* Professor of Law, Northwestern School of Law of Lewis and Clark College. I thank Dean James Huffman, Professor Bill Funk, and the students at Lewis and Clark for the well-attended debate we had on the significance of the Palazzolo decision in November 2001, which focused my thinking on this issue. I also thank Tim Dowling of the Community Rights Counsel, who provided me several outlines prepared for a Georgetown University Law Center conference on the takings issue, which helped me prepare for the debate. Particularly helpful was the outline of Professor Richard Lazarus, the preeminent environmental law analyst of the Supreme Court. See generally Richard J. Lazarus, Restoring What’s Environmental About Environmental Law in the Supreme Court, 47 UCLA L. Rev. 703 (2000); Richard J. Lazarus, Understanding Palazzolo and Its Significance for Tahoe-Sierra, CONTINUING LEGAL EDUC. (Georgetown Univ. Law Ctr., Washington, D.C.), Oct. 18–19, 2001. Finally, thanks to Bill Warnock, J.D. 2003, Northwestern School of Law of Lewis and Clark College, for help with the footnotes.
1 533 U.S. 606 (2001).
2 The Pacific Legal Foundation is a public interest law firm dedicated to advancing property rights, free enterprise, and individual liberty. See, e.g., Douglas T. Kendall & Charles P. Lord, The Takings Project: A Critical Analysis and Assessment of the Progress So Far, 25 B.C. Envtl. Aff. L. Rev. 509, 539–42 (1998).
3 Palazzolo v. Coastal Res. Mgmt. Council, C.A. No. 86-1496, 1997 WL 1526546, at *4–5 (R.I. Super. Ct. Oct. 24, 1997) (finding that the government action was not a taking because the wetlands development would constitute a nuisance; there were adjacent uplands available for development that were not burdened by the regulatory restriction; and there was no interference with the landowner’s reasonable expectations due to his knowledge of the State’s regulations when he acquired the property), aff’d on other grounds sub nom. Palazzolo v. State ex rel. Tavares, 746 A.2d 707 (R.I. 2000) (finding that the case was not ripe and thus no taking occurred because: (1) the landowner failed to submit an application for the development for which he sought compensation; (2) notice of the regulations at the time of property acquisition defeated the landowner’s claim; and (3) the uplands provided the landowner with an economically viable use), aff’d in part, rev’d in part, remanded sub nom. Palazzolo v. Rhode Island, 533 U.S. 606 (2001).
4 See John D. Echeverria, A Preliminary Assessment of Palazzolo v. Rhode Island, 31 Envtl. L. Rep. 11,112, 11,113 (2001) (“This ruling represents a setback for government defendants and destroys one of the few bright-line rules in an otherwise muddled area of the law.”); Robert Meltz, What Role Does the Law Existing When a Property is Acquired Have in Analyzing a Later Taking Claim?: The “Notice Rule, in Inverse Condemnation and Related Government Liability 381, 383, 385 (A.L.I.-A.B.A. COURSE OF STUDY, May 3, 2001), available in Westlaw, SF64 ALI-ABA 381 (“No regulatory taking occurs when the government restricts a property use under a law existing when the property was acquired—or under law whose adoption after acquisition was foreseeable. This government defense has been called the ‘notice rule,’ because the land buyer is seen as being ‘on notice’ as to the possibility of being thwarted, and hence not deserving of compensation. . . . The older a law, the fewer property owners exist who acquired before the law—hence, under the notice rule, the smaller the universe of potential takings plaintiffs.”).
5 505 U.S. 1003, 1015 (1992). Under Lucas, regulations which completely deprive burdened realty of all economic value are categorical compensable takings. Id.
