What to "Take" from Palazzolo and Tahoe-Sierra: A Temporary Loss for Property Rights
By Thomas J. Koffer
INTRODUCTION
As more property owners seek to develop diminishing space, local and federal governments must respond to the competing concerns of property owners and environmentalists.1 The clash between these interest groups over land use issues has escalated in recent years. In response, local and federal governments are considering more carefully the precise scope of the Fifth Amendment's “Takings Clause,” requiring the government to pay just compensation to property owners when their private property is taken for a public use.
For the better part of the twentieth century the Supreme Court remained silent on the Takings Clause. The accelerated pace of residential development in recent years has led to an increasing number of takings cases being litigated before the Court. This litigation has resulted in a number of significant Supreme Court rulings. Despite these rulings, takings law remains extraordinarily challenging and notoriously complex.
During its past two terms, the Court handed down two decisions that attempt to clarify issues involving the Takings Clause: Palazzolo v. Rhode Island and Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency. In Palazzolo, the Court held that notice of an existing regulation does not automatically bar an owner from bringing a regulatory takings action. One year later, in Tahoe-Sierra, the Court held that a complete ban on development for thirty-two months was not a categorical taking. While such pointed holdings led to a general expectation that the ambiguities plaguing takings law might be clarified, when considered together, Palazzolo and Tahoe-Sierra have only served to generate further uncertainty. Not surprisingly, the Palazzolo decision sparked criticism from environmentalists and praise from property rights advocates, as the case clearly bolstered the perception that the Court was intent on expanding property rights at the expense of the environment. Prior to Palazzolo, a majority of courts had created a “notice rule” that barred takings claims when a landowner had notice of a regulation limiting the landowner's use of the property. The notice rule thus held that a landowner with knowledge of an existing regulation would reap an impermissible windfall if allowed to assert an unconstitutional taking had occurred. The Supreme Court, however, ruled in Palazzolo that a landowner is not barred merely because the date of a regulation preceded the date the landowner acquired the property. As a result of the Court's decision on the notice rule, property rights groups hailed the Court's decision as a victory, declaring the case to be a “landmark,” “terribly important,” and a “vindication of past efforts.”
Less than a year later, however, the Court's Tahoe-Sierra decision triggered a contrary response. Environmental groups hailed the decision as “a major victory” and a “sharp setback for the property rights movement.” Government officials intent on preserving the environment also praised the decision. They were satisfied that the Court had finally provided “an essential level of environmental protection.” On the other hand, property rights advocates criticized Tahoe-Sierra as “potentially render[ing] the takings clause meaningless.” The Tahoe-Sierra decision has, therefore, indicated to some that the Court may be moving toward a more environmentally sensitive takings jurisprudence. Yet, when Tahoe-Sierra is analyzed in conjunction with Palazzolo, the Court's current takings jurisprudence can only be called ambiguous given the divergent emphases the Court placed on the environmental issues present in both of these cases.
This Article predicts that, despite the decidedly sensitive treatment given to the environment in Tahoe-Sierra, this case will serve only as a temporary setback for the property rights movement. Section II will examine reasons why the Court first ignored the salient environmental issues in Palazzolo and then a year later found the same types of issues to play a dispositive role in Tahoe-Sierra. These conflicting signals regarding the importance of environmental issues in takings cases seem to indicate that the issue is not entirely settled. This Article asserts that the apparent conflict is actually due to the unique facts of the Tahoe-Sierra case, and that the environmental sensitivity displayed in this opinion is salient in only a limited set of circumstances.
To further support this thesis, Section III will explore the Court's treatment of the notice rule in Palazzolo. The notice rule, previously followed by a majority of courts was struck down in Palazzolo. In doing so, the Court permitted a landowner with knowledge of a preacquisition regulation to nevertheless allege an unconstitutional taking. The Court's treatment of the notice rule is, therefore, reflective of the notion that the Court typically favors property rights.
Section IV will then explore the Court's approach to the relevant parcel issue in Tahoe-Sierra. The relevant parcel issue concerns whether the appropriate denominator in a regulatory takings equation is the effect of a regulation on a whole parcel of land or on individual segments of a parcel. Contrary to initial commentary, stating that Tahoe-Sierra “slammed the door” on further discussion of this issue, an examination of Supreme Court precedent and the Court's ruminations about the relevant parcel issue in Palazzolo indicates that this might not be so. Consequently, the Court may still adopt a property-oriented approach to this issue.
