An environmental case which is expected to be before the U.S. Supreme Court in February has Rhode Island roots, but may have serious implications nationwide in the development of what has long been considered protected wetlands. Palazzolo versus Rhode Island Coastal Council (now the Coastal Resource Management Council) is headed for the United States Supreme Court. The case could mean a loss of power for the Coastal Resource Management Council and environmental groups like it – an idea that frightens some local officials.
”This case could open up a Pandora’s box,” said Brian A. Goldman, legal council for CRMC, the defendant in the case. “It would put in jeopardy coastal wetlands not only in Rhode Island but all over the country. It could turn on its head the body of law that has regulated this kind of development and have serious financial ramifications as people will start to buy property they know they can’t develop just to be compensated.”
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But according to Eric Grant of the Sacramento, Calif. based-Pacific Legal Foundation, a non-profit organization that defends the rights of landowners nationwide, and is representing plaintiff Anthony Palazzolo, the case isn’t about state agencies or environmental protection. Instead he said, it’s about the rights of landowners to develop their land, or receive compensation for property that loses its value because of state and federal regulations.
Palazzolo is seeking $3 million in damages.
“Our basic legal theory is when regulations are applied to property and have the effect of destroying the economic value of that property, those regulations aren’t valid under the Takings Clause of the Constitution,” Grant said. “The central ruling of the courts (in Rhode Island) was that anyone who acquires property after a regulation is put into place is prevented from developing. We think that rule is unfair to property owners.”
According to the Rhode Island Attorney General’s office, the case began in the early 1960s when Palazzolo and some business associates formed the Shore Gardens Corporation, which purchased property along the south shore of Weekapaug Pond in the Misquamicut section of Westerly. The corporation then sold six buildable lots of the property and filed an application with the state Department of Health and the state Department of Natural Resources – organizations regulating development before the CRMC was formed in the 1970s — to fill the remaining 18 acres (thus eliminating the wetland and creating space for potential development).
“The application at that time was denied and no further action was taken at that time,” Goldman said. “They never appealed and never went to court.”
According to Goldman, Palazzolo solely acquired the property in 1978 and in the early 1980s filed with the CRMC the same applications he previously submitted under the Shore Gardens Corporation. By that time, Goldman said, regulations had been passed prohibiting the destruction of salt marshes and Palazzolo’s applications were denied.
In 1988 Palazzolo filed suit against the state agency in district court saying the CRMC’s decision to deny him a permit amounted to the taking of his land and as such is a violation of his Fifth Amendment rights, Grant said.
“It’s a regulatory taking of his property,” Grant said. “It’s not that they brought in their bulldozers, they have just prevented him from doing anything and therefore have destroyed the value of the property.”
The case was thrown out by a trial court judge who said since Palazzolo knew the regulations were in effect when he solely acquired the land in 1978, he could not have had a “reasonable investment-backed expectation” on filling the land. Palazzolo appealed in the state Supreme Court, where his claim was again rejected.
“Courts cannot slam their doors on landowners with legitimate claims against government agencies,” Grant said. “A rule of the law that says you take title to the land subject to a regulatory servitude encompassing all existing regulations without a right to challenge the subsequent application of any of them empowers the government to destroy the value of private property and convert it to public use. This is wrong.”
But the state contends that Palazzolo didn’t even ask to develop the property and instead applied only for a permit to fill the 18-acres of salt marsh and never told CRMC what he wanted to do with the property. In addition, Goldman said, during the course of hearings with the CRMC, Palazzolo never said what he wanted to do with the property, only that he wanted to fill it.
“All he did when he applied to CRMC was ask to fill the 18 acres of salt marsh,” Goldman said. “He didn’t ask for a use that was less harmful and there are still five buildable lots within the 18 acres that he could build on, but he didn’t apply for that.”
Goldman said the state also contends Palazzolo and his partners did get value for the property by selling some of its buildable lots.
Grant said Palazzolo has proposed construction of residential homes in the area, as well as the creation of a recreational beach facility – both of which he asserts are consistent with the surrounding area.
According to Goldman, there also are some questions as to how much of the property Palazzolo in fact owns since “at mean high tide 70 percent of the property is underwater.” He said the law states that shorefront land below the water line at mean high tide is considered in the public trust.
Still, both sides agree the case is being watched closely by both environmental groups and developers.
”The Pacific Law Foundation is following cases like this from across the country,” Grant said. “It’s happening more and more as courts are adopting these rules that are extremely unfair to property owners.”
”Protection of Rhode Island’s most valuable assets, particularly our coastlines, waterways, wetlands and other natural habitats such as salt marshes must remain among our highest priorities,” said Attorney General Sheldon Whitehouse. “This case clearly demonstrates Rhode’s Island’s commitment to protecting its valuable resources and its environment. I am pleased that we will be demonstrating that commitment on a national level before the highest court in the land.”
