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Of Nominal Value: The Impact of Tahoe-Sierra on Lucas and the Fundamental Right to Use Private Property

May 2003

Citation: 33 ELR 10331

Issue: 5

Author: J. David Breemer

In the 1992 case of Lucas v. South Carolina Coastal Council,1 the U.S. Supreme Court held that "when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is to leave his property economically idle, he has suffered a taking."2 A decade later, in Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency,3 the Court refused to apply the Lucas standard to strike down as a taking a temporary building moratorium that prevented all economically beneficial uses of property during its effective period.4 The Tahoe-Sierra Court ultimately concluded that the balancing test of Penn Central Transportation Co. v. City of New York,5 rather than a per se rule similar to that in Lucas, determines whether compensation is required for land use regulations designed to temporarily freeze all property development.6

While the Tahoe-Sierra Court declared that its decision was meant to be narrow, addressing only the issue of the standard governing a temporary building restriction, the opinion included troublesome dicta regarding the meaning of Lucas and, particularly, that decision's holding that a taking occurs where there is a complete deprivation of economically beneficial use of property. Most significantly, the dicta suggests that the "all economically beneficial use" per se takings rule only applies when there is a complete elimination of property value. A few post-Tahoe-Sierra courts and commentators have adopted this dicta when considering Lucas, and in so doing, have implicitly concluded that the presence of some value allows the government to escape a taking under Lucas.

This Article contends that it is a mistake to treat Tahoe-Sierra's sporadic emphasis on property value as indicative of the proper or controlling method for construing the "all economically beneficial use" rule. The Article begins with a review of the origins of Lucas' "all economically beneficial use" rule and briefly summarizes the Tahoe-Sierra Court's treatment of Lucas. The next section suggests several reasons why Tahoe-Sierra failed to significantly alter the meaning of the "all economically beneficial use" rule or to undermine it as an independent takings standard. This part also explores selected pre-Lucas cases to show that courts have always been concerned with the ability of the property owner to make some physical use of property. Finally, this section argues that such a use-based focus makes sense in light of traditional understandings of property rights.

The Article then provides an overview of the future direction of Lucas and the "all economically beneficial" use rule. It reveals the likely (use-based) contours of the rule by focusing on cases where government regulation requires a property owner to leave land in a natural state. The Article concludes that Lucas' categorical "beneficial use" rule continues to exist as such and is not likely to be undermined by a resurgent "investment-backed expectations" doctrine.

David Breemer is a Staff Attorney with the Pacific Legal Foundation. He received his J.D. from the William S. Richardson School of Law, University of Hawaii at Manoa, his M.A. from the University of California, Davis, and his B.A. from the University of California, Santa Barbara. The author extends his gratitude to James S. Burling, Eric Grant, and R.S. Radford for their helpful thoughts and comments.

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