Takings

Takings: an Overview

Introduction

When a government actually or constructively takes private property for public use, that government must pay "just compensation" to the property's former owners. Traditionally, there have been two constitutional restrictions on takings:

The government may only take property and re-purpose it for a public use
The private owner of the land must receive just compensation
1. This component has had its share of controversy, because of the difficulty in determining what amount of compensation is "just"
  1. Typically a "just compensation" is determined by an appraisal of the fair market value of the property
    1. However, depending of the size and unique nature of the land, it is often difficult to determine the fair market value

Sources of Law

A taking is when the government uses, regulates, and seizes private property. This action is governed by rules set by legislatures. In addition, the Fifth Amendment requires the government to pay "just compensation" when taking property for public use. This requirement applies to the states as well as the federal government.

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Types of Takings

Many types of government action infringe on private property rights. Accordingly, the Fifth Amendment's compensation requirement is not limited to government seizures of real property. Instead, it extends to all kinds of tangible and intangible property, including but not limited to easements, personal property, contract rights, and trade secrets.

The Fifth Amendment's just compensation rule applies not only to outright government seizures of private property, but also to some government regulations. "Property 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.” United States v. Dickinson, 331 U.S. 745 (1947).

It is not always clear which regulations constitute takings, and why. The government absolutely must compensate property owners for regulations requiring a physical invasion of private property, even if it is a small invasion. On the other hand, the government generally does not need to compensate for the effects of health and safety regulations or simple changes in the law. See the CRS Annotated Constitution for more details.

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Land Use Regulation

Many regulatory takings disputes arise in the context of land use regulation. The Supreme Court does not require government compensation where such regulations "substantially advance[s] legitimate governmental interests," and so long as the regulations do not prevent a property owner from making “economically viable use of his land.” Agins v. City of Tiburon, 447 U.S. 255 (1980).

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Public Purpose

In the past, courts narrowly interpreted the Fifth Amendment to only allow the government to seize property for highways, government offices, military bases, and the like. Now, courts more broadly interpret the amendment to allow the government to seize property if doing so will increase the general public welfare, such as when the government uses eminent domain to seize private property to facilitate a private development that will raise the government's tax revenues. See Kelo v. City of New London, 545 U.S> 469 (2005). Further, the Kelo court determined that a governmental claim of eminent domain is justified if the seizure is rationally related to a conceivable public purpose.

The Kelo decision significantly broadened the government's takings power. This caused significant controversy, and states were quick to act to quell concerns about this expansion of power. In response to Kelo, many states have passed laws which have restricted governments' takings abilities (ex: implementing a stricter definition of what constitutes a "public use," requiring heightened levels of scrutiny to justify an action categorized as a taking, etc).

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How Much Compensation is Just?

Generally, the government must pay the market value of seized property. There are, however, many exceptions. The government need not compensate a property owner for the portion of the property's value created by that government. For example, in United States v. Fuller, 409 U.S. 488 (1973), the Supreme Court held that when the federal government condemned a rancher's grazing land, it did not owe compensation for the portion of the land's value derived from its proximity to adjacent, federally owned grazing land.

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When is a Regulation a Taking?

Sometimes, a government regulation infringes upon private property ownership to such an extent that the regulation can be considered a taking, thus requiring just compensation. The Supreme Court, over a series of regulatory takings cases, has developed a 4-part test to determine whether a regulation is considered to be a taking.

Is the regulation a taking under Loretto?
1. A government regulation is a taking when the government authorizes a permanent physical occupation of real/personal property
Is the regulation a taking under Lucas?
1. The regulation is a taking when the regulation causes the loss of all economically beneficial/productive uses of the land, unless the regulation is justified by background principles of property law/nuisance law
Is the regulation a taking under Nollan-Dolan?
1. The regulation is a taking if the government demands an exaction that lacks a nexus with a legitimate state interest or lacks proportionality to project’s impacts
  1. Exaction – a requirement that the developer provides specified land, improvements, payments, or other benefits to the public to help offset the project’s impacts
Is the regulation a taking under the Penn Central balancing test?
1. Here a court will look at 3 factors:
  1. The character of the governmental action involved in the regulation
    1. If the government's action is a physical action, rather than a “regulatory invasion,” then the action is almost certainly a taking
  2. The extent to which the regulation has interfered with the owner’s reasonable investment-backed expectations for the parcel as a whole
  3. The regulation’s economic impact on the affected prop owner

Noxious Use

Even if a government regulation is deemed a taking, it still may be viewed as justified, as long as it meets the noxious use test, also known as the Mugler-Hadacheck test. Under this test, a regulation adopted under the police power to protect the public health, safety, or welfare is not a taking, even if the taking reduces the value of property.