Palazzolo v. Rhode Island

2001-06-28

Headline: Court allows landowner’s takings challenge over state wetlands rules to proceed, limits the defense that post-enactment buyers cannot sue, but finds no total taking and sends case back for further review.

Holding: The Court held the takings claim was ripe and that acquiring land after a regulation does not automatically bar a takings suit, but no total taking occurred because upland value remained; the case is remanded for Penn Central review.

Real World Impact:

Allows postenactment buyers to bring regulatory takings challenges.
Bars states from automatically rejecting takings suits based on purchase timing.
Remands disputes for a detailed multi-factor Penn Central analysis.

Topics: property takings claims, wetlands development rules, land-use challenges, when lawsuits can proceed

Summary

Background

Anthony Palazzolo owns a coastal parcel in Westerly, Rhode Island, most of which the State designated as protected coastal wetlands. He submitted multiple applications in the 1960s through the 1980s seeking to fill the land for development. The state agency in charge denied those applications under wetlands regulations. Palazzolo sued in state court, claiming the agency’s application of the rules amounted to a taking of his property without compensation. The Rhode Island courts dismissed parts of his claim as unripe, said his purchase after the rules were adopted barred some claims, and found one upland area still had about $200,000 in development value.

Reasoning

The Supreme Court said Palazzolo’s takings claim was ripe because the Council’s rulings and the clear substance of the wetlands regulations left no reasonable uncertainty that filling the wetlands would be barred. The Court rejected a bright-line rule that someone who acquires land after a regulation was passed can never bring a takings claim. At the same time, the Court agreed the owner did not prove a total taking because the parcel still had significant upland value. The Court therefore affirmed that portion of the state decision and sent the remaining claims back to state court for consideration under Penn Central, the multi-factor test the Court uses for partial regulatory takings.

Real world impact

Property owners who acquire land after a regulation may still challenge burdensome land-use rules. States cannot automatically defeat takings claims simply because title passed after the regulation. But not every challenge will win: here the presence of valuable upland meant no total taking, and further factual inquiry was ordered.

Dissents or concurrances

Justices split. Some Justices would have treated the claim as unripe; others concurred while stressing that timing of acquisition remains a relevant Penn Central factor on remand.