33 ELR 10331 | Environmental Law Reporter | copyright © 2003 | All rights reserved

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

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.

[33 ELR 10331]

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.

The Original Lucas and Its Portrayal in Tahoe-Sierra

The Essential Lucas

In 1986, David Lucas purchased two South Carolina beach-front lots with the intent of building a single-family residence.⁷ His plans were thwarted two years later when the South Carolina Legislature adopted a law that directed the South Carolina Coastal Council to establish a coastal baseline, seaward of which "occupyable improvements" were prohibited.⁸ The council subsequently placed the line land-ward of Lucas' lots, thus preventing him from proceeding with the planned development.⁹ This prompted Lucas to file suit on the ground that the council's actions had effected an unconstitutional taking by a depriving him of all use of his land.¹⁰

The South Carolina courts found that the council had indeed denied Lucas of any economically beneficial use of property, thereby rendering the land "valueless."¹¹ [33 ELR 10332] However, the South Carolina Supreme Court concluded that without more, this did not amount to a taking because the property was subject to the state's paramount authority to regulate in the public interest pursuant to its police powers.¹²

When the dispute came before the Court, it agreed with Lucas that the denial of all economically beneficial use of his land was sufficient to establish a regulatory taking.¹³ Writing for the majority, Justice Antonin Scalia reviewed the Court's previous takings cases and concluded that two categories of regulatory action had been identified as resulting in a taking without regard to the "public interest advanced in support of the restraint."¹⁴ The first of these per se takings categories included cases where the government used its regulatory power to physically invade or occupy private property or authorize third parties to do so.¹⁵ The second consisted of regulations that "denied all economically beneficial or productive use of land."¹⁶ Suggesting that a regulatory deprivation of productive use is the equivalent, from the landowner's point of view, of a physical occupation, Justice Scalia concluded 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."¹⁷

Under this categorical rule, the government owes compensation whenever it deprives a landowner of "all economically beneficial use" of property, regardless of the public purposes behind the challenged regulation. The only exception is for regulations that express long-standing and shared "background principles of a state's property law."¹⁸ In a concurring opinion, Justice Anthony M. Kennedy argued that a landowner's reasonable investment-backed expectations should also condition the rule. But the Lucas Court made mention of that factor only as part of the test that would control if Lucas did not apply. It has since become clear that reasonable expectations should be irrelevant when a landowner states a claim under the all economically beneficial use test.¹⁹

In explaining why a deprivation of all economic use demands just compensation, the Lucas Court identified the "typical[]" way that regulations "leave the owner of land without economically beneficial or productive options for its use"—namely, "by requiring land to be left substantially in its natural state."²⁰ In dissent, Justice Harry A. Blackmun strenuously challenged this conception of economic viability. He asserted that "the common agrarian conception of property limited owners to 'natural' uses of their land prior to and during much of the 18th century."²¹ More concretely, Justice Blackmun argued that Lucas could not have been deprived of all economically viable use because he could "picnic, swim, camp in a tent, or live on the property in a movable trailer."²² He asserted, moreover, that "state courts frequently have recognized that land has economic value where the only residual economic uses are recreation or camping."²³ Justice John Paul Stevens, also in dissent, had similar criticism for the notion that Lucas had been denied all economically viable uses of his property: after all, he "may put his land to 'other uses'—fishing or camping, for example…."²⁴

Implicit in these dissenting arguments was the suggestion that the presence of any positive property value should be sufficient to avoid a taking under the majority's rule.²⁵ The majority seemed to reject this conception by repeatedly portraying its per se rule as focused on, and satisfied by, the economic use of property, not property value.²⁶ The Court was not entirely consistent in this regard, though, and in one extensive footnote, muddied the role of use and value in the "all economically beneficial use" rule. In particular, to Justice Stevens' criticism that the majority rule would leave property owners who lose 95% of the value of their property with nothing, footnote 8 responded:

Such an owner might not be able to claim the benefit of our categorical formulation, but, as we have acknowledged time and again, "the economic impact of the regulation on the claimant and … the extent to which the regulation has interfered with distinct investment-backed expectations" are keenly relevant to takings analysis generally. It is true that in at least some cases the landowner with 95% loss will get nothing, while the landowner with total loss will recover in full.²⁷

However, the Court's detour into the language of value was minimal compared to its repeated references to the developmental use of land and its implicit rejection of the dissent's argument that the ability to sell the land as open space for some value avoided the taking.²⁸

[33 ELR 10333]

Since Lucas, courts have struggled to understand and apply the "all economically beneficial use" rule.²⁹ Many early post-Lucas commentaries³⁰ and decisions³¹ —including a case remanded by the Court for reconsideration in light of Lucas³² —appear to conclude that Lucas hinges on physical land uses. Other cases are unsure, leading to a few unconvincing attempts to decisively resolve the question in favor of value.³³

Most recent courts, however, have tackled the uncertainty by considering both property use and property value when attempting to determine if Lucas' categorical rule applies. In these decisions, which include the U.S. Court of Appeals for the Ninth Circuit's decision in Tahoe-Sierra, value is often sensibly treated as one indicator of the presence of "economically viable" uses.³⁴ In other words, value is a necessary, but not always sufficient condition, of economically beneficial use: "The economic value of property provides strong evidence of the availability of 'economically beneficial or productive uses' of that property. Nevertheless, there are instances in which certain kinds of value may be poor measures of the existence of such uses."³⁵ Therefore, as one commentator (who usually sides with the government) explained in an article published on the eve of Tahoe-Sierra, Lucas is ultimately "about uses of property that create value."³⁶

Tahoe-Sierra's Characterization of the Lucas Rule

In Tahoe-Sierra, the Court made its most extensive statements about the "all economically beneficial use" rule since the decision in Lucas. There, the question was whether a temporary land use restriction that prevented any improvement of private property during its effective period amounted to a compensable "denial of all economically beneficial use."³⁷ The Court held that it did not.

Lucas dealt, in the Court's view, with a permanent regulation and was therefore not applicable to a purposefully temporary restriction.³⁸ The Court further explained that a use restriction with a finite duration, such as the one at issue in Tahoe-Sierra, cannot logically strip property of all value.³⁹ The Court suggested that this remaining positive value precluded application of Lucas.⁴⁰ In so doing, the Court initially described Lucas in this unremarkable way:

The categorical rule that we applied in Lucas states that compensation is required when a regulation deprives an owner of "all economically beneficial uses" of his land. Under that rule, a statute that "wholly eliminated the value' of Lucas' fee simple title clearly qualified as a taking. But our holding was limited to the extraordinary circumstance when no economically productive or economically beneficial use of land is permitted.⁴¹

The Court went on, however, to draw attention to a footnote in Lucas:

The emphasis on the word "no" in the text of the [Lucas] opinion was, in effect, reiterated in a footnote explaining that the [Lucas] categorical rule would not apply if the diminution of value were 95% instead of 100%. Anything less than a "complete elimination of value," or a "total loss," the Court acknowledged, would require the kind of analysis applied in Penn Central.⁴²

Tahoe-Sierra then declared, without citation, that "Lucas was carved out for the 'extraordinary case' in which a regulation permanently deprives property of all value."⁴³

[33 ELR 10334]

This characterization of Lucas might lead one to believe that the "no economically beneficial use" takings trigger is now the equivalent of a "no monetary worth" test. This would mean that Lucas' per se takings rule is to be relegated to the economically improbable situation where regulation leaves property with zero or negative value.⁴⁴ Under this interpretation, any positive monetary value would call for application of a rudderless and pro-government balancing approach.

The Negligible Impact of Tahoe-Sierra's Treatment of Lucas

It would be a mistake to conclude that Tahoe-Sierra makes the "all economically beneficial use" standard inapplicable whenever property has a value greater than zero. Tahoe-Sierra arose as a case dealing with the narrow question of whether a temporary building moratorium that denies all beneficial property use is a per se taking.⁴⁵ In its decision, the Court did not stray from the question presented and accordingly emphasized that its decision was "narrow in scope."⁴⁶ This limitation was probably necessary to get the votes of Justices Kennedy and Sandra Day O'Connor, both of whom sided with the property owners in Lucas and Palazzolo v. Rhode Island.⁴⁷ And while Tahoe-Sierra's discussion of Lucas goes beyond the confines of the moratorium issue, that discussion was largely unnecessary to the holding. Even if taken literally, the Court's treatment of Lucas should not be viewed as allowing the government to avoid a per se taking whenever property retains some minimal monetary worth.

Tahoe-Sierra's "Value" Language Is Nonbinding Dicta

At the outset, it is important to recognize that a few modest clarifications of Lucas, not a far-reaching reinterpretation of the "all economically beneficial use," or even an application of that rule, best account for the Court's decision not to apply Lucas in Tahoe-Sierra. The first concerns the nature of the claim in Lucas. In Tahoe-Sierra, the majority declared that Lucas was decided "on the permanent takings theory that both the trial court and State Supreme Court had addressed."⁴⁸ Lucas, the Court emphasized, dealt with a statute that "was unconditional and permanent."⁴⁹ But, at the time the Court decided Lucas, there was considerable doubt as to the whether the Court was resolving a permanent or temporary takings case. Justice Kennedy and the dissenting Justices asserted that the Court was deciding a temporary takings claim⁵⁰ and the majority gave strong signals that it understood this to be the case as well.⁵¹

The clarification of Lucas as a permanent takings case immediately renders Lucas tangential to the issues in Tahoe-Sierra.⁵² After all, certiorari was granted in Tahoe-Sierra only for the purpose of addressing the Tahoe property owners' temporary takings theory.⁵³ Unlike the regulation in Lucas, the regulations reviewed in Tahoe-Sierra were designed to be temporary and were treated as such by the Court. Most importantly, it is to this permanent/temporary takings distinction that the Court pointed when it expressly declared that "Lucas is not dispositive of the question presented."⁵⁴

Tahoe-Sierra also refused to make Lucas relevant in the temporary takings context because the justifications for Lucas' rule did not apply in the context of a temporary land use restriction. Lucas' per se takings test arose, the Court noted, from the recognition that: (1) a draconian, permanent regulatory scheme may not secure any advantage to affected landowners⁵⁵; and (2) the government is unlikely to suffer financial hardship if it must pay compensation in these extraordinary cases. The Tahoe-Sierra Court believed that the opposite assumptions held true in the case of a temporary denial of all use.⁵⁶ These basic distinctions, rather than a controversial and dubious reading of Lucas, adequately explain why the Tahoe-Sierra Court refused to find that a temporary denial of all use is a per se taking.

