TAHOE-SIERRA PRESERVATION COUNCIL, INC., et al., Petitioners,

v.

TAHOE REGIONAL PLANNING AGENCY, et al.

No. 00-1167.

United States Supreme Court Official Transcript.

Monday, January 7, 2002.

Washington, D.C.

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:03 a.m.

APPEARANCES:

MICHAEL M. BERGER, ESQ., Santa Monica, California; on behalf of the Petitioners.

JOHN G. ROBERTS, JR., ESQ., Washington, D.C.; on behalf of the Respondents.

THEODORE B. OLSON, ESQ., Solicitor General, Department of Justice, Washington, D.C.; on behalf of the United States, as amicus curiae, supporting the Respondents.

*2 CONTENTS

ORAL ARGUMENT OF MICHAEL M. BERGER, ESQ. On behalf of the Petitioners ... 3

ORAL ARGUMENT OF JOHN G. ROBERTS, JR., ESQ. On behalf of the Respondents ... 25

ORAL ARGUMENT OF THEODORE B. OLSON, ESQ. On behalf of the United States, as amicus curiae, supporting the Respondents ... 43

REBUTTAL ARGUMENT OF MICHAEL M. BERGER, ESQ. On behalf of the Petitioners ... 52

*3 PROCEEDINGS

(11:03 a.m.)

CHIEF JUSTICE REHNQUIST: We'll hear argument next in Number 00-1167, Tahoe- Sierra Preservation Council v. The Tahoe Regional Planning Agency.

Mr. Berger.

ORAL ARGUMENT OF MICHAEL M. BERGER

ON BEHALF OF THE PETITIONERS

MR. BERGER: Mr. Chief Justice, and may it please the Court:

There are three important things that should be kept in mind while we're addressing the issue this morning. First, the Tahoe Regional Planning Agency totally prohibited a select group of individual landowners scattered around Lake Tahoe from making any use whatever of their land. These prohibitions were never designed as the kind of planning time-out touted by TRPA and its amici. Rather, they were amendments--

QUESTION: Well, what about a temporary order that says, gee, we're required by State law to develop a plan and it's going to take us a few months and, pending that, you can't develop? Now, does that invoke immediatelysome per se taking rule?

MR. BERGER: It does if it's a flat prohibition of use, Your Honor, and if there is--

*4 QUESTION: A flat prohibition that says, while we're developing this plan, which we think won't take long, you can't go ahead with your development?

MR. BERGER: Justice O'Connor, I do believe that if it is a total prohibition on use, and there is no use being made of the property at the time, that it's part of the public project to have this freeze on use, and it's the public that ought to be paying for that project, not the individual landowners who are frozen out.

QUESTION: Suppose that--we'll have to play with the facts a little bit, it's a hypothetical case, but that within a month from now the World Trade Center is ready to be constructed and New York says--and the owner wants to rebuild highrises for office only, and the city says, wait a minute, this is so important to the whole city, we need a year to think about it, a year in addition to the usual zoning process. A taking?

MR. BERGER: I think if they forbid the entire use of the property and don't allow any applications for use to be made, don't allow the owner to do anything--

QUESTION: Well, they could use it for a parking lot.

MR. BERGER: If there is some reasonable, economically viable, productive use that can be made of the property at the time, then I don't believe we have a *5 per se taking.

QUESTION: Well, I guess my question--and I know you had a more general introduction before I interrupted you, is the use of a moratorium a standard instrument of zoning policy, or is it very rare? I couldn't find anything in the briefs on this.

MR. BERGER: It has, I believe, become much more rare these days. There's an awful lot more planning going on. Agencies are doing a better job of planning, and they find the need for this kind of a total prohibition on development to be made.

QUESTION: My impression is that most of these moratoriums, or moratoria, whatever they're called, would not be total. I mean, if you're considering altering a rural zoning scheme that now doesn't have any limit on number of residencies per acre, and you're thinking of, say, no more than one house on every 3 acres, the only--and that's what you're thinking about, the only moratorium you would have to impose would be no more--until we make up our mind, no more than one house on every 3 acres. It wouldn't say, nobody does anything while we're sucking our thumb on this question, right?