6 See generally 533 U.S. 606 (2001). Justice Kennedy wrote for the majority, which was six to three on the ripeness issue and five to four on the notice issue. Justice Stevens concurred on the ripeness issue but dissented on the notice issue. Id. at 637–45 (Stevens, J., concurring in part, dissenting in part). Justice O’Connor concurred in the result but made clear that while the notice issue could not categorically defeat a takings claim, it was a relevant consideration under the balancing test for the existence of a taking under the Court’s decision in Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978). Id. at 632–36 (O’Connor, J., concurring). Justice Scalia’s concurrence vigorously disputed the relevance of notice under the Penn Central balancing test. Id. at 636–37 (Scalia, J., concurring). Justice Ginsberg wrote a dissent on the ripeness issue, joined by Justices Souter and Breyer. Id. at 645–54 (Ginsburg, Souter & Breyer, JJ. dissenting). Justice Breyer also wrote a separate dissent cautioning against landowners manufacturing takings claims due to transfers which separate a parcel’s developable portions from its restricted portions. Id. at 654–55 (Breyer, J., concurring).
7 438 U.S. at 135–36.
8 Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 216 F.3d 764 (9th Cir. 2000), aff’d, 122 S. Ct. 1465 (2002).
9 The grandfather of regulatory takings cases is, of course, Pennsylvania Coal Co. v. Mahon, in which Justice Holmes wrote for an eight-member majority, concluding that there could be a regulatory taking if a regulation went “too far.” 260 U.S. 393, 415 (1922). There was such a taking in Mahon, according to Holmes, although precisely why has never been entirely clear. He suggested that the legislation was protecting only the private interest of a single overlying landowner, but of course the statute aimed to protect many similarly-situated landowners. Id. at 413. He also emphasized that regulations which substantially diminished the value of land went “too far.” See id. at 413, 415. I have always thought that Holmes found a taking in Mahon because the state legislation prohibiting subsidence due to mining activities under houses and other vulnerable sites seemed to obliterate a bargain between the coal company and Mahon’s predecessor, in which the coal company sold the surface while expressly reserving for itself the mineral and support estates. See id. at 394–95. Thus, the legislation appeared to completely revise private, bargained-for rights. Justice Brandeis wrote a vigorous dissent in Mahon, in which he claimed that there could be no regulatory taking where a regulation merely prevented nuisance-like activity, such as producing subsidence of an overlying dwelling, because the miner lacked the authority to maintain a nuisance. Id. at 417 (Brandeis, J., dissenting).
10 Lucas, 505 U.S. at 1017–18. Restrictions that “inhere[d] in the title itself, in the restrictions that background principles of the State’s law of property and nuisance already place upon land ownership,” were excepted from this “total economic wipeout amounts to a compensable taking” rule. Id. at 1029.
11 See generally 458 U.S. 419 (1982).
12 Lucas, 505 U.S. at 1017 (citing San Diego Gas & Elec. Co. v. City of San Diego, 450 U.S. 621, 652 (Brennan, J., dissenting)); id. (quoting 1 Edward Coke, The Institutes of the Laws of England, ch. 1,  1 (1st Am. ed. 1812) (1797)) (“[F]or what is the land but the profits thereof[?]”). For one response to Justice Scalia’s use of Coke’s language, see Michael C. Blumm, Property Myths, Judicial Activism, and the Lucas Case, 23 Envtl. L. 907, 916 (1993), stating that “[m]ost obviously, land involves privacy as well as development rights. And it is those rights that the Supreme Court ought to be concerned about zealously protecting from governmental regulations, not development rights like Mr. Lucas.”
13 Lucas, 505 U.S. at 1015.
14 Under Penn Central balancing, the Court conducts an ad hoc factual inquiry into the particular circumstances of each case, examining: (1) the character of the governmental action; (2) the economic impact of the regulation on the landowner; and (3) any interference with reasonable investment-backed expectations. See Palazzolo v. Rhode Island, 533 U.S. 606, 634 (2001) (O’Connor, J., concurring).
15 See, e.g., Colloquium on Lucas, 23 Envtl. L. 869, 869–932 (1993); Symposium on Lucas v. South Carolina Coastal Council, 45 Stan. L. Rev. 1369, 1369–1455 (1993).
16 Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978).
17 On the rather insignificant legacy of Lucas, see infra note 77. On the Federal Circuit’s takings jurisprudence, see Kendall & Lord, supra note 2, at 558–61, 566–71, 576–80. See generally Michael C. Blumm, The End of Environmental Law?: Libertarian Property, Natural Law, and the Just Compensation Clause in the Federal Circuit, 25 Envtl. L. 171 (1995).
