The Supreme Court: Protecting Land and Home

Protecting Land and Home

Most of the time when you see a story about a government entity “taking” someone's property it relates to the construction of a new road or for other public needs. In these cases, there is clear legal precedent that for the purposes of the public good, governments can “take” an owner's property provided they are offered just compensation. Many people who lose their homes to a new roadway or other public project, probably do not believe they have been given “just compensation.” Most states have a formula for compensation that has long been established through case law.

These types of takings are physical takings, in which the government acquires property for its own use. A second, less clearly defined type of taking is a regulatory taking. These types of takings involve regulations that prevent landowners from developing their property.

Case law surrounding regulatory taking and development planning is not as well formulated. Cases that made it all the way to U.S. Supreme Court in recent years relate primarily to attempts by state and local governments to control development along coastlines or in wetlands or regulatory taking. Even temporary building moratoria (or freezes) raised questions that made it to the Court.

I'm going to review three recent rulings. The oldest, Lucas v. South Carolina Coast, decided in 1992, involves the South Carolina coastline. Palazzolo v. Rhode Island, decided in 2001, involves development in Rhode Island wetlands. Tahoe-Sierra Preservation Council, Inc. et al. v. Tahoe Regional Planning Agency et al. involves temporary moratoria to halt construction for planning purposes.

Mandating Coastline Protection

David Lucas purchased two residential lots in 1986 on a South Carolina barrier island for $975,000. At the time he purchased the property, it was legal to build a single-family house on each of the lots with no special permits required.

Two years after he purchased the property, the state of South Carolina passed the Beachfront Management Act, which mandated that the South Carolina Coastal Council set a baseline for development along the seashore. Any property nearer the water than that baseline could not be developed. The baseline set made it impossible for David Lucas to develop his property.

Lucas filed suit in state court claiming the baseline and its construction ban effected a “taking” of his property without just compensation, which was in violation of the Fifth Amendment to the Constitution. The state trial court ruled in favor of Lucas and ordered the state to pay him $1 million for his land. The South Carolina Supreme Court reversed that decision and said it was not a taking. In its ruling, the State Supreme Court said that preventing beach erosion was a valid exercise of police power “to prevent serious public harm,” so it did not require compensation.

Lucas appealed the South Carolina State Supreme Court's decisions to the United States Supreme Court, which ruled in Lucas' favor. Justice Scalia wrote in his opinion for the Court:

• “We think, in short, that there are good reasons for our frequently expressed belief that when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle, he has suffered a taking …. The trial court found Lucas's two beachfront lots to have been rendered valueless by respondent's enforcement of the coastal zone construction ban.”

Justices Stevens and Blackmun wrote separate dissents to this opinion. Justice Souter stated that the writ in this case should not even have been granted. In his dissent, Stevens said:

• “In addition to lacking support in past decisions, the Court's new rule is wholly arbitrary. A landowner whose property is diminished in value 95 percent recovers nothing, while an owner whose property is diminished 100 percent recovers the land's full value. The case at hand illustrates this arbitrariness well. The Beachfront Management Act not only prohibited the building of new dwellings in certain areas, it also prohibited the rebuilding of houses that were “destroyed beyond repair by natural causes or by fire.” … Thus, if the homes adjacent to Lucas' lot were destroyed by a hurricane one day after the Act took effect, the owners would not be able to rebuild, nor would they be assured recovery. Under the Court's categorical approach, Lucas (who has lost the opportunity to build) recovers, while his neighbors (who have lost both the opportunity to build and their homes) do not recover.”

Justice Blackmun wrote is his dissent that the decision was made before all the facts were in and the United States Supreme Court accepted a case that was not ready for decision:

• “The Beachfront Management Act includes a finding by the South Carolina General Assembly that the beach/dune system serves the purpose of 'protect[ing] life and property by serving as a storm barrier which dissipates wave energy and contributes to shoreline stability in an economical and effective manner.' … The General Assembly also found that 'development unwisely has been sited too close to the [beach/dune] system. This type of development has jeopardized the stability of the beach/dune system, accelerated erosion, and endangered adjacent property.'
• “If the state legislature is correct that the prohibition on building in front of the setback line prevents serious harm, then, under this Court's prior cases, the Act is constitutional …. Long ago it was recognized that all property in this country is held under the implied obligation that the owner's use of it shall not be injurious to the community, and the Takings Clause did not transform that principle to one that requires compensation whenever the State asserts its power to enforce it.
• “Petitioner never challenged the legislature's findings that a building ban was necessary to protect property and life. Nor did he contend that the threatened harm was not sufficiently serious to make building a house in a particular location a “harmful” use, that the legislature had not made sufficient findings, or that the legislature was motivated by anything other than a desire to minimize damage to coastal areas. Indeed, petitioner objected at trial that evidence as to the purposes of the setback requirement was irrelevant …. Nothing in the record undermines the General Assembly's assessment that prohibitions on building in front of the setback line are necessary to protect people and property from storms, high tides, and beach erosion. Because that legislative determination cannot be disregarded in the absence of such evidence … and because its determination of harm to life and property from building is sufficient to prohibit that use under this Court's cases, the South Carolina Supreme Court correctly found no taking.”

As this case was working its way through the courts, some thought it would be a landmark ruling to strengthen private property rights, but it failed because new questions were raised about regulatory taking. This case only protected property rights in situations where regulation permanently denied all possible uses of the land. The Court continued to define the issue of regulatory taking, as shown in the next two cases.