2002 Minnesota Association of City Attorneys
Educational Conference and Annual Meeting
REGULATORY TAKINGS:
PAST, PRESENT, AND FUTURE
Timothy J. Dowling
Chief Counsel
Community Rights Counsel
Community Rights Counsel
 Nonprofit public interest law firm
 Assists towns and other local governments in defending
land use controls and other community protections
 Emphasis on takings cases
 Close working relationship with the International Municipal
Lawyers Association
Community Rights Counsel Cases
 Mamaroneck, NY open space protections
 Lake Tahoe planning moratoria
 Washington, DC historic preservation laws
 Anchorage, AK fair housing laws
 San Francisco Tenant Protections
 Riverside, CA fire safety protections
 Pennsylvania & Ohio bans on harmful coal mining
 Rhode Island wetland protections
 Las Vegas Airport Safety Protections
TAKINGS LITIGATION HANDBOOK:
Defending Takings Challenges to Land Use Regulations
To order the Takings Litigation Handbook, contact American
Legal Publishing at 1-800-445-5588 or www.amlegal.com.
Takings Litigation Handbook:
Defending Takings Challenges to Land Use Regulations
The first ever “soup to nuts” Handbook for defending land use
regulations from takings challenges.
• Explains the procedural and substantive defenses that
should enable the local government to prevail in
takings cases.
• Offers advice for the development of a proper record,
obtaining insurance coverage and filing preliminary
motions.
January 2002
Takings Watch
CRC’s Monthly Update on Regulatory Takings
Community Rights Counsel
1726 M Street NW, Suite 703, Washington, DC 20036; www.communityrights.org
FEATURE CASE:
Good News on Relevant Parcel and Penn Central From the Colorado Supreme Court
Two of the most important issues in takings jurisprudence concern the definition of the relevant parcel and the application of the Penn
Central test for non-per se takings. The Colorado Supreme Court recently provided very useful guidance on both issues in Animas
Valley Sand & Gravel, Inc. v. Board of County Comm'rs, 2001 WL 1598634 (Colo. Dec. 17, 2001), a takings challenge to restrictions
imposed by the La Plata County land-use plan on a mining company.
Drawing on both Colorado and federal case law for guidance, the court ruled that to prevail under Penn Central, a claimant "must
show that it falls into the rare category of a landowner whose land has a value slightly greater than de minimis but, nonetheless, given
the totality of the circumstances, has had its land taken by a government regulation." The court adopted this slightly-greater-than-deminimis standard in part because after "[r]eading Palazzolo together with the [U.S. Supreme] Court's prior precedent, it is apparent
that the level of interference must be very high" for land-use regulation to constitute a taking. The court viewed Penn Central as a
"safety valve to protect the landowner in the truly unusual case."
The Animas court also rejected the claimant's contention that the relevant parcel for takings analysis should be limited to the
claimant’s mineral rights, or that it should look only to the geographic portion of the claimant's land affected by the challenged
government action. Instead, the court held that the relevant parcel consists of the entire contiguous parcel of land owned by the
mining company, citing Penn Central, Keystone, and Dolan.
Like Palazzolo, Animas states that claimants are not limited to the Lucas per se test in seeking relief under the Takings Clause. Yet
Animas reaffirms that in pursuing a non-per se claim, a landowner must still show that regulation is extremely severe — the functional
equivalent of an expropriation — to constitute a compensable taking.
OUTRAGE OF THE MONTH:
PERC vs. Osama bin Laden?
In our September 2001 newsletter, we lamented that certain
politicians and special interest groups were exploiting the tragic
events of September 11th to promote their policy agendas. As
galling as those early exploiters were, they were pikers when
compared to PERC, the Political Economy Research Center in
Bozeman, Montana, which bills itself as the "Center for Free
Market Environmentalism."
PERC's radical brand of free market environmentalism goes far
beyond emissions trading and other market-based proposals that
merit thoughtful attention. For example, PERC supports passage
of a federal takings bill that would gut federal environmental
protections, and it advocates auctioning off much of the nation's
public land to the highest bidder.