18 Palazzolo v. State ex rel. Tavares, 746 A.2d 707, 714 (R.I. 2000), aff’d in part, rev’d in part, remanded sub nom. Palazzolo v. Rhode Island, 533 U.S. 606 (2001).
19 Palazzolo v. Rhode Island, 533 U.S. 606, 619 (2001). In fact, Palazzolo never even submitted an application for the seventy-four house development for which he sought compensation. However, the Court ruled that while that failure was relevant to the amount of compensation due Palazzolo, it was irrelevant to the ripeness issue. Id. at 624.
20 Id. at 625–26.
21 Id. at 653 (Ginsberg, Souter & Breyer, JJ., dissenting).
22 Tavares, 746 A.2d at 716.
23 See Takings Watch (Community Rights Counsel, Washington, D.C.), Sept. 2001, at 2, available at http://communityrights.org/takingswatchnewsletter/newsletter.asp.
24 Palazzolo, 533 U.S. 606, 623.
25 Id. at 653 (Ginsberg, Souter & Breyer, JJ., dissenting).
26 See generally, e.g., Erwin Chemerinsky, Expanding the Protections of the Takings Clause, Trial, Sept. 1, 2002; Martha Coyle, Landowners Win Right to Attack Rules, Nat’l L.J., July 9, 2001, at http://www.nlj.com/archive/2001/back/0716.html.
27 One lesson from Palazzolo would of course be that government defendants must carefully peruse the certiorari petitions of takings claimants for factual errors and correct them in their responses. 533 U.S. at 652–54 (Ginsburg, Souter & Breyer, JJ., dissenting).
28 See Echevarria, supra note 4, at 11,115 (noting that the Court reaffirmed Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985)).
29 Palazzolo, 533 U.S. at 620.
30 Id. at 625. John Echevarria concluded that “[t]his language strongly suggests that a regulatory action that might otherwise result in a taking will not be found to be one if the decision is independently supported by the applicant’s failure to comply with other, facially valid regulatory requirements.” Echevarria, supra note 4, at 11,115.
31 Palazzolo, 533 U.S. at 625–26.
32 Cf. Palazzolo v. State ex rel. Tavares, 785 A.2d 561, 561 (R.I. 2001) (order remanding the case to the superior court and directing counsel to submit further memoranda).
33 Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1026 (1992).
34 Justice Stevens, who provided the sixth vote for the majority on the ripeness issue, dissented on the notice rule. Palazzolo v. Rhode Island, 533 U.S. 606, 637–38 (2001) (Stevens, J., concurring in part and dissenting in part).
35 Id. at 626–27. Perhaps the blanket rule went too far under the unusual facts of the Palazzolo case. Denying compensation because of the notice rule seemed harsh because Palazzolo’s corporation owned the wetlands at issue prior to the enactment of the regulation that banned most development. See id. Palazzolo acquired the land as an individual due to the dissolution of the corporation after the State promulgated the regulation. Id. So he possessed post-enactment title only due to the operation of state law, not due to a traditional conveyance. Id. Justice Breyer’s dissent suggested that an inheritance is another kind of transfer that should not always bar a takings claim, since such a transfer—unlike a bargained-for sale—rarely changes expectations. See id. at 654–55 (Breyer, J., dissenting). On the other hand, Justice O’Connor noted that sales often change expectations, especially where the sale price is discounted due to regulations, and that expectations are highly relevant to a takings analysis. See id. at 632–33 (O’Connor, J., concurring).
36 Id. at 627. The Court noted that “[f]uture generations, too, have a right to challenge unreasonable limitations on the use and value of land.” Id.
37 See supra note 6 and accompanying text.
38 Palazzolo, 533 U.S. at 632–33 (O’Connor, J., concurring).
39 Id. at 635 (O’Connor, J., concurring).
40 See id. at 633 (O’Connor, J., concurring); id. at 643 n.6, 644–45 (Stevens, J., concurring in part, dissenting in part); id. 654 n.3 (Ginsburg, Souter & Breyer, JJ., dissenting); id. at 654–55 (Breyer, J., dissenting).
