Amdt5.9.5 Early Jurisprudence on Regulatory Takings

Fifth Amendment:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

While government may take private property, with compensation, to promote the public interest, government may also regulate property use pursuant to its police power. For years, regulation designed to secure the common welfare, especially in the area of health and safety, was not considered a “taking.” 1

Regulation, however, 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.2 While early cases denied compensation for this diminution of property values,3 the Court changed direction in its 1922 decision, Pennsylvania Coal Co. v. Mahon. In Mahon, the Court established as a general principle that “if regulation goes too far it will be recognized as a taking.” 4 The majority in Mahon held unconstitutional a state statute prohibiting subsurface mining in regions where it presented a danger of subsidence for homeowners. The homeowners had purchased land, the deeds of which reserved to coal companies ownership of subsurface mining rights and held the companies harmless for damage caused by subsurface mining operations. The statute thus enriched the homeowners and 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” the subsurface estate.5 The regulation, therefore, in precluding the companies from exercising any mining rights whatever, went “too far.” 6 However, when presented sixty-five years later with a similar restriction on coal mining, the Court upheld it, pointing out that, unlike its predecessor, the newer law identified important public interests, and that the plaintiffs had not sufficiently demonstrated diminution of their property interests.7

The Court had long been concerned with the government imposing on one or a few individuals the costs of furthering the public interest.8 This issue has frequently arisen in disputes over zoning regulations. The Court’s first zoning case, Village of Euclid v. Ambler Realty Co., involved a real estate company’s allegation that a comprehensive municipal zoning ordinance prevented development of its land for industrial purposes and thereby reduced its value from $10,000 an acre to $2,500 an acre.9 Acknowledging that zoning was of recent origin, the Court, applying substantive due process analysis instead of takings-based analysis, observed that it must be justified by police power and evaluated by the constitutional standards applied to exercises of police power. After considering traditional nuisance law, the Court determined that the public interest was served by segregating incompatible land uses and the ordinance was thus valid on its face. Instead, a zoning regulation that diminished property values would be unconstitutional only if it were “clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.” 10 A few years later in Nectow v. City of Cambridge, the Court, again relying on due process rather than takings law, invalidated application of a zoning ordinance to a tract of land, finding that the tract would be rendered nearly worthless and that exempting the tract would not impair a substantial municipal interest.11 The Court gave additional attention to this issue in the 1970s as states and municipalities developed more comprehensive zoning techniques.12

As governmental regulation of property has expanded over the years—in terms of zoning and other land use controls, environmental regulations, and the like—the Court has avoided a “set formula to determine where regulation ends and taking begins.” 13 The Court has observed that, “[i]n the near century since Mahon, the Court for the most part has refrained from elaborating this principle through definitive rules” 14 and “[t]his area of the law has been characterized by ‘ad hoc, factual inquiries, designed to allow careful examination and weighing of all the relevant circumstances.’” 15 Nonetheless, the Court has articulated general principles that guide many of its decisions in the area.16 These principles are often referred to as the “Penn Central” framework.