MR. BERGER: That's correct, Justice Scalia--

QUESTION: And--

MR. BERGER: --and I think that's the more *6 typical kind of moratorium, and the kind that most of the amici on the agency's side have been talking about.

QUESTION: There was one Minnesota moratorium that was--seemed somewhat like this that had been sustained by, I think the Minnesota appellate court.

MR. BERGER: There was one, Your Honor, and I would submit that that court erred. It happens. Lower courts do that sometimes.

(Laughter.)

MR. BERGER: And we believe that--

QUESTION: So we notice.

(Laughter.)

MR. BERGER: And we believe that that simply is not an appropriate precedent for this Court to follow.

QUESTION: Why, why is it--I guess this is going to be your basic point. Why is it the case--let's take not this moratorium, but let's take a moratorium that lasts for a year, and after that time everyone believes the board will allow certain kinds of development. Other things being equal, that year of no use would probably have reduced the value of the land by 5, 10 percent. Now, so why, since that's the effect of the moratorium I'm imagining, should the public have to give compensation for that small diminution in value?

MR. BERGER: Because it's not the diminution in *7 value we're talking about here, Your Honor. It's the total elimination of the ability to make use of the property, and in all of this Court's cases you have talked about denial of economically productive use of land, and what we're doing here, and what you're talking about in your hypothetical, Justice Breyer, is taking away the right to use that land.

It's as if I took away your car for a year and I parked it in the garage and I kept good care of it, and I returned it to you at the end of the year with no diminution in value whatsoever, or perhaps the 5 percent that Your Honor hypothesized. You still would have been without the use of that car for a year, and I think that you would be entitled to compensation for the fact that I deprived you of the use of that car.

QUESTION: Well, certainly if the respondent here had simply said, we're going to need your property for 3 years, and so we're going to take a leasehold interest for 3 years, the respondent would have had to compensate for that.

MR. BERGER: Chief Justice, I couldn't agree with that more, and I believe that that is in fact what we're dealing with here.

QUESTION: No, but you're--it seems to me you're not dealing with that here, because in that *8 hypothetical the person, the third party in fact takes the property in the sense of using it for that party's own benefit. Here, no one, the Tahoe Regional Planning Authority isn't using the property for its benefit. It's saying that during this period of time there are some things that you can't do.

MR. BERGER: That's true, Justice Souter, but frankly I don't see the difference between them, because the Government--

QUESTION: Well, one difference is that the person taking in the one hypothetical gets a considerable personal value, i.e., the use of a car, or the use of property for a period of time. There's no such fact in evidence here.

MR. BERGER: Absolutely true, but this Court's jurisprudence has always examined cases like this from the impact on the property owner, not from what the Government gains by the taking. Justice Holmes said that in the Boston Chamber of Commerce case a century ago.

QUESTION: Isn't your argument, and wasn't your answer to Justice Breyer's question in effect to invoke the kind of standard language which has come out of the Lucas case? In other words, it is preventing all use of the property, or all economically productive use of the property, and yet Lucas garaged that phrase in the *9 circumstance in which the denial of economic use was assumed to be permanent.

Here, we're dealing with a situation--Justice Breyer's question dealt with a situation in which the deprivation is assumed to be temporary, so that it does make sense in his hypothetical to say, well, it reduces the value of the property during the interim period maybe by 10 percent. That is a very different economic fact from an indefinite, permanent deprivation which would reduce the economic value of the property down to something close to zero, and doesn't that distinction have to be recognized, and isn't that the reason why the Lucas formula simply cannot be used uncritically in this circumstance?

MR. BERGER: Justice Souter, I believe that that distinction gets recognized at the valuation phase, not at the liability phase. In other words, taking for a small period of time, or for less than the full life of the property, would be compensated less than taking the full fee interest.

