In 1986, Lucas bought 2 residential lots on the beach in South Carolina. He paid $975,000 for the two beachfront lots. The neighborhood was already developed with large beach houses (see diagram and pictures at above link), and Lucas wished to build a single-family home on each of his two lots.
In 1988, South Carolina enacted the Beachfront Management Act which barred Lucas "from erecting any permanent habitable structures on his two parcels." (casebook p. 836). The Act basically required Lucas to leave the two lots in their natural (undeveloped) state. As Justice Blackmun put it in his dissent, Lucas was allowed to picnic, camp, swim, and (in my words) tiptoe through the tulips on his land, but he was not allowed to construct a beach house as all his neighbors had already done. Blackmun also pointed out that Lucas could post a guard to walk the boundaries of his lots and "exclude others" from trespassing. Finally, he might also be able to sell his lots to his neighbors who might wish to have a larger yard for their already developed properties. (casebook p. 845). How much would his neighbor likely pay for a lot that could not be developed in any way? $450,000? $250,000? $10,000? $5,000?
So, is this heavy restriction on Lucas's two lots a taking requiring just compensation? Is it a categorical taking that requires compensation? If not, how would the Penn Central "too far/reasonable-investment-backed expectations test come out?
