

U.S. at 1015; see e.g., United States v. Pewee Coal Co., 341 US.

114 (1951). By depriving petitioners’ eight lots of all reasonable

economic use, the District has effectively imposed a negative

easement on petitioners’ property that is “the equivalent of a

physical appropriation.” Lucas, 505 U.S. at 1017. See also

Michelman, Property, Utility, and Fairness: Comments on the

Ethical Foundations of ‘Just Compensation’ Law, 80 Harv. L.

Rev. 1165, 1187 (1967) (rejecting “any sharp line of distinction

between governmental encroachments which take the different

forms of affirmative occupancy and negative restraint”). As

Justice Brennan explained, it makes little difference to the

property owner “whether his land is condemned or flooded, or

whether it is restricted by regulation to use in its natural state, if

the effect in both cases is to deprive him of all beneficial use of

it.” San Diego Gas & Elec. Co. v. City of San Diego, 450 U.S.

621, 652 (1981) (Brennan J., dissenting); see also Keystone, 480

U.S. at 516 (regulations can cause “as complete a loss as if the

government had entered upon the surface of the land and taken

exclusive possession of it”) (Rehnquist, J., dissenting). If a one-

half inch cable across one’s roof is a compensable taking (see

Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419,

438 (1982)), and the same is true of a narrow public easement

across one’s beachfront property (Nollan v. California Coastal

Comm'n, 483 U.S. 825, 841 (1987)), denying compensation to a

landowner who is prevented from making any economic use of

eight-ninths of its property defies both common sense and legal

reason.

The Takings Clause, after all, subjects governmental

regulation “to the dictates of ‘justice and fairness.”” Andrus v.

Allard, 444 U.S. 51, 65-66 (1979). However desirable an

11

additional greenspace might be for neighborhood residents, even

“a strong public desire to improve the public condition is not

enough to warrant achieving the desire by a shorter cut than the

constitutional way of paying for the change.” Pennsylvania Coal

Co. v. Mahon, 260 U.S. 393, 415-416 (1922). And the

desirability of additional open space near the National Zoo cannot

override that constitutional obligation, because a similar

“Justification can be formulated in practically every case.” Lucas,

505 U.S. at 1025 n.12.

In Lucas, this Court rejected the notion that general benefits

resulting from the State’s beachfront development ban, accruing

to Mr. Lucas as well as to the general public, prevented the ban

from being a taking. 505 U.S. at 1017. And the Court noted in

Dolan that even if reducing flood and traffic hazards were

“laudable” goals and benefitted Mrs. Dolan, it was “improper” to

saddle her with more than her fair share of the costs of attaining

them. 512 U.S. at 396. By the same token, forcing petitioners to

lose the value of their eight lots to maintain pleasing sight lines in

the Woodley Park neighborhood would “forc[e] some people

alone to bear public burdens which, in all fairness and justice,

should be borne by the public as a whole.” Armstrong v. United

States, 364 U.S. 40, 49 (1960).

The unfairness of the decision below is compounded by the

strategic gamesmanship that it would encourage. A rule that

allows government to regulate eight-ninths of an owner’s land to

the point where it has absolutely no economic use, yet avoid

paying compensation, is bound to encourage regulatory

overreaching. A city could obtain parks for free under that

approach simply by leaving burdened owners with small parts of

their land. Governments could reward favored voters by

providing amenities without raising taxes, simply by targeting

land use regulations to portions of the properties of less favored

landowners. “[A]djusting the benefits and burdens of economic

life” is one thing (Penn Central Transp. Co. v. New York City, 438

U.S. 104, 124 (1978)), but seizing from one and bestowing on

another is something else again. See United States v. Security

12

Indus. Bank, 459 U.S. 70, 78 (1982) (Takings Clause protects

against “a general economic regulation which in effect transfers

the property interest from a private [party] to a private [party]”).

In this case, the District’s transformation of /awn into an historic

monument exemplifies the risk of reckless regulation inherent in

the court of appeals’ approach.

The Takings Clause not only guards against such unfair and

discriminatory conduct, but in doing so fosters efficient

government. As Judge Williams explained below, the Takings

Clause properly applied serves “as a disincentive to wasteful

government activities” by providing ‘“‘a check on government’s

likely tendency to waste resources by treating private property as

a free good.” Pet. App. 18a. If the District is told that it must pay

for the land it covets for open space, it will have to fully account

for its own resources and those of all its citizens and property

owners. Such accountable decisionmaking, in addition to its more

general benefits, would comport with the Constitution.

Il. ON ANY DENOMINATOR THEORY, THE

- DISTRICT TOOK PETITIONERS’ PROPERTY.

Amici NAHB and AFBF agree with petitioner, for the reasons

set forth in the Petition, that the correct way to determine whether

regulations affecting less than all of a parcel effect a categorical

taking is by focusing on the regulated portion of the property.

