CRS Annotated Constitution
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When Property Is Taken
The issue whether one’s property has been “taken” with the consequent requirement of just compensation can hardly arise when government institutes condemnation proceedings directed to it. Where, however, physical damage results to property because of government action, or where regulatory action limits activity on the property or otherwise deprives it of value, whether there has been a taking in the Fifth Amendment sense becomes critical.
Government Activity Not Directed at the Property.—The older cases proceeded on the basis that the requirement of just compensation for property taken for public use referred only to “direct appropriation, and not to consequential injuries resulting from[p.1381]the exercise of lawful power.”236 Accordingly, a variety of consequential injuries were held not to constitute takings: damage to abutting property resulting from the authorization of a railroad to erect tracts, sheds, and fences over a street;237 similar deprivations, lessening the circulation of light and air and impairing access to premises, resulting from the erection of an elevated viaduct over a street, or resulting from the changing of a grade in the street.238 Nor was government held liable for the extra expense which the property owner must obligate in order to ward off the consequence of the governmental action, such as the expenses incurred by a railroad in planking an area condemned for a crossing, constructing gates, and posting gatemen,239 or by a landowner in raising the height of the dikes around his land to prevent their partial flooding consequent to private construction of a dam under public licensing.240
But the Court also decided long ago that land can be “taken” in the constitutional sense by physical invasion or occupation by the government, as occurs when government floods land.241 A later formulation was that “[p]roperty is taken in the constitutional sense when inroads are made upon an owner’s use of it to an extent that, as between private parties, a servitude has been acquired either by agreement or in course of time.”242 It was thus held that the government had imposed a servitude for which it must compensate the owner on land adjoining its fort when it repeatedly fired the guns at the fort across the land and had established a fire control service there.243 In two major cases, the Court held that the lessees or operators of airports were required to compensate the owners of adjacent land when the noise, glare, and fear of injury occasioned by the low altitude overflights during takeoffs and landings made the land unfit for the use to which the owners had applied it.244 Eventually, the term “inverse condemnation” came to[p.1382]be used to refer to such cases where the government has not instituted formal condemnation proceedings, but instead the property owner has sued for just compensation, claiming that governmental action or regulation has “taken” his property.245
Navigable Waters.—The repeated holdings that riparian ownership is subject to the power of Congress to regulate commerce constitute an important reservation to the developing law of liability in the taking area. When damage results consequentially from an improvement to a river’s navigable capacity, or from an improvement on a nonnavigable river designed to affect navigability elsewhere, it is generally not a taking of property but merely an exercise of a servitude to which the property is always subject.246 This exception does not apply to lands above the ordinary high–water mark of a stream,247 hence is inapplicable to the damage the Government may do to such “fast lands” by causing overflows, by erosion, and otherwise, consequent on erection of dams or other improvements.248 And, when previously nonnavigable waters are made navigable by private investment, government may not, without paying compensation, simply assert a navigation servitude and direct the property owners to afford public access.249
Regulatory Takings.—While it is established that government may take private property, with compensation, to promote the public interest, that interest also may be served by regulation of property use pursuant to the police power, and for years there was broad dicta that no one may claim damages due to a police regulation designed to secure the common welfare, especially in the[p.1383]area of health and safety regulations.250 “The distinguishing characteristic between eminent domain and the police power is that the former involves the taking of property because of its need for the public use while the latter involves the regulation of such property to prevent the use thereof in a manner that is detrimental to the public interest.”251 But regulation may deprive an owner of most or all beneficial use of his property and may destroy the values of the property for the purposes to which it is suited.252 The older cases flatly denied the possibility of compensation for this diminution of property values,253 but the Court in 1922 established as a general principle that “if regulation goes too far it will be recognized as a taking.”254
In the Mahon case, Justice Holmes for the Court, over Justice Brandeis’ vigorous dissent, held unconstitutional a state statute prohibiting subsurface mining in regions where it presented a danger of subsidence for homeowners. The homeowners had purchased by deeds which reserved to the coal companies ownership of subsurface mining rights and which held the companies harmless for damage caused by subsurface mining operations. The statute thus gave the homeowners more than they had been able to obtain through contracting, and at the same time deprived the coal companies of the entire value of their subsurface estates. The Court observed that “[f]or practical purposes, the right to coal consists in the right to mine,” and that the statute, by making it “commercially impracticable to mine certain coal,” had essentially “the same effect for constitutional purposes as appropriating or destroying it.”255 The regulation, therefore, in precluding the companies from[p.1384]exercising any mining rights whatever, went “too far.”256 However, when presented 65 years later with a very similar restriction on coal mining, the Court upheld it in Keystone Bituminous Coal Ass’n v. DeBenedictis.257 Unlike its precursor, the Court explained, the newer law “does not merely involve a balancing of the private economic interests of coal companies against the private interests of the surface owners.”258 Instead, the state had identified “important public interests” (e.g., conservation, protection of water supplies, preservation of land values for taxation) and had broadened the law to apply regardless of whether the surface and mineral estates were in separate ownership. A second factor distinguishing Keystone from Mahon, the Court explained, was the absence of proof that the new subsidence law made it “commercially impracticable” for the coal companies to continue mining.259 The Court rejected efforts to define separate segments of property for taking purposes—either the coal in place under protected structures, or the “support estate” recognized under Pennsylvania law.260 Economic impact is measured by reference to the property as a whole; consideration of the coal placed off limits to mining as merely part of a larger estate and not as a separate estate undermined the commercial impracticability argument.
