A. Per Se/Categorical

The per se category is best illustrated by the Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 73 L. Ed. 2d 868 (1982) (Loretto). The categorical category is best illustrated by Lucas v. South Carolina Coastal Council, 112 U.S. 2886, 120 L. Ed. 2d 798 (1992) (Lucas). In these categorical cases, the application of a regulation to property deprives the landowner of an entire property interest. Lucas claims for just compensation under the Fifth Amendment, then, break into two essential elements: (1) the imposition of a regulation totally deprives a landowner of a right in property (it can apply to personalty, but the court is less protective of personalty)[1], and (2) the right deprived is recognized under state law and is not a nuisance, the government owes compensation.

For physical invasion (or the per se claims), the government either occupies in fact or has given itself the right to occupy private property – without paying for the privilege. The physical invasion generally is not the result of natural causes or conditions, but rather is a physical occupation or condition resulting from governmental action, even governmental action that forbids the removal of the invading material. Beta Trust v. City of Cannon Beach, 33 Or. LUBA 576 (1997); see also Teegarden v. United States, 42 Fed. Cl. 252 (1998) (failing to allocate firefighting resources to petitioner’s property that was then destroyed by a wildfire, is not a compensable taking under physical invasion or any other theory).

B. Facial Taking Claims (Regulation Imposes a Taking on Its Face)

These are challenges to the enactment of a regulation. Rarely do these situations result is successful taking claims because courts take the position they do not know how the regulations will be unconstitutionally applied.

A two part “Agins” test (Agins v. City of Tiburon, 447 U.S. 255, 65 L.Ed.2d 106 (1980)) is applied to determine whether the adoption of a regulation effects a taking. The relevant questions under this test are (1) does the regulation substantially advance a legitimate governmental interest? (2) does the regulation deprive the owner of economically viable use of property?

C. “As Applied” Partial Taking Claim

These claims include circumstances where the application of a regulation to particular property is a taking of some interest in property that is less than the whole, although the regulation may not effect a taking on its face. To determine whether there is a taking under this category, apply the three Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 57 L.Ed.2d 631 (1978), factors, which require an examination of the following: (1) the character of the invasion, (2) the economic impact of the regulation as applied to the particular property, (3) the property owner’s distinct investment backed expectations with respect to that property. Palazzolo v. Rhode Island, (United States Supreme Court, June 28, 2001), slip op 11, however, makes clear that no one of these factors is dispositive of the taking question.

Moreover, as a footnote to the Penn Central balance, it appears the property as a whole analysis in Penn Central has evolved to favor the Lucas “bundle of sticks” approach to protect entire and discrete state law recognized property interests. Thus, when analyzing under the three‑part test (as well as a per se taking), consider whether state law recognizes a discrete property interest in the property right being interfered with. For example, if the regulation at issue deprived the property owner of the right to lease land, while less than a take of the fee, it is a total take of a discrete property interest, less than the whole, but compensable as a taking nevertheless.

There are few successful Penn Central taking claims as a practical matter. See District Intown Properties Ltd. Partnership v. District of Columbia, 23 F. Supp. 2d 30 (D.D.C. 1998), aff’d, 198 F.3d 874. Most partial take claims end up being characterized as a total take if the court plans to award compensation. However, a recent successful taking claim under this analysis resulted in Florida Rock Industries v. United States, 45 Fed. Cl. 21 (1999).

D. Unconstitutional Conditions (Nollan/Dolan)

A condition of approval will not result in a judicial determination of an unconstitutional taking if:

¨ The condition furthers a substantial/legitimate governmental interest +

¨ The condition is related to the interest that is served +

¨ The impacts of the development are roughly proportional to the condition imposed.

Keeping these basic categories in mind will greatly assist in applying the rules of the game to situations that arise in practice.

II. SPECIFIC ISSUES

A. Ripeness

The ripeness requirement says that taking claims regarding the application of highly discretionary local regulations to particular property, will not be reviewed on the merits until it is clear to the federal judiciary how far the regulating government will go to limit the use of the privately held property. See Palazzolo, supra, slip op 7. The ripeness rule has been called a jurisdictional requirement, but more recently the United States Supreme Court termed it as also prudential requirement for courts to apply in appropriate circumstances to avoid sticking judicial noses into local affairs. Suitum v. Tahoe Reg’l Planning Agency, 520 U.S. 725, 117 S. Ct. 1659, 1664-65 (1997).

