12.10 Regulatory Takings

• Library: The Virginia Lawyer: A Deskbook for Practitioners (Virginia CLE) (2018 Ed.)

12.10 REGULATORY TAKINGS

12.1001 In General. The area of law governing regulatory takings is complex and evolving. The concept of a regulatory taking of property rights for which the Fifth Amendment to the United States Constitution requires compensation arose in 1922 when the United States Supreme Court recognized that a compensable taking may occur if the government's regulation of property goes "too far." ³⁵⁵ The seminal case in this area is Penn Central Transportation Co. v. New York City, ³⁵⁶ in which the Court set forth a three-part analysis for regulatory taking: (i) the character of the government's actions; (ii) the economic impact on the property owner; and (iii) the extent to which the regulation interferes with distinct investment-back expectations. ³⁵⁷

In 1992, in Lucas v. South Carolina Coastal Council, ³⁵⁸ the Supreme Court identified a test for a regulatory taking requiring compensation for physical possession of property or a regulatory action that deprives the property of "all economically beneficial or productive use." ³⁵⁹ A taking meeting this definition constitutes a "categorical" taking. ³⁶⁰

What if the owner purchases the property knowing it is burdened with the prospect of regulatory restrictions on its use? In City of Virginia Beach v. Bell, ³⁶¹ the Supreme Court of Virginia held that acquiring title with foreknowledge

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of regulatory restriction on the property is a basis for the court's denying the owner compensation for any taking the regulatory restriction may constitute, because the owner took the property subject to...