Nevertheless, at first glance, it may seem that Tahoe-Sierra's suggestion that the "all economically beneficial use" rule is satisfied by positive value was necessary to the holding that a temporary denial of all use is not a per se taking. The confusion arises from the Court's conclusion that temporary takings analysis must survey the entire useful life of the restricted property, rather than just the effective period [33 ELR 10335] of the restrictions.⁵⁷ Under this framework, the Court declared that there was no taking under Lucas given that "a fee simple estate cannot be rendered valueless by a temporary prohibition on economic use, because the property owner will recover value as soon as the prohibition is lifted."⁵⁸ This reasoning implies that the refusal to apply Lucas required an initial conclusion that Lucas only applies when property is rendered valueless.

However, a closer look at the critical framework reveals the fallacy of this conclusion. The crux of Tahoe-Sierra's refusal to apply Lucas seems to be that property does not lose all value when subject to a use restriction that has a finite duration. But, in actuality, it is a retention of property use that underlies the Court's reasoning: "The property owner will recover value as soon as the prohibition is lifted" (thus avoiding a per se taking) only because the property will first recover the potential for some profitable improvement. Even in the context of a temporary regulation, the logical starting point for a Lucas analysis is the impact on property use. As the Ninth Circuit pointed out in its Tahoe-Sierra opinion:

Economic reality is precisely what differentiates a permanent ban on development, even if subsequently invalidated, from a temporary one. Basic economic theory demonstrates that the present value of land depends on the potential for future use. Accordingly, when a permanent development ban (like the one at issue in Lucas) is enacted the value of the affected land plummets, on account of the fact that the ban bars all future development of the property. In contrast when a temporary ban is enacted, both the owner of the affected land and any prospective purchasers know that, at a specific point in the future, the moratorium will no longer prohibit the development of the land at issue.⁵⁹

Put succinctly, a temporary regulation has a less than total impact on property value because it first fails to permanently destroy the potential for property improvement. As a result, Lucas is inapplicable to a temporary denial of all use simply because this type of restriction does not eliminate all economically beneficial physical uses. Consequently, a reorientation of the Lucas test from property "use" to monetary "value" is utterly unnecessary to the Court's conclusion that a temporary denial of all use is not a per se taking.

What Kind of "Value" Is Relevant to Lucas?

Even as written, the Court's extensive treatment of the place of "value" in the "all economically beneficial use" rule should not be interpreted to establish a virtually impossible "all monetary value" standard. As used in the Court's takings jurisprudence, the concept of property "value" has always been inexorably tied to the ability to improve or develop property, just as value is so tied in the economic world.⁶⁰ In Palazzolo,⁶¹ for instance, the Court rejected a takings claim under Lucas because the landowner could use his property to build a house despite the challenged regulatory regime.⁶² In so doing, the Court emphasized that the subject property retained $ 200,000 worth of "development value."⁶³

The presence of developmental value in Palazzolo undermined the owner's Lucas claim not because it indicated that a speculator might pay more than a dollar for the land, but because it underlined the existence of an economically viable physical use. To make sure that this point was not misunderstood, the Court addressed Palazzolo's complaint that all he had left was a "few crumbs of value" by agreeing that a Lucas taking is not avoided by a "token interest."⁶⁴ In the end, there was no taking because Palazzolo had more than a few token crumbs of value; he had the ability to profitably use the property: "A regulation permitting a substantial residence of an 18 acre parcel does not leave the property 'economically idle'" for purposes of Lucas.⁶⁵

The same developmental conception of value is evident in Lucas itself. In Lucas, the trial court found that regulations preventing construction of homes on Lucas' beachfront lots rendered the lots "valueless."⁶⁶ It also found that the regulations "deprived Lucas of any reasonable economic use of the lots" and "eliminated the unrestricted right of use."⁶⁷ Both the Court and the South Carolina Supreme Court accepted these findings. It is, however, undeniable from an economic point of view that the Lucas lots had some positive monetary value. This point was stressed by the dissenting opinion in Lucas⁶⁸ as well as by Justice Kennedy's concurring opinion.⁶⁹ Consequently, if Lucas rests on an elimination of all value, as Tahoe-Sierra's dicta suggests, it does so only by adhering to an understanding of "value" distinct from bare monetary worth. In light of Lucas' repeated emphasis on the ability of landowners to improve property,⁷⁰ the decision seems to treat value, to the extent it is concerned with value at all, in the same manner as Palazzolo—as synonymous with developmental or improvement potential.⁷¹

Lucas' footnote 8, to which Tahoe-Sierra points in emphasizing the importance of "value," does not require a different reading. As presented in Tahoe-Sierra, that footnote says that the landowner with a 95% loss of value will "not be able to claim the benefit of [Lucas'] categorical [all economically beneficial use] formulation."⁷² But if by the term "value" the Court means monetary worth greater than zero, [33 ELR 10336] Lucas himself should not have been able to claim the benefit of the categorical rule.⁷³ Nor should other severely regulated landowners who cannot plausibly show that they have suffered a complete elimination of monetary value. And yet Lucas and similarly situated landowners have claimed the benefit of the Lucas rule.⁷⁴ This makes perfect sense once value is understood as shorthand for the presence or absence of uses in land, i.e., when value means the value that arises from the ability to build, farm, grow, or harvest timber.

When the Tahoe-Sierra Court focused on the property value that remained in the subject properties, there is no reason to believe that it was suddenly impressed by the possibility that the properties could be sold (as open space) for more than zero dollars. It is particularly difficult to believe that both Justice Kennedy and Justice O'Connor, who were in the majority in Palazzolo, would swiftly depart from Palazzolo's treatment of "value" in a narrow Tahoe-Sierra decision that addressed only the issue of a temporary building moratorium. On the contrary, given that the challenged temporary land use restriction prevented present, but not future, residential development, the Court was almost surely thinking of the value of this available future use. Again, as the affirmed Ninth Circuit Tahoe-Sierra opinion illustrates, the focus is ultimately upon the developmental uses that remain: "Given that the [Tahoe] ordinance and resolution banned development for only a limited period, these regulations preserved the bulk of the future developmental use of the property. This future use had substantial present value."⁷⁵

Post-Tahoe-Sierra Cases Apply Lucas as a Use-Based Standard, Not as "An All Monetary Value" Rule

Despite the many reasons to limit Tahoe-Sierra to the moratorium context, a few post-Tahoe-Sierra decisions have picked up on the Court's references to property value to more generally conclude that what matters for purposes of Lucas is a deprivation of all property value.⁷⁶ A leading example is McPherson Landfill, Inc. v. Board of County Commissioners of Shawnee County,⁷⁷ in which the Kansas Supreme Court concluded that Tahoe-Sierra "confirmed the narrow application of the Lucas rule."⁷⁸ The court more specifically relied on Tahoe-Sierra for the proposition that "if the entire value of the property is not destroyed, then the analysis under [Penn Central and not Lucas] is appropriate"⁷⁹

However, McPherson Landfill is not representative of the majority of post-Tahoe-Sierra cases. Most recent decisions applying or considering Lucas have ignored Tahoe-Sierra's "all value" dicta; they continue to cite Lucas for the rule that a per se taking occurs where there is a deprivation of all economically beneficial use of property.⁸⁰ And they apply the rule by looking at the available physical uses of property. The value of the available uses is sometimes considered as well, not as the polestar of Lucas, but as a measure of the economic viability of the remaining, available uses.