The seminal ripeness cases are now: Palazzolo, supra; Suitum, supra; Williamson County Regional Planning Commission v. Hamilton Bank of Johnson County, 473 U.S. 176 (1985);MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340, 351 (1987); see also Kinzli v. City of Santa Cruz, 818 F.2d 1449, as amended, 830 F.2d 968 (1987), cert. denied, 484 U.S. 1043, 108 S. Ct. 775 (1988), Ripeness has three prongs: (1) there must be a final local decision, (2) administrative remedies must be exhausted, including pursuit of variances as well as alternative development options, and (3) as a prerequisite for bringing a federal claim, avenues for achieving state compensation must be explored. While it is the generally held view that adequate state procedures must be exhausted in state court, this was not required in City of Chicago v. International College of Surgeons, 522 U.S. 156 (1997) (federal court can exercise supplemental jurisdiction to satisfy this prong).

To the extent a state’s procedures deprive claimants of their right to a jury trial on the issue of whether a taking occurred, there may be an argument that the state procedures are inadequate. See City of Monterey v. Del Monte Dunes, Ltd., 119 S. Ct. 1624 (1999) (Seventh Amendment to the United States Constitution protects right to jury trial in a federal taking claim); see also Lakin v. Senco Prods., Inc., 329 Or. 369, 987 P.2d 476 (1999) (right to jury trial in Oregon state court proceedings); cf. Buckles v. King County, 191 F.3d 1127 (9^th Cir. 1999). See Overstreet, The Ripeness Doctrine of the Takings Clause: A Survey of Decisions Showing Just How Far Federal Courts Will Go to Avoid Adjudicating Land Use Cases, 10 J Land Use & Envtl. L 91 (1994).

Governmental units generally appreciate the ripeness rule because it gives them an opportunity to avoid taking claims by thoroughly reviewing “at least one” development application and allowing beneficial uses of property to occur within the regulatory environment. Williamson County Planning Comm’n v. Hamilton Bank, 473 U.S. 172, 192 (1985). This, as a practical matter, has meant that a land use applicant must apply for at least two different alternative development proposals and obtain a final decision from the highest local decision‑maker denying both alternative applications, before seeking judicial review. Oftentimes, however, at a waste of private and public resources, a private property owner must apply for many, many more uses to no avail. See City of Monterey v. Del Monte Dunes, Ltd., 119 S. Ct. 1624 (1999);[2] see also Kanner, Hunting the Snark, not the Quark: Has the United States Supreme Court Been Competent in Its Effort to Formulate Coherent Regulatory Takings Law? The Urban Lawyer (Spring 1999). Property owners may spend years trying to determine what uses government will let them make of their property. Whether this is fair depends upon the perspective of the person asking the question. Government side litigants argue this is perfectly acceptable. See Lazarus Litigating Suitum v. Tahoe Reg’l Planning Agency in the United States Supreme Court, 12 J. Land Use & Envtl. Law 179 (1997). Private property owners argue the converse.

Palazzolo provided badly needed clarification regarding the ripeness rule. It began its analysis by stating:

“While a landowner must give a land-use authority an appropriate opportunity to exercise its discretion, once it becomes clear that the agency lacks discretion to permit any development, or it is clear the permissible uses of the property are known to a reasonable degree of certainty, a takings claim is likely to have ripened.” Palazollo, supra, slip op 7.

Thus, the Court explained that only to the extent there is discretion to exercise, creating doubt as to permissible uses of private property, will the ripeness rule come into play.

As noted, the perennial ripeness question has been how many development applications are enough to satisfy the ripeness test as a matter of law? The federal ripeness rule requires that “at least” one meaningful application be submitted and that a variance be sought that would allow the approval of the requested development. Suitum v. Tahoe Reg’l Planning Agency, 520 U.S. 725, 117 S. Ct. 1659 (1997); Williamson County Planning Comm’n v. Hamilton Bank, 473 U.S. 172, 192 (1985); Greenbrier (Lake County Trust Co. No. 1391) v. United States, 40 Fed. Cl. 689 (1998). Again, Palazzolo provides some needed clarity. In Palazzolo, the governmental defendants argued that the petitioner needed to file more applications for “less grandiose” plans. The Supreme Court replied as follows to this assertion:

“Thus, the reasoning goes, we cannot know for sure the extent of permitted development on Petitioner’s wetlands. * * * This is belied by the unequivocal nature of the wetlands regulations at issue under the Council’s application of the regulations to the subject property.” Palazzolo, supra, slip op 7.

Because the governmental decisionmakers had been clear that they would not authorize fill, the Court stated there was no point to filing additional development applications. The Palazzolo Court made clear that the exercise of filing applications to ripen a claim was not a end in and of itself:

“The ripeness doctrine does not require a landowner to submit applications for their own sake. Petitioner is required to explore development opportunities on his upland parcel only if there is uncertainty as to the land’s permitted use.” Palazzolo, supra, slip op 8.

