Compensation for Regulatory Takings: U.s. Supreme Court Sets New Limits
| Publication year | 1988 |
| Pages | 413 |
1988, March, Pg. 413. Compensation for Regulatory Takings: U.S. Supreme Court Sets New Limits
In three recent decisions, the U.S. Supreme Court has significantly altered the law establishing the limits of compensability for governmental land use regulatory takings.
Keystone Bituminous Coal Association v. DeBenedictis ("Keystone")(fn1) was decided in March 1987; First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, California ("First Lutheran")(fn2), and Nollan v. California Coastal Commission ("Nollan")(fn3) were handed down in June 1987. These three decisions have raised as many questions as they have answered. Their full effect on the manner in which state and local governments regulate land development will not be clear for some time.
This article describes in broad outline the facts and holdings of the cases, points out questions raised but not answered by the decisions and makes certain suggestions for local government response in terms of the land use review and development approval process.
The Fifth Amendment to the U.S. Constitution prohibits the taking of private property for public use without "just compensation." State and local governments across the country have struggled to apply this prohibition to their local land use regulatory measures. Landowners and land developers are understandably quick to perceive an uncompensated taking in each setback ordinance, dedication requirement or height limitation. Local governments, responding to demands by citizens that property values be protected and the integrity of communities maintained, continually revise their land use regulatory techniques, all the while hoping that such techniques pass constitutional muster.
Since the early part of this century, the U.S. Supreme Court has been a spectator to the debate. After deciding the landmark cases of Pennsylvania Coal v. Mahon(fn4) and Village of Euclid v. Ambler Realty Corporation,(fn5) the Court embarked upon over a half-century of silence. In Pennsylvania Coal, a surface-support case arising out of coal mining activities in western Pennsylvania, Justice Holmes warned that land use regulation, if it goes too far, could be construed as a taking under the Fifth Amendment. However, in regard to what is "too far," the Court gave little guidance.
In Village of Euclid, the Supreme Court upheld the now familiar concept of zone districts in which certain listed uses were classified as permissible (uses by right), others were allowed upon review (conditional uses, uses by special review), and still others were prohibited. In Village of Euclid, such restrictions, while admittedly limiting the use of land, were held not to violate the Fifth Amendment.
While state and federal courts proceeded to apply the general statements in Pennsylvania Coal and Village of Euclid to the increasingly complex area of public regulation of land development, the Supreme Court kept its own counsel. The Court refused to reach, or stated it was unable to reach, the issue of whether a land use regulation "went too far" and thus became a compensable taking under the Fifth Amendment. Then, in 1987, the Supreme Court broke its silence and issued three significant decisions.
On March 9, 1987, the Supreme Court handed down its decision in Keystone.(fn6) At issue in the case was an industry challenge to the Pennsylvania Subsidence Act requiring that 50 percent of the coal underlying pre-existing public buildings, dwellings, and cemeteries be left in place to provide surface support. The law had been expanded to protect water courses as well. The law authorized the state Department of Environmental Resources to revoke mining permits for violations of the standards in the act.
The plaintiffs brought suit in federal court to enjoin enforcement of the act, alleging, among other claims, that the
In a 5-4 decision, authored by Justice Stevens, the U.S. Supreme Court affirmed the Third Circuit and held the Pennsylvania act to be a valid exercise of the police power for which compensation was not available under the Fifth Amendment. In contrast to First Lutheran and Nollan, described below, the Keystone opinion is a clear affirmation of the right of government to impose reasonable regulations upon the use of property, free from requirements of compensation under the Takings Clause.
The Court distinguished Pennsylvania Coal,(fn9) its 1922 landmark case construing the Takings Clause. In that case, as noted above, the Court held that an earlier Pennsylvania statute requiring surface support was a compensable taking under the Fifth Amendment, stating: "The general rule at least is that, while property may be regulated to a certain extent, if the regulation goes too far, it will be recognized as a taking."(fn10)
The majority in Keystone held that the challenged Pennsylvania statute differed from that at issue in Pennsylvania Coal in "critical and dispositive respects." In particular, the statute in Pennsylvania Coal was criticized by the Court for having been enacted to protect private property interests. In contrast, Justice Stevens described the statute at issue in Keystone as enacted to advance "genuine, substantial, and legitimate" governmental purposes:
We have held that land use regulation can effect a taking if it "does not substantially advance legitimate state interests, ... or denies an owner economically viable use of his land." [Citations omitted.] Application of these tests to petitioners' challenge demonstrates that they have not satisfied their burden of showing that the Subsidence Act constitutes a taking. First, unlike the Kohler Act [in Pennsylvania Coal], the character of the governmental action involved here leans against finding a taking; the Commonwealth of Pennsylvania has acted to arrest what it perceives to be a significant threat to the common welfare. Second, there is no record in this case to support a finding, similar to the one the Court made in Pennsylvania Coal, that the Subsidence Act makes it impossible for petitioners to profitably engage in their business, or that there has been undue interference with their investment-backed expectations.(fn11)
Justice Stevens then analyzed the specific public purpose at work in the challenged state law. Relying upon the Court's decision in Agins v. Tiburon,(fn12) he concluded that "the public interest in preventing activities similar to public nuisances is a substantial one, which in many cases has not required compensation."(fn13) Justice Stevens' use of nuisance theory is criticized by Chief Justice Rehnquist in his dissent,(fn14) but Stevens indicated that the majority opinion is not grounded solely on a finding that the Pennsylvania Subsidence Act serves a substantial public purpose. It is also based on the fact that the plaintiffs failed to show a diminution of value sufficient to satisfy the limits of compensation set forth in Pennsylvania Coal and other regulatory takings cases.(fn15)
The plaintiffs had argued that the surface support requirement required them to leave approximately twenty-seven million tons of coal in place. They concluded that the effect of the Pennsylvania statute was to appropriate this private property for...
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