Thus, the long-developed Lot 106 should be factored out of the

inquiry as to whether the District took petitioners’ property by

preventing the later development of Lots 107-114. We note,

however, that even under the multi-factor test derived from the

Federal Circuit cases, which the court of appeals’ majority

applied, the decision below is erroneous.

The Federal Circuit has played a leading role in defining and

analyzing the denominator problem in regulatory takings cases. In

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

1994), the plaintiff acquired 250 acres and later developed all but

51 of those acres for residential units. When it later sought to

develop the remaining 51 acres, New Jersey authorized it to

13

develop 12.5 acres so long as it dedicated the remaining 38.5

acres to the state. A federal agency then refused to authorize

development of the 12.5 acres. The Federal Circuit held that the

relevant parcel for takings purposes was the 12.5 acres, not the 51

acres or the 250 acres, and it found a taking because the property

owner was deprived of all viable economic use of those 12.5

acres. /d. at 1181. See also Palm Beach Isles Assocs. v. United

States, 208 F.3d 1374, 1380-1381 (Fed. Cir. 2000) (proper

denominator was the 50.7 acres for which permit was denied, not

the entire 311.7 acres originally purchased by plaintiffs); Florida

Rock Indus. v. United States, 791 F.2d 893, 905 (Fed. Cir. 1986)

(proper denominator was 98-acre tract that government had

denied permission to develop, not the entire 1560-acre parcel

purchased by plaintiff).

Although the Federal Circuit has described its multi-factor test

for the proper denominator as a “flexible approach, designed to

account for factual nuances” (Loveladies Harbor, 28 F.3d at

1181), the court has “objectif[ied] the factual inquiry’ in its recent

cases raising the denominator problem. See Tedrowe, Conceptual

Severance and Takings in the Federal Circuit, 85 Cornell L. Rev.

586, 616 (2000). Here, as described by Judge Williams, the court

of appeals disregarded objective and central factors supporting

petitioners’ position and instead relied on manipulable factors of

little or no significance. It is critical that the Court not only set to

right the court of appeals’ misplaced resolution of the

denominator problem, but also provide some guidance on how

any multi-factor test is to work.

One important factor should be whether state property law

authorizes the division of the property and the use that is being

denied. See Lucas, 505 U.S. at 1016 n.7. Another should be the

independent economic viability of each of the separate parcels.

See Machipongo Land & Coal Co. v. Department of Envtl.

Resources, 719 A.2d 19, 28 (Pa. Commw. Ct. 1998); Fee,

Unearthing the Denominator in Regulatory Taking Claims, 61 U.

Chi. L. Rev. 1535, 1557 (1994). Yet another should be whether -

the authorities treat the regulated and unregulated parcels

14

differently for zoning or taxation purposes. See American Sav. &

Loan Ass'n v. Marin County, 653 F.2d 364 (9th Cir. 1981). In this

case, any test that does not give controlling weight to the fact that

petitioners’ property was legally subdivided (Pet. App. 20a), that

the subdivided lots have been taxed as developable property at a

higher rate than developed property (ibid.), that the undeveloped

lots add no significant value to the developed lot (Pet. App. 9a),

and that the undeveloped lots retain no reasonable economic use

(Pet. App. 22), is seriously mistaken and at odds with the entire

thrust of the Takings Clause.

This Court suggested in Lucas that the property owner’s

reasonable expectations may be an important factor in the

definition of the relevant parcel. 505 U.S. at 1016 n.7. That makes

sense, so long as the general possibility of regulation in this highly

regulated society does not equate to an expectation that the value

of every development may be regulated out of existence. As

Judge Williams pointed out, in this case it is simply “farfetched to

conclude that District Intown, merely because of its proximity to

the zoo, should reasonably have anticipated an absolute ban on

construction.” Pet. App. 21a-22a. Nor did petitioner have any

reason to expect that general and longstanding preservation

statutes would block the routine building of townhouses on empty

lots next to its existing apartment building. To the contrary,

petitioner had every reason to expect that it could rely on the

District’s approval of its application to subdivide its property into

nine lots and DCRA’s subsequent zoning approval. Pet. 2. See 2

J. AUSTIN, LECTURES ON JURISPRUDENCE § 1128, at 256-257

(Robert Campbell ed. 1875) (“whenever expectations have been

raised in accordance with the declared purpose and concession of

the state, to disappoint those expectations by recall of the

concession * * * [is] pernicious”).

Instead of taking an objective approach to the denominator

problem, the decision below, as Judge Williams recognized,

“elevates formal concepts over economic reality and tends to strip

the Clause of its potential for fulfilling the framers’ likely

purposes.” Pet. App. 17a. In particular, the factors relied on by the

15

court of appeals, including contiguity, simultaneity of acquisition,

and historical use, subordinate the actual economic relationship

between the tracts to misty historical and tangential

considerations.