QUESTION: Yes, but what you're really saying is, if the--I think, that if in Justice Breyer's hypothetical there is a diminution in the value for this period of 10 percent, that you've got to compensate for the full 10 percent, and it seems to me that our cases are *10 pretty clear in saying, that's not how you measure the compensation obligation. That's the--that's an example of taking, you know, the one stick out of the bundle and saying because you can't use that one, you've got to compensate 100 percent for that one, but I think our cases rule that out, don't they?

MR. BERGER: Actually, your cases in quite a number of different circumstances say that if you do take one important stick out of the bundle, you may well have taken the property--

QUESTION: Permanently. Permanently.

MR. BERGER: Well, except in First English, Your Honor, where this Court expressly said, and examined all the cases, that temporary takings are constitutionally no different than permanent takings.

QUESTION: Well, except that that gets to the argument that the other side makes throughout here, that the assumption of that statement was that we had a taking in the first place, whereas the issue in this case is whether we do have a taking.

MR. BERGER: Well, that's correct, and what we're talking about here is a deprivation of all use. That's why we have a pretty clean case for the Court to deal with here.

QUESTION: It's a deprivation of all use if you *11 fit it into Lucas.

Lucas was a case that did not involve a permanent taking, so that it seems to me your first argument has got to be not that the Lucas formula can apply here, but that the Lucas formula should apply here as opposed to this Penn Central formula. You've got to do that in order to get into First English.

MR. BERGER: I agree with that completely, but I think that what we're dealing with, if you examine the facts of the case, is that from the time that these ordinances were enacted in 1981 until whatever end point you want to look at, there was a total deprivation of use.

QUESTION: Well, Mr. Berger, you may well have been able to prevail under the Penn Central approach, I assume, viewed in its entirety over this period of time, but that was waived. Am I correct in that?

MR. BERGER: We did not present a Penn Central case, that's correct.

QUESTION: And all you want is this pure and simple per se taking, as applied to, as it comes to us, what is it, a 3-year period?

MR. BERGER: Well, there was this 3-year period chopped out at the beginning of the time.

QUESTION: And that's what we're focused on here as the case actually comes to us?

*12 MR. BERGER: That appears to be what the Court is interested in, as the Court reframed the question.

QUESTION: May I ask you this question, Mr. Berger? Just looking at temporary takings, and just looking at the liability stage as opposed to the valuation stage, is there a distinction in your view between a regulatory taking and a physical taking?

MR. BERGER: I don't believe so, Justice Stevens. I think that this Court did deal with that in the First English case, and it explained that physical takings and regulatory takings are judged by the same constitutional standards.

QUESTION: So that in your view--of course, the physical taking, even for 10 minutes, would be a taking. There's no doubt about that. But your view is, even if the regulation prohibits all use of a piece of property, an automobile, whatever it may be, for 10 or 15 minutes, there is a taking. The damages may be infinitesimal, but there's always--past the liability stage.

MR. BERGER: If there is a total prohibition of use--

QUESTION: For 10 minutes.

MR. BERGER: --there is liability. Now--

QUESTION: So--

*13 QUESTION: Mr. Berger, can you reconcile the different approach that this Court has said goes for spatial separation, like the air space in Penn Central, and time segregation? It seems to me that if the one--if Penn Central is the regime for splitting off the air rights, it should also be the regime for splitting off a discrete period of time.

MR. BERGER: Your Honor, this Court and other courts have always dealt with the time value of property, if I may, differently than they have in these spatial terms. The fact is, leasehold interests, future interests have always been recognized as independent items of property that are independently protected by the Constitution.

If you had a piece of property that had a landlord and a tenant and a lender and some remainder person--

QUESTION: But these are all physical takings.

MR. BERGER: --with all interests, and it was condemned, all of them would be entitled to compensation.

QUESTION: But that's--

QUESTION: These are all physical takings cases.

MR. BERGER: And this Court has said in First English that there is no difference constitutionally, Justice Stevens, between the physical takings and the *14 regulatory takings.

QUESTION: Suppose I--

QUESTION: What do you do about the fact that there is a regulatory taking of sorts whenever you have a permit system, let's say the normal zoning regime in which you cannot construct any building on your acreage without first applying and getting the approval of the zoning agency?