Mays v. Board of Trustees of Miami Township⁸¹ aptly illustrates the above-mentioned point. There, an Ohio appellate court cited Tahoe-Sierra in making the following observations about takings law: "In order to constitute a 'regulatory' taking, the measure involved must be permanent in nature and of such a character and effect that the owner is deprived of all or substantially all economic use that is feasible."⁸² The court continued: "'Takings' jurisprudence does not favor claims that some more remunerative use is denied. Rather the question is whether some economically feasible use remains. Feasibility refers to the reasonable availability of the use. Its economic character is its capacity to produce a material return."⁸³ Applying these principles, the court held that there was no taking because "Plaintiffs concede they may continue to use their land for farming."⁸⁴

Federal post-Tahoe-Sierra takings decisions are similar. In Currier Builders v. Town of York,⁸⁵ for example, would-be residential developers challenged as a taking an ordinance that limited the number of building permits that could be issued within a given time span.⁸⁶ The ordinance was due to expire within three years of enactment.⁸⁷ In considering the takings claim, the federal district court explained that under Lucas, "a landowner who '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 … has suffered a taking."⁸⁸ This situation, the court noted, would "typically" occur when the landowner must leave land "substantially in its natural state."⁸⁹ The court noted that this means that retention of a "token interest" would not obviate a taking.⁹⁰

Relying on Tahoe-Sierra, the Currier Builders court rejected the developers' facial takings claim.⁹¹ The critical fact was that the ordinance, like the moratorium in Tahoe-Sierra, was of finite duration. The court then rejected the developers' [33 ELR 10337] as-applied takings claim, at least to the extent that it was raised under Lucas. But it did so for the traditional reason that a profitable use remained: "[The] property could be used for single-family residences and … building permits for such residences would most likely have been available during the initial term of the Ordinance."⁹²

A similar use-based analysis characterized a dissent to a denial of rehearing en banc in Washington Legal Foundation v. Texas Equal Access to Justice Foundation,⁹³ an opinion issued a day after Currier Builders. In the dissent, seven circuit judges unsuccessfully argued that the state's Interest on Lawyers' Trust Accounts (IOLTA) program, which requires attorneys to deposit small amounts of client funds in a system that collects the interest for the use of state-sanctioned programs, could not be a Lucas taking. Although aware of the Court's recent decision in Tahoe-Sierra,⁹⁴ the judges explained that Lucas did not apply because

the relevant inquiry must be whether IOLTA strips the plaintiffs of all economically beneficial use of their property (i.e., their interest). Simply and accurately, the answer is no. Even absent IOLTA, the plaintiffs cannot use the interest on their principals because their funds will gain no net interest; therefore, by definition, vis-a-vis the plaintiffs, there is no such thing as an economically beneficial use that the government could have taken.⁹⁵

Even when courts seem to expressly adopt Tahoe-Sierra's "value" dicta, they usually engage in a traditional application of Lucas, i.e., they focus on remaining viable physical uses of property. The leading example is R.T.G., Inc. v. Ohio.⁹⁶ There, the Ohio Supreme Court cited Tahoe-Sierra in appearing to limit Lucas' "all economically beneficial use" rule to cases where a landowner is deprived of all "value."⁹⁷ However, in finding that the state had effected a taking under Lucas by depriving a company of its coal deposits, the court did not conclude that the property was literally worth nothing; indeed, it pointed to no evidence of the post-regulation value of the coal. Rather, it reasoned that since the coal deposits could not be mined profitably, they were "valueless" for the purposes of Lucas:

"What makes the right to mine coal valuable is that it can be exercised with profit." The UFM designation [prohibiting coal mining] makes it impossible for RTG to mine coal, thereby depriving RTG from exercising its coal rights for profit. Thus, imposition of the UFM designation deprived RTG's coal rights of all economic value. Accordingly, applying Lucas, we hold that the UFM designation resulted in a categorical taking of RTG's coal rights.⁹⁸

Thus, while the R.T.G. court spoke in terms of value, it ultimately applied Lucas' "all economically beneficial use" per se rule based solely on the evidence that the company could not profitably use its coal deposits.

Similarly, in SDDS, Inc. v. South Dakota,⁹⁹ the South Dakota Supreme Court quoted Tahoe-Sierra's dicta that "Lucas was carved out for the 'extraordinary case' in which a regulation permanently deprives property of all value."¹⁰⁰ But it noted there was no per se taking under Lucas because "SDDS purchased the Lonetree site as rangeland, later sold it as such for $ 53,000 and could have so used it until a final decision on the proposal to use the site as a landfill had been made."¹⁰¹

To the same effect is Cane Tennessee v. United States.¹⁰² In that case, the U.S. Court of Federal Claims noted that "the Supreme Court in Tahoe-Sierra further clarified that "anything less than a 'complete elimination of value,' or 'total loss,' … would require the kind of analysis applied in Penn Central."¹⁰³ But when the court engaged in takings analysis, it concluded that there was no Lucas taking of the subject property because the land retained several "economically viable uses" besides the restricted right to mine coal. In particular, there was evidence that the land was suitable for cattle grazing and timber harvesting and that the timber was worth between $ 3 and $ 4 million.¹⁰⁴ Unremarkably, the presence of these profitable physical uses precluded application of Lucas.

The Once and Future "All Economically Beneficial Use" Standard

As a close analysis of Tahoe-Sierra and recent lower court takings decisions shows, it is a mistake to believe that the "all economically beneficial use" rule has given way to an "all monetary value" interpretation. Courts and commentators who believe otherwise, or who believe that the transformation is inevitable, misunderstand the important and long-standing place of property use in the Courts's takings jurisprudence and in the precedent of state courts. It is fairly clear that the Court's physical takings cases, requiring compensation no matter how minute the invasion, have arisen from the adverse impact that invasion has on the property owner's ability to use and control the occupied area.¹⁰⁵ What is less understood is that the availability of physical property use has always played an important part in the Court's regulatory takings cases and in the regulatory takings jurisprudence of the states. This judicial regard for property use is unlikely to suddenly disappear, especially on the strength of dicta that arguably constrains only one takings decision.

The Origins of the "All Economically Beneficial Use" Rule in the Court's Jurisprudence

In the regulatory takings context, the phrase "economically beneficial use" initially appears in the 1962 case of Goldblatt [33 ELR 10338] v. Town of Hempstead.¹⁰⁶ The concept traces, however, directly to the 1922 case of Pennsylvania Coal v. Mahon,¹⁰⁷ considered the font of the modern regulatory takings doctrine. In Mahon, a coal company argued that a land surface support law effected a taking because it made "it commercially impracticable to mine… coal that had been left in place." Stating that the general rule is that when a regulation "goes too far" a taking will occur,¹⁰⁸ the Court held that the challenged law required just compensation because "to make it commercially impracticable to mine certain coal has very nearly the same effect for constitutional purposes as appropriating it or destroying it."¹⁰⁹ Thus, while the terminology of "economically beneficial use" is absent, it is plain that, throughout the decision, Mahon focused on the law's impact on the ability of the company to use its property for coal mining, the only profitable option.

Forty years later, the Goldblatt Court came to a different result. However, the decision kept the takings spotlight on the land uses available to the property owner. In holding that an anti-mining ordinance did not rise to a taking, the Court stressed that the type of land use proscribed was in the nature of a nuisance.¹¹⁰ The Court then indicated that the inquiry would otherwise consider the extent to which the challenged law limited the "beneficial uses" of the property, as well as its overall value.¹¹¹

In the 1978 case of Penn Central,¹¹² the Court more directly sanctioned a use-based approach. Penn Central is, of course, best know for its multi-factor approach toward the takings inquiry. This approach requires consideration of: (1) the economic impact of the regulation; (2) the extent to which the regulation frustrates the property owner's distinct investment-backed expectations; and (3) the character of the governmental action.¹¹³ But in applying this approach to reject the takings claim, the Court explained that its decision was

based on Penn Central's present ability to use the terminal for its intended purposes and in a gainful fashion. The city conceded at oral argument that if appellants can demonstrate at some point in the future that circumstances have so changed that the terminal ceases to be "economically viable," appellants may obtain relief.¹¹⁴

Two years later, the Court elevated the "economically viable" concept into an explicit takings standard, declaring in Agins v. City of Tiburon,¹¹⁵ that a regulatory taking occurs when a regulation "does not substantially advance legitimate state interests or denies an owner economically viable use of his land."¹¹⁶ Throughout the 1980s, the Court repeated, without caveat, that "[a] statute regulating the uses that can be made of property effects a taking if it 'denies an owner economically viable use of his land.'"¹¹⁷ Indeed, three months before the Court issued the Lucas opinion, the Court reiterated that compensation is required where a regulation is challenged

only if considerations such as the purpose of the regulation or the extent to which it deprives the owner of the economic use of the property suggest that the regulation has unfairly singled out the property owner to bear a burden that should be borne by the public as a whole.¹¹⁸

These pre-Lucas cases give every indication that the adopted "economically viable or beneficial use" standard focuses on the property owner's ability to improve property in some profitable way, not on the ability to sell it for a nominal price. In Penn Central, for example, the Court explained that the challenged restrictions "not only permit reasonable beneficial use of the landmark site but also afford appellants opportunities further to enhance [i.e., use] not only the terminal site proper but also other properties."¹¹⁹ The same concern arises in San Diego Gas & Electric Co. v. City of San Diego.¹²⁰ There, a landowner whose property was designated as open space challenged the designation as a taking because it "denied in all practical effect any possible or economical use of the subject property."¹²¹

The California Court of Appeals noted that the regulation's objective was "to have the property remain unused, undisturbed in its natural state"¹²² but held that there was no right to just compensation. A majority of the Court later refused to address the merits of the takings claim, finding that the dispute was not ripe.¹²³ However, in a dissenting opinion joined by three other Justices and approved in great part by concurring Justice William H. Rehnquist,¹²⁴ Justice William J. Brennan emphasized the importance of use in determining whether the government should pay compensation for regulatory actions:

Police power regulations such as zoning ordinances and other land-use restrictions can destroy the use and enjoyment of property in order to promote the public good just as effectively as formal condemnation or physical invasion of property. From the property owner's point of view, it may matter little whether his land is condemned or flooded, or whether it is restricted by regulation to use in its natural state. From the government's point of view, the benefits flowing to the public from preservation of open space through regulation may be equally great as from creating a wildlife refuge through formal condemnation or increasing electricity production through a dam project that floods private property.¹²⁵

[33 ELR 10339]

Justice Brennan subsequently stated: "If the regulation denies the private property owner the use and enjoyment of his land and is found to be a taking, it is only fair that the public bear the costs of benefits …."¹²⁶

