A second take: re-examining our regulatory takings jurisprudence post-Tahoe.

• Author: DiUbaldo, Robert W.

INTRODUCTION

The protection of private property in the Fifth Amendment presupposes that it is wanted for public use, but provides that it shall not be taken for such use without compensation.... When this seemingly absolute protection is found to be qualified by the police power, the natural tendency of human nature is to extend the qualification more and more until at last private property disappears. But that cannot be accomplished in this way under the Constitution of the United States. (1)

--Justice Holmes

Since the Bill of Rights gave birth to modern American "takings" law over 200 years ago, courts have struggled to balance the conflict between an individual's property rights and the protection of society as a whole. Recently, the Supreme Court has applied several techniques to determine when a government action has effectuated a compensable taking. (2) The result is a combination of per se rules and balancing tests that have made defining a land-owner's property interest more difficult. (3) For example, the Supreme Court has adopted the per se rule that a landowner who is completely deprived of all "economically beneficial" use of her land must be awarded compensation, (4) unless she is using her land in a way contrary to the "background principles of the state's law of property and nuisance." (5) Determining exactly when and how this "total deprivation" occurs has been subject to much debate, particularly because of the Supreme Court's admonition to look at the "value of the parcel as a whole" when examining if there is a compensable taking. (6) Thus, when faced with a regulation that deprives a landowner of use of ninety percent of her property, it is unclear whether the situation would be analyzed as one in which the owner has been deprived of all economically beneficial use of the burdened portion of the tract, or as one in which the owner has suffered a mere dimunition in the value of the tract as a whole. (7) As a result, a "partial" regulation that denies a landowner use of a significant amount of her property is less likely to be found a taking than a "total" regulation that results in only a minor loss of value to the property, (8) This partial/total distinction seems to be at odds with the primary purpose of the Takings Clause--to provide a fair and just means of protecting private property. (9)

The Supreme Court's decision in Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, further embellished this partial/total takings distinction. (10) In an effort to preserve the environment in the Lake Tahoe Basin, the Tahoe Regional Planning Agency ("TRPA") imposed a temporary moratorium that prevented landowners in the region from building for thirty-two months. (11) The landowners contended that by denying them all economically viable use of their property during this period, the moratoria effectuated a taking and imposed a constitutional obligation on the agency to compensate the landowners for the value of the land's use. (12) The Supreme Court held, however, that the mere enactment of the regulations implementing the moratoria did not constitute a per se taking of the landowner's property. (13) In determining whether or not the landowner was deprived of all economic use of her land, the Court focused on the value of the property interest as a whole. (14) They concluded that because the temporary regulation would eventually be lifted, the landowner still retained value of her parcel and thus did not suffer a "total deprivation" deserving of compensation. (15) Writing for the majority, Justice Stevens stated that adoption of a categorical rule that any deprivation of all economic use, no matter how brief, constituted a compensable taking would impose unreasonable financial obligations upon governments for the normal delays involved in processing land use applications and would improperly encourage hasty decision-making. (16) While the Court was prudent in refusing to adopt a per se rule for analyzing temporary takings, the continued distinction between "partial" and "total" takings is problematic because it allows the government too much leeway in taking private property without compensation? (17)

Part I of this Comment discusses the background of regulatory takings jurisprudence, from Justice Holmes' landmark Pennsylvania Coal opinion to the present, and the accompanying gray area surrounding these decisions. Parts II and III analyze the recent Tahoe decision in depth, focusing on both the strengths and weaknesses of the decision and its potential impact on the future of takings. Part IV offers a different analytical framework from which to analyze regulatory takings. Under this theory, courts would abandon the partial/total distinction, and instead focus on the actual loss from the landowner's point of view. Courts would apply a number of factors to guide their decision, measuring the actual loss caused by the regulation, any reciprocal or future advantages received post-regulation, and the overall reasonableness of the taking itself, in the context of the state's laws of property and nuisance. Because Takings Clause issues require careful examination and weighing of all the relevant circumstances of each particular case, courts must resist the temptation to adopt per se rules in the takings framework.

1. A BRIEF HISTORY OF REGULATORY TAKINGS

   The Fifth Amendment to the United States Constitution states: "[P]rivate property shall not be taken for public use without just compensation." (18) Also known as the "Takings Clause," the Supreme Court has characterized it as a "tacit recognition of a preexisting power'" (19) of the government to achieve public ends by taking property from private parties. (20)

   The Takings Clause imposes two separate requirements on the government: (21) the property taken must serve some form of public use (22) and that when a taking does occur, just compensation must be awarded to the landowner. (23) Historically, compensation was only required and awarded when property was actually physically taken. (24) In 1922, however, the landmark decision in Pennsylvania Coal v. Mahon extended the tentacles of the Fifth Amendment to regulatory takings. (25) In that case, Justice Holmes established the general rule that "while property may be regulated to a certain extent, if the regulation goes too far, it will be recognized as a taking." (26)

   At issue in Pennsylvania Coal was the Kohler Act, a statute that prohibited the mining of coal if it would damage the structural support of "human habitations." (27) The defendant coal company executed a deed with the plaintiff homeowners in which the coal company reserved the right to mine the coal beneath the homeowners' property. (28) The deed also released the coal company from any liability arising from the mining of coal beneath the property. (29) While the Pennsylvania Supreme Court agreed that the defendant had contract and property rights protected by the Constitution, the court nevertheless held the statute was a legitimate exercise of police power and directed a decree for the plaintiffs. (30) The United States Supreme Court reversed the decision, holding that the government regulation had gone "too far" in diminishing the value of the coal company's property, and thus compensation was required. (31)

   Pennsylvania Coal was revolutionary not only because it applied the Fifth Amendment to regulatory takings for the first time, but also because it articulated the central conflict that would come to dominate regulatory takings jurisprudence: the preservation of individual property rights versus the deference given to legislatures in protecting "public health, safety and welfare." (32) In particular, Justice Holmes focused on the diminution in property value caused by the regulation, which has become one of the factors courts use in determining compensation. (33)

   Holmes opinion was clear in two respects. First, regulatory takings challenges should be determined on a case-by-case basis. (34) Second, there is an implied limitation of property ownership that will yield to the legislature's police power. (35) Thus, the Court repeatedly has recognized the ability of government, in certain circumstances, to regulate property without compensation, no matter how adverse the financial effect on the owner. (36)

   1. The Next Step: Penn Central Transportation Co. v. New York City--Providing the Analytical Framework for Regulatory Takings

      The Supreme Court established the analytical framework for determining whether regulations go "too far" in the landmark case of Penn Central Transportation Co. v. City of New York. (37) In that case, the New York City Land Preservation Commission failed to approve plans for construction of a fifty-story office building above the Grand Central Station terminal. (38) Since Grand Central Station had been designated a landmark, the owners had to obtain permission from the Land Preservation Commission before they could "alter the architectural features of the landmark or construct any exterior improvement on the landmark site." (39) This was to ensure that "decisions concerning construction on the landmark site" were made with due consideration of both the public interest in the maintenance of the structure and the landowner's interest in the use of the property. (40) Following Holmes's lead in Pennsylvania Coal, the Court embraced the position that physical possession was not necessary for a taking, (41) and recognized that determining whether or not a regulation constituted a taking depended largely on the "particular circumstances of the case." (42)

      Penn Central is an important decision because it outlined a balancing test consisting of three factors to be used in evaluating the constitutionality of a government regulation: 1) the economic impact of the regulation on the claimant; (43) 2) the extent to which the regulation interfered with the landowners "reasonable investment backed...