WASHINGTON _ Supreme Court justices appeared mired in a swamp of messy issues on February 26 as they heard a Rhode Island landowner's plea for compensation for being blocked from filling 18 acres of Atlantic coastal wetlands.
Attorneys for Anthony Palazzolo and the State of Rhode Island disagreed about virtually everything in the closely watched property rights case from the facts of the dispute to the procedural and substantive rules for resolving it.
For their part, the justices groped for answers on such basic issues as the exact size of Palazzolo's holding and the possible value of any permitted development on the site. "How do we know?" Justice Stephen G. Breyer asked Palazzolo's lawyer, James S. Burling of the Sacramento-based Pacific Legal Foundation.
The justices' uncertain questioning could presage a muddled outcome. That could disappoint property rights advocates, who had hoped for a ruling clarifying landowners' rights for compensation in "regulatory" takings cases. But state and local governments could also be disappointed if the ruling gives any additional room for takings claims.
Palazzolo argues that he is being blocked from building up to 74 houses on the 18 acres of wetland, which lie just inland of an oceanfront road in the town of Westerly. He is asking for more than $3.15 million in compensation, the amount he says he could realize by developing all 74 lots. In rejecting his plea, the Rhode Island Supreme Court called the projection "unrealistically optimistic."
Along with the wetlands, Palazzolo's holding encompasses a small but not precisely determined amount of "upland" property that includes a road and a developable "turnaround." Rhode Island officials say he could build at least one house on the upland. Palazzolo's lawyers argue one house amounts to "a pittance."
The case history is long and complex. Palazzolo, 80 years old and an auto wrecker by trade, bought the property along with two other people in 1959 for $8,000. Under local zoning law, he thought he could develop it for residential or recreational purposes. In 1971, a state agency gave him permission to fill the land with material dredged from adjacent Winnipaug Pond, but the agency revoked the permit shortly thereafter.
The closely held corporation Palazzolo formed lapsed in 1978, and title to the property passed to him individually. In the 1980s, he made two further attempts to win approval to fill all or part of the wetlands. The state's Coastal Resource Management Council turned him down in 1983 and again in 1985. Three years later, Palazzolo sued, claiming the state deprived him of all economic use of his land and asking for compensation under the Fifth Amendment's Takings Clause.
Procedurally, Palazzolo's case faces a major obstacle: the judicial doctrine of ripeness, which courts use to stay out of cases not yet completely developed. Palazzolo never filed a residential development plan, so Rhode Island officials say there is no way to know whether he might have been allowed to build some houses.
Conservative justices, however, were skeptical. "Why do you have to keep coming back?" Justice Antonin Scalia asked Rhode Island Attorney General Sheldon Whitehouse. Eventually, Whitehouse conceded that regulators might be "overbearing" if they forced a property owner to cross too many procedural hurdles.
On the merits, the justices struggled with two major issues: first, whether Palazzolo should have known he would not be allowed to fill the wetland when he took title to the property in 1978; and, second, whether he had an "economically viable use" of part of the land even if filling was not permitted.
Burling argued coastal landowners had every right to fill wetlands until the new regulatory regime was imposed during the 1970s, while Whitehouse said the state had protected wetlands "since time immemorial." On the value of the land, Whitehouse said Palazzolo had manufactured a takings case by focusing solely "on the portion of the property that is not buildable." Burling countered that some "nonzero value" was not enough to defeat a takings claim.
The case attracted more than a dozen friend-of-the-court briefs, with homebuilders, farmers, and property rights groups on Palazzolo's side, and state and local government groups and environmental organizations on Rhode Island's. A decision is due before the court breaks for its summer recess at the end of June.
Palazzolo v. Rhode Island, No. 99-2047
For Palazzolo: James S. Burling, Pacific Legal Foundation, (916) 362-2833.
For Rhode Island: Attorney General Sheldon Whitehouse, (401) 274-4400.
Kenneth Jost, formerly editor of the Los Angeles Daily Journal, is staff writer for Congressional Quarterly and author of The Supreme Court Yearbook.
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