Almost all of the Court's later cases include language that specifically link the protected "use and enjoyment" of property to the physical improvement of property.¹²⁷ This is not to suggest that pre-Lucas decisions focus on physical use to the exclusion of monetary value. But neither do these decisions focus on value to the exclusion of use: "Although a comparison of values before and after" a regulatory action "is relevant, … it is by no means conclusive …."¹²⁸ Indeed, to the extent that one can generalize about the relative position of use and value in the pre-Lucas takings inquiry, it seems, as previously noted, that value is treated as one measure of the "use to which the land could readily be converted, as well as the existing use."¹²⁹

The last pre-Lucas decision to consider a regulatory takings challenge to a generally applicable law, Keystone Bituminous Coal Ass'n v. DeBenedictis,¹³⁰ illustrates the interplay of land use and value in the takings analysis. In Keystone, the Court considered the constitutionality of a Pennsylvania law that required coal mining companies to leave about 50% of their coal in place for surface support.¹³¹ In concluding that the law did not rise to the level of a taking, the Court focused on the fact that the coal companies could continue to mine certain coal deposits and could do so profitably: "Petitioners have not claimed … that the Act makes it commercially impracticable for them to continue mining their bituminous coal interests in Western Pennsylvania. Indeed, petitioners have not even pointed to a single mine that can no longer be mined."¹³² The Court added: "Nor is there any evidence that mining in any specific location affected by the 50% rule has been unprofitable."¹³³ Four dissenting Justices disputed the majority's broad definition of the property interest to which takings analysis applies,¹³⁴ but agreed that under this analysis "the State may not completely extinguish a property interest or prohibit all use without providing compensation."¹³⁵

The Long History of Use-Based Takings in State Decisions

Pre-Lucas state decisions also consistently recognized that a regulatory taking occurs when the government prevents a landowner from making economically viable or beneficial use of property. While these decisions often compare preregulation and post-regulation property values, they hardly consider value to be the dispositive factor. On the contrary, they show little doubt that what is ultimately required under this test is a consideration of the type of physical land uses available to the owner. In a 1978 case,¹³⁶ for example, the Texas Supreme Court ruled that a regulatory taking could occur if "the property was rendered "wholly useless" or "created a disproportionate diminution in economic value."¹³⁷ But more importantly, it went on to find a taking because the city had imposed a scenic easement whereby "plaintiffs lost all use of their land."¹³⁸ As in Lucas, basic economic principles compel the recognition that this scenic easement could not leave the property with a monetary value of zero. The absolute restriction on use was enough to require compensation.

The New Hampshire Supreme Court came to the same conclusion a few years later in Burrows v. City of Keene.¹³⁹ In Burrows, the court held that a zoning change placing private property in a conservation district was intended to prevent "all 'normal private development.'"¹⁴⁰ In accomplishing this purpose, the regulation effected a taking because it prohibited "all economically feasible uses of the land, thus placing the entire burden of preserving the land as open space upon the plaintiffs."¹⁴¹ The fact that the city offered to buy the property under the open space zoning, thus showing that some property value remained, did nothing to diminish the regulation's compensable impact.¹⁴²

Several later decisions more explicitly recognized that property retaining some value can be taken under the "beneficial use" standard. The first is a 1983 decision out of the North Dakota Supreme Court. In Rippley v. City of Lincoln,¹⁴³ the city designated 20 acres of private property for future public use. The court concluded that the zoning designation "destroys all reasonable use of the [plaintiffs'] property."¹⁴⁴ However, the court also acknowledged that the designation permitted the owners to "continue to sell hay from the undeveloped land" for an expected annual "return of approximately $ 150.00."¹⁴⁵ In spite of this value, the court held that there was a taking.

[33 ELR 10340]

For support, the Rippley court turned to an instructive 20-year-old decision out of New Jersey, Morris County Land Improvement Co. v. Township of Parsippany-Troy Hills.¹⁴⁶ In Morris County, the township rezoned land inundated by water from low-density residential uses to limited recreational and agricultural use.¹⁴⁷ The New Jersey Supreme Court found that the property was unsuited for the permitted uses, or that such uses were conditioned upon permits that would not be issued.¹⁴⁸ It concluded: "About the only practical use which can be made of the property in the zone is a hunting or fishing preserve or a wildlife sanctuary, none of which can be considered productive."¹⁴⁹ The court held that the government had taken the subject property because "land improvement is rendered practically impossible."¹⁵⁰ This decision would eventually be cited by the majority in Lucas.¹⁵¹

The same year that Rippley was decided, a Rhode Island decision found a taking where private property was zoned to remain in a natural state. In Annicelli v. Town of South Kingston,¹⁵² it was clear that the property had a value of between $ 1,000 and $ 8,500.¹⁵³ The town's appraiser, who advocated the higher number, "conceded that several of the [potential] uses were impractical."¹⁵⁴ The Rhode Island Supreme Court went further, upholding the lower court's conclusion that "all reasonable or beneficial use of [the] property has been rendered an impossibility."¹⁵⁵ "Consequently," the court held that there had been a taking under the Court's takings jurisprudence.¹⁵⁶

Cases from other jurisdictions¹⁵⁷ affirm the clear implication of these decisions: even before Lucas, a per se taking occurred in the states when government destroyed all economically beneficial use of property. An elimination of all value was not necessary; what mattered was whether the regulation "so restricts the use that the land cannot practically be utilized for any reasonable purpose or when the permitted uses are those to which the property is not adapted or which are economically infeasible."¹⁵⁸ As the New York Supreme Court said of property long ago:

While [regulation] can limit their use, it cannot render them useless. True a line always exists beyond which the erection of a dwelling, or place of business, or any other use of a sub-standard lot may have become detrimental to the general welfare, but in such cases the municipality is bound to compensate the owner if it proposes, in the public interest to bar his property from any practical use for which it might be suited. It cannot compel him to sell to an adjoining owner nor can it require him to purchase additional contiguous property, if such is available. Rather, it must itself acquire the property by purchase or condemnation since, in effect, it is taking it for a public purpose.¹⁵⁹

In short, "the general rule [has always been] that the 'existence of permissible uses determines whether a property restriction denies a property holder the economically viable use of its property.'"¹⁶⁰ As the foregoing review of selected state cases illustrates, this regard for the role of use in the pre-Lucas takings framework is widespread and unlimited by jurisdictional boundaries. Consequently, the "all economically beneficial use" taking standard is unlikely to recede as a use-based test even if courts erroneously conclude that Lucas has been limited by Tahoe-Sierra's dicta.

Lucas and the Fundamental Right to Use Private Property

The protection of economically beneficial uses in the regulatory takings context is a logical and necessary byproduct of the traditional understanding of the nature of private property. Under this understanding, property is comprised of a bundle of attributes or rights, among which are the ability to possess, use, enjoy, dispose, and exclude others.¹⁶¹ Some rights have, however, been considered more important to the enjoyment of property than others. U.S. courts have long held the right to make some profitable use of property to be a fundamental attribute of private property.

The special and protected nature of the right to use property was made perfectly clear in the 1911 case of Curtin v. Benson.¹⁶² There, the Court explained:

The powers of a sovereign cannot be exercised to destroy essential uses of private property. The right of appellant to pasture his cattle upon his land and the right of access to it are of the very essence of his proprietorship. May conditions be put upon their exercise such as appellees put upon them? In answering the question we shall assume, for the time being, that [the government] has interpreted correctly the regulations of the Secretary of the [33 ELR 10341] Interior. [The government's] order is not, it will be observed, a regulation of the use of the land, as an order to fence the lands might be, but is an absolute prohibition of use. It is not a prevention of a misuse or illegal use but the prevention of a legal and essential use, an attribute of its ownership, one which goes to make up its essence and value. To take it away is practically to take his property away, and to do that is beyond the power even of sover-eignty, except by proper proceedings to that end [providing just compensation].¹⁶³

Later, in United States v. Causby,¹⁶⁴ the Court indicated that the right to use property is so important that its destruction cannot be mitigated, for purposes of government liability, by the mere retention of some property value. In Causby, the issue was whether the use of airspace above private property by low flying airplanes amounted to a compensable taking.¹⁶⁵ Using language that clarifies the Tahoe-Sierra Court's use of the phrase "total loss," the Court explained that "if, by reason of the frequency and altitude of the flights, respondents could not use this land for any purpose, their loss would be complete."¹⁶⁶ In this hypothetical case of total loss, the Court stressed, there would undoubtedly be a taking because "the owner's right to possess and exploit the land—that is to say, his beneficial ownership of it—would be destroyed."¹⁶⁷ The Court went on to conclude that the flights caused a taking in the actual case at hand, even though some minor uses and therefore "some value" remained in the subject property.¹⁶⁸ The critical consideration was that the remaining uses were severely limited and not economically viable: "The path of airplanes might reduce a valuable factory site to a grazing land, an orchard to a vegetable path, a residential section to a wheatfield."¹⁶⁹

State courts also long ago raised the right to use property high in the bundle of rights protected by the Takings Clause. In 1874, the Michigan Supreme Court eloquently stressed the essential nature of the right to use property:

Is not the idea of property in, or title to lands, apart from, and stripped of all its incidents, a purely metaphysical abstraction, as immaterial and useless to the owner as "the stuff that dreams are made of?" Is it not a much less injury to him, if it can injure him at all, to deprive him of this abstraction, than of the incidents of property, which alone render it practically valuable to him? And among the incidents of land, or anything else, is not the right to enjoy its beneficial use, and so far to control it as to exclude others from that use, the most beneficial, the one most real and practicable idea of property, of which it is a much greater wrong to deprive a man, than the mere abstract idea of property without incidents?¹⁷⁰

Only a few years before, the New Hampshire Supreme Court similarly declared:

If property in land consists of certain essential rights, and a physical interference with the land substantially subverts one of those rights, such interference "takes," pro tanto, the owner's "property." The right of indefinite user (or of using indefinitely) is a essential quality. "Use is the real side of property." This right of user necessarily includes the right and power of excluding others from using the land. From the very nature of these rights of user and exclusion, it is evident they cannot be materially abridged without, ipso facto, taking the owner's "property."¹⁷¹

One hundred years later, the Burrows court would quote from the above passage to support its conclusion that government regulation had effected a taking by depriving a landowner of all economically beneficial use of property.