By making contiguity a controlling factor, the court of appeals

effectively declared a “presumption that contiguous parcels under

common ownership should be treated as one parcel for purposes

of the takings analysis.” Pet. App. 19a. But no such presumption

governs eminent domain cases: if a person owns an office

building next to a house and the government condemns the office

building, the government has to pay for the value of the office

building, contiguous to the house or not. Perhaps regulatory

takings cases require a more complex analysis, but that would not

justify the court of appeals’ loaded presumption. Moreover,

placing so much emphasis on contiguity discriminates against

large holdings: the larger the parcel, the more likely the survival

of some economically viable use after regulation, giving

government a free shot at stopping any development on such

holdings.

Indeed, under the contiguity presumption, if A and B each

own an empty lot near a zoo, with A residing in his house on an

adjoining lot and B in her house across town, precluding

development of the two empty lots will “take” B’s property but

not A’s. This illustration shows that contiguity of parcels is part

of the denominator problem; it rarely will offer a solution.

Simultaneity of acquisition and unity of ownership are also

factors of limited value. If one person buys a sugar mill and a

cattle ranch at the same time, that says nothing about whether the

government’s destruction of all the sugar mill’s value decades

later is or is not a taking. Moreover, such factors necessarily

generate perverse incentives. For example, if unitary acquisition

and ownership are enough to defeat a takings claim, then land

owners would do well to contract for “shills” to transform what

really is one transaction into several and to create multiple “paper”

owners. See Rose, Mahon Reconstructed: Why the Takings Issue

16

is Still a Muddle, 57 S. Cal. L. Rev. 561, 568 (1984) (warning that

misapplication of Takings Clause “may cause owners to make

elaborate and socially useless splits of their property nights”).

Such game-playing by property owners would be just as costly

and inefficient as the maneuvering by the District of Columbia in

this case. The Framers did not intend, when they gave

constitutional protection to the ownership of property, to create a

game in which the rules were subject to manipulation by either the

government or property owners.

In sum, if the lower courts should determine the denominator

by focusing on the land subject to the regulation at issue, as we

strongly believe, this Court should say so. If that determination

instead should rest on a broader multi-factor test, this Court

urgently needs to convey guidance on what the relevant factors

are and how to apply them. In either event, reversing the decision

below will permit the Takings Clause to take its place “‘as a shield

against the arbitrary use of governmental power.” Webb's

Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 164

(1980).

IV. THIS COURT SHOULD MAKE CLEAR THAT DE

MINIMIS OR SPECULATIVE USES ARE NOT

ENOUGH TO DEFEAT A TAKINGS CLAIM.

The District found that “any construction that destroyed the

lawn would be incompatible with the lawn’s status as a historic

landmark.” Pet. App. 13a; J.A. 368. Yet Judge Edwards’ opinion

concluded that even looking at the eight lawn lots separately, there

was no taking because those lots were not “rendered ‘valueless’

by the regulation at issue.” Pet. App. 13a. According to the

majority, something “marginally less than total destruction” is

never a taking. /bid.

That Judge Edwards cited Lucas for this proposition is

remarkable. In Lucas, Justice Blackmun in dissent described the

conclusion “that the property had lost all economic value” as

“almost certainly erroneous” because “([p]etitioner still can enjoy

other attributes of ownership, such as the nght to exclude others”

17

or “‘to alienate the land.” 505 U.S. at 1043-1044. According to

Justice Blackmun, Lucas’ ability to continue to “picnic, swim,

camp in a tent, or live on the property in a moveable trailer” was

enough to counter his takings claim: “land has economic value

[sufficient to defeat a takings claim] where the only residual

economic uses are recreation or camping.” But the Court did not

adopt that view.

As Judge Williams complained, under the standard applied by

the majority in this case (and by Justice Blackmun in dissent in

Lucas), “no regulation can ever effect a total taking.” Pet. App.

28a. There will always be some conceivable use of property.

Here, the owners could picnic on the lawns, or play croquet, or

perhaps create spectacular flower gardens to enjoy. Maybe they

could even charge others to use the property in these ways. But

none of those are reasonable economic uses. At best, they create

de minimis value that bears no comparison to the value of the land

for building. This Court should grant plenary review in this case

to make clear that “the very barest thread of value, yielded by

some thoroughly bucolic use,” does not “defeat a total takings

claim.” Pet. App. 28a.

, CONCLUSION

The petition for certiorari should be granted.

Respectfully submitted.

Duane J. Desiderio

National Association of

Home Builders

1201 15" Street, N.W.

Washington, DC 20005

(202) 822-0200

John J. Rademacher

American Farm Bureau

Federation

225 Touhy Avenue

Park Ridge, IL. 60068

(847) 685-8600

JULY 2000

18

Timothy S. Bishop

Counsel of Record

Jeffrey W. Sarles

Steffen N. Johnson

Mayer, Brown & Platt

190 South LaSalle St.

Chicago, IL. 60603

(312) 782-0600