Mugler v. Kansas, 123 U.S. 623, 668–69 (1887). See also The Legal Tender Cases, 79 U.S. (12 Wall.) 457, 551 (1871); Chi., B. & Q. R.R. v. City of Chi., 166 U.S. 226, 255 (1897); Reinman v. Little Rock, 237 U.S. 171 (1915); Omnia Com. Co. v. United States, 261 U.S. 502 (1923); Norman v. Balt. & Ohio R.R., 294 U.S. 240 (1935). back
E.g., Hadacheck v. Sebastian, 239 U.S. 394 (1915) (ordinance upheld restricting owner of brick factory from continuing his use after residential growth surrounding factory made use noxious, even though value of property was reduced by more than 90%); Miller v. Schoene, 276 U.S. 272 (1928) (no compensation due owner’s loss of red cedar trees ordered destroyed because they were infected with rust that threatened contamination of neighboring apple orchards: preferment of public interest in saving cash crop to property interest in ornamental trees was rational). back
Mugler v. Kansas, 123 U.S. 623, 668–69 (1887) (ban on manufacture of liquor greatly devalued plaintiff’s plant and machinery; no taking possible simply because of legislation deeming a use injurious to public health and welfare); Welch v. Swasey, 214 U.S. 91 (1909) (state law limiting maximum height of buildings did not constitute a taking); Corn Refining Products Co. v. Eddy, 249 U.S. 427 (1919) (state law requiring companies to affix labels on product disclosing ingredients was not a taking of plaintiff’s proprietary formula, because there is no constitutional right to sell goods without revealing information to purchasers); Hamilton v. Ky. Distilleries & Warehouse Co., 251 U.S. 146 (1919) (federal statute banning domestic liquor sales during wartime was not a taking); Jacob Ruppert, Inc. v. Caffey, 251 U.S. 264 (1920) (extension of federal ban on liquor to beer sales also did not constitute a taking, despite the ban taking effect immediately); Walls v. Midland Carbon Co., 254 U.S. 300 (1920) (state ban on the use of natural gas for purposes other than heating did not constitute a taking even though it forced a plant to close, because the ban was within the state’s police power to regulate consumption of natural resources). back
Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922). See also Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992) (a regulation that deprives a property owner of all beneficial use of his property requires compensation, unless the owner’s proposed use is one prohibited by background principles of property or nuisance law existing at the time the property was acquired). back
Mahon, 260 U.S. at 414–15. back
Id. at 415. In dissent, Justice Louis Brandeis argued that a restriction imposed to abridge the owner’s exercise of his rights in order to prohibit a noxious use or to protect the public health and safety simply could not be a taking, because the owner retained his interest and his possession. Id. at 416. back
Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470 (1987). back
Nashville, C. & St. L. Ry. v. Walters, 294 U.S. 405 (1935) (government may not require railroad at its own expense to separate the grade of a railroad track from that of an interstate highway). See also Panhandle Co. v. Highway Comm’n, 294 U.S. 613 (1935); Atchison, T. & Santa Fe Ry. v. Pub. Util. Comm’n, 346 U.S. 346 (1953). Compare the Court’s two decisions in Ga. Ry. & Elec. Co. v. City of Decatur, 295 U.S. 165 (1935) and 297 U.S. 620 (1936). back
Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926). back
Id. at 395. See also Zahn v. Bd. of Pub. Works, 274 U.S. 325 (1927). back
Nectow v. City of Cambridge, 277 U.S. 183 (1928). back
Initially, the Court’s return to the land-use area involved substantive due process, not takings. Vill. of Belle Terre v. Boraas, 416 U.S. 1 (1974) (sustaining single-family zoning as applied to group of college students sharing a house); Moore v. City of E. Cleveland, 431 U.S. 494 (1977) (voiding single-family zoning so strictly construed as to bar a grandmother from living with two grandchildren of different children). See also City of Eastlake v. Forest City Enters., 426 U.S. 668 (1976). back
Penn Cent. Transp. Co. v. City of N.Y., 438 U.S. 104, 124 (1978). The phrase appeared first in Goldblatt v. Town of Hempstead, 369 U.S. 590, 594 (1962). back
Murr v. Wisconsin, 137 S. Ct. 1933, 1942 (2017) (rejecting the argument of the owners of two adjoining undeveloped lots that a regulatory taking occurred through the enactment of regulations that forbade improvement or separate sale of the lots). back
Id. (quoting Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency 535 U.S. 302, 322 (2002)). back
While observing that the “central dynamic of the Court’s regulatory takings jurisprudence . . . is its flexibility,” the Court in Murr v. Wisconsin reiterated the “two guidelines . . . for determining when government regulation is so onerous that it constitutes a taking.” Id. at 1942. First, with some qualifications, “'a regulation which denies all economically beneficial or productive use of land will require compensation under the Takings Clause.’” Id. (quoting Palazzolo v. Rhode Island, 533 U.S. 606, 617 (2001)). Second, if “a regulation impedes the use of property without depriving the owner of all economically beneficial use, a taking still may be found based on ‘a complex of factors,’ including (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action.” Id. at 1942–43 (quoting Palazzolo, 533 U.S. at 617). back