In identifying "economically beneficial use" as a compensable stick in the bundle of property rights, Lucas built upon a century of takings jurisprudence. And in identifying the typical way that regulations cause a taking under this standard—"by requiring land to be left substantially in its natural state"—Lucas simply culminated the Court's and the state court's tradition of protecting the right to profitably use private property.¹⁷² This protection does not give a landowner the ability to realize the "highest or best use" of his property¹⁷³; but Lucas (and its progenitors) do constitutionalize the right to make some economically viable, i.e., profitable, physical use of property.¹⁷⁴ In some cases, the construction of homes may be the only use that satisfies this standard.¹⁷⁵ But, in others, less intensive uses—such as farming,¹⁷⁶ agriculture, timber harvesting,¹⁷⁷ and grazing¹⁷⁸ —may suffice. What has shown to be inadequate time and again is the ability to sell property for nominal value after being forced to leave it otherwise idle.¹⁷⁹ The [33 ELR 10342] roots of these basic rules are deep and not likely to be, nor should be, severed easily or lightly.¹⁸⁰

Conclusion: The "Natural State" of the Categorical Takings Rule

Tahoe-Sierra was meant as a narrow decision dealing with the standard applicable to temporary moratoria and it should remain so confined. Language suggesting that there can be no per se taking in general unless a regulation deprives land of all monetary worth is especially to be discounted. Such a focus is irrelevant to the conclusion that a temporary regulation survives a permanent takings test and runs counter to the Court's implicit use of "value" as a measure of the capacity for profitable land improvement. More fundamentally, there is no historical basis for resting takings analysis on the presence or absence of "value" when a landowner's complaint is that the government has prohibited viable use of property.

In the near term, Tahoe-Sierra may obscure the use-based tradition—at least in cases where some use exists—by shifting the rhetorical focus from the remaining use to the value it engenders. However, the mettle of property use, and Lucas' role in solidifying it in the regulatory takings context, will be correctly measured in cases where regulation permanently leaves an entire parcel of private property in a natural state. Here, the presence of some monetary worth is unlikely to stand against the long line of federal and state decisions protecting the right to profitably use property. This line of decisions plainly establishes that "the [takings] line has been crossed where the purpose and practical effect of the regulation is to appropriate private property for … open space" or other similar public purposes, regardless of the existence of minimal value.¹⁸¹

The Court most recently confirmed the special, compensable status of the "natural state" case in Lucas and Palazzolo, explaining that any rights remaining after such a draconian restriction—such as personal recreational uses¹⁸² or the ability to sell to a speculator for nominal value—are a "token interest" that cannot satisfy the Takings Clause. The same outlook is evident in the Court's earlier takings jurisprudence. In Causby, to take one example, the owner's land was never actually occupied; what was invaded was the right of use.¹⁸³ Yet, this right was less infringed, given that the owner could still improve the property in some way, than in the case where the owner is prohibited by regulation from altering his land in any way. Lucas made the obvious explicit: there is no compelling reason why a severely regulated landowner should be required to accept the nominal value left by the regulation (and the right to pay property taxes), while the owner in a Causby situation receives full compensation.

In short, future challenges to regulations so draconian that they create a natural preserve out of private property will reveal Tahoe-Sierra's "value" language for what it is—too peripheral and too weak to transform the "all economically beneficial use" standard into a test avoided by the retention of nominal monetary property value. Land use restrictions destroying all profitable physical uses of land will generally continue to comprise a category of regulatory action that is compensable "without case-specific inquiry into the public interest advanced in support of the restraint."¹⁸⁴ [33 ELR 10343] The more perplexing question is what role investment-backed expectations will play in this category.

Justice Kennedy, in the majority in Tahoe-Sierra, concurred in Lucas primarily on the ground that the government had destroyed Lucas' investment-backed expectations.¹⁸⁵ And Justice O'Connor, though in the majority in Lucas, similarly stressed the need to consider investment-backed expectations in her concurring Palazzolo opinion.¹⁸⁶ Her opinion was later cited extensively in the Tahoe-Sierra opinion.¹⁸⁷ All of this suggests that the applicability of investment-backed expectations in an "all economically beneficial use" may be open to question, despite recent decisions holding otherwise.¹⁸⁸

However, even assuming that it applies, the "investment-backed expectations" requirement should rarely hinder a claim otherwise arising under the "all economically beneficial use" standard. Historically, investment-backed expectations were invoked to defeat a takings claim when it was shown that the claimant was on either constructive or actual notice of the challenged restrictions at the time the property acquired.¹⁸⁹ But Palazzolo expressly rejected this "notice rule" as a basis for avoiding liability.¹⁹⁰ It has accordingly forced the investment-backed expectations inquiry to focus elsewhere, at least to the extent that it applies in a Lucas-type dispute. A logical shift is to the extent of development permitted on land similarly situated to the claimant's; if development is common, the landowner buying into this scheme should have protected expectations.¹⁹¹ This conception of "investment-backed expectations" is likely to favor the landowner since many "all economically beneficial use" cases arise precisely because a landowner has been singled out among his neighbors to provide open space or a nature preserve for an otherwise developed neighborhood.¹⁹²

In sum, Lucas, Palazzolo, and many other earlier cases have considered a regulatory command to leave property permanently devoid of profitable uses to be the equivalent of a compensable act of condemnation. Tahoe-Sierra ill-advisedly tinkers with this "all economically beneficial use" rule in dicta, but ultimately fails to lower its bottom line to the case where a property owner manages to have land appraised, in contravention of basic economics, at zero value. The courts have always protected the ability of property owners to use their property in some gainful manner; it is folly to believe that they are suddenly going to embrace the appropriation of all uses for a public purpose simply because the owner might be able to sell his property for a fistful of dollars.

1. 505 U.S. 1003, 1019, 22 ELR 21104, 21108 (1992) (holding 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") (emphasis in original).

2. Id. The Takings Clause of the Fifth Amendment to the U.S. Constitution provides in part: "Nor shall private property be taken for public use, without just compensation." U.S. CONST. amend. V.

3. 122 S. Ct. 1465, 32 ELR 20627 (2002).

4. See id. at 1470, 1472, 32 ELR at 20627, 20628. For general commentary on the Court's Tahoe-Sierra opinion, see J. David Breemer, Temporary Insanity: The Long Tale of Tahoe-Sierra and Its Quiet Ending in the United States Supreme Court, 71 FORDHAM L. REV. 1 (2002).

5. 438 U.S. 104, 8 ELR 20528 (1978). The Penn Central takings test considers such factors as "the regulation's economic effect on the landowner, the extent to which the regulation interferes with reasonable investment-backed expectations, and the character of the government action." Palazzolo v. Rhode Island, 533 U.S. 606, 617, 32 ELR 20516, 20517 (2001).

6. See Tahoe-Sierra, 122 S. Ct. at 1489, 32 ELR at 20634.

7. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1006-07, 22 ELR 21104, 21105 (1992).

8. Id. at 1008-09, 22 ELR at 21105.

9. Id.

10. Id. at 1009, 22 ELR at 21105.

11. Id.

12. Id. at 1009-10, 22 ELR at 21105-06.

13. Id. at 1015, 22 ELR at 21107.

14. Id.

15. Id.

16. Id.

17. Id. at 1019, 22 ELR at 21108.

18. See id. at 1029, 22 ELR at 21111. In order to avoid a taking where all productive use is denied, land use restrictions "must inhere in the title itself, in the restrictions that background principles of the State's law of property and nuisance already place upon land ownership." For discussion of the scope of this exception, see David L. Callies & J. David Breemer, Background Principles: Custom Public Trust, and Preexisting Statutes as Exceptions to Regulatory Takings, in TAKINGS SIDES ON TAKINGS ISSUES: PUBLIC AND PRIVATE PERSPECTIVES 125 (Thomas E. Roberts ed., 2002).

19. See Palazzolo v. Rhode Island, 533 U.S. 606, 626-28, 32 ELR 20516, 20519 (2001) (rejecting "reasonable investment-backed expectations" argument that the post-enactment transfer of title would "absolve the State of its obligation to defend any action restricting land use, no matter how extreme or unreasonable"); Palm Beach Isles Assocs. v. United States, 231 F.3d 1354, 1362-64 (Fed. Cir. 2000) (analyzing Lucas and concluding that "investment-backed expectations" are not applicable to the per se takings rule).

20. Lucas, 505 U.S. at 1018, 22 ELR at 21108 (emphasis added).

21. Id. at 1059, 22 ELR at 21119 (Blackmun, J., dissenting).

22. Id. at 1044, 22 ELR at 21115 (emphasis added).

23. Id.

24. Id. at 1065 n.29, 22 ELR at 21120 n.29 (Stevens, J., dissenting).

25. Id. at 1044, 22 ELR at 21115 (Blackmun, J., dissenting) ("State courts frequently have recognized that land has economic value where the only residual economic uses are recreation or camping."); id. (noting that the land "would have value for neighbors and for those prepared to enjoy proximity to the ocean without a house").

