The impact of Tahoe-Sierra on temporary regulatory takings law.

• Author: Siegel, Daniel L.

I.

INTRODUCTION

This paper explores the development of temporary regulatory takings law, the Supreme Court's latest temporary takings opinion--Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency (2)--and the impact of Tahoe-Sierra on subsequent lower court temporary takings decisions. As will be seen, since Tahoe-Sierra rejected the argument that building moratoria are per se takings, its greatest impact has been on cases challenging moratoria. Its impact on temporary takings challenges, however, has extended far beyond moratoria because essential elements of the Tahoe-Sierra holding--such as its affirmation of the "parcel as a whole" rule--apply to other types of temporary restrictions on the use of property.

II.

FIRST ENGLISH: TEMPORARY TAKINGS COME OF AGE

The concept of "temporary takings" hit the big time with the United States Supreme Court's decision in First English Evangelical Lutheran Church v. County of Los Angeles. (3) Prior to that opinion, some state courts, such as those in California, New York and Pennsylvania, interpreted the federal and their own state constitutions as not requiring compensation where government rescinded a regulation after a court determined that it was a taking. (4) Inverse condemnation damages were only available where, after a court determined that the regulation was excessive, the government nevertheless decided to maintain the regulation. (5)

First English, however, brought about a sea change by holding that compensation is the appropriate remedy for temporary regulatory takings. As the Court explained, "where the government's activities have already worked a taking of all use of property, no subsequent action by the government can relieve it of the duty to provide compensation for the period during which the taking was effective." (6)

The practical impact of First English has been profound. Following First English, planners operate under the fear that a court may find that their decision constituted a taking requiring the payment of compensation, even if the decision is withdrawn. (7)

Although First English held that compensation is required even where government reverses an action that was held to be a taking, the Court left open the question of how to determine whether there was a taking in the first place. The Court faced that question in Tahoe-Sierra. To best understand the Tahoe-Sierra decision, and its impact on temporary takings law, it will be helpful to briefly explore the various types of temporary takings, as well as key takings tests.

III.

TYPES OF TEMPORARY REGULATORY TAKINGS

Temporary regulatory takings can be separated into several categories, each of which tends to receive a different treatment by the courts. We will note the categories here; in the last section of this paper, we will explore the different treatments given to these various types of temporary takings in light of Tahoe-Sierra.

1. Physical Takings

   Government usually physically takes property by either formally acquiring the property through an eminent domain process, or by informally taking property through a physical action (such as building a damn that floods private property). As indicated in Loretto v. Teleprompter Manhattan CATV Corp., (8) however, government can also use the regulatory process to physically take property. In Loretto, for example, the State of New York adopted a statute that permitted cable companies to install cables and switch boxes in apartment buildings without the building owner's permission. Other examples of physical appropriations through the use of the regulatory process are seen in Nollan v. California Coastal Commission, (9) and Dolan v. City of Tigard, (10) where public entities issued building permits conditioned on the owners dedicating property to public uses.

2. Regulations of Use

   1. Prospectively temporary

      Certain land use restrictions are from the outset intended to be temporary. These regulations, such as moratoria, are designed to put development activities on hold pending triggering events--for example, the drafting of a plan to control development in a region, (11) the availability of sufficient water to allow new water hookups, (12) or a determination that it would be safe to allow oil and gas drilling under public lands that were slated for use as a nuclear waste disposal. (13) Tahoe-Sierra concerned a building moratorium, although as we will review later, its reach probably goes well beyond prospectively temporary takings.

   2. Retrospectively temporary

      Other regulations are intended to be permanent but are subsequently rescinded. The rescission is often in response to an adverse judicial decision, or a defensive reaction to a threatened or actual lawsuit. Courts have used the term "retrospectively temporary" to describe this type of temporary restriction. (14)

   3. Permitting Delays

      Finally, some courts have given special treatment to two related categories of permitting delays: (1) cases where the delay is excessive, and (2) situations in which government erroneously denies a use due to its misinterpretation of governing law. We will review in detail these delays, and other temporary takings categories, following an analysis of Tahoe-Sierra.

