High Court Backs Compensation for Loss of Land Rights : Property: Justices rule that a state must prove it is blocking development to prevent public harm or pay the owner for his sacrifice.

WASHINGTON —  In a decision widely anticipated both by property rights advocates and environmentalists, the Supreme Court on Monday made it easier for property owners to win compensation when government forbids them to develop their land.

Officials can prevent development without compensation if the land use would be a “nuisance” and cause clear harm to others, the court said, but they cannot refuse compensation simply because banning the development would benefit the public.

“When the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good,” he must be compensated for his loss, Justice Antonin Scalia wrote for the majority.

The 6-3 decision reverses a ruling by the South Carolina Supreme Court, which found that no compensation was owed to a man who paid $975,000 for two beachfront lots in 1986 but was blocked two years later by a new state law from building on them.

Returning the case (Lucas vs. South Carolina Coastal Council, 91-453) to the state for possible further action, the high court said that South Carolina would have to do more than demonstrate that banning construction would benefit the public interest--in this case, preserving the shoreline from erosion.

Instead, Scalia said, the state would have to show that the development would constitute a public nuisance, that is, actively do harm.

In a concurring opinion, Justice Anthony M. Kennedy wrote that a key test of compensation is whether the deprivation of property “is contrary to reasonable, investment-backed expectations” by the property owner.

The sharply circumscribed opinion was hailed as a victory by both sides in the philosophical dispute over ownership rights versus public interest.

In a prepared statement, Interior Secretary Manuel Lujan Jr. said: “For too long, governments at every level have taken land or water for special purposes and left landowners high and dry with empty pockets. Now they will have to be fairly compensated.”

Similarly, American Farm Bureau Federation President Dean Kleckner said that the decision “delivers a message to regulators that they have gone too far in taking private property without awarding just compensation to landowners.”

But environmentalists, who had feared that a court ruling might sharply inhibit efforts to protect wetlands and combat beach erosion, hailed the decision because it was closely confined to the South Carolina law.

Glenn Sugameli, an attorney for the National Wildlife Federation, said that he sees the ruling as “a major setback to the special interest groups that . . . fraudulently claim that they are wise users of natural resources. Not even a conservative court accepts the extreme argument that property owners must always be compensated whenever regulations designed to protect the public affect the use or value of property.”

The case leading to Monday’s opinion arose from David H. Lucas’ 1986 purchase of two lots on the Isle of Palms, a barrier island near Charleston, S.C.

Since the late 1970s, Lucas had been a residential developer in the area. He paid $975,000 for the two parcels and planned to build single-family homes on them.

But in 1988, the South Carolina Legislature passed the Beachfront Management Act, designed to protect the state’s coastal area from overdevelopment and erosion. Under that law, no building was permitted on land subject to beach erosion. Overnight, Lucas’ lots had become virtually worthless.

Lucas filed suit, relying on the Fifth Amendment, which prohibits the taking of private property for public use without just compensation.

The lower court ordered that he be paid $1.23 million. But the state Supreme Court overturned that decision on grounds that the government need not pay compensation when it seeks “to prevent serious public harm,” in this instance to unstable coastline.

In a sharp dissent from the majority opinion on Monday, Justice Harry A. Blackmun said that with the decision “the court launches a missile to kill a mouse.”

The majority, he said, had relied on “an unreviewed (and implausible) state trial court finding” to grant a review of whether compensation must be paid in cases where state actions block the economic use of real estate.”

Scalia’s opinion was joined by Chief Justice William H. Rehnquist and Justices Byron R. White, Sandra Day O’Connor and Clarence Thomas. Justice John Paul Stevens also dissented, saying there is an inherent investment risk when people buy property likely to be subject to government regulation. Justice David H. Souter said in a separate statement that the court should have refrained from deciding the case for technical reasons.

Passage of South Carolina’s Beachfront Management Act touched off a spate of lawsuits, and the Lucas case, best known among them, had become a rallying point for a property rights movement dedicated to the proposition that government regulation, spurred by the environmental movement, is running rampant.