Also known as: background principle · background principles of law · Lucas background principles
Written by attorneys — see sources below.
Pre-existing limitations on land ownership derived from a state's property and nuisance law that inhere in title at the time of acquisition. These limitations permit a regulation eliminating all economically beneficial use without triggering a per se taking under the Fifth Amendment.
Metro Tech bought coastal bluff land to build a data center. After purchase, the state banned all structures in an erosion zone. The ban prevented any buildings, but it duplicated longstanding nuisance rules against development that would accelerate erosion harming neighbors. Because the restriction already inhered in title under those background principles, no compensation was required.
A corporation owned wetlands subject to new state restrictions when Palazzolo became sole shareholder by operation of law. He claimed a total taking. The Court held that post-acquisition notice of the rules did not automatically bar the claim, but any background principles of state property law existing at original acquisition could still defeat compensation.
Anthony Palazzolo, a lifelong resident of Westerly, Rhode Island, formed Shore Gardens, Inc. (SGI) with associates in 1959 to purchase three undeveloped adjoining parcels along Atlantic Avenue bordering Winnapaug Pond to the north and the beach to the south. SGI subdivided the property into 80 lots in the 1960s and developed most into single-family homes, but left the petitioner's 20-acre parcel undeveloped. Most of the property consists of salt marsh subject to tidal flooding requiring substantial fill for structures. In 1971, Rhode Island created the Coastal Resources Management Council (CRMC) to regulate coastal development. In 1978, the CRMC promulgated regulations designating much of the property as protected coastal wetlands where filling is prohibited without a special exception. That same year SGI's corporate charter was revoked for unpaid taxes, transferring title to Palazzolo as sole shareholder. In 1983, Palazzolo applied to the CRMC to construct a bulkhead and fill the entire wetlands for a beach club, but the application was denied as vague and inadequate with significant environmental impacts. In 1985, he submitted a more specific proposal to fill 11 acres for a beach club including parking for 50 cars with trailers, dumpsters, port-a-johns, picnic tables, and barbecue pits, which the CRMC also rejected for failing to serve a compelling public purpose. Palazzolo filed an inverse condemnation action in Rhode Island Superior Court seeking $3,150,000 in damages based on the value of a 74-lot residential subdivision, alleging the regulations deprived him of all economically beneficial use. After a bench trial, the Superior Court ruled against him, finding the parcel retained $200,000 in development value on an upland portion. The Rhode Island Supreme Court affirmed on multiple grounds, including lack of ripeness and that Palazzolo lacked standing to challenge pre-acquisition regulations. The United States Supreme Court granted certiorari to review the Rhode Island Supreme Court's decision.
View caseOwners held lakefront parcels subject to a six-year moratorium on all building. They argued the delay eliminated all economic use. The Court noted that traditional short-term moratoria do not trigger per se liability and that background principles of property law may prevent even longer pauses from qualifying as total takings.
In the early 1980s, the Tahoe Regional Planning Agency imposed two moratoria on development in the Lake Tahoe Basin. The first, Ordinance 81-5, took effect on August 24, 1981, and lasted until August 26, 1983. The second, Resolution 83-21, ran from August 27, 1983, to April 25, 1984. Together these measures prohibited virtually all development on sensitive lands for a total of 32 months while TRPA developed a comprehensive land-use plan. Lake Tahoe's exceptional water clarity had begun to deteriorate due to increased land development starting in the late 1950s and early 1960s. Runoff from impervious surfaces on steeper slopes and stream environment zones carried nutrients that promoted algae growth. In response, California and Nevada, along with the federal government, amended the Tahoe Regional Planning Compact in 1980 to require TRPA to establish environmental threshold carrying capacities and adopt a regional plan. The 1980 Compact amendment directed TRPA to adopt thresholds within 18 months and a plan within a year thereafter. It also included a finding that temporary halts on development were necessary to preserve the region's capacity for future development consistent with the ultimate plan. TRPA enacted Ordinance 81-5 in June 1981 after concluding it could not meet the original deadlines, and later adopted Resolution 83-21 when no plan was in place by August 1983. Petitioners, including the Tahoe-Sierra Preservation Council representing about 2,000 owners and a class of approximately 400 individual owners of vacant lots purchased before 1980 primarily for building single-family homes, filed parallel actions in federal courts in Nevada and California shortly after the 1984 plan was adopted. The suits were consolidated in the District of Nevada. The District Court found that the moratoria constituted categorical takings under Lucas because they temporarily deprived owners of all economically viable use. The Ninth Circuit reversed that determination. The Ninth Circuit held that the temporary nature of the regulations meant no categorical taking had occurred and that Penn Central analysis applied, though petitioners had not challenged the District Court's Penn Central findings. The Supreme Court granted certiorari to address whether the moratoria effected per se takings.
View caseA developer acquired tidal wetlands already subject to common-law nuisance rules against filling that would flood neighboring parcels. After a state permit denial eliminated all economic use, the court held the restriction was a background principle inhering in title, so no compensation was owed.