MR. BERGER: Justice Scalia--

QUESTION: During that period, there's been a total taking. You cannot do anything with that property until you get the building approved.

MR. BERGER: Clearly you cannot do anything until you've gotten the property approved, but it seems to me that there is a fundamental difference between a landowner working through a system whose end product is, at least theoretically and probably very likely, the issuance of a permit to go ahead and develop something that is economically productive on that land as opposed to being stuck in a system where you're forbidden--

QUESTION: But that would have been during that interval of time it meets your test. Nothing can be done until the permit issues, so a fortiori, under your theory, compensation due.

MR. BERGER: I don't believe so, Justice *15 O'Connor, because--

QUESTION: Well, that's what it sounds like.

Now, what about your basic zoning law? I'm going to, as a city, limit the use of this property to one house per acre. You can't have unlimited apartments or commercial property owner. Now, for the enactment of that, is there a taking immediately?

MR. BERGER: No, Your Honor.

QUESTION: Well, you're permanently deprived of the use of it for commercial purposes.

MR. BERGER: Yes, Your Honor, but you are not totally deprived of the use of it.

QUESTION: But can we get back to the basic question that Justice Scalia asked, and Justice O'Connor asked it as well. I want your answer. Why is it that a delay for purposes of ordinary zoning, which, let's assume, prohibits you from any use of the property, is not a taking?

MR. BERGER: Because you are there in a process working toward the actual development of the process, of the property, pardon me, in contrast to being in a situation like these people are, where there is no process for development. There is instead the desire--

QUESTION: Let's assume that the Tahoe Regional Planning Agency thought, in good faith, that there would *16 be some development allowed, but they needed a year to think about it. My--that's the same as the World Trade Center hypothetical. We know something very valuable is going to be built, but you say it's a taking, and I don't understand the difference between that and the regular zoning procedure.

MR. BERGER: The difference is that in the second situation there is a conscious and total prohibition on use, and that's the purpose of the regulation, is to prohibit the use. In the former situation, where you're applying for a permit, the purpose of the regulation is not to prohibit use but, in fact, to enable use.

QUESTION: Well then, it seems to me you have to change your answer about the World Trade Center hypothetical, where you say there's going to be a very valuable use, we just don't know what it is, but we need a year to think about it, in addition to the normal--and you told me that was taking, but now your rationale seems to me to back away from that.

MR. BERGER: If they are in a process where there will be development at the end, then I believe that there is not an automatic per se taking, but it seems to me that what we're dealing with, if we've got a total use prohibition, we do have a taking. It's a question of *17 time.

QUESTION: But Mr. Berger, your--it seems to me your deciding whether the temporary taking is--whether the temporary interference is a taking or not depends on what's going to happen after the temporary period expires, because in one situation you think, well, they know they're going to get something valuable out of it, in the other they don't, but that means that the test for the temporary period turns entirely on an evaluation of the future.

MR. BERGER: Well, if I made it sound that way, Justice Stevens, I apologize. I--what I'm saying is that you have two different schemes set up. One is a process leading toward development. The other is a process of total blockage, and where the intent of the Government is simply to block the use of property. We're not looking at the future--

QUESTION: Well, you're not suggesting they're doing it just for the sole purpose of blocking the use. Don't they have some ultimate goal in sight here?

MR. BERGER: Sometimes they may. Sometimes they don't.

QUESTION: But your--you rest on the hypothesis that they are just interested in a total blockage for a temporary period of time, and they don't *18 care what happens later.

MR. BERGER: But that is the fact that we're dealing with. We're dealing with--

QUESTION: They don't have any interest in protecting the lake?

MR. BERGER: We have no question about their ability to protect the lake. The question is how they do that, and what they've decided to do in order to protect the lake is to prohibit these people from making any use of their land.

QUESTION: But it seems to me in effect--maybe this is a variant on Justice Stevens' question--that you're saying, what's really wrong here is that this is not done in good faith, that this is not done, let's say, in the case of the period of time necessary to get permits, with an actual development in mind. This is called a moratorium, but they mean something more than just moratorium, they just mean stop, period, and it sounds to me as though you're making it turn on whether it's good faith or bad faith.

