The First Circuit issued a decision Monday that is squarely correct on existing law — and underscores what's wrong with that law. Downing/Salt Pond Partners, L.P. v. State of Rhode Island and Providence Plantations, http://www.ca1.uscourts.gov/cgi-bin/getopn.pl?OPINION=10-1484P.01A.
First, here are the facts as alleged and recited in the decision (written by CJ Lynch, with the Sixth Man of the First Circuit , Justice Souter, on the panel, so there's some fire power here):
In 1992 a landowner obtained a land use permit from a Rhode Island agency to develop a residential community on its land. Between 1992 and 2007, the owner built homes on 26 of the planned 79 lots in the subdivision, built the roads, and began the infrastructure improvements necessary to build out the remaining lots. In August 2007, another state agency concluded that what hadn't yet been built on needed to be preserved. Agency #1 sent the owner a notice in August 2007 stating the the permit was still valid and remained so pending a determination by agency #1 on the issues raised by agency #2. This language is obscure to me as to whether that meant agency #1 was saying don't build any more or was saying you can keep going until we say otherwise; if the latter, than I can't understand why the owner didn't get as much of this built as he could as fast as he could, but it looks like he didn't. (One of the lovely results of the current law on takings is that it incents landowners to develop the stuffings out of their property while they can instead of preserving it, as this case teaches.)
In any event, in June 2008, agency #2 issued a memo confirming its recommendation to agency #1 that either construction be prohibited or an archeological recovery project costing a mere $6 million be undertaken. In August 2008, following informal discussions with agency #2, the owner requested agency #1 to submit the matter for hearing.
Time continues to march on. In February 2009, the owner tells agency #1 that he's going to resume construction. No response, he says (the agency says 'informal negotiations were ongoing"). In June 2009, the owner resumes construction; the same day, agency #1 issues a cease and desist order. The owner asks for a hearing and alleges that as of the time he filed suit in August 2009, the agency had provided no response, despite the owner sending notice trying to follow up.
In the suit, the owner alleges a regulatory taking. From 2009 until now, agency #1 managed to issue a notice of hearing; the district court reported in its March 2010 opinion that the matter was to be referred to an agency subcommittee. As of the oral argument on appeal in 2011, after four or five hearings, the process was not yet done – indeed, they still had to file written submissions, at which point the subcommittee would make a recommendation to the full agency. Hence, one can reasonably predict another significant slug of time will pass before this ever gets through the subcommittee to the agency — and what's to stop the full agency from taking the same amount of time as the subcommittee? So, basically, the administrative process for reviewing the regulatory restriction has, to date, taken four years, and they still have a long way to go.
Nevertheless, under governing Supreme Court law (Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985)), that's just too bad. As the First Circuit explains, under Williamson, the owner must get through all the administrative processes regarding the restricting regulation(s) before he can go to court. Then, he can only go to state court, not federal court (although he's claiming a violation of the federal takings clause) to seek a state remedy. And, as the First Circuit noted, the findings in the state ruling will likely estop the owner from ever being able to assert his taking claim in federal court, under another Supreme Court decision, San Remo Hotel, L.P. v. City and County of San Franciso, 545 U.S. 323 (2005).
If you think there's something wrong with this picture, you are not alone. Chief Justice Rehnquist, who was in the majority in establishing the Williamson ripeness requirements, had a change of heart. See his concurrence in San Remo, quoted by the First Circuit, noting that "the justifications for [the] state-litigation requirement are suspect, while its impact on takings plaintiffs is dramatic." But to date, as the First Circuit opinion also notes, the Supreme Court has denied all cert requests to re-visit Williamson.
Whatever you think about the substance of regulatory takings law, no one can be comfortable with the status quo regarding these procedural and jurisdictional obstacles. In this case, for example, the owner cannot build on any of its remaining lots, for years and years and years. Maybe in the end that's not a taking - the substance of this claim would appear to raise some issues regarding what the relevant parcel is, another thorny question in takings law. But whether the owner wins or loses his takings claim, shouldn't it at least have the opportunity to make his case in court, instead of being stuck in adminstrative limbo?
And if an owner can eventually obtain a "final" agency decision (which means a ruling in which the agency doesn't leave any openings), then in this type of "as-applied" claim, he can only go to state court to pursue an inverse condemnation claim — no attorney's fees, even though federal takings claims can be asserted under section 1983. There's a Maine SJC case that seems to leave some wiggle room on asserting the civil rights claim at the same time as the inverse condemnation claim, in state court, but this is basically academic, because if the state court rejects the inverse condemnation claim it's going to reject the civil rights claim, too. And whatever the state court finds will as a practical matter be the final word. And the Maine SJC has never found a regulatory taking. Ever. (Under previous SJC rulings, if you can picnic or park on property, there's no taking. But I digress )
The panel here seems to be not entirely pleased with this procedural situation, either. It closes its decision by saying "While the two agencies strenuously deny that they have been unresponsive or have unreasonably delayed their decisions on Downing's project, we express the hope that the parties will promptly attempt to resolve any remaining disagreements."