In Kawaoka v. City of Arroyo Grande, 17 F.3d 1227, 1232 (9^th Cir.), cert. denied, 115 S. Ct. 193 (1994), the court determined that property owners must submit “one formal development plan”; see also Howard W. Heck & Assoc., Inc. v. United States, 134 F.3d 1468 (D.C. Cir. 1998). In Eastern Minerals Int’l v. United States, 36 Fed. Cl. 541, 548 (1996), the court determined: “Each plaintiff must satisfy the threshold requirement of a single meaningful application to yield a ripe takings claim.” See also Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 938 F.2d 153, on remand, 808 F. Supp. 1484, aff’d in part and rev’d in part, 34 F.3d 753, opinion amended, 42 F.3d 1306, cert. denied, California v. Tahoe Sierra Preservation Council, 115 S. Ct. 1401, on remand, 992 F. Supp. 1218 (9^th Cir. 1991) (ripeness requirement does not require property owner to seek amendment to regional plan for claim to be ripe); but see Restigouche, Inc. v. Town of Jupiter, 59 F.3d 1208 (11^th Cir. 1995) (landowner must seek rezoning, variances and a meaningful application for a taking claim to be ripe for judicial review); see also Kanner, Hunting the Snark, Not the Quark: Has the United States Supreme Court Been Competent in Its Effort to Formulate Coherent Regulatory Takings Law? The Urban Lawyer, Spring 1999. As noted, federal legislation has been promoted to clarify federal ripeness law to enable the federal courts and litigants to have some certainty regarding the circumstances in which a federal taking claim may be reviewed on the merits. See “The Private Property Rights Implementation Act of 1999” (H.R. 2372). However, for a vast majority of governmental regulators and landowners, Palazollo will be adequate to clarify this issue without new legislation.

Regarding the confluence of the first, second and third prong of the ripeness rule, the following frustrating case is illustrative in its unfair consequences. In Santa Fe Village Venture v. City of Albuquerque, 914 F. Supp. 478 (D.N.M. 1995), the plaintiff’s first federal suit was dismissed on ripeness grounds because the property owner never sought compensation in state court. Then, the plaintiff’s second suit in state court for inverse condemnation (without any federal claims pleaded) was dismissed for lack of standing. The plaintiff’s third suit, again in federal court, alleging federal constitutional violations was dismissed because the federal claims were not raised in state court - even though the state court had already decided that the property owner lacked standing to bring its action there. The plaintiff was out of court based on a sort of jurisdictional shell game in which no court ever heard his claim on the merits and it was clear he could not ever have his claim heard on the merits.

1. Ripeness and Physical Invasions/Per Se Cases

The general rule is that when government occupies property, the claim is ripe from the moment of physical occupation. If the government actually occupies or requires the occupation of private property, the taking claim is ripe in the sense that a final governmental decision has obviously been reached. Accordingly, it is generally unnecessary to seek other kinds of development approvals when government occupies or requires the public occupation of private property. Nelson v. City of Lake Oswego; 126 Or. App. 416, 422, 869 P.2d 350 (1994); Ferguson v. Mill City, 120 Or. App. 210, 852 P.2d 205 (1993); see also Nike v. City of Beaverton, 35 Or. LUBA 57 (1998); Harris v. City of Wichita, 862 F. Supp. 287, 291 (D. Kan. 1994), aff’d, 74 F.3d 1249 (9^th Cir. 1996).

However, according to one court, the fact that government will certainly invade private property in the future by closing and relocating an access road, does not necessarily mean the claim is ripe if the relocation is subject to access permit requirements and the private property owner has not applied for governmental permission to relocate the access road to another reasonable location. Curran v. State by & Through ODOT, 151 Or. 781 (1997).

Therefore, even in the context of physical invasion claims, it is important to consider whether your client’s case presents a physical invasion taking in the context of the Williamson County ripeness considerations. Missing a ripeness hurdle can foreclose the taking claim. So, for example, an alleged physical invasion in the nature of a de facto conservation easement was not recognized by a court in reviewing a taking claim arising from the Columbia River Gorge Commission’s denial of a development application for partition and permission to construct dwelling. Miller v. Columbia River Gorge Comm’n, 118 Or. App. 553, 848 P.2d 629 (1993).

2. Ripeness and the “As Applied”/Partial or “Categorical Regulatory Taking Cases

The ripeness doctrine applies to cases where the application of a regulation deprives a property owner of all economically beneficial use (categorical takings) or a part thereof (partial takings). The only limits to the application of the ripeness doctrine in this regard are (1) the alternative approval method must not be a “late created special permit procedure” (Lucas), and (2) the application the doctrine of futility (MacDonald Sommer and Frates, 477 U.S. 340, 91 L.Ed.2d 285 (1986)). Futility has been elusive for most property owners to show. See Joyce v. Multnomah County, 114 Or. App. 244, 248 (1992). (“[P]etitioner’s arguments, however, come to little more than a weighing of the evidence that he anticipates would be produced against him in variance or permit proceedings that have not been held.”) Nevertheless, the newly explained limits of the reach of the ripeness rule, as explained in Palazzolo, should enable more property owners to get their regulatory takings claims to the attention of the judiciary under the futility doctrine.

