The United States Supreme Court May Agree To Hear An Important Case On Investment Backed Expectations This Term

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The US Supreme Court will soon decide whether millions of property owners will maintain the ability to sue the government for regulatory takings arising under the Clean Water Act.

Last June, a property owner filed a petition asking the Court to overturn the Federal Circuit Court of Appeal’s opinion in Mehaffy v. United States. In that case, the court denied a property owner’s claim that the U.S. government had unconstitutionally taken his property by improperly applying the Clean Water Act to prevent him from exercising his property rights under an express easement from the government to fill in wetlands on his property. The court concluded that, in spite of his preexisting agreement with the government, the property owner could not claim a taking because the CWA was already in effect when he purchased the property–thus diminishing any expecations he may have had to use the property as he saw fit.

The lower court’s opinion is note worthy for two reasons. First, it flatly contradicts the Supreme Court’s prior opinion in Palazzolo v. Rhode Island. In that case, the Court held that the fact that a staute existed prior to the purchase of a property was not sufficient to bar a subsequent purchaser from claiming that the statute unconstitutionally deprived him of the use of his property.

Second, and more importantly, by holding that the enactment of a statute bars all takings claims by subsequent purchasers, the lower court has effectively barred all takings claims arising under the CWA for countless property owners that purchased their property after the CWA was enacted in 1972. This is particularly troubling, given the CWA’s notoriously ambiguous scope. As Justice Alito opnined last year,

“The reach of the Clean Water Act is notoriously unclear. Any piece of land that is wet at     least part of the year is in danger of being classified by EPA employees as wetlands covered by the Act, and according to the Federal Government, if property owners begin to [develop] a lot that the agency thinks possesses the requisite wetness, the property owners are at the agency’s mercy . . . . [T]he precise reach of the Act remains unclear.”

Indeed, many property owners have no idea the CWA applies to their property until the government brings an enforcement action. And even then, the applicability of the CWA is often hotly contested.

Yet, under the lower court’s opinion, these unknowing purchasers would be deemed to have had notice that CWA could restrict the use of there property– thus be barring them from bringing a takings claim even if the government’s actions under the CWA radically reduced the value of their property.

The Supreme Court has yet to agree to hear the case. However, this week the Court requested that the government respond to the property owner’s petitition. Such a request is a sign that the Court is considering granting review.

The Sacramento land use lawyers at Kassouni Law are dedicated to the protection of Constitutional property rights. If you are experiencing a similar legal matter, please consider contacting the property rights and land use lawyers by calling (916) 930-0030. The land use lawyers serve clients throughout the state of California with offices in Sacramento and Los Angeles.

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