The Court had been early concerned with the imposition upon one or a few individuals of the costs of furthering the public interest.261 But it was with respect to zoning that the Court first experienced some difficulty in this regard. The Court’s first zoning case[p.1385]involved a real estate company’s challenge to a comprehensive municipal zoning ordinance, alleging that the ordinance prevented development of its land for industrial purposes and thereby reduced its value from $10,000 an acre to $2,500 an acre.262 Acknowledging that zoning was of recent origin, the Court observed that it must find its justification in the police power and be evaluated by the constitutional standards applied to exercises of the police power. After considering traditional nuisance law, the Court determined that the public interest was served by segregation of incompatible land uses and the ordinance was thus valid on its face; whether its application to diminish property values in any particular case was also valid would depend, the Court said, upon a finding that it was not “clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.”263 A few years later the Court, again relying on due process rather than taking law, did invalidate the application of a zoning ordinance to a tract of land, finding that the tract would be rendered nearly worthless and that to exempt the tract would impair no substantial municipal interest.264 But then the Court withdrew from the land–use scene for about 50 years, leaving the States and their municipalities mostly free to develop increasingly more comprehensive zoning techniques.265
As governmental regulation of property has expanded over the years—in terms of zoning and land use controls, environmental regulations, and the like—the Court never developed, as it admitted, a “set formula to determine where regulation ends and taking begins.”266 Rather, as one commentator remarked, its decisions constitute a “crazy quilt pattern” of judgments.267 Nonetheless, the[p.1386]Court has now formulated general principles that guide many of its decisions in the area.
In Penn Central Transportation Co. v. City of New York,268 the Court, while cautioning that regulatory takings cases require “essentially ad hoc, factual inquiries,” nonetheless laid out general guidance for determining whether a regulatory taking has occurred. “The economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with reasonable investment–backed expectations are . . . relevant considerations. So too, is the character of the governmental action. A ‘taking’ may more readily be found when the interference with property can be characterized as a physical invasion by government than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good.”269
At issue in Penn Central was the City’s landmarks preservation law, as applied to deny approval to construct a 53–story office building atop Grand Central Terminal. The Court upheld the landmarks law against Penn Central’s takings claim through application of the principles set forth above. The economic impact on Penn Central was considered: the Company could still make a “reasonable return” on its investment by continuing to use the facility as a rail terminal with office rentals and concessions, and the City specifically permitted owners of landmark sites to transfer to other sites the right to develop those sites beyond the otherwise permissible zoning restrictions, a valuable right which mitigated the burden otherwise to be suffered by the owner. As for the character of the governmental regulation, the Court found the landmarks law to be an economic regulation rather than a governmental appropriation of property, the preservation of historic sites being a permissible goal and one which served the public interest.270
Justice Holmes began his analysis in Mahon with the observation that “[g]overnment hardly could go on if to some extent values incident to property could not be diminished without paying for every . . . change in the general law,”271 and Penn Central’s economic impact standard also leaves ample room for recognition of this principle. Thus, the Court can easily hold that a mere permit requirement does not amount to a taking,272 nor does a simple rec[p.1387]ordation requirement.273 The tests become more useful, however, when compliance with regulation becomes more onerous.
