Advising the client regarding protection of property rights: Harris Act and inverse condemnation claims.

• Author: Trevarthen, Susan L.

Practitioners are advised to carefully weigh the potential gains against the potential costs of litigation, in time and money, before advising a client to pursue either claim.

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This article addresses issues facing the real property practitioner in advising clients on the protection of their private property rights. Overviews of two particular aspects of property rights are provided: rights to compensation for an inverse condemnation of property based on the Fifth and 14th amendments of the U.S. Constitution, and rights under Florida's statute protecting private property rights, popularly known as the Harris Act. These are complex issues and the law is still evolving. In many cases, the real property practitioner would be well advised to retain special land use counsel to assist in determining, securing, and protecting entitlements and in litigating those entitlements, if needed.

Absent unusually strong facts, inverse condemnation is rarely a viable claim and can result in significant expense and delay to the client. There are also significant barriers to success under the Harris Act unless a settlement can be achieved. The act seems to (and was explicitly intended to) provide a broader basis for relief than inverse condemnation. However, the proper interpretation of the act is quite uncertain, and has not been clarified much by precedent to date. Thus, practitioners are advised to carefully weigh the potential gains against the potential costs of litigation, in time and money, before advising a client to pursue either claim.

Inverse Condemnation

Inverse condemnation is a claim made by a property owner that the effect of a governmental action on its property is so devastating that it is the equivalent of the direct exercise of eminent domain, and thus requires just compensation under the Fifth or 14th amendments. Such claims are also referred to as regulatory takings. In order to establish liability, the property owner must prove that it was deprived of all or substantially all economically beneficial use of its property, whether temporarily or permanently. There is a great deal of case law and commentary on inverse condemnation law; thus, this article's treatment of this claim is relatively brief.

The typical land use regulation, even where it drastically interferes with use of property for a period of two or three years or revokes an existing use, is unlikely to be held to constitute a regulatory taking. (1) As an indication of just how substantial this deprivation of use must be in order to establish a taking, Justice Scalia (one of the most property rights-friendly justices on the Supreme Court) has stated that even a 95-percent reduction in value is not always sufficient to establish liability. (2) Even what seem to be rather egregious facts may not be sufficient to establish liability. (3) Examples of successful claims include those that can establish physical occupation of the property by the government, complete elimination of use of the property, or elimination of access to the property. (4) Property owners with less extreme facts can try to establish liability under the balancing test of Penn Central Transportation Company v. City of New York, 438 U.S. 104 (1978). (5)

Claimants must exhaust their administrative remedies before bringing a takings claim. (6) Claimants must also prove that there has been a final decision as to the allowable uses of the property, so that the matter is ripe for judicial review. (7) However, on appropriate facts, a taking claim will be allowed to proceed even if not ripe if further review can be shown to be futile, such as where an adopted city policy forbids requested relief. (8)

The ripeness standard can be quite difficult to interpret and apply, and difficult to satisfy. Several noteworthy cases have spent a decade or longer litigating whether the case is ripe, bouncing back and forth from federal to state court without ever reaching the merits. If the merits are reached, then the property owner has a daunting task in establishing liability under the prevailing constitutional test. For these reasons, I suggest that, unless unusual and extreme facts are present, it is very unlikely that the client will receive much relief from an inverse condemnation claim. The potential for ultimate success may be greater with the second type of claim I examine, a Harris Act claim. However, the uncertainty in the meaning of key statutory terms makes it likely that the litigation will be expensive and time-consuming, unless a settlement is reached.

The Harris Act

* The movement toward statutory private property rights protection

Over the past 10 to 15 years, a wave of private property rights protection legislation has swept the U.S. Marketed as grass roots initiatives, but often backed heavily by industries dependent on the use of real property (including agriculture and land development) through the mechanism of "public interest" legal foundations, these statutes have attempted to severely limit what government can accomplish through exercise of its police power and greatly increase the types of regulation that can trigger compensation. This property rights movement sought protection for landowners from what were perceived to be unduly onerous environmental and land use regulations. Several efforts to enact federal legislation failed, but the effort to change the law via state legislatures met with much more success. (9)

More than 20 states have enacted private property protection laws, including Florida. (10) They were designed to address the belief of some property owners that they are being asked to bear a disproportionate share of the burdens of achieving environmental and quality of life goals for the public at large through restrictive regulation of the use of their land. Some of the concern was based on a feeling that the federal taking standard was not protective enough, because compensation is not due under the U.S. Constitution as interpreted by the federal courts unless there is a physical invasion of the property or all economically beneficial or productive use has been removed. (11) This policy disagreement was exacerbated by the reluctance of the U.S. Supreme Court to reach the merits of takings cases and the lack of clear standards in taking law. A handful of famous taking cases languished in the state and federal courts for years, frustrating affected plaintiffs and other property owners attempting to understand the constitutional limits.

The legislative response to these concerns took several forms. One followed the example of the National Environmental Protection Act (NEPA), which requires an assessment of environmental impacts prior to federal action, including an identification of alternative actions that may result in less impact on the environment. Private property rights activists adapted this model to develop legislation that required government to assess the impact of land use and environmental regulation on private property rights, and identify alternative forms of regulation that would be less burdensome on those rights. This "assessment" model was adopted in the majority of states.

A second form of legislation is characterized by a requirement for landowner compensation based on some defined diminution in value of its property due to a burdensome regulation. The compensation model was adopted in a minority of states, including Florida.

* Florida's Bert J. Harris, Jr., Private Property Rights Protection Act, F.S. [section] 70.001 et seq.

Much has been written on this act generally. (12) For the most complete and up-to-date description of Florida's experience with the implementation of this law, see the excellent chapter in the treatise published by the Environmental and Land Use Law Section of The Florida Bar. (13)...