Palazzolo v. Rhode Island
The Supreme Court ruled that a landowner who takes title to property after a land-use regulation is already in place can still sue the government over that regulation as an unconstitutional taking, rejecting Rhode Island's argument that a later buyer automatically loses that right. It also found Anthony Palazzolo's claim was ready for court because state regulators had made unmistakably clear that no filling of his wetlands would ever be permitted.
At the same time, the Court agreed that Palazzolo had not lost all economic use of his land, since part of it could still be built on, and sent the case back so the lower courts could weigh his claim under a more flexible balancing test used for partial takings.
“The State may not put so potent a Hobbesian stick into the Lockean bundle.”
Rejecting the idea that acquiring land after a regulation existed strips an owner of the right to challenge it.
How it got here: Rhode Island's trial court and supreme court both ruled against Palazzolo's takings claim on multiple grounds; he asked the U.S. Supreme Court to review the state supreme court's decision.
The Case in Depth
What happened
Anthony Palazzolo owned waterfront land in Westerly, Rhode Island, most of which state regulators classified as protected coastal wetlands. After his repeated proposals to fill the marsh — for a subdivision and later a private beach club — were rejected by the state's coastal council, he sued, claiming the wetlands rules took his property without compensation. The regulations had been adopted while the land was still owned by his corporation, before he personally inherited title.
The question before the Court
Anthony Palazzolo bought coastal land already covered by Rhode Island's wetlands rules before he personally took title to it. Could he still sue the state for taking his property, and had he done enough to bring that claim to court?
The Court's answer
Partly — yes, Palazzolo could bring his takings claim even though he acquired the land after the wetlands rules were adopted, and yes, his claim was ripe because state regulators had made unmistakably clear that no filling of the wetlands would ever be allowed for any purpose. The Court rejected Rhode Island's argument that anyone who takes title to already-regulated land automatically forfeits the right to challenge that regulation as an unconstitutional taking.
But the Court agreed with the state courts that Palazzolo had not lost all economic use of his property, since the non-wetland "upland" portion could still be built on and was worth about $200,000. So his claim that regulators took everything failed, and the case went back to the lower courts to decide, under a more flexible balancing test, whether the wetlands restrictions still amounted to a partial taking requiring compensation.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
The ruling means people who inherit, buy, or otherwise acquire land after regulations are already on the books can still challenge those regulations as takings, not just the original owners. It also sharpens the rules for when a landowner has done enough with regulators before suing, affecting how property owners nationwide pursue compensation claims against zoning, wetlands, and other land-use restrictions.
What changes now
The case returns to the Rhode Island courts, which must now evaluate Palazzolo's claim under the multi-factor Penn Central test, weighing the regulation's economic impact, its effect on his investment expectations, and the character of the government action. This is a final ruling on the ripeness and post-acquisition-title questions, but the ultimate question of whether Palazzolo is entitled to any compensation remains open for further proceedings.
What this does not decide
The Court did not decide whether Palazzolo is actually entitled to compensation — that question goes back to the lower courts under the Penn Central balancing test. It also declined to decide whether the wetlands portion of the property could be treated separately from the uplands for takings purposes, or when a regulation becomes a permanent "background principle" of state property law.
Concurrences and dissents
Concurrence — Justice O'Connor
Justice O'Connor agreed with the majority but stressed that the timing of a regulation relative to when an owner acquired title still matters under Penn Central — it's one factor in judging investment-backed expectations, not something courts should ignore or treat as decisive. She warned against turning this into a rigid rule in either direction.
Concurrence — Justice Scalia
Justice Scalia wrote separately to reject Justice O'Connor's view, arguing that whether a restriction existed before a purchaser bought the land should have no bearing on whether that restriction goes too far and becomes a taking. He said a Penn Central taking, like a total taking, is not erased simply because title changed hands.
Concurrence in part — Justice Stevens
Justice Stevens agreed the claim was ripe but argued the majority wrongly let Palazzolo seek compensation for a taking that, if it occurred at all, happened when the regulations were adopted — while the land was still owned by his corporation. He argued Palazzolo lacked standing to recover for any injury that predated his own ownership.
Dissent — Justice Ginsburg
“I would reject Palazzolo's bait-and-switch ploy and affirm the judgment of the Rhode Island Supreme Court.”Arguing Palazzolo unfairly changed his legal theory on appeal after the trial record was built around a narrower claim.
Justice Ginsburg argued the claim was not ripe at all, saying Palazzolo switched legal theories on appeal after the record was built around his original, narrower claim, and that the record remained genuinely unclear about how much of his upland property could be developed. She would have affirmed the state court in full.
Dissent — Justice Breyer
Justice Breyer joined Justice Ginsburg's dissent in full but wrote separately to add that, if the claim had been ripe, he would agree with Justice O'Connor that a change in ownership does not automatically defeat a takings claim, since the timing of a regulation relative to a change in ownership can still be weighed under Penn Central.
How the Court got there
The legal reasoning, step by step
- The Court applied its rule that a takings claim challenging a land-use regulation is not ready for court ("ripe") until the agency has reached a final decision on how the regulation applies to the specific property, so a court knows how far the restriction actually goes.
- Because the coastal council's rulings and the state's own arguments left no doubt that no filling of any kind would be allowed on the wetlands for any use, the Court concluded further applications would have been pointless, and the claim was ripe without them.
- Turning to whether a later buyer can sue over a rule that predates his ownership, the Court rejected the idea that property rights are entirely defined by whatever regulations exist when someone takes title; letting the government set an expiration date on takings claims this way would let it escape responsibility for even extreme restrictions.
- The Court found this conclusion consistent with its earlier ruling in Nollan v. California Coastal Comm'n, which allowed a takings claim even though the buyers had notice of the government's beach-access policy before they purchased their home, and held that a later case, Lucas v. South Carolina Coastal Council, had not overturned that principle.
- Applying the toughest takings test — denial of all economically beneficial use — the Court concluded Palazzolo's claim failed because the non-wetland part of his property could still be developed and was worth roughly $200,000, so the case had to go back to the lower courts to be evaluated instead under the multi-factor balancing test from Penn Central Transportation Co. v. New York City.
Doctrinal impact
Cases affected by this decision
Reaffirms Nollan v. California Coastal Comm'n (483 U. S. 825)
The Court relied on Nollan as controlling precedent that notice of a regulation doesn't bar a buyer's takings claim.
Reaffirms Williamson County Regional Planning Comm'n v. Hamilton Bank (473 U. S. 172)
The Court applied Williamson County's final-decision ripeness rule to find Palazzolo's claim was ready for review.