41 Id. at 617 (citing Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1035 (1992) (Kennedy, J., concurring)).
42 Id. at 632 (O’Connor, J., concurring).
43 Id. at 654–55 (Breyer, J., dissenting) (“I do not see how a constitutional provision concerned with fairness and justice could reward any such strategic behavior.”).
44 See supra notes 14 (summarizing the Penn Central test).
45 See supra note 41–43 and accompanying text.
46 Palazzolo, 533 U.S. at 637 (Scalia, J., concurring) (quoting Lucas, 505 U.S. at 1029); see supra note 10 (explaining the “background principles” exception to Lucas takings). Justice Scalia first advanced the notion that pre-acquisition notice of restrictions was irrelevant for takings purposes in Nollan v. California Coastal Commission. 483 U.S. 825, 833 n.2 (1987) (“So long as the Commission could not have deprived the prior owners of the easement without compensating them, the prior owners must be understood to have transferred their full property rights in conveying their lots.”).
47 Palazzolo, 533 U.S. at 636–37 (Scalia, J., concurring).
48 See id. at 626.
49 Id. at 636 (O’Connor, J., concurring).
50 See generally Marc R. Lisker, Regulatory Takings and the Denominator Problem, 27 Rutgers L.J. 663 (1996).
51 For the Penn Central factors see supra note 14. Justice Holmes in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 419 (1922), first articulated the “significant diminution of value” test.
52 438 U.S. 104, 130–31 (1978).
53 480 U.S. 470, 498 (1987) (“The 27 million tons of coal [required to be left in place by the state subsidence control statute] do not constitute a separate segment of property for takings law purposes.”).
54 505 U.S. 1003, 1016 n.7 (1992).
55 The term originated in Margaret Jane Radin, The Liberal Conception of Property: Cross Currents in the Jurisprudence of Takings, 88 Colum. L. Rev. 1667, 1676 (1988).
56 Palazzolo v. Rhode Island, 533 U.S. 606, 616 (2001).
57 Id.
58 Id. at 631.
59 Palazzolo v. State ex rel. Tavares, 746 A.2d 710, 715 (R.I. 2000), aff’d in part, rev’d in part, remanded sub nom. Palazzolo v. Rhode Island, 533 U.S. 606 (2001).
60 Palazzolo v. Rhode Island, 533 U.S. 606, 631–32 (2001).
61 Id. at 631.
62 Id. at 631–32.
63 Id. at 631 (citing Richard A. Epstein, Takings: Descent and Resurrection, 1987 Sup. Ct. Rev. 1, 16–17 (1987) and John E. Fee, Comment, Unearthing the Denominator in Regulatory Takings Claims, 61 U. Chi. L. Rev. 1535 (1994)).
64 See supra notes 52–53 and accompanying text. Justice Kennedy did seem to resolve one issue lingering since Justice Scalia’s Lucas opinion, in which he had suggested that “background principles” of state property and nuisance law immune from takings claims were limited to common law rules. 505 U.S. 1003, 1004 (1992); see supra note 10. Justice Kennedy clearly indicated that statutes could form such background principles. Although he declined to suggest when legislation could become a background principle sufficient to defeat a takings claim, he did provide a kind of “equal protection” gloss to takings analysis by positing that “[a] regulation cannot be a background principle for some owners but not for others.” Palazzolo, 533 U.S. at 630.
65 See Kendall & Lord, supra note 2, at 566–71. See generally Blumm, supra note 17, at 177–82, 192–98 (condemning the partial takings approach); James L. Huffman, Judge Plager’s “Sea Change” in Regulatory Takings Law, 6 Fordham Envtl. L.J. 597 (1995) (praising the Plager approach); Jay Plager, Takings Law and Appellate Decision Making, 25 Envtl. L. 161 (1995).