So, what does selling the Grand Canyon to Disney have to do
with Osama bin Laden? We're given the answer in a November
29, 2001 fundraising letter by PERC Chairman John Tomlin, who
has the temerity to make an explicit appeal for donations to
PERC based on the September 11th attacks. Mr. Tomlin begins
the letter by observing: "At PERC, we have asked ourselves what
is the role of free market environmentalism in a world rocked by
terrorism and a sense of insecurity." As one wag put it, you
might as well ask: “What is the role of broccoli in an MRI
exam?” None, as far as we can see.
Undeterred, Mr. Tomlin continues: "When we thought about
what is under attack, we realized that the terrorists are threatened
by those core principles on which PERC was founded." Huh?
The terrorists have proffered a number of bogus excuses to
justify their evil actions, but so far free market environmentalism
has not made the list.
Then comes the monetary appeal: "As we stand strong against
this menace * * * we need your continued support, now more
than ever.” We hope that any recipient of the PERC fundraising
letter will instead direct a donation to one of the charitable groups
providing assistance to the September 11th victims and their
families.
Our thanks goes to Dick Schneider, professor at Wake Forest
Law School, for bringing PERC’s letter to our attention.
Bad News for Local Governments
 Many takings lawsuits
 Expensive and time-consuming to defend
 Many landowner victories in the U.S. Supreme Court
Good News for Local Governments
 Local governments win the vast majority of takings cases
 Landowner wins in U.S. Supreme Court are narrow
 Very strong arguments against an expansive interpretation of
the Takings Clause
Today’s Topics

Five Themes for Litigating Takings Cases
 Three Categories of Takings Claims
 Ten Cutting-Edge Issues

RLUIPA

Palazzolo v. Rhode Island
 Tahoe Moratorium Case
Five Themes for Litigating
Regulatory Takings Cases
1. Narrow Text and Original Meaning
2. Judicial Respect for our Federal System
3. Judicial Deference to the Policymaking Branches
4. Avoiding Unduly Harsh Fiscal Impacts
5. The Government as Guardian of Property Rights
and Property Values
THE TAKINGS CLAUSE
“Nor shall private property be taken for public use,
without just compensation.”
Minnesota Rule for Gov’t Enterprise Function
McShane v. City of Faribault, 292 N.W.2d 253
(Minn. 1980) (airport zoning: taking based on
substantial and measurable decline in market
value)
Three Categories of
Inverse Condemnation Claims
1. Physical Occupation Cases
2. Pure Regulatory Takings Cases
3. Dedications and Exactions
Loretto v. Teleprompter Manhattan
CATV Corp. (1981)
Loretto v. Teleprompter Manhattan CATV
Corp., 458 U.S. 419 (1982)
A government-compelled permanent physical
occupation of private property is a per se taking
Per se rule is “very narrow”
A continuous right of access is permanent, even
if the actual invasion is intermittent
Lucas v. South Carolina Coastal Council
(1992)
Lucas v. South Carolina Coastal Council,
505 U.S. 1003 (1992)
Regulation that denies all economically viable use
of land is a per se taking
Avoid per se liability if regulation is justified
by “background principles of law”
Penn Central Transportation Company
v.
New York City (1978)
Penn Central Transp. Co. v. New York City,
438 U.S. 104 (1978)
Multifactor Test:
Character of the government action
Economic impact
Reasonable, investment-backed expectations
Nollan v. California Coastal Commission (1987)
Nollan v. California Coastal Commission (1987)
Nollan v. California Coastal Commission,
483 U.S. 825 (1987)
Compelled dedication must bear a “logical nexus”
to the problem or concern posed by the proposed
development.
The Nollan dedication failed because enhanced
beach-side access is not logically related to the
loss of the view from the highway.