26. See id. at 1031, 22 ELR at 21111 (economically beneficial use equated with "habitable or productive improvements") (emphasis added); id. at 1025 n. 12, 22 ELR at 21110 n.12 (referring to "all developmental or economically beneficial land uses") (emphasis added); see also id. at 1065 n.29, 22 ELR at 21120 n.29 (Stevens, J., dissenting) (decrying the Court's emphasis on "developmental" uses) (emphasis added).

27. Id. at 1019 n.8, 22 ELR at 21108 n.8 (internal citation omitted) (emphasis in original).

28. See id. at 1044, 22 ELR at 21115 (Blackmun, J., dissenting) ("Petitioner also retains the right to alienate the land, which would have value for neighbors and for those prepared to enjoy proximity to the ocean without a house.").

29. See Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg'l Planning Agency, 216 F.3d 764, 780 & n.22, 30 ELR 20638, 20631 & n.22 (9th Cir. 2000), aff'd, 122 S. Ct. 1465, 32 ELR 20627 (2002). The Ninth Circuit notes that the "precise meaning of the phrase [economically beneficial or productive use] is elusive" and that "the central confusion over its meaning centers on the relationship between the "use" of property and its "value."

30. See, e.g., Molly S. McUsic, The Ghost of Lochner: Modern Takings Doctrine and Its Impact on Economic Legislation, 76 B.U. L. REV. 605, 629-30 (1996) ("The right to various uses of land is the Court's newest source of core property rights."); David L. Callies, Taking the Taking Issue Into the Twenty-First Century, in AFTER Lucas: LAND USE REGULATION AND THE TAKING OF PRIVATE PROPERTY WITHOUT COMPENSATION 5 (David Callies ed., 1993) ("The [Lucas] Court did not say the regulation had to render the property valueless, but only devoid of economically beneficial use."); Richard C. Ausness, Regulatory Takings and Wetlands Protection in the Post-Lucas Era, 30 LAND USE & WATER L. REV. 403-04 (1995) (noting that "Lucas ensures that [property owners] will not be required to leave their land in a wholly unproductive state" and that "property need not be literally worthless to come within the purview of the categorical rule"); Lynda L. Butler, Private Land Use, Changing Public Values, and Notions of Relativity, 6 B.Y.U. L. REV. 629, 634 (1992) (Lucas "provides clear evidence of the law's continuing support for a landowner's exploitive tendencies").

31. Christensen v. Yolo County Bd. of Supervisors, 995 F.2d 161, 165 (9th Cir. 1993) ("Generally, the existence of permissible uses determines whether a development restriction denies a property holder the economically viable use of its property."); City of Fitzgerrald v. City of Iowa City, 492 N.W.2d 659, 666 (Iowa 1992) (citing Lucas for proposition that "[a] loss of development potential may be a significant factor in 'takings' claims based on zoning restrictions"); Cannon v. Department of Envtl. Conservation, 867 P.2d 797, 801 (Ark. 1994) (Lucas satisfied where landowner could have "subdivided [for residential purposes] using larger lots," used the property "as a commercial lodge," or sold to a purchaser who "wished to attempt a subdivision having larger lots"); City of St. Petersburg v. Bowen, 675 So. 2d 626, 631 (Fla. Ct. App. 1996) (closing of apartment building violated Lucas' "all economically beneficial use" test because the building "can be put to no other use").

32. Lopes v. City of Peabody, 629 N.E.2d 1312 (Mass. 1994) ("The Supreme Court did not say … that a regulatory taking only occurred when property was rendered valueless.").

33. See, e.g., Palm Beach Isles Assocs. v. United States, 208 F.3d 1374, 1381, 30 ELR 20481, 20483-84 (Fed. Cir. 2000) (The court equated denial of all economically viable use with loss of all economic value. However, the court found a taking without pointing to any specific evidence of the property's post-denial value and while noting that the property might have nominal value.).

34. See Tahoe-Sierra, 216 F.3d at 781-82, 30 ELR at 20644; Del Monte Dunes, Ltd. v. City of Monterey, 95 F.3d 1422, 1433, 27 ELR 20139, 20144 (9th Cir. 1996) ("Although the value of the subject property is relevant to the economically viable use inquiry, our focus is primarily on use, not value."); Bowles v. United States, 31 Fed. Cl. 37, 47-48 (Cl. Ct. 1994) (concluding that a landowner had suffered a taking because the denial of a fill permit stripped the owner of his ability to build a home and alternative uses not feasible given their probable value); see also Florida Rock Indus., Inc. v. United States, 18 F.3d 1560, 1564-65, 24 ELR 21036, 21038 (Fed. Cir. 1994) (stating that "if a regulation categorically prohibits all economically viable use of the land—destroying its economic value for private ownership—the regulation has an effect equivalent to a permanent physical occupation").

35. Tahoe-Sierra, 216 F.3d at 780, 30 ELR at 20643-44.

36. Douglas T. Kendall, Defining the Lucas Box: Palazzolo, Tahoe, and the Use/Value Debate, in TAKINGS SIDES ON THE TAKINGS ISSUE, supra note 18, at 428 (emphasis added).

37. Tahoe-Sierra, 122 S. Ct. at 1470, 32 ELR at 20627.

38. Id. at 1483, 32 ELR at 20632.

39. Id. at 1484, 32 ELR at 20632.

40. Id.

41. Id. at 1483, 32 ELR at 20632.

42. Id.

43. Id. at 1484, 32 ELR at 20632.

44. See Florida Rock Indus., Inc. v. United States, 8 Cl. Ct. 160, 166 n.6, 15 ELR 20626, 20628 n.6 (Cl. Ct. 1985) ("If passively holding land against the possibility that restrictions on its use will be lifted were deemed a productive economic use, property would never be rendered useless by regulation and there could be no such thing as a regulatory taking.").

45. See Tahoe-Sierra, 122 S. Ct. at 1470, 32 ELR at 20627.

46. Id.

47. 533 U.S. 606, 32 ELR 20516 (2001).

48. Tahoe-Sierra, 122 S. Ct. at 1483, 32 ELR at 20632 (emphasis added).

49. Id. at 1482-83, 32 ELR at 20632.

50. See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1033, 22 ELR 21104, 21112 (1992) (Kennedy, J., concurring) (noting that "we do not decide the ultimate question whether a temporary taking has occurred"); id. at 1042, 22 ELR at 21114 (Blackmun, J., dissenting).

51. Id. at 1011-12, 22 ELR at 21106 (rejecting the argument that "permitting Lucas to press his claim of a past deprivation [for period before 1990] on this appeal would be improper" because

Lucas had no reason to proceed on a "temporary taking" theory at trial, or even to seek remand for that purpose prior to submission of the case to the South Carolina Supreme Court, since as the Act then read, the taking was unconditional and permanent. Moreover, given the breadth of the South Carolina Supreme Court's holding and judgment, Lucas would plainly be unable (absent our intervention now) to obtain further state court adjudication with respect to the 1988-1990 period.

52. W.R. Grace & Co. v. Cambridge City Council, 779 N.E.2d 141, 153 (Mass. Ct. App. 2002) (citing Tahoe-Sierra for proposition that "[a] moratorium that deprives the owner of value for a temporary period is not a per se taking because the deprivation is not permanent").

53. The Court granted certiorari only on this question: "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-Sierra Preservation Council, Inc. v. Tahoe Reg'l Planning Agency, 533 U.S. 948 (2001).

54. Tahoe-Sierra, 122 S. Ct. at 1482, 32 ELR at 20632.

55. This concept was clearly explained in Maine v. Johnson, 265 A.2d 711, 716 (Me. 1976). In explaining why a deprivation of all economic use caused a taking, the Maine Supreme Court said that the owner's "compensation by sharing in the benefits which this restriction is intended to secure is so disproportionate to their deprivation of reasonable use that such exercise of the State's police power is unreasonable."

56. Tahoe-Sierra, 122 S. Ct. at 1485, 1487-88, 1489, 32 ELR at 20633-34.

57. See id. at 1483-84, 32 ELR at 20632.

58. Id. at 1484, 32 ELR at 20632.

59. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg'l Planning Agency, 216 F.3d 764, 781 n.26, 30 ELR 20638, 20644 n.26 (9th Cir. 2000) (emphasis added).

60. For a good review of regulatory takings standards from an economic point of view, see William W. Wade, Economic Backbone of the Penn Central Test After Florida Rock V, K&K, and Palazzolo, 32 ELR 11221 (Oct. 2002).

61. 533 U.S. at 606, 32 ELR at 20516.

62. Id. at 630-32, 32 ELR at 20520.

63. Id. at 631, 32 ELR at 20520 (emphasis added).

64. Id.

65. Id.

66. 505 U.S. at 1009, 22 ELR at 21105.

67. Id.

68. Id. at 1043-44, 22 ELR at 21115 (the finding that Lucas' lots were rendered valueless is "almost certainly erroneous").

69. Id. at 1033-34, 22 ELR at 21112 (Kennedy, J., concurring).

70. See supra note 26.

71. James W. Sanderson & Ann Mesmer, A Review of Regulatory Takings After Lucas, 70 DENV. U. L. REV. 487, 505 (1993) ("value" means development value to the Lucas Court"); Ausness, supra note 30, at 403 ("the Lucas Court has made it clear that its categorical rule protects the commercial or developmental value of property").

