III. Fifth Amendment Regulatory Takings Claims

• Library: Sword and Shield: A Practical Approach to Section 1983 Litigation (ABA) (2015 Ed.)

III. FIFTH AMENDMENT REGULATORY TAKINGS CLAIMS

A substantial body of law covers the takings issue, and the discussion of this complex area, by necessity, is compressed. Other sources are available when detailed analysis is needed.⁷⁶ The goal here is limited to setting a framework for analysis of takings issues.

In Lingle v. Chevron USA, Inc.,⁷⁷ the Supreme Court set out four possible takings claims:

[A] plaintiff seeking to challenge a government regulation as an uncompensated taking of private property may proceed . . . by alleging a "physical" taking, a Lucas-type "total regulatory taking," a Penn Central taking, or a land-use exaction violating the standards set forth in Nollan and Dolan.⁷⁸

A. Public Use or Public Purpose

A regulatory takings claim cannot be filed against a government entity unless the government action complained of was done in furtherance of a public use or purpose. In Kelo v. City of New London,⁷⁹ the Supreme Court affirmed long-standing precedent that interprets the phrase "public use" broadly to include public purpose. Use by the public is not necessary. In Kelo, the Court upheld a condemnation of private homes even though the government would lease the land taken to private persons. The Court found the goal of promoting economic development for taxes and jobs to be a valid public purpose. In Hawaii Housing Authority v. Midkiff,⁸⁰ the Court said that a purely private taking is impermissible, but the Court went on to make it clear that low-level rational basis scrutiny is to be applied to challenges that the government's use is private. Kelo, elucidating on Midkiff, says that a one-to-one transfer of property to an identifiable person solely for the reason that the latter party may put the land to a more productive use would be "suspicious."⁸¹ Presumably, in such a case, meaningful rational basis scrutiny would apply.⁸²

The Kelo decision generated a nationwide debate over the propriety of using eminent domain to take property for economic development. Within a few years, 44 states amended their constitutions or passed statutes in varying ways, either prohibiting its use for economic development or requiring a super-majority of the legislature to authorize such a taking.⁸³ Also, in recent years, numerous state courts have addressed the question of whether economic development qualifies as a public use under their state constitutions, with varying results.⁸⁴

An action lies in federal court under § 1983 to enjoin a taking for a private use.⁸⁵ The Williamson County requirement that compensation be sought in state court is not applicable to such a claim.⁸⁶ If, however, there is an ongoing state court condemnation action, a federal court may abstain.⁸⁷ If an illegal or private taking is found, it is unclear what remedy lies beyond an injunction. Compensation cannot be awarded because the compensation clause is triggered only when there is a taking for a public use. If a court finds government action is for a private use, it cannot cure the illegality by awarding compensation. In such a case, in addition to an injunction, damages under the due process clause may be available.⁸⁸

B. Physical Takings Claims

In Loretto v. Teleprompter Manhattan CATV Corp.,⁸⁹ the Court established a per se takings test for permanent physical invasions. A cable company under city authority installed a small box on the roof of an apartment building and ran cable wires down its side. The purpose was to make cable television available to tenants. The owner-landlord alleged the invasion was a taking. Though the intrusion was minor, the Court held that a permanent physical occupation of property by the state or a third party pursuant to state authority is a taking, regardless of the scope or economic impact of the intrusion.

The Court created a per se takings test for permanent physical occupations but said its ruling was "narrow."⁹⁰ Temporary physical invasions are exempt from the per se test. Two cases afford examples; one was the imposition of a navigational servitude on a once nonnavigable pond, made navigable with government permission. The servitude allowed public use of the pond.⁹¹ The other involved a state law that required shopping center owners to allow third parties to exercise speech and petitioning rights. Though physical invasions resulted, they were temporary. Such invasions are not permanent and therefore are not per se takings but are judged by the Court's Penn Central multifactor test.⁹² With temporary invasions, "[a]lso relevant to the takings inquiry is the degree to which the invasion is intended or is the foreseeable result of authorized government action."⁹³

In Nollan v. California Coastal Commission,⁹⁴ the Court confronted a state-required public easement along an otherwise private beachfront, which allowed the public to pass "to and fro." Even though the easement did not allow people to station themselves permanently on the land, the Court held it was permanent for the purposes of Loretto.