Dolan v. City of Tigard (1994)
Picture #1
Dolan v. City of Tigard (1994)
Picture #2
Dolan v. City of Tigard,
512 U.S. 374 (1994)
Dedication requirement must be “roughly
proportional” to the harm anticipated from the
proposed development
Precise mathematical calculation is not required
Must make some effort to quantify findings to
support the dedication
Kottschade v. City of Rochester, 537 N.W. 2d 301
(Minn. Ct. App. 1995)
DOLAN DIAGRAM
Dolan Diagram
Roughly Proportional
Dolan
Nollan
Impact
of
Development
Burdens
Legitimate
State
Interest
Dedication
Demanded
Helps Solve
Under Dolan, local governments must be prepared to demonstrated that:
1. The proposed development exacerbates or creates the need for a public service;
2. The dedication demanded will benefit the proposed development or help address the
need; and
3. The dedication demanded is “roughly proportional” to the harm.
elements of a successogram include the fol-
Transfer of
Development Right s
g area, or designated
ion zone, from which
ment is transferred
ing area, or designated
rea, to which develophts are sent.
or bank, of develophts.
ocedure for transfer of
ams provide incentives
ers to purchase develhts. They also create
y protected prime
developers pay farmeased development
other parts of the ju-
tablishment may be
ere urban growth is
spersed throughout
Land preservation
emeal.
Preservat ion Zone
Transfer Zone
Area of ident ified import ant nat ural,
cult ural, or farm land. Generally t he
area is zoned w it h low developm ent
densit y pot ent ial (1 unit per 5 acres, for
example).
Ident ified grow t h area. Developer can
increase t he allow able densit y t hrough
purchasing development right s from a
propert y ow ner locat ed in t he preservat ion zone.
Top Ten Issues for Local Governments to
Win in Regulatory Takings Cases
Procedural Issues
1. Takings cases against local governments generally must be
filed in state court. Williamson County Reg’l Planning
Comm’n v. Hamilton Bank (U.S. 1985). Issue preclusion
prevents re-litigation of the same issues in federal court.
Compensation Ripeness:
Carpenter Outdoor Advertising, Co. v. City of
Fenton, 251 F.3d 686 (8th Cir. 2001)
Kottschade v. City of Rochester, Civil No. 01-898
ADM/AJB (D. Minn. Jan. 22, 2002)
Finality Ripeness:
Wheeler v. City of Wayzata, 533 N.W. 2d 405
(Minn. 1995)
Hunkins v. city of Minneapolis, 508 N.W. 2d 542
(Minn. Ctr. App. 1994)
Top Ten Continued...
Procedural Issues
2. There is no right in state court to have a jury decide the
question of liability.
Top Ten Continued...
Defining the Lucas Box
3. A per se taking under Lucas occurs only where land is
rendered valueless.
4. Reasonable planning moratoria and permit delays are not
Lucas takings.


Woodbury Place Partners v. City of Woodbury, 492
N.W. 2d 258 (Minn. Ct. App. 1993)
Nuisance Abatement: Zeman v. City of Minneapolis,
552 N.W. 2d 548 (Minn. 1996); City of Minneapolis v.
Fisher, 504 N.W. 2d 520 (Minn. Ct. App. 1993)
5. Statutes and regulations may act as “background
principles” that defeat takings claims.
 Palazzolo v. Rhode Island
 Outdoor Graphics, Inc. v. City of Burlington, 103 F.3d
690 (8th Cir. 1996) (billboard ordinance)
Top Ten Continued...
Winning Under Penn Central
6.
Clear rules define the “parcel as a whole” for takings
analysis and prevent segmentation into affected and nonaffected portions.
7.
8.
The finding of a taking under Penn Central requires a very
dramatic (greater than 90 percent) diminution in value.
 Animas Valley Sand & Gravel, Inc. v. Board of County
Comm'rs, 2001 WL 1598634, No. 00SC151 (Colo. Dec.
17, 2001) (a taking under Penn Central occurs only
where regulation leaves a landowner with "slightly
greater than de minimis" value)
There is no generalized means-end theory of takings liability.
The question of whether a land-use law advances a
legitimate state interest is a due process inquiry.
Top Ten Continued...
Properly Limiting the Nollan and Dolan Tests
9. The essential nexus/rough proportionality test of
Dolan/Nollan applies only to required dedications, not impact
fees and other development conditions.
