Property Class Notes 1/15/04


Nollan v. California Coastal Commission


What happened in this case?  Notice that the law is changing!  The Scalia camp is in the ascendant!  It’s a flip!  What had been the majority becomes the minority and vice versa.


A lot of how you evaluate eminent domain cases, and particularly regulatory takings, depends on how you feel about government and whether government can be trusted to protect the institution of private property.  Do we have to worry about the government going too far?


Nollan owned some beachfront property.  There was a little bungalow on the land, and the Nollans wanted to tear it down and build a single-family residence.  They were going to make a much bigger structure.  The government was concerned about a “wall” of residential properties creating a barrier to the view of the ocean.  So, as a condition to get their permit, the government required them to provide an easement.


Where was the easement?  You’ve got the ocean.  The state owns the beach up to the “mean high tide” line.  Then there’s the area between that line and the Nollans’ wall.  Then there’s the house, and then there’s a public highway.


The state wanted to condition the permit on granting an easement between the mean high tide line and the wall.  It would be a different case if the state required an easement from the public highway to the beach.  (That’s what I thought this was!!!)


That’s the fact pattern.  But what’s the public purpose here?  You want people to be able to see the beach from the highway and know that it’s public.  That’s a sufficient public purpose to justify regulation and taking by eminent domain.  But the big question is: is this a compensable taking or just a regulation that adjusts the benefits and burdens of economic life in our society and doesn’t require compensation?


The Court starts with the proposition that if the California Coastal Commission had wanted to, they could have denied a building permit altogether.  If they had done that, then there would have been no taking.  If the state can do that, why can’t the state just put a condition on the building that says “If you want to build on this property, you must grant an easement that runs between the wall and the mean high tide line”?


There are three main “sticks” in the bundle of property rights: the right to exclude, the right to use and enjoy, and the right to alienate.  Which of these rights would be most affected by the actions of the California Coastal Commission?  Arguably, it’s the right to exclude.  You now have the public “intruding” on the landowners’ property and being authorized to do so by the government.  So this is a physical invasion, but is it permanent?  You might argue that people won’t use the easement 24 hours a day, year-round.  However, the Court is willing to assume, without discussion, that the invasion is permanent.  They find it doesn’t have to be continuous to be permanent.


So the landowners lose primarily their right to exclude, but secondarily the right to use and enjoy and a little bit of the right to alienate.


There seems to be a problem here.  The majority admits that they could ban the construction altogether, which is more severe than what the state actually did.  The state said: “You can build, and we’ll give you permission, but in return, you must allow the public to cross your land.”  Why can’t they do that?  Why can’t they condition their approval on this requirement?


Why are they talking about “‘fire’ in a crowded theater”?  Why does Scalia go off on this tangent?  Why would it be unlawful to let people pay $100 to yell “fire” in a crowded theater when the state could just ban it altogether?


The justification for prohibiting people from yelling “fire” is public safety, and that allows you to prohibit it altogether.  The justification for allowing the permitting process would be to raise money.  There is an important public purpose that would allow you to prohibit the speech, but the permitting process doesn’t serve that same purpose.  Therefore, it would be unconstitutional.


How does that apply to this case?  Just because they can ban something doesn’t mean they can impose a condition that forces people to give up a constitutional right.


The government is restricted: if you have a constitutional right, like free speech, the government can’t impose conditions on the exercise of that right.  Here, you have the constitutional right not to have your property taken except to a public purpose with just compensation.  What the government is doing is imposing a condition on that right: the Nollans must give up their constitutional right in order to get a building permit.  Scalia says that this condition is unconstitutional.  Just because the government has the right to do something more severe doesn’t mean the government has the right to do something less severe, that is, putting a condition on the exercise of a constitutional right.


Land use regulation is not a taking if it advances a substantial state interest and does not deny the owner economically viable use of the land.


The nexus requirement


The condition must be closely tailored to the public purpose that justifies the restriction.


What if the easement ran between the highway and the beach?  Could they have done that?  Scalia suggests they could have because this condition (highway-to-beach easement) actually furthers the Commission’s public purpose (or goal) as stated.


One way of understanding this case is that the California Coastal Commission screwed up in stating the wrong purpose.


This goes on all the time in real estate development.  If you want to build a residential development, for example, a community may force you to give them land for a school or fire station in return for being allowed to develop.  But on the other hand, if I’m a farmer and the state says they’re going to take 20 acres of land to build a school, that must be compensated in order to be constitutional.


The rule of the case is that if the relationship between the condition and public purpose exists, then the condition is constitutional.  But if the relationship doesn’t exist then the regulation can’t be imposed.


Dolan v. City of Tigard


In this case, the city imposed a condition and it was clear that the expansion of the plaintiff’s hardware store, which resulted in increased traffic, was causing some harm.  It was clear that what the state was doing satisfied the Nollan nexus requirement.  The Supreme Court looked at this and said it was fine.


But what was wrong in Dolan was that there was no reasonable relationship between how much land Dolan was being required to give up and how much harm she was causing.


Therefore, there are two requirements:


1.     There must be a nexus between the condition and the public purpose.

2.     The burden on the landowner must be proportional to the amount of harm the landowner is causing by their current use of the land.


Lucas v. South Carolina Coastal Council


Lucas is a real estate developer on the barrier islands off the coast of South Carolina.  South Carolina has hurricanes from time to time that cause bad stuff.  Through a series of federal and state legislative enactments, it is determined that there is a line in front of which no real estate development will be permitted.  At the time Lucas purchases the land, he is permitted to build and no permit is required in order to build.  In other words, the land is properly zoned.


After acquiring the new lots, a new statute comes into effect that establishes the “no-build” line.  It turns out his lots are on the seaward side of that line and he loses his chance to develop the land altogether.


The trial court decides, and no one disputes, that the land has lost its value altogether.  (Braunstein thinks this probably isn’t strictly true: the land has some value, it’s just that it’s minimal versus what you would get if you could develop it.)


This will develop the third of the per se rules: when government regulation denies an owner all economically viable use of his land.


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