Where a party claims the application of the Endangered Species Act (ESA) deprives him of all economically viable use, the Oregon Court of Appeals has held he must apply for an incidental take permit from the federal government before his taking claim is ripe. Boise Cascade v. State, 164 Or. App. 114 (1999).

3. Ripeness and Facial Claims

Facial challenges to regulations are generally ripe under the finality prong, the moment the challenged regulation or ordinance is adopted. Cope v. Cannon Beach, 317 Or 339, 342, 855 P.2d 1083 (1993); Suitum v. Tahoe Reg’l Planning Agency, 117 S. Ct. 1659 (1997); Richardson v. City & County of Honolulu, 124 F.3d 1150 (9^th Cir. 1997); Sinclair Oil Corp., v. County of Santa Barbara, 96 F.3d 401 (9^th Cir. 1996); Whitney Ben., Inc. v. United States, 18 Cl. Ct. 394, 407, aff’d, 926 F.2d 1169, 1171 (Fed. Cir.), cert. denied, 502 U.S. 952 (1991) (a facial taking occurred upon enactment of federal statute); Levald, Inc. v. City of Palm Desert, 998 F.2d 680 (9^th Cir. 1993), cert. denied, 114 S. Ct. 924 (1994). Nevertheless, where a facial claim is argued as an unconstitutional conditions claim, ripeness rules may be applied by some courts. Nike v. City of Beaverton, 35 Or. LUBA 57 (1998), aff’d, 157 Or. App. 397 (1998); but see Heal v. Hearings Bd., 96 Wn. App. 522 (1999).

4. Ripeness and Conditions of Approval

As noted, at least as to conditions requiring the government to occupy private property, the finality prong of the Williamson County rule generally has not been employed to prevent judicial review. Nelson v. City of Lake Oswego; 126 Or. App. 416 (1994); Schultz v. City of Grants Pass, 131 Or. App. 220 (1994). In J.C. Reeves Corp. v. Clackamas County, 131 Or. App. 615 (1994), the Oregon Court of Appeals determined that an unconstitutional conditions claim was appropriate for review without subsequent ripening events, although it did not couch its analysis in ripeness terms.

In Oregon, LUBA has determined that the ripeness rule applies to claims alleging unconstitutional conditions. Reeves v. City of Tualatin, 31 Or. LUBA 11, 13-14 (1996); see also Dolan v. City of Tigard, 20 Or. LUBA 411 (1991) (unconstitutional conditions allegation not ripe in the absence of a request for a variance and a denial thereof). LUBA’s holdings regarding ripeness of unconstitutional conditions in Reeves and Dolan have not been specifically tested. This holding, however, seems contrary to the ripeness rule of Palazzolo in the sense that when government imposes conditions of approval, it seems reasonably clear how far the government will go in imposing conditions of approval.

Nevertheless, there is some uncertainty about whether the imposition of conditions of approval alleged to be unconstitutional requires the claimant to seek additional land use approvals before the taking claim is ripe. Some state statutes may even purport to make ripening an unconstitutional conditions claim a statutory prerequisite. See ORS 197.796 (asserting that an unconstitutional conditions taking claim must raised in local permit proceedings and then brought either to LUBA within the 21‑day deadline for filing local land use appeals or a complaint for just compensation must be filed within six months of the imposition of the conditions). While it seems relatively clear that the reason for a ripeness rule argues against the serial application prong being applied to unconstitutional conditions, each case should be evaluated on its own with reference to local law.

5. The Ripeness Rule and the Futility Exception

Under federal precedents, the futility exception is appropriate where the process for obtaining a permit is so burdensome or futile that it “effectively deprives the property of value” or “[n]o reasonable landowner would find a door left open for obtaining a permit.” Broadwater Farms Joint Venture v. United States, 35 Fed. Cl. 232, 236 n.1 and 236-38 (1996), vacated without op. by 121 F.3d 727, on remand, 45 Fed. Cl. 154 (1999). The doctrine of futility excuses the requirement that a landowner seek a variance in circumstances where the application submitted was for development of a nature and intensity that did not expressly conflict with any particular provision of the applicable zoning ordinances. Del Monte Dunes v. Monterey, 920 F.2d 1496, appeal after remand, 95 F.3d 1422, reh’g granted, 118 F.3d 660, reh’g en banc denied, 127 F.3d 1149, aff’d, City of Monterey v. Del Monte Dunes, Ltd., 119 S. Ct. 1624 (1999).

