Dolan v. City of Tigard: another step in the right direction.

• Author: Huffman, James L.
• Position: Colloquium on Dolan: The Takings Clause Doctrine of the Supreme Court and the Federal Circuit

1. JUDICIAL BALANCING AND THE TAKINGS CLAUSE

   The Supreme Court's decision in Dolan v. City of Tigard(1) is another step, following Lucas v. South Carolina Coastal Council,(2) in the right direction.(3) In Dolan, a majority of the Court has moved closer to abandoning the illogical distinction between regulatory and nonregulatory takings. Despite its potential to help rationalize takings jurisprudence, however, the Dolan opinion will be understood by some commentators as a relatively insignificant holding about burdens and standards of proof in land use regulation cases.(4) It will certainly be so interpreted by lawyers for, and advocates of, the regulatory state.(5) If this is an important opinion, its significance rests less in its holding than in its dictum. And as a dismayed Justice Stevens points out in his dissent, the Supreme Court's dictum is often the basis for its later holdings.(6)

   Innumerable commentators have observed that the Supreme Court's takings jurisprudence is a jumble of confusing holdings with little in the way of coherent guiding principles.(7) Like much of modern constitutional law, takings law has been infected with the virus of judicial balancing tests.(8) Ironically, the principle which is supposed to undergird this constitutional jurisprudence of judicial balancing is democracy. The idea seems to be that ours is fundamentally a democratic constitution in which the majority can have its way so long as it does not systematically exclude "discrete and insular" minorities.(9) After several decades of caselaw inspired by this idea, John Hart Ely offered a carefully reasoned rationalization in his book Democracy and Distrust.(10)

   When the Court first articulated this view of our Constitution in the celebrated footnote four of United States v. Carolene Products Co.,(11) it acknowledged that the Constitution did contain some explicit substantive limits on majoritarian government, most of which appear in the Bill of Rights.(12) However, since Carolene Products, the Court has gradually extended the reach of judicial balancing to most constitutional protections of individual liberty. For example, balancing tests have even been applied to validate regulation of speech(13) and limitation on religious freedom.(14)

   This approach is particularly troublesome in the context of the takings clause which, by its terms, permits the state to pursue its legitimate interests so long as it does not impose, unfairly, the associated costs on the particular individuals whose property rights happen to be affected.(15) Although the takings clause is viewed by most advocates of land use regulation as an unfortunate obstacle to the pursuit of the public good,(16) the provision is a recognition of the state's power to regulate private property for public purposes upon payment of just compensation. In a constitutional system which values both democracy and liberty,(17) the beauty of the takings clause is that it provides a solution to the difficult problem of protecting individual rights in the face of legitimate government actions which often impact arbitrarily and unevenly on isolated individuals.(18)

   With the exception of the traditional uses of eminent domain, governments have seldom chosen to compensate, voluntarily, property owners impacted by regulation.(19) The Dolan case illustrates that some governments are now even disinclined to compensate where tradition would have called for exercise of the eminent domain power.(20) The drafters of the takings clause understood that we should expect nothing different from government. Absent judicial enforcement of the takings clause, governments have every incentive to take private property without compensation. Democracy will deter such wealth redistribution only when large numbers of people are likely to bear the costs.(21) The takings clause exists, along with the rest of the Bill of Rights, because the constitutional framers understood the inevitability of the tyranny of the majority in an unlimited democracy.(22)

   There is a pragmatic explanation for the reliance on ad hoc judicial balancing in takings cases. Government action does impact people, including property owners. It is impractical for the state to compensate for every such impact. As Justice Holmes stated in Pennsylvania Coal Co. v. Mahon,(23) "[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."(24) The Court's task, said Holmes, is to determine when a regulation goes "too far."(25)

   This language has been relied on to justify a takings jurisprudence which has permitted a nearly total diminution in property value, without compensation, so long as the state has a legitimate purpose.(26) But Holmes did not stop with this pragmatic observation and vague prescription. He went on to observe that many regulations provide what he called an "average reciprocity of advantage" to those impacted.(27) In other words, if we understand that much of what government does imposes costs and confers benefits on many people, we will see that the takings clause is not an obstacle to most legitimate government action because there is implicit compensation for many of the takings which unavoidably occur.(28) Indeed, when democratic government is restricted from taking advantage of minorities, including individuals who happen to own property peculiarly affected by government regulation, the democratic process will assure that costs and benefits of government action are relatively evenly spread and that benefits exceed costs.(29)

   It is possible that the specific holding in Dolan will fuel the flames of judicial balancing. Justice Rehnquist's opinion for the Court states the issue thus: "[W]hat is the required degree of connection between the exactions imposed by the city and the projected impacts of the proposed development[?]"(30) This is the issue, says Rehnquist, because the Court is required to apply a two-part test in "exactions" cases. The difficulty is that the Court had not, prior to Dolan, articulated the second half of the test. Indeed the lower court decisions in Dolan suggested that there was some doubt about the first part of the test,(31) but according to Justice Rehnquist it was clearly established in Nollan v. California Coastal Comm'n(32) that the Court must first determine "whether the `essential nexus' exists between the `legitimate state interest' and the permit condition exacted by the city."(33) Because the regulation in question in Nollan lacked the essential nexus to the condition imposed, the Court was not required to articulate the second half of the two-part test.

   A review of state court decisions on the issue posed by Rehnquist revealed that "general agreement exists among the courts `that the dedication should have some reasonable relationship to the needs created by the [development].'"(34) Although the majority found the "reasonable relationship" test "closer to the federal constitutional norm" than the tests proposed by the parties to Dolan, they rejected it "because the term `reasonable relationship' seems confusingly similar to the term `rational basis' which describes the minimal level of scrutiny under the Equal Protection Clause of the Fourteenth Amendment."(35) Instead the Court concluded that a "rough...