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U.S. Supreme Court Hands Planners A Clear Victory

WASHINGTON _ The U.S. Supreme Court gave state and local governments a green light to continue using temporary moratoria to limit or block development while devising long-range land use plans. In a setback for property rights advocates in a closely watched California case, the court ruled 6-3 that temporary moratoria do not automatically amount to a "taking" of private property requiring government compensation to affected landowners. "A rule that required compensation for every delay in the use of property would render routine government processes prohibitively expensive or encourage hasty decision-making," Justice John Paul Stevens wrote for the majority. "Such an important change in the law should be the product of legislative rulemaking rather than adjudication." The court ruling still allows private landowners to seek compensation for regulatory delays, but only under a multi-factored test that virtually always favors government interests over property rights. Stevens said that a delay could be one factor — but only one — in determining whether a taking had occurred. The decision in Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, No. 00-1167, ended a lawsuit pursued for 18 years by several hundred plaintiffs who owned property near Lake Tahoe on either side of the California-Nevada border. The bistate Tahoe Regional Planning Agency (TRPA) sharply limited development in the area beginning in 1981 to reduce runoff that was threatening the lake's much-celebrated crystalline beauty. Dissenting justices said the delay at issue — calculated as 32 months by the majority and six years by the dissent — required compensation. "A ‘moratorium' lasting nearly six years bears no resemblance to the short-term nature of traditional moratoria," Chief Justice William H. Rehnquist wrote in a dissenting opinion. Lawyers representing national planning groups praised the ruling. "It's the best news for state and local officials in the land use area for a long time," said Timothy Dowling, chief counsel for the public interest group Community Rights Counsel, which wrote a friend of the court brief on behalf of state and local governments. "It's a win for planners, it's a win for property owners, and it's a win for the public," said Lora Lucero, a staff attorney with the American Planning Association in Chicago. "The court is saying very clearly that you have to balance everyone's interests. Everybody wins with that." Daniel Siegel, a California deputy attorney general in the land law section, called the ruling "an excellent decision." "The decision promotes thoughtful planning with full public participation," Siegel said. "If planners faced with the loss of an important resource like Lake Tahoe were prohibited from putting development on hold while they put together a land use plan, they would either have to throw together a plan quickly with little input or allow the resource to be potentially destroyed while they craft a plan." Property rights advocates said they were disappointed, but some sought to minimize the impact of the ruling. "I'm not happy with it, but it could have been worse," said Richard Samp, who filed a friend of the court brief for the conservative Washington Legal Foundation. "It's an unfortunate step backward," said Michael Berger, the veteran Santa Monica property rights attorney who represented the plaintiffs. "The court had been steadily moving in a direction to accord landowners the same kind of Bill of Rights protections that other citizens get," Berger continued, "and this is a stumble in the road." The case reached the Supreme Court after a tortured procedural history spanning 18 years (see CP&DR Legal Digest, July 2000). After a series of rebuffs by the Ninth U.S. Circuit Court of Appeals, landowners reached the Supreme Court with only one, stark legal issue: whether the temporary moratoria imposed from 1981 to 1984 pending adoption of a long-range land use plan amounted to a per se taking of property without regard to the planning agency's justifications. Berger and other property rights advocates strenuously argued for a categorical rule to prevent state and local governments from stringing property owners along with a succession of "temporary" land use moratoria. But attorneys for the Tahoe agency, both states, and a number of planning and environmental groups warned that treating any moratorium as a taking would effectively cripple the planning process. The court's majority agreed with the planners. "The interest in facilitating informed decisionmaking by regulatory agencies counsels against adopting a per se rule," Stevens wrote. "Otherwise, the financial constraints of compensating property owners during a moratorium may force officials to rush through the planning process or to abandon the practice altogether." The six-vote majority included the court's four liberal justices — Stevens, David H. Souter, Ruth Bader Ginsburg, and Stephen G. Breyer — and the two centrist conservatives: Sandra Day O'Connor and Anthony M. Kennedy. Joining Rehnquist in dissent were the court's other two strong conservatives: Antonin Scalia and Clarence Thomas. Stevens appeared to have held O'Connor's and Kennedy's votes in part by quoting approvingly from pivotal opinions each wrote in the court's ruling partly favoring property owners in a somewhat similar takings case, Palazzolo v. Rhode Island, 533 U.S. 606 (2001) (see CP&DR Legal Digest, August 2001). The new ruling represented a rare setback for property rights advocates during Rehnquist's 16 years as chief justice. In the first of those decisions — First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304 (1987) — the court ruled that governments must compensate a landowner for a taking even if it is only temporary. Five years later, the court ruled in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), that a landowner is entitled to compensation if a regulation has the effect of preventing all economically viable use of the property. In the new decision, Stevens reaffirmed First English, but said that case did not address the "quite different" question of whether the temporary regulation at issue actually amounted to taking. (On remand, California courts said the regulation was not a taking.) As for Lucas, Stevens significantly limited the impact of the decision by saying that it applied only to a permanent restriction on any economic use of land. Property "cannot be rendered valueless by a temporary prohibition on economic use," Stevens wrote, "because the property will recover value as soon as the prohibition is lifted." Instead of a per se rule, Stevens said takings claims based on land use moratoria must be decided according to a three-part test announced in the court's 1978 decision, Penn Central Transp. Co. v. New York City, 438 U.S. 104. Under that test, a takings claim is evaluated on the basis of the purpose of the government action, the economic effect on the landowner, and the effect on "reasonable investment-backed expectations." Samp predicted that some landowners could win compensation under the ruling. "A moratorium whose length cannot be justified on some reasonable ground like the need to fully explore the ramifications of allowing development is not reasonable and thus would constitute a taking," he said. But Dowling disagreed. "It will be an exceedingly rare case in which a landowner could show under this ruling that a moratorium was so extreme and unreasonable as to constitute a taking," he said. For his part, Berger conceded the decision left his clients with no effective remedy. "They're dead in the water," he said. A lawyer for the Tahoe planning agency agreed. "I don't think there's an appeal to the World Court," said Clement Shute, the private San Francisco attorney who represented TRPA up to the Supreme Court arguments. The Tahoe landowners say they continue to be effectively blocked from developing their property or are forced to sell parcels to government agencies at below-market prices. Shute insisted that the long-range plan finally adopted in 1987 has allowed some building, and has permitted landowners to trade for other development rights or to sell parcels at fair market prices. The Case: Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency, No. 00-1167, 02 C.D.O.S. 3495, 2002 DJDAR 4399. Filed April 23, 2002. The Lawyers: For the landowners: Michael Berger, Berger & Norton, (310) 449-1000. For the agency: E. Clement Shute, Shute, Mihaly and Weinberger, (415) 552-7272. Kenneth Jost, formerly editor of the Los Angeles Daily Journal, is staff writer for Congressional Quarterly and author of The Supreme Court Yearbook.