As more property owners seek to develop diminishing space, local and federal governments must respond to the competing concerns of property owners and environmentalists.1 The clash between these interest groups over land use issues has escalated in recent years. In response, local and federal governments are considering more carefully the precise scope of the Fifth Amendment's “Takings Clause,” requiring the government to pay just compensation to property owners when their private property is taken for a public use.
For the better part of the twentieth century the Supreme Court remained silent on the Takings Clause. The accelerated pace of residential development in recent years has led to an increasing number of takings cases being litigated before the Court. This litigation has resulted in a number of significant Supreme Court rulings. Despite these rulings, takings law remains extraordinarily challenging and notoriously complex.
During its past two terms, the Court handed down two decisions that attempt to clarify issues involving the Takings Clause: Palazzolo v. Rhode Island and Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency. In Palazzolo, the Court held that notice of an existing regulation does not automatically bar an owner from bringing a regulatory takings action. One year later, in Tahoe-Sierra, the Court held that a complete ban on development for thirty-two months was not a categorical taking. While such pointed holdings led to a general expectation that the ambiguities plaguing takings law might be clarified, when considered together, Palazzolo and Tahoe-Sierra have only served to generate further uncertainty. Not surprisingly, the Palazzolo decision sparked criticism from environmentalists and praise from property rights advocates, as the case clearly bolstered the perception that the Court was intent on expanding property rights at the expense of the environment. Prior to Palazzolo, a majority of courts had created a “notice rule” that barred takings claims when a landowner had notice of a regulation limiting the landowner's use of the property. The notice rule thus held that a landowner with knowledge of an existing regulation would reap an impermissible windfall if allowed to assert an unconstitutional taking had occurred. The Supreme Court, however, ruled in Palazzolo that a landowner is not barred merely because the date of a regulation preceded the date the landowner acquired the property. As a result of the Court's decision on the notice rule, property rights groups hailed the Court's decision as a victory, declaring the case to be a “landmark,” “terribly important,” and a “vindication of past efforts.”
Less than a year later, however, the Court's Tahoe-Sierra decision triggered a contrary response. Environmental groups hailed the decision as “a major victory” and a “sharp setback for the property rights movement.” Government officials intent on preserving the environment also praised the decision. They were satisfied that the Court had finally provided “an essential level of environmental protection.” On the other hand, property rights advocates criticized Tahoe-Sierra as “potentially render[ing] the takings clause meaningless.” The Tahoe-Sierra decision has, therefore, indicated to some that the Court may be moving toward a more environmentally sensitive takings jurisprudence. Yet, when Tahoe-Sierra is analyzed in conjunction with Palazzolo, the Court's current takings jurisprudence can only be called ambiguous given the divergent emphases the Court placed on the environmental issues present in both of these cases.
This Article predicts that, despite the decidedly sensitive treatment given to the environment in Tahoe-Sierra, this case will serve only as a temporary setback for the property rights movement. Section II will examine reasons why the Court first ignored the salient environmental issues in Palazzolo and then a year later found the same types of issues to play a dispositive role in Tahoe-Sierra. These conflicting signals regarding the importance of environmental issues in takings cases seem to indicate that the issue is not entirely settled. This Article asserts that the apparent conflict is actually due to the unique facts of the Tahoe-Sierra case, and that the environmental sensitivity displayed in this opinion is salient in only a limited set of circumstances.
To further support this thesis, Section III will explore the Court's treatment of the notice rule in Palazzolo. The notice rule, previously followed by a majority of courts was struck down in Palazzolo. In doing so, the Court permitted a landowner with knowledge of a preacquisition regulation to nevertheless allege an unconstitutional taking. The Court's treatment of the notice rule is, therefore, reflective of the notion that the Court typically favors property rights.
Section IV will then explore the Court's approach to the relevant parcel issue in Tahoe-Sierra. The relevant parcel issue concerns whether the appropriate denominator in a regulatory takings equation is the effect of a regulation on a whole parcel of land or on individual segments of a parcel. Contrary to initial commentary, stating that Tahoe-Sierra “slammed the door” on further discussion of this issue, an examination of Supreme Court precedent and the Court's ruminations about the relevant parcel issue in Palazzolo indicates that this might not be so. Consequently, the Court may still adopt a property-oriented approach to this issue.
