© 2001 The Washington Post Company
June 29, 2001
By Eric Pianin, Washington Post Staff Writer

The Supreme Court yesterday granted new protections to landowners who maintain that environmental regulations diminish the value of their property, ruling that government can be required to compensate them for interfering with their ability to develop the land.

The ruling concerned cases in which property owners buy land knowing that it is subject to environmental or zoning limits -- such as restrictions on developing wetlands or fragile beaches. In a splintered decision that involved shifting majorities on different aspects of the case, five justices said even when such limits are already in place, they can amount to a "taking" from the new owner and require compensation by the government.

Writing the majority opinion, Justice Anthony M. Kennedy said the government may not be relieved "of its obligation to defend any action restricting land use, no matter how extreme or unreasonable."

The ruling was not a clear-cut victory for property owners, because the court concluded that the Rhode Island property owner who had brought the case had not succeeded in demonstrating he had been deprived of all economic use of his waterfront property.

But property rights groups hailed the decision as a breakthrough in their efforts to curtail government encroachment on environmentally sensitive, privately held land. Some environmental groups and legal experts warned that the ruling could embolden developers to flood the courts with litigation challenging environmental and zoning rules and seeking millions of dollars in compensation.

"This increases opportunities for developers and other landowners to sue state and local governments over land use and environmental regulations, and it will inevitably impose a further chill on environmental protection efforts at all levels of government," said John Echeverria, director of the environmental policy project at the Georgetown University Law Center.

Gary Garczynski, first vice president of the National Association of Home Builders and a builder-developer in Northern Virginia, said the ruling reaffirms the constitutional rights of property owners.

"I think the court made it clear that government has an obligation to treat property owners fairly and pay for land when there's a taking, and regulations pile up and spin out out of control," he said.

The decision is part of a line of cases in which property rights advocates have pressed the high court to adopt a broad view of the Constitution's "takings" clause, which requires that government pay "just compensation" to property owners for any "taking" of their land.

Property rights advocates have argued, for the most part unsuccessfully, that restrictions on land use can amount to such takings and therefore require payments -- a result that would make it difficult for state and local governments to enact such limits. Pacific Legal Foundation lawyers intervened in the case to challenge the notion -- widely adopted in lower court decisions -- that property owners cannot win regulatory takings claims if they bought their land after regulations became effective.

The case was brought by Anthony Palazzolo, the owner of 18 acres of undeveloped salt marshes in the town of Westerly, nestled on the edge of the Rhode Island coastline. The property helps prevent the flooding of Winnapaug Pond, a quarter mile inland from the Atlantic Ocean.

The marshes also serve as a refuge and spawning ground for shellfish, fish and birds. In 1965, the state enacted legislation permitting a state agency to restrict the development of coastal wetlands such as Palazzolo's and then created a Coastal Resources Management Council in 1971. Palazzolo became sole shareholder in the property in 1978.

Palazzolo had tried to fill in the wetlands at various times over several decades, proposing to build either a 74-house subdivision or a recreational beach facility. After the state repeatedly rejected his applications, Palazzolo sued, alleging that the state's actions were an unconstitutional "taking" of his property that deprived him of all economically beneficial uses.

A state trial court ruled against Palazzolo October 1997 and the Rhode Island Supreme Court unanimously upheld the the decision on Feb. 25, 2000, finding that Palazzolo's claim was not "ripe for review." The Rhode Island court said that he had not demonstrated he had been deprived of all beneficial use of his property, and that he had no reasonable expectations he could develop a subdivision on this property.

Yesterday, the high court offered a splintered ruling in which shifting majorities ruled that the case, indeed, was ripe for review. But it concurred with the lower court that Palazzolo had failed to demonstrate fully that he had been deprived of all economic use of the land -- and remanded the case to resolve that issue.

But on the critical question of whether Palazzolo had the right to challenge environmental regulations predating 1978, when he assumed full ownership of the property, the court ruled that states should not be free to "shape and define property rights and reasonable investment-backed expections" while denying subsequent owners the right to claim injury from lost value.

Kennedy was joined by five other justices in whole or in part -- Chief Justice William H. Rehnquist, Sandra Day O'Connor, Antonin Scalia, Clarence Thomas and John Paul Stevens. Three justices -- Ruth Bader Ginsburg, David H. Souter and Stephen G. Breyer -- dissented, with Ginsberg writing that Palazzolo had not demonstrated his case was "ripe" for appeal.

Staff writer Anita Huslin contributed to this report. Error: Unable to read footer file.