Justices Rule On Property Rights, N.Y.C. Religious School

IN a significant ruling for property owners, on June 24 the United States Supreme Court limited the authority of local governments to take private land for environmental purposes in exchange for granting a building or other land-use permit.

When a city or county board requires a property owner, as a condition for obtaining a land-use permit, to dedicate part of his land to drainage control or public green space, the government must demonstrate a ``rough proportionality'' between the exacted requirements and the actual environmental harms to be alleviated, the high court ruled in a 5-to-4 decision.

Property-rights advocates were jubilant. Chip Mellor, president of the Institute of Justice in Washington, says: ``Especially in these days of tight budgets, governments are more and more trying to impose the costs of public improvements on property owners with the flimsiest of excuses. Now the Supreme Court has said that government cannot, in this ad hoc manner, make individual landowners assume large burdens that belong to all the taxpayers.''

As happens each June, High Court decisions are coming out in basketfuls as the justices pack up for their summer recess. Among other actions, the court:

* Ruled that New York State violated the separation of church and state when lawmakers created a special public school district for a community of Hasidic Jews. The creation of the Kiryas Joel school district for disabled children crosses the line from a permissible accommodation of religion ``to impermissible establishment,'' the court said in a 6-to-3 ruling. ``[N]eutrality as among religions must be honored,'' Justice David Souter wrote.

* Ruled in an Oregon case that a state constitution or law cannot prohibit all judicial review of punitive-damage awards in personal-injury cases to determine if punitive damages - which are intended to punish a defendant and deter future wrongdoing rather than to compensate the injured person - are excessive. Such review is required to satisfy ``due process,'' the justices said. But the court, which in a series of cases has upheld high punitive damages, offered no further guidance on when such awards might be excessive.

* Upheld the ``unitary'' method used by California and six other states in taxing the profits of multinational corporations. Under this system, which generally results in higher taxes for corporations, a state calculates a corporation's income taxes according to a formula that takes account of a corporation's worldwide earnings, not just the earnings of whatever subsidiaries do business in the state.

In the land-use case, Dolan v. City of Tigard, Florence Dolan, the owner of an electrical and plumbing-supply store in a suburb of Portland, Ore., petitioned the city for approval to expand her store and parking lot. The city agreed, on the condition that she turn over about 10 percent of her 1.7-acre lot for public use, especially a storm-drainage channel and a pedestrian and bicycle path. But the city made no serious attempt to relate these requirements to public needs that would arise from Mrs. Dolan's proposed improvements. IN his majority opinion in favor of Dolan, Chief Justice William Rehnquist wrote: ``The city must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development.'' The ruling both shifted the burden of proof to the city and raised the degree of proof needed to justify the regulation.

This approach more closely parallels the Supreme Court's scrutiny of government restrictions on civil rights than the more lax oversight traditionally accorded economic regulations.

In addition to the specific protection it gives landowners, the decision is important ``because it raises the level of judicial scrutiny accorded property rights,'' says Prof. Douglas Kmiec of Notre Dame Law School, who has written about the case. ``The decision partly closes the gap between the judicial treatment of civil liberties and of economic rights under the Constitution.''

Mr. Mellor, whose Institute of Justice filed a brief supporting the property owner, agrees: ``This means that private-property rights are no longer given second-class treatment under the Bill of Rights.''