Environmental Laws Constrain Landowners Facing State and Local Development Restrictions on Its Land, a Vermont Ski Resort Sues for Compensation

Article excerpt

LONG before the first zoning regulation specifying house-lot size, governments put restrictions on what citizens could do with their own land. So-called "nuisance" ordinances, which forbid land uses that would damage or threaten neighbors' interests, hark back to English common law.

The influx of environmental laws in the United States over the past two decades has put private property under a whole new set of restrictions. A recent example of these constraints involves Killington Ltd., Vermont's largest ski-resort operator. On Aug. 27, Killington sued the state, charging that it effectively confiscated part of the company's land holdings when it designated 1,600 acres as critical bear habitat. The company also sued the town of Mendon, Vt., whose zoning law bans commercial development at altitudes above 2,500 feet.

Such cases raise a question: When does government regulation cross an ill-defined line and become a "taking" of private property? If a taking can be proved, the US Constitution's Fifth Amendment requires compensation for the owner.

Last year, the US Supreme Court ruled on a South Carolina case involving a landowner's contention that a state regulation restricting beach-front building had deprived him of any economic gain from his property and, thus, had effectively "taken" it. The state courts had ruled that the owner was not entitled to compensation. The high court, however, was sympathetic to the plaintiff's argument and ordered the case back to the lower courts for reconsideration of his claim.

The Supreme Court majority held that in a case like this, where all economic use of a piece of land is prohibited, compensation is required - unless the proposed use of the land would create a nuisance in the common-law sense of the term. This summer, in an out-of-court settlement, South Carolina paid the landowner, David Lucas, $1.5 million to buy his property.

In an ironic footnote to that case, the state decided to sell the land to make up for its outlay to Mr. Lucas.

The Lucas case underscored the difficulty of determining just when a taking has occurred. The Supreme Court has acknowledged the possibility of a "regulatory taking" - when state regulatory action so deprives an owner of economic use that it amounts to confiscation. But it hasn't defined just when this condition exists. Instead, the court has emphasized that the question must be decided on a case-by-case basis.

The number of such cases is increasing, according to Jerold Kayden, a senior fellow with the Lincoln Institute of Land Policy in Cambridge, Mass. A central factor, he points out, is whether owners have been deprived of all economic use of their land or just some of it. This issue is central to the Killington case. Supporters of Vermont's regulations, Mr. Kayden says, argue that the company could get some return on its investment by renting campsites, for example. But "that kind of argument," he says, "drives property owners absolutely ballistic."

Frank Urso is an attorney for Killington. He says the ski operator's 10-year battle to get approval for such limited uses as selective logging and construction of a snow-making pond made it clear that the state's purpose was to ban all use and preserve an untouched bear habitat. …