Also, futility theoretically can excuse successive applications for permits on other land owned or leased by the taking plaintiff where it is obvious the regulating authority would deny subsequent permits in the same manner as permits had been denied on other property. Eastern Minerals Int’l v. United States, 36 Fed. Cl. 541 (1996); see also Palazzolo, supra; see also City of Houston v. Kolb, 982 S.W.2d 949 (Tex. App. 1999) cert. denied 120 S. Ct. 2690 (2000). Kolb is especially interesting because the City of Houston had denied the requested development approval on the basis that the City had plans to construct a major road through the property. Accordingly, the existence of the City’s plans and its statements of its intentions to hold fast to those plans, established it would be futile to seek other development approvals for the subject property.

Futility has been employed to excuse filing a local appeal of a city engineer’s denial of a permit to the planning commission. City of Albany v. Oxford Solid Waste Landfill, 476 S.E.2d 729 (1996). In City of Albany, the court reasoned futility was appropriate in such a case because:

“the trial court found that the [permit application] was rejected by the City Engineer because he was instructed by the City Manager at the direction of the Albany City commission not to issue the permit. In light of these peculiar facts, it is obvious that to require Oxford to pursue an administrative appeal before the City’s Planning Commission would be a futile act.”

City of Albany v. Oxford Solid Waste Landfill, 476 S.E.2d 729 (1996).

On the other hand, in Curran v. State by & Through ODOT, 151 Or. App. 781, 788 n.10 (1997), the Oregon Court of Appeals determined it was not futile to apply for an ODOT access permit even though plaintiff’s engineering report establishes the alternative access ODOT states it will require is unreasonable. Specifically the court stated:

“The engineer’s report states that the location suggested by ODOT for an alternative access route is not reasonable. The report does not assess, however, the feasibility of constructing a road at any other location on the property.”

As noted, Palazzolo makes clear that where the regulations themselves do not provide discretion or the government has already made determinations that reasonably show the permissible uses of property, there is no constitutional reason to submit what would then be an additional, futile development applications simply for the sake of submitting such applications.

Finally, futility may also excuse compliance with the second prong of the ripeness test if, under state or local law, there is no possibility that the plaintiff can obtain just compensation through an inverse condemnation action. Suitum v. Tahoe Regional Planning Agency, 520 U.S. 725, 734 n 8 (1997); see also Christensen v. Yolo County Bd. of Supervisors, 995 F.2d 161 (9^th Cir. 1993).

III. THE DETAILS OF THE FIVE KINDS OF TAKING CLAIMS

A. Per Se/Categorical Takings

These are the total taking situations described above[3] (i.e., no economically beneficial use remains after regulation or the regulation requires government to physically occupy some part, or all of, one’s land). Once a categorical taking is established, the burden shifts to government to establish why the prohibition is constitutional. This requires a showing by government that the prohibition is contemplated under the title to the subject property or that the uses of the property constitute a common law nuisance. Of course, the best defense to these claims is the regulation does not amount to a categorical taking at all; i.e., there is some economically beneficial use of property that remains or that the regulation does not require a physical occupation of property.

One area of confusion is that some courts improperly determine that only those physical invasions that interfere with “substantial interests” in property warrant just compensation. See State of Oregon v. Winters, 170 Or App 118 (2000) in which the Oregon Court of Appeals determined that a temporary road easement taken by the state was not a compensable physical invasion style taking. The court determined a compensable taking is generally defined as any “substantial interference with private property rights.” This is wrong and inconsistent with federal law:

“Our cases establish that even a minimal permanent physical occupation of property requires compensation under the taking Clause.” Palazzolo, supra, citing Loretto, supra 458 U.S. 419, 427 (1982).

Regarding categorical takings, an analysis of key cases follows.

1. Palazzolo v. Rhode Island (United States Supreme Court June 28, 2001)

A categorical taking results if the disputed regulation effects a total taking of all economically beneficial or productive use[4] of property[5] (not the “economically viable” test used in Agins). In a categorical style taking, a court does not apply the Penn Central “fairness factors” analysis to categorical taking claims.[6] However, if there is some value remaining for an economically beneficial use, then the taking must be analyzed as a Penn Central style partial take, rather than a categorical take.

A. Notice Rule

Palazzolo is perhaps most important in the context of the so-called notice rule. Palozzolo holds that post-enactment notice to a property owner of a restrictive regulation, does not absolve the government of the obligation to pay for a taking occasioned by the regulation. The Court stated:

“[A] state, by ipsie dixit, may not transform private property into public property without compensation.” (Citations omitted.) Palazzolo, supra slip op 10.

The Court went on to state:

“A blanket rule that purchasers with notice have no compensation right when a claim becomes ripe is too blunt an instrument to accord with the duty to compensate for what is taken.” Palazzolo, supra slip op 11.

