- The Washington Times - Friday, June 29, 2001

The Supreme Court yesterday handed a partial victory to a Rhode Island man who claimed the state's wetlands regulations cost him $3.4 million in lost property values.
While the 5-4 decision stopped short of saying that Anthony Palazzolo was due payment for the effect of the Rhode Island rules on his 18 acres, the court said the state could not put "an expiration date" on landowners' rights to be compensated when regulations block development.
"Future generations, too, have a right to challenge unreasonable limitations on the use and value of land," said the court's ruling, written by Justice Anthony M. Kennedy and backed by Chief Justice William H. Rehnquist with Justices Sandra Day O'Connor, Antonin Scalia and Clarence Thomas.
In a ruling that property-rights advocates called a major victory, the majority opinion said government may not bind current or future landowners from filing lawsuits when land-use restrictions devalue their property.
Nor may officials delay an owner's lawsuit by claiming the case is not "ripe" for judgment, the court ruled.
Justice John Paul Stevens dissented from the judgment while agreeing with some of its reasoning on Fifth Amendment property issues, saying the majority "oversimplified a complex calculus."
Justices Ruth Bader Ginsburg, David H. Souter and Stephen G. Breyer dissented outright, saying Mr. Palazzolo had no losses to claim because Rhode Island had not reached "a final, definitive position" on his waterfront land during the decades he sought in vain to build on it.
"I'm pleased I didn't quit. I've been fighting this for 40 years," said Mr. Palazzolo. All that time, he has paid taxes — currently about $3,000 a year — on 74 unimproved house lots, he said in an interview after the announcement on the last day of the Supreme Court term.
"I'm just one of the many who thinks the Constitution protects the right for people to improve their property provided we do no harm, and this is a major, major victory," said Mr. Palazzolo, 81, praising Pacific Legal Foundation attorney Jim Burling for pursuing his case.
"Today's ruling … sends a clear message to state and federal regulators across the country that, no matter how well-intentioned their environmental goals, they cannot simply put a freeze on the use of private property without giving the owner a fair price for it," Mr. Burling said.
Nancie Marzullo, who heads Defenders of Property Rights, a national interest group, said the decision was among her group's largest victories. She said its "buffet of legal precedents" will govern the broad range of so-called takings cases.
But Miss Marzullo said sending the case back to Rhode Island courts to set a value on his loss will be "a huge question mark" for Mr. Palazzolo.
"The Rhode Island remand definitely is going to affect how happy Mr. Palazzolo will be, but in the big picture this is a tremendous victory," she said. "Had we lost on our issues, the Defenders of Property Rights could have changed its name to Defenders of Corporate Trades or something. There wouldn't have been any takings law left."
While property-rights advocates saw the decision as a victory, the court did not endorse Mr. Palazzolo's claim that he was deprived of all the land's value, which he put at $3.4 million.
Kendra Beaver, attorney for Save the Bay, a Rhode Island environmental group, said, "It's pretty much a victory for us, because Winnipaug Pond will be protected and 18 acres of land will not be filled." She cited a concurring opinion by Justice O'Connor, who suggested close examination of the claims.
"It is undisputed that the parcel retains significant worth for construction of a residence," ruled the majority, including Justice O'Connor, in sending that portion of the case back to the Rhode Island courts to set a price on the value lost because of restrictions on land for which Mr. Palazzolo's company paid $21,000 in 1959.
"Nobody expected them to hand him a check. That was not what was expected. What they did was to give him his day in court," said Palazzolo supporter Brian Bishop of Rhode Island Wise Use.
Mr. Palazzolo must battle again in Rhode Island courts to set a price on the lost value of land that his corporation bought in 1959 and that he acquired personally in 1978, after passage of restrictive regulations that prevented filling needed to build on most of the property.
Mr. Palazzolo claimed he was the victim of "inverse condemnation" because he was left with the right to build only one large single-family home on 18 acres, where he sought to build a 74-home subdivision or, at one point, a "beach club."
"The state's rule would work a critical alteration to the nature of property, as the newly regulated landowner is stripped of the ability to transfer the interest which was possessed prior to the regulation. The state may not by this means secure a windfall for itself," the court ruled.

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