72. See Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg'l Planning Agency, 122 S. Ct. 1465, 1483, 32 ELR 20627, 20632 (2002).

73. See supra notes 28, 68 and accompanying text.

74. Of particular interest is Loveladies Harbor, Inc. v. United States, the first major case out of the U.S. Court of Appeals for the Federal Circuit to apply Lucas. 28 F.3d 1171, 24 ELR 21072 (Fed. Cir. 1994). There, the court concluded that a Lucas per se taking occurred when the government prevented a landowner from proceeding with a residential development, even though the action seemed to have left the property with positive economic value to the tune of $ 1,000 per acre.

75. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg'l Planning Agency, 216 F.3d 764, 781, 30 ELR 20638, 20644 (9th Cir. 2000) (emphasis added).

76. See Appolo Fuels, Inc. v. United States, 2002 U.S. Claims LEXIS 347 (Ct. Cl. Dec. 18, 2002); Lost Tree Village Corp. v. City of Vero Beach, 2002 Fla. App. LEXIS 16856 (Fla. Dist. Ct. App. Nov. 13, 2002).

77. 2002 Kan. LEXIS 457 (Kan. July 12, 2002).

78. Id. at *56.

79. Id. at *57.

80. See, e.g., Philip Morris v. Reilly, 2002 U.S. App. LEXIS 24403, *23 (1st Cir. Dec. 2, 2002); Swartz v. Beach, 2002 U.S. Dist. LEXIS 19272 *49-51 (D. Wyo. Oct. 7, 2002). Covington v. Jefferson County Planning Comm'n, 53 P.2d 828 (Idaho 2002); see also W.R. Grace & Co. v. Cambridge City Council, 779 N.E.2d 141, 153 (Mass. Ct. App. 2002) ("compensation is required … when governmental regulation deprives the owner of "all economically beneficial or productive use of land, and absent such a "complete deprivation of use," the multifactor Penn Central test controls).

81. 2002 Ohio App. LEXIS 3303 (Ohio. Ct. App. 2002).

82. Id. at 23.

83. Id. at 25.

84. Id. at 24.

85. 2002 U.S. Dist. LEXIS 9942 (D. Me. May 30, 2002).

86. Id. at *5-7.

87. Id. at *7.

88. Id. at *20.

89. Id.

90. Id.

91. Id. at *25.

92. Id. at *28.

93. 293 F.3d 242 (5th Cir. 2002) (dissent to denial of rehearing en banc).

94. Id. at 246 n.13.

95. Id. at 252 (emphasis added).

96. 2002 Ohio LEXIS 3064 (Ohio Dec. 18, 2002).

97. Id. at *20 ("Lucas applies where the regulation has deprived the property of all economic value").

98. Id. at *30.

99. 650 N.W.2d 1 (S.D. 2002).

100. Id. at 10.

101. Id. (emphasis added).

102. 2002 U.S. Claims LEXIS 255 (Fed. Cl. Oct. 2, 2002).

103. Id. at *18.

104. Id. at *23-26.

105. See, e.g., Pumpelly v. Green Bay Co., 13 Wall. 166 (U.S. 1872) ("where real estate is actually invaded by superinduced water, earth, sand or other material, or by having an artificial structure placed upon it, so as to effectually destroy or impair its usefulness, it is a taking") (emphasis added); cf. YMCA v. United States, 395 U.S. 85, 92 (1969) ("Ordinarily … government occupation or private property deprives the owner of his use if the property, and it is this deprivation for which the Constitution requires compensation.").

106. 369 U.S. 590 (1962).

107. 260 U.S. 393 (1922).

108. Id. at 415.

109. Id. at 413-14 (emphasis added).

110. Goldblatt, 369 U.S. at 595.

111. Id. at 593-94.

112. 438 U.S. at 104, 8 ELR at 20528.

113. Id. at 124, 8 ELR at 20533.

114. Id. at 138 n.36, 8 ELR at 20536 n.36 (emphasis added).

115. 447 U.S. 255, 10 ELR 20361 (1980).

116. Id. at 260, 10 ELR at 20362 (emphasis added).

117. Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 495, 17 ELR 20440, 20446 (1987) (quoting Agins, 447 U.S. at 260, 10 ELR at 20362)).

118. Yee v. City of Escondido, 503 U.S. 519, 522 (1992) (emphasis added).

119. 438 U.S. at 138, 8 ELR at 20536.

120. 450 U.S. 621, 636-60, 11 ELR 20345, 20348-55 (1981) (Brennan, J., dissenting).

121. Id. at 652 n.18, 11 ELR at 20353 n.18 (Brennan, J., dissenting).

122. Id.

123. Id. at 633, 11 ELR at 20347-48.

124. Id. at 633-34, 11 ELR at 20348 (Rehnquist, J., concurring) ("If I were satisfied that this appeal was from a 'final judgment or decree' … I would have little difficulty in agreeing with much of what is said in the dissenting opinion of Justice Brennan").

125. Id. at 652, 11 ELR at 20353 (Brennan, J, dissenting) (emphasis added).

126. Id. at 656, 11 ELR at 20354 (Brennan, J., dissenting).

127. See, e.g., McDonald, Sommer & Frates v. County of Yolo, 477 U.S. 340, 352 (1986) equating "beneficial use" with the opportunity to use property for some residential development or for agricultural purposes); Nollan v. California Coastal Comm'n, 483 U.S. 825, 833 n.2, 17 ELR 20918, 20920 n.2 (1987) ("the right to build on one's own property … cannot remotely be described as a 'government benefit'").

128. Goldblatt v. Town of Hempstead, 369 U.S. 590, 594 (1962).

129. United States v. Causby, 328 U.S. 256, 261 (1946).

130. 480 U.S. 470, 17 ELR 20440 (1987). In Keystone, the Court considered whether a law amounted to a taking by requiring coal companies to leave 50% of the coal beneath certain land areas in order to provide vertical support. Id. at 476-77, 17 ELR at 20441-42. It concluded that they had not suffered an economic impact large enough to cause a taking. Id. at 497-99, 17 ELR at 20447.

131. Id. at 477, 17 ELR at 20442.

132. Id. at 496-97, 17 ELR at 20446.

133. Id.

134. Relying on Penn Central's admonition that takings analysis focuses on property's owner's "parcel as a whole," the majority looked at the total coal held by the companies, rather than just the regulated deposits. See id. at 497-98, 17 ELR at 20447. The dissenters rejected this aggregative framework in favor of an approach recognizing separately economically viable units, as defined by state law, as the relevant property interest. Id. at 517-20, 17 ELR at 20452-53 (Rehnquist, J., dissenting).

135. Id. at 513, 17 ELR at 20451 (Rehnquist, J., dissenting) (emphasis added).

136. Teague v. City of Austin, 570 S.W.2d 389 (Tex. 1978).

137. Id. at 393.

138. Id. at 394.

139. 42 A.2d 15 (N.H. 1981).

140. Id. at 21.

141. Id.

142. Id.

143. 330 N.W.2d 505 (N.D. 1983).

144. Id. at 508.

145. Id. at 506-08.

146. 193 A.2d 232 (N.J. 1963).

147. Id. at 235-37.

148. Id. at 239-40.

149. Id. at 240. The court also noted, however, that there was a possibility that the land could be reclaimed for some developmental use assuming the granting of permits and utilization of special reclamation technique. Id. at 239-40.

150. Id. at 242.

151. 505 U.S. at 1018, 22 ELR at 21108. The Court cited Morris County for the proposition that regulations "typically" deprive an owner of "all economically beneficial uses" of land, triggering the need for compensation, when the regulations require land to be "left substantially in its natural state."

152. 463 A.2d 133 (R.I. 1983).

153. Id. at 136.

154. Id.

155. Id. at 140.

156. Id.

157. See, e.g., Dooley v. Town of Fairfield, 197 A.2d 770, 773 (Conn. 1964) (property lost at least 75% of value and "the uses which are presently permitted in the new zone place such limitations on the area that the enforcement of the regulation amounts, in effect, to a practical confiscation of the land"); Frankel v. Baltimore, 162 A.2d 447, 451 (Md. 1960) (zoning "restricts the use of the [subject] property so that it cannot … be used for any reasonable purpose" which circumstance allows the owner to "successfully attack the validity of the ordinance as a taking").

For a federal case that applies a use-based construction of "economically viable use," see 1902 Atl., Ltd. v. Hudson, 574 F. Supp. 1381, 1405, 14 ELR 20023, 20033 (E.D. Va. 1983). In 1902 Atlantic, the court considered whether the U.S. Army Corps of Engineers' denial of a dredge and fill permit for a 11 3/4-acre parcel. The court noted that the denial might cause a taking under Penn Central due to a severe diminution in value. However, the court also found that the denial prevented all economically viable or reasonable use and therefore, "in justice and fairness," held that a taking had occurred. Id.

158. Morris County Land Improvement Co. v. Township of Parsippany-Troy Hills, 193 A.2d 232, 242 (N.J. 1963).

159. Long Island Research Bureau, Inc. v. Young, 159 N.Y.S.2d 414, 416-17 (N.Y. 1957).

160. Long Beach Equities, Inc. v. County of Ventura, 231 Cal. App. 3d 1016, 1036 (Cal. App. Ct. 1991) (emphasis added).

161. See 1 WILLIAM BLACKSTONE, COMMENTARIES *138.

162. 222 U.S. 78 (1911) (emphasis added).

163. Id. at 86.

164. 328 U.S. 256 (1946).

