Palazollo v. Rhode Island

Law and Justice Committee

Palazzolo v. Rhode Island

Facts	Lower Court Ruling
Issues	Palazzolo's Argument
Rhode Island 's Argument	State Interest

Facts: Palazollo owned land in Westerly, Rhode Island, a large portion of which bordered on a saltwater pond and was wetlands. The wetlands could not be developed without first being filled. Palazollo acquired the wetland portion of his land after state regulations limiting the development of wetlands ware enacted. Between 1962 and 1983, Palazollo filed four applications with various Rhode Island agencies to alter the property. During this period, regulation of wetlands changed substantially at the state and federal levels. All of Palazollo's applications were rejected and not appealed. In 1985, Palazollo filed a new application to fill the property to construct a beach facility. In 1986, the state Coastal Resource Management Council (CRMC) rejected the application. Palazollo appealed the denial to the Rhode Island Supreme Court. Palazollo also filed an inverse condemnation suit against the state alleging that the denial of his application violated state and federal constitutional Takings Clauses.

Lower Court Ruling: The Rhode Island Supreme Court ruled that no property had been "taken" in violation of the state or federal Constitution. The Court held that Palazollo's claim was not "ripe" under Williamson Cty. Reg. Planning Comm'n v. Hamilton Bank, 473 U.S. 172 (1985) because he had not applied for permission to subdivide the land into 74 lots and therefore had not received a final decision regarding the application of the regulations to his property. It was shown that Palazollo's prior applications to fill the wetlands had not sought to subdivide the property in this manner. Conversely, he had specifically stated that he had no plans to build on the filled land.

The Court also ruled that Palazollo had not explored a less ambitious use of the property (developing the non-wetlands portion of the property) and therefore could not claim that the state had deprived him of all beneficial use of his property. The Court also held that Palazollo was not entitled to compensation because the regulations limiting his ability to fill the wetlands was already in place and therefore he could not reasonably expected that he could fill the property and develop a 74 lot subdivision.

Issues: The petition for certiorari presents three issues:

Whether a regulatory takings claim is categorically barred whenever the enactment of the regulation predates the claimant's acquisition of the property?
Whether a takings claim is "ripe" for judicial review even though the property owner has failed to comply with certain state administrative requirements?
Whether the remaining permissible uses of regulated property are economically viable merely because the property retains a value greater than zero? (If developed according to claimant's plan, the property would be worth $3.15 million. If developed pursuant to state plan, the property would be worth $367,500).

Palazzolo's Argument: Palazollo argues that his takings claim is ripe and he is not required to submit additional applications for a "less ambitious development," which would have been futile because CRMC had told him that any application requesting the filling of the wetlands would be denied. Palazollo further alleges that wetlands regulations cannot be justified under the common law of easements and nuisance, the regulations effect a taking, regardless of whether the regulations pre-dated the owner's acquisition of the property. (Relying on Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) which stands for the proposition that the government can avoid paying compensation for land use limitations that otherwise amount to categorical takings only if those limitations on use "inhere in the title itself, in the restrictions that background principles of the state's law of property and nuisance already place upon land ownership."). Finally, Palazollo argues that he has been denied economically viable use of his property because the Rhode Island Supreme Court did not consider whether another type of development would be economically feasible in light of the cost.

Rhode Island's Argument: Rhode Island argues that Palazollo's claim isn't ripe because he never applied to develop the property in the manner which form the basis of his claim, and had never sought the approval of the state agencies necessary to complete the project. The state also argues that Palazollo did not have reasonable investment-backed expectations to engage in the project for which he now seeks damages.

State Interest: Land use regulation is one of the most important functions of states and local governments and one of the most contentious in the courts. NCSL has policy opposing the enactment of federal takings regulations and laws that seek to bypass state and local administrative procedures and state courts in order to gain an earlier entry into federal court.

For more information, please contact Susan Parnas Frederick at (202) 624-3566.

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