Not So Fast

Like a shoplifter confronted by a closed-circuit TV camera, governments are finding they can no longer take with impunity. Three recent cases, one in a California court of appeals and two in the U.S. Claims Court, reinforce a trend toward stricter scrutiny of government regulations that violate property rights.

The California case, Rooke v. City of Scotts Valley, involved an elderly couple, Donald and Marjorie Rooke, who attempted to sell their trailer park in 1986. The Rookes learned that the city of Scotts Valley had passed an ordinance requiring them to show that no low- or moderate-income tenants would be affected and that all of the tenants would be able to find other sites for their trailers. Furthermore, the ordinance required the Rookes to pay each tenant the in-place value of their mobile homes. Since this amount includes the value of the land, the Rookes would in effect be required to buy the park again before they could sell it.

The state Superior Court ruled that the ordinance (since repealed) violated the Fifth Amendment's Takings Clause, but it found that the Rookes could not be awarded damages because they had not exhausted all the possible administrative remedies. That aspect of the judgment was overturned by the Sixth District Court of Appeals, which concluded that since the ordinance was unconstitutional on its face, the Rookes are entitled to compensation without having to jump through the city's procedural hoops.

The two federal cases involved the Army Corps of Engineers' refusal to issue permits for the filling of property designated as wetlands. In both cases the land was purchased before Congress gave the corps jurisdiction over it. The U.S. Claims Court found that the permit denials amounted to the taking of property without just compensation, in violation of the Fifth Amendment.

In Florida Rock Industries Inc. v. United States, the plaintiff had purchased 1,560 acres in Dade County, Florida, with the intent of mining it for limestone. The corps ordered the company to stop mining and later refused to grant a permit to continue the operation on 98 of the acres. The court awarded damages of $1 million to compensate for the loss of that parcel's use.

In the other case, Loveladies Harbor Inc. v. United States, the court awarded $2.7 million to the plaintiff for 12.5 acres in Ocean County, New Jersey, that could not be developed without a fill permit. "The value of the property," declared the court, "has been virtually eradicated as a result of government action."