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CRC Op-eds and Letters to the Editor
Regulating, Not Taking
Timothy J. Dowling
March 26, 2001

It is no surprise that Eric Grant, counsel for Pacific Legal Foundation and the claimant in Palazzolo v. Rhode Island, presents a one-sided view of the case in his [March 20] opinion piece. Here's the rest of the story.

Palazzolo -a regulatory takings challenge to state protections for pristine wetlands along the Rhode Island coast - presents two issues to the U.S. Supreme Court that Grant virtually ignores. First, the Rhode Island Supreme Court ruled that Palazzolo's taking claim is unripe because he never applied for permission to build the residential subdivision that formed the basis of his lawsuit at trial.

Palazzolo now contends that his claim has nothing to do with the subdivision, but instead is rooted in the state's denial of permission to build a beach club on the property. But the trial record is devoid of any valuation evidence regarding a beach club because the case as litigated by Palazzolo was based on the subdivision proposal. Palazzolo should not be allowed to engage in this bait-and-switch strategy.

Second, Palazzolo argues that the wetland protections worked a per se taking under Lucas v. South Carolina Coastal Council. But the Lucas per se rule applies only where regulation denies a landowner all economically viable use of the land. It is undisputed that Palazzolo may build at least one home on his land, and that the land is worth at least $200,000-almost 16 times his corporation's $13,000 purchase price. A denial of all economically viable use? Hardly.

Grant contends that takings liability should attach even where a landowner buys land after the enactment of the challenged restriction, as Palazzolo did. Under this approach, however, land speculators could reap unjust windfalls by scooping up long-protected lands at bargain prices and then suing for a taking based on the value of the land as fully developed.

Fortunately, that is not the law. Lucas holds that no taking occurs where a permit denial is authorized by a pre-existing "background principle" of law that shapes the landowner's title, like Rhode Island's wetland protection law. Grant contends that under Lucas, background principles include only common-law doctrines like nuisance, not statutes and other positive law. But Lucas and other rulings recognize that positive law defines property rights in ways that affect constitutional analysis.

As Justice Anthony Kennedy noted in his Lucas concurrence, the takings inquiry should embrace "the whole of our legal tradition," not just common law principles. Moreover, because the trial court found that Palazzolo's proposed wetland destruction would constitute a nuisance, it is especially appropriate to give background principles status to a statute designed to protect neighboring landowners and the public from such nuisances and nuisancelike activity.

Grant further argues that the background principles defense is limited to ancient, "frozen" principles of law. But Lucas makes clear that the defense is more flexible, stating that "changed circumstances or new knowledge may make what was previously permissible no longer so" without working a taking.

Every judge who has considered Palazzolo's takings claim has rejected it. So should the U.S. Supreme Court.

Timothy J. Dowling is chief counsel at the Community Rights Counsel, which submitted an amicus brief in Palazzolo.

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