165. Id. at 259-61.

166. Id. at 261 (emphasis added).

167. Id. at 262 (emphasis added).

168. Id.

169. Id.

170. Grand Rapids Booming Co. v. Jarvis, 30 Mich. 308, 311 (Mich. 1874) (emphasis added).

171. Eaton v. B.C. & M. R.R., 51 N.H. 504, 511 (N.H. 1872) (emphasis added).

172. The Court cited two state court cases, Morris County and Annicelli, that found a denial of all economic use caused a taking.

173. Animas Valley Sand & Gravel, Inc. v. Board of County Comm'rs of the County of La Plata, Colo., 38 P.3d 59, 65 (Colo. 2001) (citing Penn Cental and other Supreme Court cases for proposition that "a landowner is not entitled to the highest and best use of his property" under takings jurisprudence); Golden Gate Corp. v. Town of Narragansett, 359 A.2d 321, 328 (R.I. 1976) (regulations do not cause a taking simply by prohibiting the most profitable use of land).

174. See, e.g., Holiday Homes, Inc. v. Miami Township Bd. of Trustees, 1992 Ohio App. LEXIS 5326, *9-10 (Ohio Ct. App. 1992) (finding property "economically infeasible" and subject to constitutional attack because "a profit could not be realized … because the cost to develop the property for single-family use exceeds the market value that can be gained from leasing or selling the property"); Frankel v. Baltimore, 162 A.2d 447, 450 (Md. 1960) (crediting testimony that building homes on irregular plot in residentially zoned area would not be economically feasible and therefore supported takings claim).

175. This will occur most often in cases where land is zoned exclusively for residential uses and government prevents this legally permissible use when sought. Lucas is the obvious example, but there are others. See, e.g., Harrington Glen, Inc. v. Borough of Leonia, 243 A.2d 233, 237 (N.J. 1968) ("Denial of permission to build a home upon the [residentially zoned] lot deprives it of all productive or beneficial use."); Faucher v. Gross Ile Township, 32 N.W.2d 440, 442 (Mich. 1948) (denial of setback variance for residential lot held "confiscatory" of the rights of plaintiffs as the owners of the residentially zoned parcel).

176. See, e.g., Mays v. Board of Trustees of Miami Township, 2002 Ohio App. LEXIS 3303, *24 (Ohio. Ct. App. 2002).

177. See, e.g., Cane Tennessee v. United States, 2002 U.S. Claims LEXIS 255, *23-26 (Fed. Cl. Oct. 2, 2002).

178. See, e.g., SDDS, Inc. v. South Dakota, 650 N.W.2d 1, 10 (S.D. 2002).

179. See supra notes 136-58 and accompanying text. The ability to sell the property in an active "investors" market for more than nominal value may avoid a taking under Lucas. See Florida Rock Indus., Inc. v. United States, 18 F.3d 1560, 1566, 24 ELR 21036, 21039 (Fed. Cir. 1994):

there was an active though speculative investment market for Florida Rock's land at the time of and following the permit denial. The fair market prices which Florida Rock could have commanded at that time remains, still, to be determined, but it was certainly much higher than the nominal $ 500 per acre value accepted by the Court of Claims.

But "the mere fact that there is one willing buyer of the subject property, especially where that buyer is the government, does not, as a matter of law, defeat a takings claim." Del Monte Dunes, Ltd. v. City of Monterey, 95 F.3d 1422, 1433, 27 ELR 20139, 20144 (9th Cir. 1996).

180. See generally James S. Burling, Can Property Value Avert a Regulatory Taking When Economically Beneficial Use Has Been Destroyed? in TAKINGS SIDES ON TAKINGS ISSUES, supra note 18, at 451-559 (tracing admiration and protection of right to use property in early common law and in the thought of American Founding Fathers).

181. See, e.g., Del Monte Dunes, 95 F.3d at 1433, 27 ELR at 20144; Annicelli v. Town of S. Kingston, 463 A.2d 133, 141 (R.I. 1983) ("the public interest in preserving barrier beaches is commendable," but "where plaintiff's property has been taken for the benefit of the community welfare, the occasion is appropriate for an award of just compensation"); Maine v. Johnson, 265 A.2d 711, 716 (Me. 1976) (holding that the cost of preserving private property as wetlands "should be borne publicly"); Dooley v. Town of Fairfield, 197 A.2d 770, 773-74 (Conn. 1964) (rezoning of property into floodplain district caused a taking); Harrington Glen. Inc. v. Borough of Leonia, 243 A.2d 233, 238-39 (N.J. 1968); Tews v. Woolhiser, 185 N.E. 827, 831 (Ill. 1933) ("If it be of public benefit that property remain open and unused, then certainly the public, and not private individuals, should bear the cost of reasonable compensation for such property."); Morris County Land Improvement Co. v. Township of Parsippany-Troy Hills, 193 A.2d 232, 241 (N.J. 1963) ("While the issue of regulation as against a taking is always a matter of degree, there can be no question that the line has been crossed where the purpose and practical effect of the regulation is to appropriate private property for … open space."); Burrows v. City of Keene, 42 A.2d 15, 21 (N.H. 1981) (imposition of a "conservation district" designed to preserve private property as open space caused a taking); Teague v. City of Austin, 570 S.W.2d 389, 394 (Tex. 1978) (denial of development permit caused a taking where designed to preserve "the natural and traditional character of the land and waterway"); see also Wisconsin v. Herwig, 117 N.W.2d 335, 340 (Wis. 1962) ("if the lake and necessary lands surrounding the pond is to be a [wildlife] refuge, the state should acquire whatever rights or easement are needed by purchase, lease or condemnation").

The courts' willingness to require compensation for regulations placing land in a state of preservation may arise, at least in part, from the fact that in these cases it is relatively clear that the land is being pressed into public service. See Jed Rubenfield, Usings, 102 YALE L.J. 1077, 1157 (1993) (noting analogy between condemned property and land left in a natural state for a public purpose); Roger Clegg, Reclaiming the Text of the Takings Clause, 46 S.C. L. REV. 531, 557 (1995) (noting that a "public use" focus requires compensation where regulation prohibits development to provide wildlife habitat). Indeed, judicial focus on the availability of viable physical property uses may generally function as a proxy test for whether a regulation goes beyond merely proscribing use to impressing land into public service. See, e.g., Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1018, 22 ELR 21104, 21108 (1992) ("regulations that leave the owner without economically beneficial or productive options for its use … carry with them a heightened risk that private property is being pressed into some form of public service under the guise of mitigating serious public harm"). This will make sense in many, but not all, cases because public use of private property logically requires condemnation or a near-total prevention of all competing private use options.

182. Commercial recreation, fishing, or hunting uses may, on the other hand, constitute economically viable uses. See 1902 Atl., Ltd. v. Hudson, 574 F. Supp. 1381, 1405, 14 ELR 20023, 20033 (E.D. Va. 1983).

183. See Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 135, 8 ELR 20528, 20536 (1978).

184. Lucas, 505 U.S. at 1015, 22 ELR at 21107.

185. Id. at 1032-36, 22 ELR at 21111-12 (Kennedy, J., concurring).

186. Palazzolo v. Rhode Island, 533 U.S. 606, 632-35, 32 ELR 20516, 20520-21 (2001).

187. 122 S. Ct. at 1486, 1489, 32 ELR at 20633, 20634.

188. See Palm Beach Isles Assocs. v. United States, 231 F.3d 1354, 1362-64 (Fed. Cir. 2002) (analyzing Lucas and concluding that "investment-backed expectations" are not applicable to the per se takings rule).

189. See R.S. Radford & J. David Breemer, Great Expectations: Will Palazzolo Clarify the Murky Doctrine of "Investment-Backed Expectations" in Regulatory Takings Law?, 9 N.Y.U. ENVTL. L.J. 449 (2001).

190. Palazzolo, 533 U.S. at 626-30, 32 ELR at 20519-20.

191. See id. at 635, 32 ELR at 20521 (O'Connor, J., concurring). Justice O'Connor identified two factors relevant to an investment-backed expectations inquiry undertaking as part of a Penn Central partial takings analysis. One is "the regulatory regime in place at the time the claimant acquires the property," i.e., whether the owner knew or should have known of the restrictions when taking title. Id. at 632-33, 32 ELR at 20521. The other consideration is "the nature and extent of permitted development under the regulatory regime vis-a-vis the development sought by the claimant." Id. at 634, 32 ELR at 20521. However, since the first "notice" factor was rejected by the Palazzolo majority in the context of a Lucas claim, only Justice O'Connor's second "investment-backed expectations" consideration is a potential candidate for inclusion in cases falling under Lucas' "all economically beneficial use" test.

192. See, e.g., Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1008-09, 22 ELR 21104, 21105 (1992); Bowles v. United States, 31 Fed. Cl. 37, 46 (Cl. Ct. 1994) ("All Mr. Bowles wanted to do was the same exact use as his surrounding neighbors; build a home in a residential subdivision."); Annicelli v. Town of S. Kingston, 463 A.2d 133, 141 (R.I. 1983) (taking found where government requires land to be left unimproved in "an area in which [30] such structures already exist"); Harrington Glen, Inc. v. Borough of Leonia, 243 A.2d 233, 235-36 (N.J. 1968) (taking found where home building was precluded on residential lot surrounded by residential houses); Faucher v. Gross Ile Township, 32 N.W.2d 440, 442 (Mich. 1948) (denial of variance allowing construction of a home in residential subdivision held "confiscatory" even though owners were on notice of zoning requirements).

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