Several times the Court has relied on the concept of “distinct (or “reasonable”) investment–backed expectations” first introduced in Penn Central. In Ruckelshaus v. Monsanto Co.,274 the Court used the concept to determine whether a taking had resulted from the government’s disclosure of trade secret information submitted with applications for pesticide registrations. Disclosure of data that had been submitted from 1972 to 1978, a period when the statute guaranteed confidentiality and thus “formed the basis of a reasonable investment–backed expectation,” would have destroyed the property value of the trade secret and constituted a taking.275 Following 1978 amendments setting forth conditions of data disclosure, however, applicants voluntarily submitting data in exchange for the economic benefits of registration had no reasonable expectation of additional protections of confidentiality.276 Relying less heavily on the concept but rejecting an assertion that reasonable investment backed–expectations had been upset, the Court in Connolly v. Pension Benefit Guaranty Corp.277 upheld retroactive imposition of liability for pension plan withdrawal on the basis that employers had at least constructive notice that Congress might buttress the legislative scheme to accomplish its legislative aim that employees receive promised benefits.
Supplement: [P. 1387, add to text at end of sentence containing n.277:]
However, where a statute imposes severe and “substantially disproportionate” retroactive liability based on conduct several decades earlier, on parties that could not have anticipated the liability, a taking (or violation of due process) may occur. On this rationale, the Court in Eastern Enterprises v. Apfel 34 struck down the Coal Miner Retiree Health Benefit Act’s requirement that companies formerly engaged in mining pay miner retiree health benefits, as applied to a company that spun off its mining operation in 1965 before collective bargaining agreements included an express promise of lifetime benefits.
In the course of its opinion in Penn Central the Court rejected the principle that no compensation is required when regulation bans a noxious or harmful effect of land use.280 The principle, it had been contended, followed from several earlier cases, including Goldblatt v. Town of Hempstead.281 In that case, after the town had expanded around an excavation used by a company for mining sand and gravel, the town enacted an ordinance that in effect terminated further mining at the site. Declaring that no compensation was owed, the Court stated that “[a] prohibition simply upon the use of property for purposes that are declared, by valid legislation, to be injurious to the health, morals, or safety of the community, cannot, in any just sense, be deemed a taking or an appropriation of property for the public benefit. Such legislation does not disturb the owner in the control or use of his property for lawful purposes, nor restrict his right to dispose of it, but is only a declaration by the State that its use by any one, for certain forbidden purposes, is prejudicial to the public interests.”282 In Penn Central, however, the Court denied that there was any such test and that prior cases had turned on the concept. “These cases are better understood as resting not on any supposed ‘noxious’ quality of the prohibited uses but rather on the ground that the restrictions were reasonably related to the implementation of a policy—not unlike historic preservation—expected to produce a widespread public benefit and applicable to all similarly situated property.”283 More recently, in Lucas[p.1389]v. South Carolina Coastal Council,284 the Court explained “noxious use” analysis as merely an early characterization of police power measures that do not require compensation. “[N]oxious use logic cannot serve as a touchstone to distinguish regulatory ‘takings’—which require compensation—from regulatory deprivations that do not require compensation.”285
Penn Central is not the only guide to when a regulatory taking has occurred; other criteria have emerged from other cases before and after Penn Central. The Court has long recognized a per se takings rule for physical invasions: when government permanently286 occupies or authorizes someone else to occupy property, the action constitutes a taking and compensation must be paid regardless of the public interests served by the occupation or the extent of damage to the parcel as a whole.287 The modern case dealt with a law that required landlords to permit a cable television company to install its cable facilities upon their buildings; although the equipment occupied only about 1 1/2 cubic feet of space on the exterior of each building and had only de minimis economic impact, a divided Court held that the regulation authorized a permanent physical occupation of the property and thus constituted a taking.288
A second per se taking rule is of more recent vintage. Land use controls constitute takings, the Court stated in Agins v. City of Tiburon, if they do not “substantially advance legitimate govern[p.1390]mental interests,”289 or if they deny a property owner “economically viable use of his land.”290 This second Agins criterion creates a categorical rule: “when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle, he has suffered a taking.”291 The only exceptions, the Court explained in Lucas, are for those restrictions that come with the property as title encumbrances or other legally enforceable limitations. Regulations “so severe” as to prohibit all economically beneficial use of land “cannot be newly legislated or decreed (without compensation), but must inhere in the title itself, in the restrictions that background principles of the State’s law of property and nuisance already place upon land ownership. A law or decree with such an effect must, in other words, do no more than duplicate the result that could have been achieved in the courts— by adjacent land owners (or other uniquely affected persons) under the State’s law of private nuisance, or by the State under its complementary power to abate [public] nuisances . . . , or otherwise.”292 Thus, while there is no broad “noxious use” exception separating police power regulations from takings, there is a much narrower exception based on the law of nuisance and related principles.