MR. BERGER: Oh, I don't think it needs to. I think, in fact, in this case, when they put this moratorium in the context not of--they don't even call it a moratorium. They did this as amendments to their Water Quality Act. What they said was, these properties *19 need to be kept frozen in order to protect the clarity of Lake Tahoe.

QUESTION: And your argument in effect contrasts that with an existing permit system whereby if you comply with certain requirements you will ultimately end up with a permit, the purpose of which is to make sure you do comply with the requirements.

MR. BERGER: Exactly, Chief Justice.

QUESTION: But you still have--I mean, in the one case the regulating agency has said, you can't do anything with your land while we're thinking about the scheme we're going to adopt, and in the other case the agency has said, just as categorically, you can't do anything with your land while we consider your application. In both cases they're, for a later regulatory purpose they're both saying, you can't do anything with your land.

MR. BERGER: Justice Scalia, in a sense that is certainly true, but in the case of the processing of a permit application, we know that there is permitted use. It's there. It's in the books.

QUESTION: Not during the pendency. Not while the application is pending.

MR. BERGER: The regulations of the agency say that for this property there is permitted use. The *20 question is how you make that use, and under what conditions and circumstances, not whether there will be use at all, where you have in the second situation a total prohibition on use and we don't know what's going to happen at the end of that total prohibition on use.

The key to it may be this case itself, where the light at the end of the tunnel that they keep touting as the saving grace of this kind of a regulatory regime turned out to be no light at all. There was a complete continuation of the use prohibition when this temporary so-called period ended.

QUESTION: Well, under your theory it would seem that--suppose that a building catches fire and is substantially destroyed by fire, and the fire department comes, and the police department, and they block it off for a period of time, no use while this is investigated, none, property owner can do nothing, can't enter it, you're out of there. I guess the city or the governing jurisdiction would have to pay the property owner.

MR. BERGER: I don't think at that point, Your Honor, that that would be a taking.

QUESTION: But it fits squarely within your argument.

MR. BERGER: No, I think that in that case, Your Honor, you would at least be entitled to perhaps some *21 nuisance examination. You've got a wrecked building that is a hazard, and at least the Government would have the ability to order the property cleaned up before anything else could be done with it, and I think in those circumstances--

QUESTION: But that seems to make the question whether there's a taking turn on the nature of the motive of the--underlying the regulation or the prohibition, and I thought your position was, regardless of the good faith and the great public interest in doing it, the State has to pay when it does this.

MR. BERGER: Your Honor, I think we all have to live with what this Court called the nuisance exception when it decided the Lucas case, and that there are some things that the Government can do that prohibit all use that are not compensatory.

QUESTION: Are you satisfied with the standard that says, every Government regulation is a candidate for a taking, just as every speech act is a First Amendment candidate, but it's actually a taking in this area only when the impact of the Government regulation is not part of a reasonable process looking towards a reasonable form of regulated development?

MR. BERGER: I think I could accept that, Justice Breyer.

*22 QUESTION: Well, if that's so, they're going to say they win, because they're going to say, of course, this was an effort, reasonably, to regulate Lake Tahoe over a period of time. It's very complicated, it didn't last--it lasted a long time, but no more than necessary.

MR. BERGER: Oh, I would disagree with that characterization. This was not an effort to regulate Lake Tahoe. This was an effort to prevent the use of these properties. Certainly they--

QUESTION: But that's a reasonableness calculation, and that's the Penn Central aspect rather than the more categorical approach that you're urging upon us, I should think.

MR. BERGER: Your Honor, if they had come up with a nuanced, subtle regulation that had something to it other than the meat ax approach that the agency took in this case, I think you would have a Penn Central-type analysis, but what we've got in this case is not anything subtle at all. We've got a complete, easy, quick prohibition, and--

QUESTION: What is the status today? What is it, 22 years later?

MR. BERGER: We're 22 years later.

QUESTION: What's the status today of the properties affected by this suit?

