Facts
- Anthony Palazzolo owned coastal property in Westerly, Rhode Island, much of which consisted of salt marsh requiring substantial fill for development; some upland area remained.
- In 1971, Rhode Island created the Coastal Resources Management Council (CRMC) and adopted a coastal program that treated salt marshes as protected coastal wetlands with strict limits on development.
- In 1983, Palazzolo sought permits to fill most of the marsh and build a bulkhead; CRMC denied the application based on wetland impacts and inconsistency with the coastal program.
- In 1985, he submitted a reduced proposal to fill a smaller portion for a private beach club and parking; CRMC denied it for failure to satisfy the “special exception” criteria and for ecological harm.
- Palazzolo brought an inverse-condemnation claim alleging the regulatory denials effected a taking under the Fifth and Fourteenth Amendments.
- A key premise on remand was that the parcel retained permitted economic use, including the potential to build at least one single-family residence on upland portions with substantial market value.
- After the U.S. Supreme Court held the claim ripe and not barred by post-enactment acquisition, the case returned to state court for a merits determination of whether a taking occurred.
Issues
- Whether application of coastal-wetlands restrictions and permit denials deprived the owner of all economically beneficial use, constituting a categorical taking under Lucas.
- If not, whether the restrictions nonetheless constituted a compensable regulatory taking under Penn Central based on economic impact, interference with reasonable investment-backed expectations, and the character of the government action.
Decision
- The Superior Court entered judgment for the State and denied compensation.
- The court found no categorical taking under Lucas because the property retained economically valuable, permissible uses, including residential development on upland portions.
- The court treated the relevant parcel as the property as a whole, not the marsh portion in isolation, and concluded the parcel retained significant value.
- The court found no taking under Penn Central because the remaining permitted use and value reduced the severity of economic impact, expectations of intensive fill-based development were not reasonable, and the regulation was a general environmental program protecting coastal wetlands.
- The court also relied on the idea that restricting large-scale filling of salt marshes aligned with background limits in property and nuisance law and did not require compensation where substantial value remained.
Legal Principles
- A Lucas categorical taking requires denial of all economically beneficial or productive use of the relevant parcel; residual valuable use defeats a per se claim.
- The relevant parcel is generally evaluated as the parcel as a whole rather than segregating regulated portions to manufacture total deprivation.
- Under Penn Central, courts assess (1) economic impact, (2) interference with reasonable investment-backed expectations, and (3) the character of the government action; significant remaining value and broadly applicable environmental regulation weigh against a taking.
- Post-enactment acquisition of title does not, by itself, bar a takings claim; ripeness is satisfied when the regulatory agency has effectively reached a final position such that further applications would be futile.
- Restrictions consistent with background principles of property and nuisance law may limit asserted uses without compensation, particularly where regulation prevents serious harm and does not eliminate all value.
Conclusion
On remand, the court held that denial of permits to fill protected coastal wetlands did not effect a compensable taking because the owner retained viable, valuable residential use of the parcel and the wetlands restrictions reflected a broadly applicable environmental program rather than a confiscatory imposition under either Lucas or Penn Central.