10. The essential nexus/rough proportionality test of
Dolan/Nollan does not apply to so-called “unsuccessful
exactions.”
Goss v. City of Little Rock, 151 F. 3d 861 (8th Cir. 1998)
Religious Land Use and Institutionalized
Persons Act
 Originally passed as the Religious Freedom
Restoration Act (RFRA) of 1993.
 City of Boerne v. Flores, 521 U.S. 507 (1997) struck
down RFRA for exceeding Congress’s enforcement
powers under the Fourteenth Amendment.
 RLUIPA passed in 2000 to reinstate strict scrutiny
for government actions that burden exercise of
religion.
RLUIPA (cont.)
 General Rule:
“No government shall impose or implement a land
use regulation in a manner that imposes a
substantial burden on the religious exercise of a
person” unless it “is in furtherance of a compelling
governmental interest” in the “least restrictive
means” possible.
 Rooted in Congress’s Spending power and the
Commerce Clause
 Shifts Burden of Proof to Government
RLUIPA Case Law
 Constitutionality upheld in Mayweathers v. Terhune,
2001 WL 804140 (E.D. Cal. 2001)
 Relaxed exhaustion and ripeness requirements in
Murphy v. Zoning Comm’n for the Town of New
Milford, 148 F. Supp.2d 173 (D. Conn. 2001).
 Fear of arrest was precisely the type of chilling
effect on religious practices Congress intended to
trigger RLUIPA. Murphy v. Zoning Comm’n.
RLUIPA Case Law (cont.)
Substantial Burden Further Defined:
 Aesthetic harm of 150-ft. pole on golf course
adjacent to church was not a substantial burden on
congregation’s religious exercise. Omnipoint
Communications v. City of White Plains, 202 F.R.D.
402 (S.D. N.Y. 2001).
 National Park Service’s ban on selling t-shirts on
National Mall in Washington, DC was not substantial
burden on vocation to spread the gospel.
Henderson v. Kennedy, 265 F.3d 1072 (D.C. Cir.
2001).
 Importance of Religious Practice also a factor.
Henderson v. Kennedy.
RLUIPA’s Affect on Zoning
 Chicago changed zoning laws to avoid RLUIPA
liability. C.L.U.B. v. City of Chicago, 157 F. Supp.2d
903 (N.D. Ill 2001).
 Churches sued under RLUIPA’s discrimination
provision because clubs and recreation centers
were uses of right in certain areas where churches
were not.
 Chicago required special use permits of other
“church-like uses” and suit failed.
Palazzolo Coastal Wetlands
Palazzolo Coastal Wetlands
Palazzolo Coastal Wetlands
Palazzolo v. Rhode Island
121 S. Ct. 2448 (June 28, 2001)
5-4 win for landowner
“Movement” case handled by Pacific Legal
Foundation in the Supreme Court
Mush – raises more questions than it answers
Palazzolo: Six Opinions
Justice Kennedy (Majority) -- joined by Chief Justice
Rehnquist and Justices
O’Connor, Scalia, and
Thomas
Justice O’Connor (Concurrence)
Justice Scalia (Concurrence)
Justice Stevens (Dissent)
Justice Ginsberg (Dissent)
Justice Breyer (Dissent)
Four Factual Wrinkles in Palazzolo
1. The Nature of the Takings Claim:
Subdivision vs. Beach Club Proposal?
2. The Number of Houses that May be Built:
One or Several?
3. Palazzolo’s Acquisition Date: 1978 or 1959?
4. The Trial Court’s Nuisance Finding
Summary of Palazzolo Rulings
 Case is ripe
 Claim is not barred simply because Palazzolo
acquired the land after the rules were issued
 No per se take under Lucas because the land
retained significant value
The Palazzolo Ripeness Ruling
Reaffirms basic ripeness rule: court must know
the extent of permitted development
“[A] landowner may not establish a taking
before a land-use authority has the opportunity,
using its own reasonable procedures, to decide
and explain the reach of a challenged
regulation.”
State law may impose additional ripeness rules
-- beyond federal ripeness rules -- to control
damage awards based on hypothetical uses.
