Property Rights Foundation of America®
Founded 1994

reprinted from the New York Property Rights Clearinghouse, Vol. 6 No. 1 (PRFA, Summer 2002)

April 27, 2002:

Planning board may impose lengthy building moratorium

Supreme Court Rejects "Categorical" Compensation for Temporary Taking

Lake Tahoe Planning Agency Took only a "Temporal Slice" of the Property Interest

By Carol W. LaGrasse

The United States Supreme Court finally brought to a close fourteen years of litigation by Lake Tahoe Basin property owners, but opened the door to more restriction of private property by government at every level. The property owners had sought compensation for being prohibited from all productive use of their property for between 32 months and almost six years, depending on the definition of the government "action." But the Supreme Court held that that the Tahoe Regional Planning Agency (TRPA) had extracted only a "temporal slice of the fee interest" by imposing a moratorium on development, not a temporary "taking" that rose to the level justifying compensation.

The decision made legal the imposition of two moratoria lasting 32 months, while the nation's first interstate zoning agency, which protects famed Lake Tahoe on the California - Nevada border, developed regional "environmental threshold carrying capacities" and worked on the development of a regional water quality plan. The decision did not address the justice of a subsequent injunction, cited by the Chief Justice Rehnquist in his dissent, that extended the mandated period of non-use of the properties to six years.

Writing for the 6-3 majority on April 23, 2002, Justice John Paul Stevens turned many times to the well-known 1960 Penn Central decision. He held that, unlike when property is taken directly, regulatory takings involve concepts of "fairness and justice" that "are less than fully determinate."

His decision concentrated on disproving the argument that the plaintiffs were "categorically" entitled to compensation because the landowners "had been temporarily deprived of "all economically viable use of their land."

Justice Stevens made the point that the plaintiffs' appeal had failed to challenge the District Court's finding disallowing an argument "that the regulations constitute a taking under the ad hoc balancing approach described in Penn Central" and did not "dispute that the restrictions imposed on their properties are appropriate means of securing the purpose set forth in the Compact." The justice concluded that he was left with ruling on whether Lucas applies, that is, "whether a categorical taking occurred because [the government orders] denied the plaintiffs of 'all economically beneficial or productive use of land.'"

In his 21-page decision, Justice Stevens emphasized that the question presented is limited to "whether a moratorium on development imposed during the process of devising a comprehensive land-use plan constitutes a per se taking of property requiring compensation under the Takings Clause."

Immediately following the decision, certain news articles have conveyed a misinterpretation that the Supreme Court ruling generally denied compensation for temporary takings. But Justice Stevens wrote, "In rejecting petitioners' per se rule, we do not hold that the temporary nature of a land-use restriction precludes finding that it effects a taking; we simply recognize that it should not be given exclusive significance one way or the other."

The decision is quite troubling, however. Referring to Agins. v. City of Tiburon and Danforth v. United States, Justice Stevens advanced the theory, "An interest in real property is defined by metes and bounds that describe its geographic dimensions and the term of years that describes the temporal aspect of the owner's interest...Both dimensions must be considered if the interest is to be viewed in its entirety. Hence a permanent deprivation of the owner's use of the entire area is a taking of 'the parcel as a whole,' whereas a temporary restriction that merely causes a diminution in value is not. Logically, a fee simple estate cannot be rendered valueless by a temporary prohibition of economic use, because the property will recover value as soon as the prohibition is lifted...('...Mere fluctuations in value during the process of governmental decisionmaking, absent extraordinary delay, are "incidents of ownership. They cannot be considered as a 'taking' in the constitutional sense."')"

In his dissent, Chief Justice Rehnquist wrote:

"Assume the following situation: Respondent is contemplating the creating of a National Park around Lake Tahoe to preserve its scenic beauty. Respondent decided to take a 6-year leasehold over the petitioners' property, during which any human activity on the land would be prohibited, in order to prevent any further destruction to the area while it was deciding whether to request that the area be designated a National Park.

"Surely that leasehold would require compensation. In a series of World War II-era cases in which the Government had condemned leasehold interests in order to support the war effort, the Government conceded that it was required to pay compensation for the leasehold interest. See United States v. Petty Motor Co...(1946); United States v. General Motors Corp...(1945). The Court ignores this 'practical equivalence' between respondent's deprivation and the deprivation resulting from a leasehold. In so doing, the Court allows the government to 'do by regulation what it cannot do through eminent domain-i.e., take private property without paying for it.'"

The Supreme Court decision affirmed the direction of central planning that is becoming prevalent in this country. The Court refused to impose "serious constraints on the planning process," by setting any specific takings compensation rule such as one excluding the normal delays associated with processing permits or one that covered only delays of more than year.

The decision states, "In fact, the consensus in the planning community appears to be that moratoria, or 'interim development controls' as they are often called, are an essential tool of successful development."

Central planning has high credibility in the Supreme Court decision:

"The interest in facilitating informed decisionmaking by regulatory agencies counsels against adopting a per se rule that would impose such severe costs on their deliberations. 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. To the extent that communities are forced to abandon using moratoria, landowners will have incentives to develop their property quickly before a comprehensive plan can be enacted, thereby fostering inefficient and ill-conceived growth."

The decision reflects an ivory tower understanding of the participatory process during regional planning:

"Indeed, the interest in protecting the decisional process is even stronger when an agency is developing a regional plan than when it is considering a permit for a single parcel. In the proceedings involving the Lake Tahoe Basin, for example, the moratoria enabled TRPA to obtain the benefit of comments and criticisms from interested parties, such as the petitioners, during its deliberations," the Supreme Court held.

By mingling citations of landmark Supreme Court decisions, Justice Stevens muted a key principle that protects property rights that he cited from Nollan.

"Moreover, with a temporary ban on development there is a lesser risk that individual landowners will be 'singled out' to bear a special burden that should be shared by the public as a whole." (citing Nollan v. California Coastal Commission) "At least with a moratorium there is a clear 'reciprocity of advantage,' Mahon..., because it protects the interests of all affected landowners against immediate construction that might be inconsistent with the provisions of the plan that is ultimately adopted. 'While each of us is burdened somewhat by such restrictions, we, in turn, benefit greatly from the restrictions that are placed on others.' Keystone...," the majority decision states.

However, for all its orientation toward central planning, the decision revolves around a theme with an outcome that is essentially unpredictable. "We conclude, therefore, that the interest in 'fairness and justice' will be best served by relying on the familiar Penn Central approach when deciding cases like this, rather than by attempting to craft a new categorical rule."

It is left to planners to extend their moratoria and to cite the Court's adulatory remarks about the nature of central planning. Property rights advocates would do well to pay careful heed to the Court's narrowly defined rejection of the Lake Tahoe Basin landowners' temporary takings claim and its virtual admonition to frame future claims in terms of Penn Central.


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