Supreme Court rules against property owners

Published July 1, 2002

The United States Supreme Court in April brought to a close 14 years of litigation by Lake Tahoe Basin property owners. In doing so, the Court opened the door to increased restriction of private property by governments at every level.

The Lake Tahoe property owners had sought compensation because government action had prohibited all productive use of their property for between 32 months and almost six years, depending on the definition of the government “action.” The Supreme Court held the Tahoe Regional Planning Agency (TRPA) had extracted only a “temporal slice of the fee interest” by imposing a moratorium on development—a temporary “taking” that did not rise to a level justifying compensation.

Temporary nature of action the key

The decision made legal the imposition of two moratoria lasting 32 months, while the nation’s first interstate zoning agency, which protects famed Lake Tahoe on the California–Nevada border, developed regional “environmental threshold carrying capacities” and worked on the development of a regional water quality plan. The decision did not address the justice of a subsequent injunction, cited by Chief Justice Rehnquist in his dissent, that extended the mandated period of non-use of the properties to six years.

Writing for the 6-3 majority on April 23, 2002, Justice John Paul Stevens turned many times to the well-known 1960 Penn Central decision. He held that, unlike when property is taken directly, regulatory takings involve concepts of “fairness and justice” that “are less than fully determinate.”

His decision concentrated on disproving the argument that plaintiffs were “categorically” entitled to compensation because as landowners they “had been temporarily deprived of all economically viable use of their land.”

Stevens noted the plaintiffs’ appeal had failed to challenge a District Court finding that disallowed an argument “that the regulations constitute a taking under the ad hoc balancing approach described in Penn Central” and did not “dispute that the restrictions imposed on their properties are appropriate means of securing the purpose set forth in the Compact.” Stevens concluded he was left with ruling on whether Lucas applies—that is, “whether a categorical taking occurred because [the government orders] denied the plaintiffs of ‘all economically beneficial or productive use of land.'” In his 21-page decision, Stevens emphasized that the question presented is limited to “whether a moratorium on development imposed during the process of devising a comprehensive land-use plan constitutes a per se taking of property requiring compensation under the Takings Clause.”

Immediately following the decision, many news articles conveyed a misinterpretation that the Supreme Court ruling generally denied compensation for temporary takings. But Stevens wrote, “In rejecting petitioners’ per se rule, we do not hold that the temporary nature of a land-use restriction precludes finding that it effects a taking; we simply recognize that it should not be given exclusive significance one way or the other.”

Troubling implications

Stevens’ narrow interpretation notwithstanding, the decision is quite troubling.

Referring to Agins v. City of Tiburon and Danforth v. United States, Stevens advanced the theory,

“An interest in real property is defined by metes and bounds that describe its geographic dimensions and the term of years that describes the temporal aspect of the owner’s interest. … Both dimensions must be considered if the interest is to be viewed in its entirety. Hence a permanent deprivation of the owner’s use of the entire area is a taking of ‘the parcel as a whole,’ whereas a temporary restriction that merely causes a diminution in value is not. Logically, a fee simple estate cannot be rendered valueless by a temporary prohibition of economic use, because the property will recover value as soon as the prohibition is lifted … (‘… Mere fluctuations in value during the process of governmental decisionmaking, absent extraordinary delay, are “incidents of ownership. They cannot be considered as a ‘taking’ in the constitutional sense.”‘)”

In his dissent, Rehnquist wrote:

“Assume the following situation: Respondent is contemplating the creating of a National Park around Lake Tahoe to preserve its scenic beauty. Respondent decided to take a 6-year leasehold over the petitioners’ property, during which any human activity on the land would be prohibited, in order to prevent any further destruction to the area while it was deciding whether to request that the area be designated a National Park.

“Surely that leasehold would require compensation. In a series of World War II-era cases in which the Government had condemned leasehold interests in order to support the war effort, the Government conceded that it was required to pay compensation for the leasehold interest. See United States v. Petty Motor Co. (1946); United States v. General Motors Corp. (1945). The Court ignores this ‘practical equivalence’ between respondent’s deprivation and the deprivation resulting from a leasehold. In so doing, the Court allows the government to ‘do by regulation what it cannot do through eminent domain—i.e., take private property without paying for it.'”

Decision encourages central planners

The Court’s decision has affirmed the direction of central planning that is becoming prevalent in this country. The Court refused to impose “serious constraints on the planning process” by setting any specific takings compensation rule, such as one excluding the normal delays associated with processing permits or one that covered only delays of more than year.

The decision states, “In fact, the consensus in the planning community appears to be that moratoria, or ‘interim development controls’ as they are often called, are an essential tool of successful development.”

Central planning is given high credibility in the Court’s decision:

“The interest in facilitating informed decisionmaking by regulatory agencies counsels against adopting a per se rule that would impose such severe costs on their deliberations. Otherwise the financial constraints of compensating property owners during a moratorium may force officials to rush through the planning process or to abandon the practice altogether. To the extent that communities are forced to abandon using moratoria, landowners will have incentives to develop their property quickly before a comprehensive plan can be enacted, thereby fostering inefficient and ill-conceived growth.”

The decision reflects an ivory tower understanding of the participatory process during regional planning:

“Indeed, the interest in protecting the decisional process is even stronger when an agency is developing a regional plan than when it is considering a permit for a single parcel. In the proceedings involving the Lake Tahoe Basin, for example, the moratoria enabled TRPA to obtain the benefit of comments and criticisms from interested parties, such as the petitioners, during its deliberations.”

By mingling citations of landmark Supreme Court decisions, Stevens muted a key principle, protective of property rights, which he cited from Nollan.

“Moreover, with a temporary ban on development there is a lesser risk that individual landowners will be ‘singled out’ to bear a special burden that should be shared by the public as a whole” (citing Nollan v. California Coastal Commission).

The decision continues, “At least with a moratorium there is a clear ‘reciprocity of advantage,’ Mahon … , because it protects the interests of all affected landowners against immediate construction that might be inconsistent with the provisions of the plan that is ultimately adopted. ‘While each of us is burdened somewhat by such restrictions, we, in turn, benefit greatly from the restrictions that are placed on others.’ Keystone …”

Essentially unpredictable

For all its orientation toward central planning, the decision revolves around a theme with an outcome that is essentially unpredictable. “We conclude, therefore, that the interest in ‘fairness and justice’ will be best served by relying on the familiar Penn Central approach when deciding cases like this, rather than by attempting to craft a new categorical rule.”

It is left to planners to extend their moratoria and cite the Court’s adulatory remarks about the nature of central planning. Property rights advocates would do well to heed carefully the Court’s narrowly defined rejection of the Lake Tahoe Basin landowners’ temporary takings claim and its virtual admonition to frame future claims in terms of Penn Central.

Carol LaGrasse is a retired civil and environmental engineer and president of the Property Rights Foundation.

For more information …

The U.S. Supreme Court’s April 23, 2002 decision in Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency is available on the Internet in HTML and PDF formats at

The syllabus, majority opinion, and separate dissents by Justice Rehnquist and Justice Thomas are also available through PolicyBot. Search for documents #2366804 (syllabus, 4pp), #2366805 (majority opinion, 39pp), #2366806 (Rehnquist dissent, 13pp), and #2366807 (Thomas dissent, 2pp).