The “or otherwise” reference, the Court explained in Lucas,293 was principally directed to cases holding that in times of great public peril, such as war, spreading municipal fires, and the like, property may be taken and destroyed without necessitating compensation. Thus, in United States v. Caltex,294 the owners of property de[p.1391]stroyed by retreating United States armies in Manila during World War II were held not entitled to compensation, and in United States v. Central Eureka Mining Co.,295 the Court held that a federal order suspending the operations of a nonessential gold mine for the duration of the war in order to redistribute the miners, unaccompanied by governmental possession and use or a forced sale of the facility, was not a taking entitling the owner to compensation for loss of profits. Finally, the Court held that when federal troops occupied several buildings during a riot in order to dislodge rioters and looters who had already invaded the buildings, the action was taken as much for the owners’ benefit as for the general public benefit and the owners must bear the costs of the damage inflicted on the buildings subsequent to the occupation.296
The first prong of the Agins test,297 focusing on whether land use controls “substantially advance legitimate governmental interests,” was applied in Nollan v. California Coastal Commission.298 There the Court held that extraction of a public access easement across a strip of beach as a condition for a permit to enlarge a beachfront home did not “substantially advance” the state’s legitimate interest in preserving public view of the beach from the street in front of the lot. The easement instead was designed to allow the public to walk back and forth along the beach between two public beaches. “[U]nless the permit condition serves the same governmental purpose as the development ban,” the Court concluded, “the building restriction is not a valid regulation of land use but ‘an out–and–out plan of extortion.”’299
Supplement: [P. 1391, delete remainder of paragraph after n.299 and substitute the following:]
“If [the government] wants an easement across the Nollans’ property, it must pay for it.” 35 Because the Nollan Court found no essential nexus between the permit condition and the asserted government interest, it did not address whether there is any additional requirement when such a nexus does exist, as is often the case with land dedications and other permit conditions.36 Seven years later, however, the Court announced in Dolan v. City of Tigard 37 that exaction conditions attached to development permits must be related to the impact of the proposed development not only in nature but also in degree. Government must establish a “rough proportionality” between such conditions and the developmental impacts at which they are aimed.38 The Court ruled in Dolan that the city’s conditioning of a building permit for expansion of a hardware store on the store owner’s dedication of a portion of her land for a floodplain/recreational easement and for an adjacent pedestrian/bicycle pathway amounted to a taking. The requisite nexus existed between the city’s interest in flood control and imposition of the floodplain easement, and between the interest in minimizing traffic congestion and the required bike path dedication, but the Court found that the city had not established a rough proportionality of degree. The floodplain/recreational easement not only prevented the property owner from building in the floodplain—a legitimate constraint—but also deprived her of the right to exclude others. And the city had not adequately demonstrated that the bike path was necessitated by the additional vehicle and bicycle trips that would be generated by the applicant’s development.39
Nollan and Dolan occasioned considerable debate over the breadth of what became known as the “heightened scrutiny” test. The stakes were plainly high, in that the test, where it applies, lessens the traditional judicial deference to local police power and places the burden of proof as to rough proportionality on the government. In City of Monterey v. Del Monte Dunes at Monterey, Ltd.,40 the Court unanimously confined the Dolan rough proportionality test—and, by implication, the Nollan nexus test—to the exaction context that gave rise to those cases. For certain, then, is that City of Monterey bars application of rough proportionality to outright denials of development. Still unclear, however, is whether the Court meant to place outside Dolan exactions of a purely monetary nature, in contrast with the dedication conditions involved in Nollan and Dolan.41
Following the Penn Central decision, the Court grappled with the issue of the appropriate remedy property owners should pursue in objecting to land use regulations.304 The remedy question arises[p.1393]because there are two possible constitutional objections to be made to regulations that go “too far” in reducing the value of property or which do not substantially advance a legitimate governmental interest. The regulation may be invalidated as a denial of due process, or may be deemed a taking requiring compensation, at least for the period in which the regulation was in effect. The Court finally resolved the issue in First English Evangelical Lutheran Church v. County of Los Angeles, holding that, when land use regulation is held to be a taking, compensation is due for the period of implementation prior to the holding.305 The Court recognized that, even though government may elect in such circumstances to discontinue regulation and thereby avoid compensation for a permanent property deprivation, “no subsequent action by the government can relieve it of the duty to provide compensation for the period during which the taking was effective.”306