Interpreted literally, Loretto raised the specter that conditions imposed in the permitting process that resulted in physical occupations, such as subdivision exactions of land for schools or roads, were per se takings. In Nollan, however, the Court held that requiring the easement as a condition for issuing a land use permit would avoid the conclusion that a taking had occurred if the state could show that a nexus existed between the effects of the landowner's proposed development and the land that was being exacted for easement use.

C. Regulatory Takings

The most frequently levied complaint in land use litigation is that government has regulated land excessively and thereby "taken" the land for which compensation must be paid under the Fifth Amendment's takings clause. While the authors of the Fifth Amendment intended to require compensation only for physical expropriations of property,⁹⁵ the Court, as Chief Justice Rehnquist has said, does "not . . . read [the takings clause] literally,"⁹⁶ and has held that the word "take," in effect, includes "excessively regulate."

The Court's expansion of the takings clause to include regulations is generally viewed as having arisen in the 1922 decision, Pennsylvania Coal v. Mahon.⁹⁷ A Pennsylvania statute prohibited mining beneath residential areas in such a way as to cause mine subsidence. The coal company claimed that the statute was an unconstitutional taking of mineral rights since the statute effectively prohibited it from excavating coal that the company had expressly reserved to itself in conveying the land to the Mahons' predecessor in title. The Court agreed with the coal company. Justice Holmes considered the issue a "question of degree" and warned that "[w]e are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change." The famous, or perhaps infamous, test he established was that "while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking."⁹⁸ In this case the statute went too far, since it made it commercially impracticable to mine certain coal that had been expressly reserved by contract to advance a purpose that Holmes regarded as predominantly private in nature.

1. Lucas and Total Deprivation of Value or Use Claims

In 1992, the Supreme Court established a categorical rule for economic impact cases in Lucas v. South Carolina Coastal Council.⁹⁹ The owner of two beachfront lots was unable to build due to the application of a setback rule adopted to deter sand dune loss and beach erosion. Accepting the state trial court's finding that the lots subject to the regulation were valueless, the Court held that where a regulation deprives real property of all economically viable use, a taking occurs unless the state can prove that the regulation does no more to restrict use than what the state courts could do under background principles of property law or the law of private or public nuisance.

Lucas was successful in his case, due to the finding that his land was "valueless." Such a finding is highly unusual. To take advantage of the Lucas categorical rule, one must show a deprivation of all economically viable use, and "all" means 100 percent or something very close to it. In Palazzolo v. Rhode Island,¹⁰⁰ the Court rejected the argument that a 93.7 percent diminution in value was a categorical taking.

Lucas claims will fail if the government can show that background principles of state property or nuisance law justify the total restriction. The Supreme Court applied the rule in Stop the Beach Renourishment Inc. v. Florida Department of Environmental Protection,¹⁰¹ in which coastal property owners contended that the state supreme court's interpretation of Florida's law relating to beach ownership effected a taking. The issue arose due to the state's beach restoration program implemented in response to the loss of dry sand due to erosion. On restored beaches, the statute established a fixed erosion control line. Under the statute, the sand added by restoration belonged to the state. Beachfront property owners claimed that under the state's common law, the boundary between public and private ownership of tidal lands was the ordinary high-tide mark and that new land created by the state landward of the ordinary high-tide line belonged to the private owners, giving them direct access to the ocean. When the state's fixed line fell landward of the ordinary high-tide line, the beachfront property owners lost the right to claim title to the new land and direct access to the water. The Florida court held that under the common law, these claimed rights were superseded by the state's right to fill submerged land. In a unanimous decision, the U.S. Supreme Court found the state court's ruling consistent with the background principles of state property law.¹⁰²

2. Penn Central: The...