A few weeks ago, property rights advocates lost three big court cases. It's not unusual for June to be an important month for legal opinions because the U.S. Supreme Court wraps up its work before going on summer hiatus. But it is usual for property owners to go oh-for-June.
What gives? Is this big news? Or is it only a temporary halt in property rights advocates' long, slow drive toward success?
The answer is somewhere in the middle. The property rights movement has made huge strides against government land use regulation during the last 25 years - but not many of those strides have come lately. At the Supreme Court, at least, government regulators and property owners have been deadlocked for at least a decade.
Landowners may turn more often to ballot measures for relief, as they did in the case of Oregon's Measure 37. Or they might pray for President Bush to appoint more hard-line judges. In the meantime, there is little they can do but wait.
The big headlines, of course, were for the Supreme Court's 5-4 ruling to uphold the use of eminent domain by the City of New London, Conn., to take land from private landowners for transfer to a private developer - a tactic frequently used in California (see Economic Development, Page 6). But in the San Remo Hotel case from San Francisco, the court ruled unanimously that property owners who lose a takings case in state court can't re-try the case in federal court.
Additionally, the California Supreme Court upheld the constitutionality of the Coastal Commission over property rights advocates' claims that the system of appointing commissioners violated separation of powers principles. All three opinions were issued in the same week.
In a perverse way, the week was reminiscent of the landmark month of June 1987, when the U.S. Supreme Court handed the property rights movement two of its most highly publicized victories.
In First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, which was decided on June 9, 1987, the Supreme Court broke the longstanding stalemate in the arena of regulatory takings by ruling that First English Church could sue the county in state court and seek monetary damages for a regulatory taking.
In Nollan v. California Coastal Commission, 483 US 825, decided on June 26, 1987, the court struck down the Coastal Commission's practice of demanding lateral easements along the beach as a condition of approval for virtually all building permits. This decision rejected the notion of “indirect nexus” and laid down the rule that a development exaction must have a direct relationship to the impact of the project; otherwise, the exaction constituted a regulatory taking.
At the time, these rulings were considered the leading edge of a property rights revolution. The takings question had laid dormant for more than 50 years before property rights lawyers took up the cause during the late1970s. Theirs was a mostly uphill battle until the First English/Nollan rulings, which appeared so revolutionary that total victory for the property rights advocates appeared to be only a matter of time.
That was 18 years ago. Since then, we have seen some evolution, but - at least in the courts - no revolution. The property owners won First English only by a 6-3 vote, and they won Nollan 5-4.
The First English Church eventually lost its takings case in California state court. Exactions did not get trimmed back in the wake of Nollan. Mostly, the connection with the project was just better documented, at considerable expense to cities and developers.
What followed next was a series of Supreme Court cases that muddied the waters.
In Lucas v. South Carolina Coastal Council, 505 US 1003 (1992), a majority opinion by Justice Antonin Scalia favored the property owners but laid down a confusing set of rules that has proven difficult to understand or follow. (It was the basic philosophy of the Oregon Measure 37, however.) In Dolan v. City of Tigard, 512 U.S. 687 (1994), the high court ruled that exactions must be roughly proportional to the project's impacts, but everybody in California was already following that principle. The court ruled in favor of the Tahoe Regional Planning Agency twice. In Palazzolo v. Rhode Island, 533 US 606 (2001), the Supreme Court did reinstate a property owners takings claim on a wetlands issue, but only by a 5-4 vote.
Property rights advocates have had a tough time at the high court mostly because of two Republican appointees who don't follow ideology - Californian Anthony Kennedy, who was appointed in 1988 after the bruising and failed attempt by President Reagan to appoint strident Robert Bork, and David Souter, who was unknown state court judge when he was appointed by President George H.W. Bush in 1990. In both cases, a Republican president chose not to challenge a Democratic Congress. Both Kennedy and Souter voted with the majority in the New London case. Palazzolo went to the property owner because Kennedy joined the majority.
In many ways the most interesting of the recent court rulings is San Remo - partly because it was unanimous and partly because it shows how much legal history prior toFirst English and Nollan would have to be undone for the property rights revolution to prevail.
In San Remo Hotel v. San Francisco, the hotel owners challenged the city's right to charge a fee of $567,000 as a condition of approving the conversion of their hotel from residential to tourist use. The hotel owners sued in federal court but got sent state court. There the hotel owners lost all down the line, culminating in a 2002 California Supreme Court ruling. After that, the owners sued again in federal court, and the right to sue was appealed all the way to the Supreme Court.
The underpinning of the majority's ruling in San Remo was the Supreme Court's last ruling on regulatory takings prior to First English. All through the 1980s, the court struggled with the question of whether a landowner could be compensated for a regulatory taking, because a regulation is temporary, not permanent, and can be changed at any time. Chief Justice William Rehnquist eventually solved the problem in First English by inventing the “temporary taking.” But two years earlier, in Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 US 172 (1985), the court ruled that a property owner with a regulatory takings claim had to exhaust all remedies in state court before going to federal court. This laid the groundwork for the majority ruling in San Remo. The hotel owners lost in state court; therefore, there is no recourse in federal court.
Although the issue at hand was decided unanimously, the court split 5-4 on the whether to reconsider Williamson County. A concurring opinion by Rehnquist (in which Kennedy joined) questioned why a property owner can pursue a First Amendment claim in federal court but not a Fifth Amendment claim.
Of course, property owners are eagerly hoping that President George W. Bush will appoint more strident Supreme Court justices in the future so that the revolution may at last be completed. This is clearly a possibility.
For example, Bush has just appointed California Supreme Court Justice Janice Rogers Brown to the D.C. Circuit Court of Appeals, apparently grooming her for the Supreme Court. Brown dissented in the California Supreme Court's 2002 ruling San Remo ruling, calling the fee “extortion.”
On the other hand, in June, Brown signed a concurring opinion in the Coastal Commission case, saying that legislation giving the commissioners fixed terms solved a constitutional defect.
If the court had declared the Coastal Act unconstitutional, 30 years of regulatory decisions would have been thrown into doubt - something no conservative justice would have been comfortable doing. There's a difference between being a strident “conservative” on social and economic issues and being a true judicial conservative. The property rights revolution has never completely succeeded because justices such as Souter, Kennedy, and Sandra Day O'Connor - all appointed by Republican presidents - have been cautious about overturning precedent. There is no guarantee that Janice Rogers Brown or anybody else will take a more aggressive approach once they get on the high court.