The Palazzolo “Notice Rule” Ruling
Post-enactment acquisition is not an absolute bar
to a takings challenge to a statute or regulation
Fairness concerns
“Background principles” include statutes and rules
derived from a State’s legal tradition
Palazzolo: Expectations Analysis
Pre-existing statutes and rules are still relevant
to the Penn Central test
O’Connor concurrence plus four dissenters
No other Justice joined Scalia’s view to the
contrary
Palazzolo: The Lucas Per Se Rule Issue
$200,000 in value (6.4% of claimed value)
defeats a Lucas per se claim; a 93.6% value
loss is not enough to trigger the Lucas per se
rule
“Token interest” does not defeat a Lucas claim
Palazzolo describes Lucas test both in terms of
“use” and “value”
Palazzolo: Concluding Observations
1. Both sides claim victory
2. The Court may have muddled the parcel-as-a
-whole rule
3. No discussion of the value of wetlands
4. More charged rhetoric from Justice Scalia
5. More rhetorical flourish from the Court in favor of
takings claimants
Lake Tahoe Picture #1
Lake Tahoe Picture #2
Lake Tahoe Picture #3
Tahoe-Sierra Preservation Council, Inc.
v.
Tahoe Regional Planning Agency,
216 F.3d 764 (9th Cir. 2000),
cert. granted, 121 S. Ct. 2589 (June 29, 2001)
“Whether the Court of Appeals properly determined
that a temporary moratorium on land development
does not constitute a taking of property requiring
compensation under the Takings Clause of the
United States Constitution?”
Tahoe Facts
Lake losing one foot of clarity every year due to
uncontrolled development
32-month planning moratorium to allow for
preparation of a regional growth plan
450 landowners brought facial takings claim
Tahoe: Trial Court
Moratorium reasonable in scope and duration
No interference with reasonable expectations
(average holding period in the Tahoe Basin = 25
years)
No Penn Central Taking
Per se taking under Lucas
Tahoe: Ninth Circuit
No Lucas Taking
Must consider all uses, including future uses
Cannot “temporally sever” the landowners’ property
interests (parcel-as-a-whole rule)
Agins v. City of Tiburon, 447 U.S. 255 (1980) -“mere fluctuations in value during the process of
government decisionmaking, absent extraordinary
delay . . . cannot be considered a ‘taking’ . . .”
Tahoe: In the Supreme Court
Key issue = meaning of the Court’s 1987 ruling in
First English
The only issue concerns the Lucas ruling
The trial court found that none of the land is
“valueless”
It is now undisputed that the moratorium was
reasonable in scope and duration
Restrictions under the regional plan are not before
the court
TAHOE ORAL ARGUMENT
Woodbury Place Partners v. City of Woodbury,
492 N.W.2d 258 (Minn. Ct. App. 1992)
J. SCALIA: My impression is that most of these moratoriums, or
moratoria, whatever they’re called would not be total…..
MR. BERGER: That’s correct, Justice Scalia – and I think that’s the
more typical kind of moratorium, and the kind that most of the amici on
the agency’s side have been talking about.
C. J. REHNQUIST: There was one Minnesota moratorium that was –
seemed somewhat like this that had been sustained by, I think the
appellate court.
MR. BERGER: There was one, Your Honor, and I would submit that
that court erred. It happens. Lower courts do that sometimes.
(Laughter.)
C. J. REHNQUIST: So we notice.
(Laughter.)
MR. BERGER: And we believe that that simply is not an appropriate
precedent for this court to follow.
MCQUEEN V. SOUTH CAROLINA
COASTAL COUNCIL
McQueen bought two oceanfront lots in the 1960s
In 1977, South Carolina adopted rules that restrict the
filling of coastal wetlands
McQueen took no action for 30 years after his
purchase; the lots reverted to their natural condition
In 1991, the State denied McQueen permission to fill
and develop the lots
It is undisputed that the permit denial extinguished all
economically viable use of the land
Issue: Did McQueen’s inaction for thirty years reflect
the lack of a reasonable expectation to develop that
defeats his takings claim?