The Court reaffirmed its statements in Nollan, 483 U.S. 825, 834 n 2 that:

“So long as the [California Coastal Commission] could not have deprived the prior owners of the easement without compensating them, the prior owners must be understood to have transferred their full property rights in conveying the lot.”

2. Lucas

In analyzing categorical taking claims, the following language from Lucas is important:

“* * * regulations that leave the owner of land without economically beneficial or productive options for its use -- typically, as here, by requiring land to be left in its natural state -- carry with them a heightened risk that private property is being pressed into some form of public service under the guise of mitigating some serious public harm.”

Under Lucas, the inquiry is (1) what constitutes a total deprivation of property interest(s),[7] and (2) the nature of the property interest alleged to be totally deprived.[8] To determine the answer to these questions, look to the deprivation required by the regulations themselves and to the reasonable expectations of the property owner. For example, where specific water rights are recognized by a state, the deprivation of these rights may be a taking. Similarly, if state law recognizes conservation easements, requiring the dedication of the equivalent of a conservation easement may also be a taking under this analysis. The lesson for government is to be careful in identifying new property rights under state law and, for developers, to identify such rights when regulatory deprivations occur.

In determining what constitutes the property to be analyzed for determining a total taking, both government and developers should keep in mind the following admonition from the U.S. Supreme Court in a personal property rights case (Concrete Pipe & Products of California, Inc. v. Construction Laborers Pension Trust for Southern California., 113 S. Ct. 2264 (1993)):

“We reject Concrete Pipe’s contention that the appropriate analytical framework is the one employed in our cases dealing with permanent physical occupation or destruction of economically beneficial use of real property. [Citing Lucas]. While Concrete Pipe tries to shoehorn its claim into this analysis by asserting that ‘[t]he property of [Concrete Pipe] which is taken is in its entirety’ * * * we rejected this analysis years ago in Penn Central * * * where we held that a claimant’s parcel of property could not be divided into what was taken and what was left for purposes of demonstrating the taking of the former to be complete and hence compensable. To the extent that any portion of property is taken, that portion is always taken in its entirety; the relevant question, however, is whether the property taken is all, or only a portion of the parcel in question. Accord Keystone Bituminous (Keystone Bituminous Coal Association v. DeBenedictis, 480 U.S. 470, 94 L. Ed. 2d 472 (1987) * * *.

* * * * *

[O]ur cases have long held that mere diminution in value of property, however serious, is insufficient to demonstrate a taking.”

Id. at 2290-91.

A categorical taking may be a total taking of a smaller interest that is less than the whole. While this may seem to conflict with Concrete Pipe, no one ever said the law of unconstitutional takings was completely coherent. Consider the following from Kaiser Aetna v. United States, 444 U.S. 164 (1979):

“Moreover, an owner suffers a special kind of injury when a stranger directly invades and occupies the owner’s property. As [previous text in opinion] indicates, property law has long protected an owner’s expectation that he will be relatively undisturbed at least in the possession of his property. To require, as well, that the owner permit another to exercise complete dominion literally adds insult to injury. Furthermore, such an occupation is qualifiedly more severe than a regulation of the use of property, even a regulation that imposes affirmative duties on the owner, since the owner may have no control over the timing, extent or nature of the invasion.” (citations omitted)

Therefore, it appears reasonably clear that small physical occupations of real property are compensable takings. However, genuinely small losses of value resulting from the imposition of a governmental regulation, probably are not compensable takings. Nevertheless, in a case with enough lost value to warrant litigating the matter, Palazzolo makes clear that there is the potential for diminution of value cases that will warrant the payment of just compensation under the Takings Clause.

3. Example of Loretto Style cases

a. GTE Northwest, Inc. v. Public Utility Commission

GTE Northwest, Inc. v. Public Utility Commission, 321 Or 458 (1995), applied the per se rule of Loretto in the context of utility regulation. Regardless of the pervasive regulatory environment of the communications industry, the requirement that GTE allow other companies to “collocate” wires in GTE’s was a compensable Loretto style physical invasion. See also Verizon Communications Inc. v. FCC, 219 F.3d 744, cert granted 531 U.S. 511 (January 22, 2001).

(b) Bargmann v. Nebraska, 600 N.W. 797 (1999)

In Bargmann, the court determined that the city government’s failure to regulate development in a floodplains did not constitute a taking of property when the plaintiff’s property flooded. However, the court determined that the state had liability since it had approved the construction contract that caused the flooding at issue.

(c) Echevarrieta v. City of Rancho Palos Verdes, 103 Cal. Rptr 165 (Jan. 3, 2001) in which the court determined that a view protection ordinance preventing cutting of trees did not constitute a physical occupation style taking.

