Chapter 19 - § 19.4 • REGULATORY TAKINGS
| Jurisdiction | Colorado |
If exercise of eminent domain power is the quintessential takings case, the "flip side" is inverse condemnation or, as it is sometimes called, regulatory taking.138 Whereas in an eminent domain case the government wants to appropriate land, in an inverse condemnation or regulatory takings case, the government does not intend to take ownership of the land; rather it takes some action that reduces the value of or adversely affects that land. To have standing to assert an inverse condemnation claim, the plaintiff must have suffered an actual injury to a legally protected interest.139 Actions for inverse condemnation or regulatory taking belong to the persons who own the property at the time of the taking, and absent an express assignment, the right to pursue the action does not pass with the land to subsequent owners.140
§ 19.4.1—Contours Of Regulatory Takings
The two most common regulatory takings scenarios are: (1) a regulation is passed which limits the owner's use of the land with detrimental economic impact, or (2) the government damages the owner's land in some way. Unlike the U.S. Constitution, the Colorado Constitution specifically addresses the latter scenario with a "damages clause," discussed in § 19.7. Regulatory takings are a difficult point of law, because absent a regulation that results in a total loss in value, there are few bright line rules to let practitioners know when a taking has occurred. Justice Holmes famously commented that a regulation that goes "too far"141 may constitute a taking, but as is often pointed out, figuring out what is "too far" has defined takings jurisprudence in the decades since.
As a general principle, courts are reluctant to find regulatory takings, because at some point the government's ability to adopt regulations would be paralyzed;142 every regulation has some amount of economic impact on someone. As Justice Holmes wrote in Pennsylvania Coal Co. v. Mahon, "[g]overnment hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law."143 To establish a claim for inverse condemnation, the Colorado Constitution requires a property owner to show that: (1) there has been a taking or damaging of a property interest; (2) for a public purpose; (3) without just compensation; (4) by a governmental or public entity that has the power of eminent domain, but which has refused to exercise that power.144 The mere planning of impending condemnations does not, in itself, constitute a taking so as to warrant awarding compensation.145
The following tests and guidelines help determine what is "too far."
The Tests
The Colorado Supreme Court has interpreted the Colorado takings clause as "consistent with the federal clause."146 Accordingly, with the exception of one anomaly noted below, federal case law provides relevant guidance even if the case is brought solely under the Colorado Constitution.147 The U.S. Supreme Court laid out a two-tiered analysis in Palazzolo v. Rhode Island,148 which the Colorado Supreme Court adopted in Animas Valley Sand & Gravel, Inc. v. Board of County Commissioners:149 "First, a court must determine whether the landowner has proved a per se takings claim either by showing that the regulation has no legitimate purpose,150 or by showing that the regulation leaves his or her land without reasonable economic value. Second, if a landowner fails to prove a per se taking, the landowner still may be able to prove a taking occurred under a fact specific inquiry."151
Per se takings are discussed in § 19.5. For non per se takings, usually termed regulatory takings, federal and state law generally rely on the three-part test set forth in Penn Central Transportation Co. v. New York City:152 (1) "The economic impact of the regulation"; (2) the regulation's interference with "investment-backed expectations"; and (3) the "character of the [government] action."153 The Animas court noted that often the Penn Central inquiry has, in Colorado, in fact "focused exclusively on the economic viability of the regulated land."154
§ 19.4.2—Diminution Of Value
The general rule is that a regulation that results in a partial diminution of value will not constitute a taking. The following cases illustrate how difficult and rare it is to find that a regulation that deprives the owner of some, but not all, economic use has resulted in a taking. In Agins v. Tiburon155 the U.S. Supreme Court held that there was no taking despite an 85 percent reduction in the value of the land in question. Similarly, in Village of Euclid v. Ambler Realty Co.,156 the Court held that a 75 percent reduction was not a taking, and in Hadacheck v. Sebastian,157 the Court found no taking with a 92.5 percent reduction in value.
Colorado cases follow suit. In National Advertising Co. v. Board of Adjustment,158 a zoning ordinance forced plaintiffs to remove two billboards that could not be lowered to the new 45-foot maximum height requirement.159 The Colorado Court of Appeals held that because the company owned nine other billboards that could be so lowered, the regulations had not deprived the company of all reasonable use or economic value of its land, and therefore there was no taking:
Although a governmental regulation prohibiting all reasonable use of private property constitutes a taking, property owners are not entitled to receive just compensation when an ordinance reasonably restricts, but does not prohibit, all reasonable use of their property. Nor are they constitutionally entitled to obtain the highest and best use of their property or to gain maximum profits from its use.160
In Trailer Haven MHP v. City of Aurora,161 the city passed an ordinance requiring a buffer zone between mobile homes, and the owner of a mobile home park brought a regulatory takings claim. The court similarly found no taking:
In questions of taking, we are concerned with whether the owner is foreclosed from all reasonable use of the property. Here, the amended code does not deprive the owner of Trailer Haven from operating the mobile home park. Instead, the code requires conformance to the new spacing requirements in the future. Thus, the actions of Aurora requiring Trailer Haven to bring its mobile home park into compliance with the amended city code do not constitute a taking because enforcement of the code will not deprive Trailer Haven of all use of the property.162
The Colorado Supreme Court considered whether a temporary zoning regulation could be considered a taking in Droste v. Board of County Commissioners.163 There, the Colorado Supreme Court explained that "[t]he Local Government Land Use Control Enabling Act includes the necessarily implied authority of the local government to impose, through a public hearing process, a moratorium of limited duration to halt further development pending adoption of a master plan; however, the length and conditions of a moratorium are subject to the protection of property owners against uncompensated takings as provided by statutes concerning regulatory impairment of property rights, C.R.S. §§ 29-20-101 et seq., 29-20-201 to 29-20-204."164
§ 19.4.3—The "Substantially Advances" Test In Colorado
In 1980, the U.S. Supreme Court held in Agins v. City of"Tiburon165 that a regulation effects a taking if it "does not substantially advance legitimate state interests."166 The Colorado Supreme Court has adopted this test, as demonstrated in Animas: "a regulation constitutes a per se taking when it 'does not substantially advance legitimate state interests.'"167
In May of 2005, the U.S. Supreme Court abandoned the "substantially advances" test in the case of Lingle v. Chevron U.S.A. Inc.168 Writing for the majority, Justice O'Connor stated:
On occasion, a would-be doctrinal rule or test finds its way into our case law through simple repetition of a phrase—however fortuitously coined. A quarter century ago, in Agins v. City of Tiburon the Court declared that government regulation of private property "effects a taking if [such regulation] does not substantially advance legitimate state interests. . . ."169
In Lingle, the Court concluded "that this formula prescribes an inquiry in the nature of a due process, not a takings, test, and that it has no proper place in our takings jurisprudence."170
Despite the fact that the Colorado Supreme Court has "interpreted the Colorado takings clause as consistent with the federal clause,"171 Colorado has not yet rejected the "substantially advances" test. The Colorado Supreme Court declined to decide the issue in 2006.172 Justice Coats would have granted certiorari on the question:
Whether in light of the United States Supreme Court's recent holding that the question...
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