*23 MR. BERGER: The clients that I represent are still, for the most part, unable to do anything. There is the new plan put in in 1987, which this Court looked at in the Suitum case, and some of the people, those in the position of Mrs. Suitum, in the stream environment zones, are still totally prohibited from using their land. Most of the people are still totally prohibited from using their land.

A large number of them have sold their land to Government agencies that were buying them up at bargain basement prices, at nothing approaching what would, an appraiser would call fair market value, but the value of land that couldn't be developed, in order to mitigate their losses, and as the court approved in the Del Monte Dunes case, what they'd like to do is to make themselves whole.

QUESTION: Well, is it your position that all of the properties involved in this petition are, today, still totally deprived of any use whatever?

MR. BERGER: I believe, Justice O'Connor, there may be a handful of them that under the 1987 plan, and the regulations that came under that in 1989, were finally released and allowed to do something, but it's only a small number, and for the most part these properties are still unused and unusable.

*24 QUESTION: Is it your position that the application of the Penn Central approach would not result in appropriate compensation determinations at the end of the day?

MR. BERGER: I don't know that, Your Honor. As a pragmatic matter, doing a Penn Central approach on a case that involves hundreds and hundreds of individual properties would have been a nightmarish litigation that only the wealthiest of landowners would be able to afford and, particularly in light of the clear prohibition of use that they decided that they needed, we thought that it made more sense to do a Lucas-type approach than a Penn Central approach in this case.

QUESTION: May I just ask this one question? With regard to those who have subsequently been permitted to develop their land, it's your view that you're nevertheless entitled to a takings compensation for the period which the moratorium was in effect?

MR. BERGER: Yes--

QUESTION: Yes.

MR. BERGER: --Justice Stevens, that's true.

I'd like to reserve the rest of my time, Mr. Chief Justice, if I may.

QUESTION: Very well, Mr. Berger.

Mr. Roberts.

*25 ORAL ARGUMENT OF JOHN G. ROBERTS, JR.

ON BEHALF OF THE RESPONDENTS

MR. ROBERTS: Thank you, Mr. Chief Justice, and may it please the Court:

Petitioners' only takings claim before the court of appeals and his only-- their only takings claim before this Court is a facial per se claim. That means that their contention is that the mere enactment of the temporary moratorium in this case effected a taking with respect to every parcel to which it applied-- that's the facial aspect--without any consideration of the reasons for the moratorium. That's the per se aspect. And what is more, that bold claim is limited at this point to the temporary moratorium in effect from August '81 until April 1984.

QUESTION: Mr. Roberts, you described it as a bold claim. Supposing it had gone on for 10 years.

MR. ROBERTS: In 10--

QUESTION: Would it be still bold?

MR. ROBERTS: On the facial aspect I think so, Your Honor. I think doing the Penn Central analysis and not the Lucas analysis, so long as it's not a permanent deprivation abuse.

Now, certainly a 10-year claim would have a much harder row to hoe against a takings challenge, but I would *26 like to know the impact on the property's value, why the 10 years was necessary, if it was, the sorts of things that are factored under Penn Central.

QUESTION: Well, you could do a Penn Central--you could have done Penn Central in Lucas. I mean, Penn Central is wonderful. We could apply it to everything, but as Mr. Berger pointed out, that's a terribly complicated analysis, enormously expensive for property owners to have to go through, which is why you have cases like Lucas.

MR. ROBERTS: This Court said Lucas applied only in the rare circumstance, a total ban on economic reproductive use.

QUESTION: Suppose I take a 3-year leasehold, right. The Government comes in and says, we're taking this property for 3 years, not a permanent taking, just a 3-year taking.

MR. ROBERTS: That--

QUESTION: We do a Penn Central analysis of that?

MR. ROBERTS: Oh, no. If the Government condemns a leasehold, that's a taking, and compensation is due.

QUESTION: All right, suppose in this case that one of these barred owners leased the property to someone *27 who's going to put a mobile home on it for a year, the moratorium comes in effect, assume the mobile home can't be--is that a taking of the leasehold, of the lessee's--

MR. ROBERTS: No.