4. Examples of Lucas Style Cases

a. Palazzolo v. Rhode Island, (United States Supreme Court June 28, 2001)

While pleaded alternatively as a Lucas case, the United States Supreme Court stated it was not one. The case involved a property the value of which had been diminished from $3,150,000 to $200,0000 or a diminution of some 94% of the property value. However, the Court spent a great deal of time noting that in total taking situations where there is no economically viable use of property under the restrictive regulation, the fact that a property owner may have acquired his property with notice of the restrictive regulation does not foreclose the payment of just compensation.

b. McQueen v. South Carolina Coastal Council530 S.E.2d 628 (S.C. 2000) cert granted, reversed and remanded 2001 WL 721005 (2001).

While the intermediate state appellate court determined that the total denial of the right to construct a bulkhead and to fill behind it was the denial of all economically beneficial use of that property, the South Carolina Supreme Court reversed. Noting that the similarities between the instant case and Lucas, the South Carolina Court applied the notice rule to foreclose just compensation. Specifically, the court stated that because McQueen acquired his property after the restrictive regulation was in place, he was not entitled to compensatory relief. Of course, this view of takings under the “notice rule” has been discredited in the recent Supreme Court decision in Palazzolo, as noted above. The United States Supreme Court seems to have made its view of McQueen’s total taking case case clear in this regard as it accepted certiorari and reversed and remanded the McQueen case in light of Palazzolo.

c. Good v. United States, 189 F 3d 1355 (Fed. Cir. 1999).

The rationale of the Good case was reversed by the United States Supreme Court in Palozzolo. Good erroneously held that Lucas:

“did not hold that the denial of all economically beneficial or productive use of land eliminates the requirement that the landowner have reasonable investment-backed expectations of developing his land.” Id 1361.

d. Del Monte Dunes v. City of Monterey, 526 U.S. 687 (1999).

After rejecting five different development applications, the City of Monterey was sued on the theories that the City’s development denials took all economically beneficial use of the subject 36-acre property as well as advanced no legitimate governmental interest. The property owner won on both counts and the Supreme Court also held that the legitimate governmental interest question was properly submitted to the jury.

e. Loveladies Harbor v. United States

In Loveladies Harbor v. United States, 28 F.3d 1171 (1994), the nuisance exception did not apply to avoid a compensable taking, as the court determined the government failed to carry its burden to show the state could have prevented the fill under its law of nuisance.[9] Rather, the property interest in the development of the 12.5 acres was vested in the owner as a matter of state property law, so it was not within the power of the state to regulate it without compensation under a common law nuisance theory.

f. Steel v. Cape Corp.

Steel v. Cape Corp., 677 A.2d 634 (1996), holds that denial of a proposal to rezone property on the basis that the new zoning district because the rezone would make school facilities inadequate was a regulatory taking citing Dolan and Nollan. This case does not categorize well under the traditional tests because it blends a variety of principles. The court determined:

“While the provision of public facilities is a legitimate concern of the County, the burden of providing adequate schools is disproportionately placed upon [the plaintiff] when residential use is denied them while being granted to its neighbors.”

Id. at 650-52.

Of course, even though a regulation may well deprive a property owner of all economically beneficial use, just compensation may not be awarded in all cases. To understand this, one must understand the exceptions to the categorical taking rule.

g. Two exceptions to Lucas categorical taking rule:

Even if the landowner establishes a total deprivation, no compensation is due if the disputed regulation prevents a nuisance[10] (maintaining a nuisance is not one of the ownership sticks in the bundle of property rights[11]). In addition, no compensation is due where the effect of the regulation inures in the title under established principles of state law.[12] Palazzolo makes clear that the kind of background principles of state law referred to in this Lucas context, however, are limited. Palozzolo first makes clear that Lucas does not stand for the proposition that:

“any new regulation, once enacted, becomes a background principle of property law which cannot be challenged by those who acquire title after the enactment. Slip op 11.

The Palazzolo Court went on to state:

“It suffices to say that a regulation and that otherwise would be unconstitutional absent compensation is not transformed into a background principle of the State's law by mere virtue of the passage of title. This relative standard would be incompatible with our description of the concept in Lucas, which is explained in terms of those common, shared understandings permissible limitations derived from a State's legal tradition. * * *. A regulation or common-law rule cannot be a background principle for some owners but not for others." (Emphasis supplied). Palazzolo, supra slip op 11.

5. Pre-Palazollo Cases Dealing with the Lucas Exceptions:

(i) Landgate v. California Coastal Commission, 17 Cal. 4^th 1006 (1998); see also Buckley v. California Coastal Commission, 68 Cal App 4^th 1786 (1998) holding that the improper assertion of authority over land, preventing all economically beneficial use thereof, does not constitute a taking during the period of the prohibition, because judicial reversal of bureaucratic bungling is considered a normal delay in the development approval processes.

