Tahoe Case Leaves Door Open for Property Owners

from Liberty Matters

April 30, 2002 - By a 6-3 margin, the U.S. Supreme Court refused to rule that the 32-month moratoria placed on land development at Lake Tahoe constituted, in and of themselves, a taking of property.  The majority included Justices Kennedy and O’Connor who are considered “swing justices” on property rights matters.  

The ruling, however, does not give government a free hand in land use planning.  Rather, the Court left open to property owners the option of presenting a taking case based upon proof of diminishment of economic value caused by a land use regulation. The Court pointed out that this ruling is narrowly limited to claims that temporary restrictions are takings, regardless of proof of value. 

In Tahoe, property owners did not attempt to prove diminishment of economic use of their land.  Moreover, their claims of restrictions for a period longer than 32 months were barred by statutes of limitations. The Court stated that, as a result of the limited nature of the claim, the “narrow inquiry” was “whether the mere enactment of the regulations constituted a taking.”  

The Court rejected the property owner’s theory, choosing instead to keep in place the rule of Penn Central Trans. Co. v. New York City, which requires that a regulatory taking decision must rest upon analysis of “a complex of factors including…economic effect on the landowner, the extent to which the regulation interferes with reasonable investment-backed expectations, and the character of the government action.” 

The Court made it clear that its ruling does not mean that all land use moratoria are free from the requirements of the Fifth Amendment:  “the answer to the abstract question whether a temporary moratorium effects a taking is neither ‘yes, always’ nor ‘no, never;’ the answer depends upon the particular circumstances of the case.”  The Court re-affirmed its commitment to Justice Holmes’ statement that “if regulation goes too far it will be recognized as a taking.”  

The question of whether a regulation has gone “too far” is left to a case by case “careful examination and weighing of all the relevant circumstances.” In an effort to point the majority in a different direction, Chief Justice Rehnquist emphasized the full suspension of development, which lasted more than six years.  But, the majority refused to analyze the case in such fashion because the parties had not argued the case on that basis.  

Although Tahoe was not the victory property owners hoped for, we can still hold land use regulators to the same standard applicable prior to the Tahoe decision.