LAW : Property Rights, Limits on Use Collide Before Court

In 1986, David H. Lucas bought two beachfront lots on the Isle of Palms in South Carolina for $957,000. He wanted to build two houses, one for himself and one to sell.

Two years later, South Carolina passed the Beachfront Management Act, designed to protect the state’s coastal area from overdevelopment and erosion. Under that law, no building was to be permitted on land subject to beach erosion. Overnight, Lucas’ prime lots became nearly worthless.

He sued, claiming the state government had unconstitutionally taken his property. He relied on the Fifth Amendment, which says “private property (shall not) be taken for public use, without just compensation.” A trial judge agreed with Lucas that the property had been made “valueless” and awarded him $1.17 million in compensation.

The South Carolina Supreme Court, however, reversed that decision on a 3-2 vote. It ruled that the government need not pay compensation when it seeks “to prevent serious public harm,” in this instance to an unstable coastline.

Next week, the U.S. Supreme Court will hear Lucas’ appeal of what property rights advocates say could be the most important case in years. The solidly conservative court could halt what they consider zealous over-regulation by forcing the government to pay compensation.

“I think they are finally ready to deal with property rights. And this case gives them a broad canvas to paint on,” said attorney Michael M. Berger of Santa Monica, Calif., who has defended property owners.

But both environmentalists and many state officials fear the outcome in Lucas vs. South Carolina (91-453). They say that the high court, should it rule in favor of Lucas, could undercut laws protecting wetlands, forests and beaches.

BACKGROUND: When the government condemns land for its use--for example, to build a freeway--it must, by law, pay compensation to the owner. But the Supreme Court has struggled over whether a government regulation that prohibits the use of property also demands that compensation be paid.

In 1987, the court bolstered property rights in two tentative rulings in Southern California cases. First, it said that a beachfront property owner who wanted to build a larger home could not be forced to open his beach to the public unless state officials could show that his development somehow harmed the public.

In a second case, the court said that a regulation forbidding any construction in an area, even if it is temporary, can trigger the need to pay compensation. The court did not rule, however, as to whether the government’s justification--that the property in question was on a flood plain--would shield it from having to pay compensation.

That issue now must be decided. Does the state’s claim that building along the shore will harm the fragile coastal dunes shield it from having to pay compensation?

No, say lawyers for Lucas. The state must pay the owner if it wants to prohibit building on his land, they say.

Yes, say lawyers for the state. Otherwise, the government could not afford to keep developers from building in flood plains, on steep hillsides and on beaches where such construction could cause harm to others and to valuable public lands.

OUTCOME: The high court is likely to rule for Lucas, but the rationale for its decision could vary widely. Lucas’ lawyers have asked the court to rule that landowners deserve compensation whenever they are prohibited from using their property, regardless of the government’s justification.

If the court were to adopt this approach, it could bring about a revolution in property law. For example, California counties could be forced to pay millions of dollars in compensation to land owners who are barred from building on flood plains and unstable hillsides.

The Bush Administration has taken a more moderate position. “The government has the right to abate nuisances and prevent harm to public health and safety” without owing compensation, the Justice Department said, but it added that South Carolina should have to prove that building houses on Lucas’ property would cause actual harm.