Landowners Dealt a Blow by Justices

The Supreme Court upheld the government’s power to impose a temporary ban on development Tuesday, ruling in a Lake Tahoe case that property owners are not due compensation whenever they are barred from building on their land.

The 6-3 ruling is an important victory for city planners, state officials and environmentalists nationwide. It reaffirms the broad authority of local and state officials to control development and regulate property.

It rejects the claim of property-rights advocates who said the government must pay “just compensation” to owners who are barred from using their land, even temporarily.

Justice John Paul Stevens, writing for the majority, described a moratorium on building as “an essential tool of successful development.”

He cited an array of examples, from a 30-month halt to development within the Petroglyph National Monument in New Mexico to the many cities that banned new homes for a time while new sewage treatment plants were built. Sometimes a natural disaster, such as a hurricane, flood or wildfire, prompts officials to impose a building moratorium while they rethink where homes or offices can be safely constructed.

If every delay were treated as a constitutional violation that required compensation for the property owners, cities and states would be bankrupted by lawsuits, Stevens said.

But he did not close the door to individual property owners--such as those at Lake Tahoe--winning such a claim in court.

“In our view, the answer to the abstract question of whether a temporary moratorium effects a taking [of property] is neither ‘yes, always’ nor ‘no, never’; the answer depends upon the particular circumstances of the case,” he wrote.

However, the ruling deals a stinging defeat to nearly 700 families who bought lots near Lake Tahoe in the late 1970s. They hoped to build vacation or retirement homes there but soon ran afoul of new environmental rules.

Because of runoff from the hillsides, the clear blue waters of the lake were turning algae-green. In 1981, the Tahoe Regional Planning Agency halted new construction while it devised a land-use plan to deal with the erosion.

Nearly three years later, the moratorium was lifted, and some landowners whose lots were not at high risk for erosion were permitted to build homes. Others waited years to win permits, and still others were never granted permits to build.

Hundreds of the landowners joined a lawsuit that challenged the development bans. But as their case moved through the courts, it focused only on a 34-month moratorium that ended in 1984.

A federal trial judge ruled the families had been denied all use of their land during that period and were entitled to compensation. But the U.S. 9th Circuit Court of Appeals reversed that decision and said a temporary moratorium, by its very nature, does not deprive a landowner of all use of his land forever.

The Supreme Court took up the case last year (Tahoe-Sierra Preservation Council vs. Tahoe Regional Planning Agency, 00-1167) and voted Tuesday to affirm the 9th Circuit.

“We’ve been left with a worthless piece of property,” said Kenneth Eberle of Cambria, Calif., one of the original plaintiffs. He and his wife, Betty, bought two adjoining lots in 1977 but have not been permitted to build there. “I don’t think this is fair or reasonable. I guess I’d say today I no longer believe in the court’s willingness to protect our rights,” Eberle said.

The dispute turned on how to interpret the 5th Amendment to the Constitution, which says “private property . . . shall not . . . be taken for public use, without just compensation.”

Stevens said there remains a “fundamental distinction” between the government’s seizing of property for its use and a government regulation that prevents or limits the owner’s use of the property.

For example, if the state wants to take land to build a freeway, it must pay the owner just compensation. But the high court has struggled for decades to define just when a regulatory limit on land use amounts to a “taking” of private property.

Under Chief Justice William H. Rehnquist, the court’s conservative wing has strengthened property rights. In a key decision 10 years ago, the court said property owners are entitled to compensation when officials bar them from making any use of their land.

That 5-4 ruling came in the case of David Lucas, a South Carolina man who was prohibited from building on his two beachfront lots. State officials had prohibited building in some low-lying lands after Hurricane Hugo hit the area.

But in Lucas vs. South Carolina, the high court announced a strict rule: full compensation must be paid whenever the government permanently bars any and all use of private property.

This year, the justices took up the Lake Tahoe case to decide whether the same automatic compensation rule applied when officials imposed a temporary ban on building.

Stevens called the automatic compensation rule “extreme” and unworkable. “We resist the temptation to adopt per se rules” in land-use cases, he said. He wasjoined by Justices Sandra Day O’Connor, Anthony M. Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.

In dissent, Rehnquist said the landowners in this case were subjected to extreme treatment and deserve compensation for it. “The Taking Clause requires the government to pay compensation whenever it deprives owners of all economically viable use of their land,” Rehnquist said. Justices Antonin Scalia and Clarence Thomas joined his dissent.

During his 16 years as chief justice, Rehnquist usually had a narrow majority to rule in favor of property rights, but Justices O’Connor and Kennedy switched sides this time and joined the liberal majority.

Georgetown University law professor Richard Lazarus, an expert on land-use law, called the ruling a welcome surprise. “This is the first time I can recall the court discussing the propriety of land-use planning at length. And basically they say it’s a tough job, but the government’s got to do it if we are going to protect the environment.”

Because it is a constitutional ruling, the decision affects government at all levels, from cities and counties to states and federal agencies. In what may have been a key move, U.S. Solicitor General Theodore B. Olson joined the case and argued in support of the Tahoe planning agency.

Leaders of the property-rights movement said they were dismayed but not devastated by the outcome.

The Pacific Legal Foundation in Sacramento called the ruling “an unfortunate blip in the forward progress of property rights.”

“We strongly agree with the chief justice, who recognized that while Lake Tahoe is a national treasure, the costs for its environmental protection should be borne by the public at large, not by a handful of property owners,” said foundation attorney R. S. Radford.

In some instances, local agencies and the U.S. Forest Service have offered to buy the lots of owners who have been barred from building on them.

The prices offered are quite low, said Santa Monica attorney Michael M. Berger, who represented the remaining 449 Lake Tahoe families before the Supreme Court.

It is impractical for these families to bring individual lawsuits in a case such as this, Berger said. He had urged the court to adopt the rule that a “total prohibition” of using land requires some compensation, even if it is temporary.

“We’ve come a long distance over the last 16 years in ‘takings’ law,” Berger said. “Landowners have some real legal protection today. But this is a disappointment. It is unfortunate backpedaling from where the court seemed to be headed.”