In 1988 Congress enacted the Indian Gaming Regulatory Act to provide a statutory basis for the operation of gaming by Indian tribes. The Act divides gaming on Indian lands into three classes. Class III gaming includes slot machines, casino games, banking card games, dog racing, and lotteries. Such gaming is lawful only when conducted in conformance with a Tribal-State compact entered into by the Indian tribe and the State. The Act imposes upon the States a duty to negotiate in good faith with an Indian tribe toward the formation of such a compact. It authorizes a tribe to bring suit in federal court against a State in order to compel performance of that duty. The Seminole Tribe of Florida requested that the State of Florida enter into negotiations for a compact governing class III gaming on the Tribe's lands. When the State refused to negotiate, the Tribe filed suit in September 1991 in the United States District Court for the Northern District of Florida against the State and its Governor, Lawton Chiles. The Tribe invoked jurisdiction under 25 U.S.C. § 2710(d)(7)(A), as well as 28 U.S.C. §§ 1331 and 1362. It alleged that respondents had refused to enter into any negotiation for inclusion of certain gaming activities in a tribal-state compact, thereby violating the requirement of good faith negotiation contained in § 2710(d)(3). The State moved to dismiss the complaint, arguing that the suit violated the State's sovereign immunity from suit in federal court. The District Court denied the motion. On interlocutory appeal, the Court of Appeals for the Eleventh Circuit reversed. It held that the Eleventh Amendment barred the Tribe's suit against the State and that the doctrine of Ex parte Young did not permit a suit against the Governor to enforce the statutory duty. The Eleventh Circuit remanded with directions to dismiss the suit. The Supreme Court granted certiorari in 1995 to consider whether the Eleventh Amendment prevents Congress from authorizing suits by Indian tribes against States for prospective injunctive relief to enforce legislation enacted pursuant to the Indian Commerce Clause and whether the Ex parte Young doctrine permits suits against a State's Governor for such relief.
View caseChevron challenged a Hawaii rent-control statute limiting gasoline dealers' returns. The Court clarified that background principles of property law determine whether a regulation effects a taking, separate from any inquiry into the government's purpose or the owner's expectations.
In 1997, the State of Hawaii had a highly concentrated wholesale oil market due to its small size and isolation over 1,600 miles from the mainland, with only two refineries and six gasoline wholesalers operating in the state. Chevron U.S.A. Inc. was the largest refiner and marketer, controlling 60 percent of the in-state gasoline market and 30 percent of the wholesale market on Oahu. Gasoline was sold at retail through approximately 300 service stations, about half leased by oil companies to independent lessee-dealers. Chevron operated 64 such lessee-dealer stations under arrangements where it leased land, constructed stations, and leased them to dealers while setting wholesale prices and requiring supply contracts. In June 1997, the Hawaii Legislature enacted Act 257, which capped the rent oil companies could charge lessee-dealers at 15 percent of gross profits from gasoline sales plus 15 percent of other product sales, and imposed other restrictions on station ownership. Thirty days after enactment, Chevron filed suit in the United States District Court for the District of Hawaii against the Governor and Attorney General, challenging the rent cap. The parties stipulated that the cap would reduce aggregate rent on 11 of Chevron's stations by about $207,000 per year but allow increases on the remaining 53, potentially raising overall rental income by nearly $1.1 million annually, and that Chevron had not recovered station maintenance costs through rent alone over the past 20 years. The District Court granted summary judgment to Chevron. On appeal, the Ninth Circuit vacated the judgment and remanded the case. After a one-day bench trial featuring competing expert economists, the District Court entered judgment for Chevron. The Ninth Circuit affirmed, and the Supreme Court granted certiorari in 2004.
View caseAn owner acquired shoreline parcels already encumbered by the state's public-trust doctrine reserving the wet-sand area for public use. A later regulation enforcing that line eliminated all development. Because the doctrine was a background principle at acquisition, no total-taking compensation was required.
Lexmark International, Inc. manufactures and sells laser printers along with the toner cartridges designed exclusively for those printers. It introduced a Prebate program that offered customers a 20-percent discount on new cartridges if they agreed to return the empty cartridges to Lexmark once used. The program terms were communicated to consumers through notices printed on the toner-cartridge boxes. Static Control Components, Inc. manufactures and sells components necessary for remanufacturers to refurbish used Lexmark toner cartridges. Static Control developed a microchip that could mimic the microchip in Lexmark Prebate cartridges, enabling remanufacturers to refurbish and resell those cartridges after replacing the original chip. In 2002 Lexmark sued Static Control alleging violations of the Copyright Act and the Digital Millennium Copyright Act. Static Control counterclaimed under section 43(a) of the Lanham Act, alleging that Lexmark misled end-users into believing they are legally bound by the Prebate terms. Static Control further alleged that Lexmark sent letters to remanufacturers falsely advising that it was illegal to sell refurbished Prebate cartridges and to use Static Control products. Static Control alleged that these statements caused it lost sales and damage to its business reputation. The district court granted Lexmark’s motion to dismiss the Lanham Act counterclaim on prudential standing grounds. The Sixth Circuit reversed after applying the reasonable-interest test. The Supreme Court granted certiorari to decide the appropriate analytical framework.
View caseA total deprivation does not require compensation if the prohibited use was already barred by background principles of state nuisance or property law that existed when the owner acquired title. These principles are treated as inherent limitations already present in the owner's bundle of rights.
No. A later purchaser may still challenge a regulation, but any background principles already in force at the time of the original acquisition remain available to the state as a defense. Notice of existing rules does not itself create new background principles.
Traditional short-term moratoria generally do not eliminate all economic use and therefore fall outside Lucas. Even longer pauses may be shielded if they reflect longstanding implied limitations already part of state property law.
Examples include adverse possession, easements, riparian rights, navigational servitudes, public trust doctrines, and common-law nuisance rules that predate acquisition. These limitations are viewed as already embedded in title rather than newly imposed by regulation.
…rendered petitioner's lots valueless must be accepted, and the South Carolina Supreme Court must determine on remand whether any background principles of state property or nuisance law would have prohibited the uses petitioner now intends. Pp. 1014-1032. (a) Early in this Court's takings jurisprudence, it was determined that government…