(ii) Ali v. City of Los Angeles, 77 Cal. App 4^th 246 (1999). At issue was the denial of a demolition permit for a structure damaged by fire. The court treated as beyond dispute that, in the absence of being rebuilt, the structures on the subject property lacked any economic viability. The California Court determined that because the government’s delay in refusing to issue the demolition permit was “so unreasonable from a legal standpoint” as to be arbitrary, not in furtherance of any legitimate governmental objective, and for no purpose other than to delay any development other than for a SRO hotel, that it constituted a taking.[13] Therefore, if bureaucratic bungling is “so unreasonable from a legal standpoint” to be considered arbitrary, then such arbitrariness is not a “normal delay” in the development approval process.

(iii) Boise Cascade v. State, 164 Or. 114 (1999), holding, among other things, there is no background principle of state law that bars property owners from knocking down bird nests.

(iv) M & J Coal v. United States, 47 F3d 1148 (1995) determines that restrictions under federal mining laws, that might otherwise be compensable as a taking are not compensable because those restrictions were part of the owners’ title to begin with.

(v) Hoeck v. City of Portland, 57 F3d, 781, 789 (9^th cir. 1995) cert. denied 516 U.S. 1112, regards a municipal ordinance making the maintenance of dilapidated buildings a nuisance. This case holds that a municipal order to tear the dilapidated building down, did not constitute a compensable taking.

(vi) Atlas Corporation v. United States, 895 F.2d 745 (Fed Cir. 1990), regarding the imposition of an environmental regulation[14] requiring the cleanup of uranium mine tailings, which cleanup was alleged to cost more than the value of the mill property at issue. The clean up requirement was nevertheless determined not to be a total taking.

(vii) Heal v. Hearings Bd., 96 Wn. App. 522 (1999), holds that the adoption of a steep slope ordinance has to be based on the best scientific data available to support foreclosing building opportunities on parts of particular properties. Otherwise, the ordinance would violate principles of proportionality and be unconstitutional.

(viii) Dissent on cert in Stevens v. City of Cannon Beach, 505 U.S. 1207 (1994) by Scalia, in which O’Connor joined, states:

“[A] State may not deny rights protected under the Federal constitution * * * by invoking nonexistent rules of state substantive law. Our opinion in Lucas * * * would be a nullity if anything that a State court chooses to denominate a ‘background law’ * * * could eliminate property rights.”

B. Where Do Moratoria Fit In?[15]

1. Moratoria could be alleged to be a taking on either a facial or as applied challenges.

The seminal case concerning temporary takings (and therefore moratoria) is the United States Supreme Court’s decision in First Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987). First English holds that temporary land use restrictions that deprive a property owner of all economically beneficial use of property require payment of just compensation, unless a state law background principle (nuisance) excuses the payment of just compensation. In Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), governmental regulations depriving a property owner of all economically viable use of property, were held to be compensable under the Takings Clause of the United States Constitution. Together, these cases state that temporary development regulations that forbid all economically viable use of property are compensable under the Fifth Amendment to the United States Constitution. Both cases recognize potential exceptions. Nevertheless, both cases are important in understanding temporary taking issues and the issues surrounding development moratoria.

Some lower courts have been reluctant to apply First English and Lucas to temporary taking and moratorium situations. Certiorari is pending in such a case: Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency, 16 F. 3d 764 (9th Cir. 2000), cert granted 69 USLW 3505, June 28, 2001. This case will hopefully resolve the law about when a temporary restriction that deprives a land owner of all economically baneful use of property, is a compensable taking: that is to the extent the First English and Lucas precedents are unclear. The question the high court certified is:

"Whether the [California] Court of Appeals properly determined that a temporary moratorium on land development does not constitute a taking of property requiring compensation under the Takings Clause of the United States Constitution?"

2. Moratoria imposed outside of statutory authority or time limitations can give, and have given rise to, 42 USC § 1983 liability.

In Mission Springs, Inc., v. City of Spokane, 134 Wash. 2d 947, 952-54 (1998), the city failed to approve a project and instead ordered a traffic study before granting final permit approval, against the advice of its city attorney. The Washington court held that the city council’s delay and the failure to allow the requested permits to be granted violated the plaintiff’s due process rights.

3. Issues consider regarding whether a moratorium constitutes a taking.

a. Is there a substantial governmental purpose?

b. Does the moratorium deprive property owners of all economically beneficial use or is there some economically beneficial use that can be applied for.

c. Is the moratorium of a finite duration?

d. To what extent is the government taking action to remedy the circumstances giving rise to the moratorium?

e. Watch the outcome in Tahoe-Sierra.

IV. FACIAL CHALLENGE TO LAND USE REGULATIONS

This situation involves the allegation that the mere enactment of a regulation constitutes a “taking.”

I. GENERAL SUMMARY OF TAKING CLAIMS