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Palazzolo v. Rhode Island

Citation. 533 U.S. 606, 121 S. Ct. 2448, 150 L. Ed. 2d 592, 2001 U.S.
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Brief Fact Summary.

The Petitioner, Palazzolo (Petitioner), owned a waterfront parcel of land, almost all of which was designated coastal wetland. The Respondent, the state of Rhode Island (Respondent), rejected Petitioner’s development proposals.

Synopsis of Rule of Law.

A regulation may be found to constitute a taking if it goes too far in light of the property owner’s reasonable investment backed expectations, even though it does not deprive the owner of all economically viable use.


The majority of the property in question consisted of wetland, salt water marsh that needed serious fill and draining work to be suitable for any construction. Seven years prior to the Petitioner’s personal possession of title, the majority of the property was designated a coastal wetland by the Coast Resources Management Council. However, Petitioner’s corporation, of which petitioner was the sole shareholder, had invested in the property in 1959, prior to the enactment of the wetlands regulations. The regulations promulgated by the Council designated the marsh areas to be protected coastal wetlands. Undisputed evidence showed one of the Petitioner’s upland parcels of property continued to have a $200,000 development value although the remaining portions of property had become protected wetlands.


Whether the Rhode Island Coast Resources Management Council’s application of the wetlands regulations was a taking without just compensation.


Owner was not deprived of all economically valuable use. Remanded for consideration under the Penn Central analysis. On remand the court would need to make a determination of whether the regulations went too far so as to constitute taking, considering the owner’s investment backed expectations. Court would have to consider whether he has suffered a taking even though some use of the parcel remained viable and also considering the character of the government’s action and the economic interference with owner’s investment backed expectations.
The Supreme Court of the United States (Supreme Court) expressed some sympathy for the argument that the upward parcel could be distinct and separate from the rest of the parcel. However, the Petitioner did not properly raise the argument at the state court level such that the Supreme Court was only considering whether it was a taking as to the entire parcel as a whole. However, the question of what was the proper denominator, i.e. whether the whole property or just a fraction of the property, must be considered was a question left open for the future.
The Supreme Court also found that the date of personal acquisition of title, after the regulation was passed, did not bar this takings claim.


Affirms and continues the Lucas bright line rule, but says that the Penn Central factors must be evaluated in each case also to determine if the regulation went too far. The Supreme Court states that leaving an owner with a token interest should not allow the state to evade the duty to compensate. It is unclear how if it would differ factually from Lucas because here a more significant value does remain for the upper parcel of land.

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