QUESTION: --interest?

MR. ROBERTS: No. You don't sever up the property interest and--so that it corresponds to the extent of the regulation and then say--

QUESTION: You're taking from the lessee. That's all he's got.

MR. ROBERTS: Well, the right at issue here is the right to build residences, to develop the property.

QUESTION: No. My hypothetical is that it applies to a mobile home and the guy who leases for--the lot for a year, and then TRPA says you can't put the mobile home on there for a year. They take this entire leasehold. Compensable?

MR. ROBERTS: It would first of all be under the Penn Central analysis, and the economic impact--

QUESTION: Why, if it's a total taking?

QUESTION: General Motors certainly didn't do Penn Central.

MR. ROBERTS: No, but the other--the distinction is the one this Court talked about in Loretto, *28 between--you mentioned the World War II condemnation cases. The Pee Wee Coal case, the Government came in and occupied the coal mine to prevent a strike. That was a taking. In Central Eureka they said, you cannot use the gold mine, and this Court said, that's different, that's not a taking.

That's the type of distinction that we're talking about here between physical appropriation or, extended to Lucas, a ban on total economic use, and the temporary regulation that's at issue here. Because the regulation is temporary, the land retains economic value.

QUESTION: I'm still not sure of your answer. Your answer is that in my hypothetical about the 1-year lease that's taken from the lessee, it has to be a Penn Central analysis because?

MR. ROBERTS: Because you're starting out with a property--presumably the regulation applies to the property generally, and it just so happens that this one parcel has been severed out into a leasehold, and in doing that, that is a question that has to be addressed before you get to the analysis, should you sever out the affected property interest to a leasehold.

QUESTION: But you could have made that same argument in General Motors, and I think the Government did, that you shouldn't just treat it as a leasehold, *29 you've got to value the whole property. The court says no, there was a leasehold in effect, that's what the Government took, that's what the Government has to pay for.

MR. ROBERTS: But if--if this Court is--in its past takings cases, when it's been presented with a regulation that applies to a discrete property interest, it hasn't said, well, let's redefine the effective property interests to that. It didn't do it in Penn Central, it didn't do it in Keystone Bituminous, and it didn't do it in the construction laborers case.

The way the property was held by the petitioners in this case is fee simple. This regulation applied to fee simple property. It did not affect the value anywhere near the extent that the regulation in Lucas did.

QUESTION: No, but just to make it clear, in my hypothetical--I know it didn't happen, but in my hypothetical, no recovery because?

MR. ROBERTS: No, I'm not sure it's no recovery, but I am sure that it's still evaluated under Penn Central, because--

QUESTION: But Mr. Roberts, if you evaluate it under Penn Central, would it be legitimate to evaluate it this way. I've assumed it would be, but maybe I'm wrong. Assume that the leasehold is not physically taken, so that *30 the Government doesn't substitute itself for the trailer owner and use the property. It's strictly a prohibition of use. I assumed that under Penn Central the lessee would have his claim against the lessor because the lessor was not delivering. The lessor would not have a claim for a permanent deprivation here because there, with respect to the lessor there would only be the temporary taking.

MR. ROBERTS: Well--

QUESTION: So that the lessee would probably come out okay against a different party. The lessor would be in the same position that the lessor would be in if there had never been a lease. Is that the way it would work?

MR. ROBERTS: Well, presumably the impact of regulation would be something that would be addressed in the lease agreement itself.

QUESTION: Yes.

MR. ROBERTS: I mean, if they were leasing it to build a mobile home and it turns out they can't, who bears the responsibility for that, again a matter between the lessor and the lessee.

The important point is that the, what the petitioners are arguing for is an extension of the Lucas rule which applied in a, as the Court said, the rare circumstance in which all economic use is prohibited, and *31 the Court emphasized in Lucas that that had the consequence of rendering the property valueless. This is how the Court phrased the question presented in Lucas, whether the act's dramatic effect on the economic value of Lucas' lot accomplished a taking.

Well, here, there is no dramatic effect on the economic value of the affected lots, because we're talking about temporary regulation for a limited time.