Supplement: [P. 1393, add to text following n.306:]
Outside the land–use context, however, the Court has now recognized a limited number of situations where invalidation, rather than compensation, remains the appropriate takings remedy.42
The process of describing general criteria to guide resolution of regulatory taking claims, begun in Penn Central, has reduced to some extent the ad hoc character of takings law. It is nonetheless true that not all cases fit neatly into the categories delimited to date, and that still other cases that might be so categorized are explained in different terms by the Court. The overriding objective, the Court frequently reminds us, is to vitalize the Fifth Amendment’s protection against government “forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”307 Thus a taking may be found if the effect of regulation is enrichment of the government itself rather than adjustment of the benefits and burdens of economic life in promotion of the public good.308 Similarly, the Court looks[p.1394]askance at governmental efforts to secure public benefits at a landowner’s expense—“government actions that may be characterized as acquisitions of resources to permit or facilitate uniquely public functions.”309
On the other side of the coin, the nature as well as the extent of property interests affected by governmental regulation sometimes takes on importance. The Court emphasizes that the taking of one “strand” or “stick” in the “bundle” of property rights does not necessarily constitute a taking as long as the property as a whole retains economic viability,310 but some strands are more important than others. The right to exclude others from one’s land is so basic to ownership that extinguishment of this right ordinarily constitutes a taking.311 Similarly valued is the right to pass on property to one’s heirs.312
Supplement: [P. 1394, add to text after n.312:]
Nor must property have realizable net value to fall under the Takings Clause.43
Even though takings were found or assumed in the recent decisions in First English, Nollan, and Lucas, considerable obstacles remain for future litigants challenging regulatory restrictions on land use. As suggested above, regulatory takings will most likely remain difficult to establish in spite of Nollan. The Lucas fact situation, in which governmental regulation rendered property “valueless,” may prove to be relatively rare (although how the “segmentation” issue313 is handled may prove pivotal in this regard). And even if a taking can be established, the Court cautioned in First English that its holding was limited “to the facts presented [a taking was assumed] and [did] not deal with the quite different questions that would arise in the case of normal delays in obtaining building per[p.1395]mits, changes in zoning ordinances, variances, and the like.”314
Supplement: [P. 1395, delete remainder of paragraph after n.314 and substitute the following new paragraph:]
Failure to incur such administrative (and judicial) delays can result in dismissal of an as–applied taking claim based on ripeness doctrine, an area of takings law that the Court has developed extensively since Penn Central. In the leading decision of Williamson County Regional Planning Commission v. Hamilton Bank,44 the Court announced the canonical two–part ripeness test for takings actions brought in federal court against state and local agencies. First, for an as–applied challenge, the property owner must obtain from the regulating agency a “final, definitive position” regarding how it will apply its regulation to the owner’s land. Second, the owner must exhaust any possibilities for obtaining compensation from state fora before coming to federal court. Thus, the claim in Williamson County was found unripe because the plaintiff had failed to seek a variance (first prong of test), and had not sought compensation from the state courts in question even though they recognized inverse condemnation claims (second prong). Similarly, in MacDonald, Sommer & Frates v. County of Yolo,45 a final decision was found lacking where the landowner had been denied approval for one subdivision plan calling for intense development, but that denial had not foreclosed the possibility that a scaled–down (though still economic) version would be approved.46 In a somewhat different context, a taking challenge to a municipal rent control ordinance was considered “premature” in the absence of evidence that a tenant hardship provision had ever been applied to reduce what would otherwise be considered a reasonable rent increase.47 Facial challenges dispense with the Williamson County final decision prerequisite, though at great risk to the plaintiff in that without pursuing administrative remedies, a claimant often lacks evidence that a statute has the requisite economic impact on his or her property.48
Supplement: [P. 1387, add to n.277 after initial citation:]
Accord, Concrete Pipe & Products v. Construction Laborers Pension Trust, 508 U.S. 602, 645–46 (1993) .
Supplement: [P. 1394, change n.312 to read:]
Hodel v. Irving, 481 U.S. 704 (1987) (complete abrogation of the right to pass on to heirs fractionated interests in lands constitutes a taking); Babbitt v. Youpee, 519 U.S. 234 (1997) (same result based on “severe” restriction of the right).
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