Regulatory takings challenges are no doubt tough. Especially Penn Central regulatory takings challenges. Facial Penn Central regulatory takings claims, moreso.
The U.S. Court of Appeals' opinion in Clayland Farm Ents, LLC v. Talbot County, No. 19-2102 (Feb. 9, 2021) - the latest in this case we've been following - proves the point. The court affirmed the district court's summary judgment on the property owner's takings, due process, and civil conspiracy claims.
The property owner brought its claims in Maryland state court claiming, among other things, that the County's two indefinite moratoria on development and sewer availability -- which prohibited owners from seeking or obtaining County subdivision -- was a facial taking:
Clayland’s appellate briefing asserts that Bill Nos. 1214, 1257, and 1229 constitute a facial regulatory taking under both federal and state law. Bill No. 1214 temporarily reduced the permissible density of VC-zoned properties from four units per acre to one unit per two acres and prohibited new subdivision of any existing VC-zoned parcel into more than one additional lot. Bill No. 1257 extended these restrictions until the adoption of a new comprehensive plan. Bill No. 1229 separately implemented a tier map.
Slip op. at 11. The complaint sought declaratory and injunctive relief (although we're not quite sure from the opinion whether it also included a claim for compensation).
The case didn't present a Lucas economic wipeout situation, and the court of appeals therefore applied the daunting Penn Central analysis:
- Economic impact: even with application of the regulation, the property retained value (which, we assume for purposes of our review here, was a reflection of the remaining uses of the property) of nearly $2 million, a 40% diminution because of the regulations. Not enough, according to the court: "And yet this Court has found that a hypothetical 83 percent diminution in value was insufficient to establish a regulatory taking." Slip op. at 12. And, the regs didn't wipe out all uses (just the most beneficial use: "Further, the Property retained valuable, expressly permitted uses under Bill Nos. 1214 and 1257." Slip op. at 12).
- RIBE: Here, the court's analysis gets into that Inception-like dream-within-a-dream "property" loop that asks "what is the 'property' alleged to be taken?" Here, the owners asserted it was the land itself or at least the right to develop and use the land. The court consequently made short work of the argument, concluding as a matter of law that because "Clayland had not affected preexisting development rights in relation to the Property" (under Maryland law), slip op. at 13, it didn't possess reasonable investment-backed expectations. According to the court, no vested right to develop (a permit, for example), no property right, no RIBE: "But Clayland never obtained a permit, began construction, or took any action on any other development to which it now claims entitlement. Clayland could not reasonably expect that its zoning designation would remain unchanged in perpetuity." Slip op. at 13-14. The owner was simply relying on the existing state of the law, according to the court. And we know where that gets you.
- Character: this was regulation, not an action that resulted in something that reminded the Fourth Circuit of a taking by eminent domain. Slip op. at 14. Moratoria have been "expressly approved" by the Supreme Court. Slip op. at 15 (yes, citing Tahoe-Sierra). These moratoria were long (6 years), but that alone isn't enough.
The opinion also considered and rejected the due process claim because the owner did not possess a property interest. Same analysis under RIBE, above. And even if it did, the regulations are not arbitrary and capricious. The rational basis test strikes again.
Clayland Farm Ents., LLC v. Talbot County, No. 19-2102 (4th Cir. Feb. 9, 2021)