      IV.

      SETTING THE STAGE FOR TAHOE-SIERRA: KEY

      TAKINGS TESTS

      To better understand the Tahoe-Sierra decision, and its impact on temporary takings law, it will be useful to review three key takings tests: the general test outlined in Penn Central Transportation Co. v. City of New York, (15) and the subsequent per se tests established in Loretto v. Teleprompter Manhattan CATV Corp. (16) and in Lucas v. South Carolina Coastal Council. (17)

      Penn Central: Taking Determined by Weighing Various Factors on a Case by Case Basis

      In Penn Central Transportation Co. v. City of New York, (18) the Court gave some form to its prior broad pronouncements about what constitutes a regulatory taking. Penn Central started out by reiterating the generalized principle that courts are to decide whether "'justice and fairness' require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons." (19) It added some specificity to that, however, by explaining that while the determination "depends largely 'upon the particular circumstances [in that] case,'" three factors are particularly significant: (1) The economic impact of the regulation on the claimant; (2) The extent to which the regulation interferes with "distinct investment-backed expectations"; and (3) The character of the governmental action. (20) Expanding on the last factor, the Court explained that the probability of a taking is increased where the regulation can be categorized as a "physical invasion by government." (21)

      Loretto: Regulations Requiring Permanent Physical Occupations Are Per Se Takings

      The Court carved out an exception to the Penn Central weighing of factors approach in Loretto v. Teleprompter Manhattan CATV Corp. (22) As previously noted, Loretto involved a state statute that required apartment owners to allow cable companies to install cables and switch boxes in apartment buildings. Following up on Penn Central's statement that regulations akin to physical invasions are more likely to be deemed takings, (23) the Loretto Court held that where a regulation requires the permanent physical occupation of property, it is a taking per se. (24) There is no need to engage in a Penn Central review of the case's particular circumstances. On the other hand, of special significance to the topic of this paper, the Court expressly held that a temporary physical invasion is not a per se taking. (25)

      Lucas: Regulations Denying "All Economically Viable Use" Are Per Se Takings

      Finally, a decade after Loretto, the Court created a second category of "categorical takings" in Lucas v. South Carolina Coastal Council. (26) The Lucas Court accepted the trial court's determination that regulations prohibiting any development on the landowner's two ocean front lots made those lots "valueless." (27) The Court went on to hold that, with certain exceptions, where regulations deny "all economically beneficial use" of property, there is no need to engage in a Penn Central weighing of various factors; there is a per se taking. (28)

      V.

      THE DECISION IN TAHOE-SIERRA

      In Tahoe-Sierra, the United States Supreme Court issued a 6-3 decision holding that a 32-month development moratorium, adopted by the Tahoe Regional Planning Agency (TRPA) while it crafted a regional plan in the 1980s, was not a "categorical taking" under the Fifth Amendment of the U.S. Constitution. (29) Rather, the Court explained that moratoria should be reviewed on a case-by-case basis under the principles articulated in Penn Central--something that the property owners in Tahoe-Sierra chose not to pursue for strategic reasons. (30)

      Tahoe-Sierra stems from efforts to protect a spectacular lake--Lake Tahoe. As the Supreme Court noted there was no dispute that Lake Tahoe is "uniquely beautiful ... a national treasure that must be protected and preserved." (31) There was also no dispute that, as the result of unwise development--especially on environmentally fragile lands--Lake Tahoe's stunningly transparent waters have "deteriorated rapidly over the past 40 years." (32) Absent a turnaround, the trial court thus found that "the lake will lose its clarity and its trademark blue color, becoming green and opaque for eternity." (33)

      In 1968, in an effort to curb this disturbing trend, the States of Nevada and California created, and Congress approved, the Tahoe Regional Planning Compact, which established an entity to regulate development in the Tahoe Basin--the Tahoe Regional Planning Agency. (34) TRPA, however, proved ineffective. (35) In 1980, the States therefore amended their compact (again with Congress's approval) to enhance TRPA's powers and responsibilities. (36) In particular, TRPA was required to (1) develop...