66 See Kendall & Lord, supra note 2, at 539, 555–58.
67 Justice Scalia reiterated his professed dedication to original intent in a recent dedication of a new building at my law school. See Shelby Oppel & Paige Parker, Scalia Sticks with the Original in Constitutional Controversy, Oregonian, Feb. 11, 2002, at B1 (lamenting that originalists like himself are a minority on the bench and discussing several originalist issues but ignoring his takings jurisprudence). Of course, there is no original intent that the Takings Clause would apply to regulations, see generally William Michael Treanor, The Original Understanding of the Takings Clause and the Political Process, 95 Colum. L. Rev. 782 (1995), a fact that Justice Scalia acknowledged in his Lucas opinion. See 505 U.S. at 1028 n.15; see also Kendall & Lord, supra note 2, at 515–16 n.16 (collecting other commentary on the nonoriginalist origins of the recent expansion in the Takings Clause).
The irony of Justice Scalia dedicating a building which won environmental awards at a leading environmental law school was not lost on many, as over 450 people from twenty different environmental, civil rights, and social justice groups demonstrated against him and the prospect that President Bush would do as he promised and nominate like-minded Justices. See Rally for Justice, at http://www.rallyforjustice.org/ (last visited Apr. 13, 2002).
68 483 U.S. 825, 841–42 (1987).
69 Id. at 832–33.
70 Id. at 833 n.2; see supra note 46.
71 Chief Justice Rehnquist and Justices White, O’Connor, and Thomas joined in Justice Scalia’s Lucas opinion. 505 U.S. 1003, 1005 (1992).
72 Id. at 1035 (Kennedy, J., concurring) (“In my view, reasonable expectations must be understood in light of our whole legal tradition. The common law of nuisance is too narrow a confine for the exercise of regulatory power in a complex and interdependent society.”).
73 Id. (Kennedy, J., concurring) (“[Background principles are] based on objective rules and customs that can be understood as reasonable by all parties involved.”).
74 533 U.S. 606, 616, 620 (2001); see also id. at 626. “The right to improve property, of course, is subject to the reasonable exercise of state authority. . . . [A] particular exercise of the States’ regulatory power [however, may be] so unreasonable or onerous as to compel compensation.” Id. at 627. “Future generations, too, have a right to challenge unreasonable limitations on the use and value of land.” Id.
75 See supra note 64.
76 Palazzolo, 533 U.S. at 631.
77 See Ronald H. Rosenberg, The Non-Impact of the United States Supreme Court Regulatory Takings Cases on the State Courts: Does the Supreme Court Really Matter?, 6 Fordham Envtl. L.J. 523, 545–48 (1995) (stating that of eighty state court cases citing Lucas over a two-and-a-half year period, only three relied on it to find a regulatory taking).
78 Wyer v. Bd. of Envtl. Prot., 747 A.2d 192, 193 (Me. 2000).
79 Palazzolo, 533 U.S. at 635 (O’Connor, J., concurring) (“[O]ur decision today does not remove the regulatory backdrop against which an owner takes title to property from the purview of Penn Central inquiry. It simply restores balance to that inquiry.”).
80 Id. at 636 (O’Connor, J., concurring). For the full quote, see supra text accompanying note 49.
81 See Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 122 S. Ct. 1465, 1477–78 (2002).
82 See supra notes 52–53 and accompanying text.
83 Armstrong v. United States, 364 U.S. 40, 49 (1960).
84 See supra notes 72–74 and accompanying text.
85 See supra note 39 and accompanying text.
86 In fact, Professor Lazarus considers Justice Kennedy to be the “bellwether Justice in environmental cases,” with a near 100 percent record for being in the Court majority in such cases. Richard J. Lazarus, Restoring What’s Environmental About Environmental Law in the Supreme Court, 47 UCLA L. Rev. 703, 715, 733 (2000).
87 Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 122 S. Ct. 1465 (2002).
88 See supra notes 37–40 and accompanying text.
89 Tahoe-Sierra, 122 S. Ct. at 1478, 1486–88.
90 See supra note 14.
91 Tahoe-Sierra, 122 S. Ct. at 1484.
92 Id. at 1483.
93 Id. at 1481. For the quote from Penn Central, see supra text accompanying note 52.
94 See supra text following notes 65, 86.
95 See supra text accompanying note 63.
96 See supra text following note 80.