Testing Time at the Supreme Court

Yes, the lawyer replied.

His answer was certainly no surprise to the justices listening remotely to the argument. His theory of the case required precisely that answer, as Justice Barrett — who may be giving Justice Elena Kagan a run for her money in the department of well-designed hypothetical questions — surely knew. Nonetheless, it underscored just how audacious the Pacific Legal Foundation’s position is.

For the modern property-rights movement, in which the Pacific Legal Foundation has been active since the Reagan era, the Cedar Point Nursery case represents unfinished business. The best friend the movement had at the Supreme Court was Justice Antonin Scalia, among whose projects was to expand the type of government action that counts as a taking. He achieved an important breakthrough in a 1992 case, Lucas v. South Carolina Coastal Council.

Until that decision, the court had limited the definition of a categorical taking to a physical occupation of private property, eminent domain being the prime example. Government actions that didn’t “take” private property in the literal sense, but simply limited its use in certain ways, were regarded as “regulatory takings,” with the private and governmental interests being weighed against one another to determine whether compensation was required. In the Lucas case, a new land-use regulation deprived the landowner of his shore-front property’s entire economic value by preventing him from building homes on it. That was a categorical taking, the Lucas decision held. No balancing. The government simply lost.

When a regulation “declares ‘off-limits’ all economically productive or beneficial uses of land,” Justice Scalia wrote for the court, “compensation must be paid to sustain it.”

Nine years later, the question returned in Palazzolo v. Rhode Island, a case brought to the court by the Pacific Legal Foundation. What if the loss of economic value was something short of 100 percent? The landowner sued the state for $3 million when a wetlands regulation forced him to abandon his plan to divide his land into 74 individual building lots. Ah, but part of the property that was not subject to the regulation retained a value of $200,000. So did the regulation effect a Lucas-style taking?

The case left the court sharply divided. It was decided on the final day of the term in 2001 with six separate opinions. As a technical matter, the landowner won; the Rhode Island Supreme Court had ruled against him, and the justices sent the case back to that court for reconsideration. The Pacific Legal Foundation had won the battle but lost the war. The majority treated the case as an ordinary regulatory taking, refusing to apply Justice Scalia’s innovative definition of a categorical taking. The case left Justice Scalia’s Lucas decision essentially confined to its facts. At his death five years ago, his deregulatory project remained incomplete.

That was the war that resumed at the Supreme Court this week, and that history explains why, from the Pacific Legal Foundation’s point of view, anything short of total victory is beside the point. (And in a twist of fate, the lawyer who argued against the foundation in the Palazzolo case was Sheldon Whitehouse, then Rhode Island’s attorney general and now one of the Democratic senators behind a fire-breathing brief in this week’s case that traces the network of conservative funders behind the current effort to expand property rights.) The Trump administration had filed a brief supporting the Pacific Legal Foundation. The Biden administration informed the court by letter last month that the brief “no longer represents the position of the United States.”