I have previously opined that the Supreme Court has effectively solved the takings puzzle,(1) and it has. Like 1000-piece puzzles in the game room of a large family, however, near the end, a few pieces are missing. In truth, the problem is not so much missing as ill-fitting pieces left over from other puzzles long ago forgotten and now deserving abandonment. The ill-fitting takings pieces are Agins v. City of Tiburon,(2) and the "ad hockly"-edged Penn Central Transportation Co. v. New York City.(3) These cases perpetuate an overly deferential standard of review and proof burdens that undermine the goal of fairly balancing the reciprocally defined concepts of property and police power. Worse, these decisions mask a virtually insurmountable presumption of constitutionality that has too often been a presumption in favor of exclusion, felt most disturbingly by the least affluent.(4) Troubling also is that the Agins/Penn Central presumption of the regulation's validity is a presumption against freedom of ownership, responsibly defined as encompassing both individual right and duty.(5) The effects of this presumption could not be understood while the takings puzzle remained unsolved because property scholarship and its sub-area of takings were traveling simply in contesting camps, lobbing aphorisms of libertarian autonomy against benign statist redistribution.(6) Some of this still goes on, of course, but with more subtle and prudent insight, rather than simple partisanship, discerning property to be a device mixing "independence and cooperation" by which we form community.(7)
What follows is a brief recapitulation of the Supreme Court's analytical resolution of the takings problem and a case-specific examination of some areas where out-of-date Agins and Penn Central-generated pieces do not fit into the carefully arranged precedental framework of Lucas v. South Carolina Coastal Council,(8) Nollan v. California Coastal Commission,(9) and Dolan v. City of Tigard.(10)
The straightforward purpose of the Takings Clause is to avoid the disproportionate placement of public burdens upon a single property owner.(11)
Yet, litigation over the clause has been difficult because it pits two indeterminate concepts-property and police power-against each other. Knowing where private rights end and public power begins is the essence of the quandary. Until recently, the difficulty revealed no sign of abating. Arguably, Lochner v. New York(12) blocked the path. Lochner, of course, is the talismanic name for the proposition that federal judges ought not legislate from the bench.(13) Judicial restraint is a commendable principle born of separation of powers doctrine and, in the land-use context, of federalism. Yet, misplaced restraint in the face of government overreaching defeats constitutional purpose and is about as helpful as misplacing the explanatory picture on a puzzle box cover.
The Natural Law--Objective Reality of Property
The resolution of the takings puzzle depends upon realizing that the judicial protection of legitimate private property rights is not tantamount to inappropriate judicial theorizing about social policy. Why are these situations different? In Lochner, the majority had no objective standard by which to say that a legislative specification of the maximum number of hours to be worked by a baker was right or wrong.(14) Reasonable minds could differ as to whether working more than sixty hours per week should be allowed, and the Court had no superior institutional resources or textual constitutional basis to say otherwise. In such case, what is right and wrong is mostly a matter of positive law.(15) By contrast, in takings cases, what is right or wrong in terms of acceptable levels of regulation is governed more overtly by the objective, natural law(16) basis of common law property rights.
American constitutional history declares Jeremy Bentham to be mistaken: property and law are not "born together," and they do not die together either.(17) Private property preexists government and is protected not merely because this or that law may be in place, but because it advances the nature of the human person more effectively and directly than alternative forms of property distribution.(18) Furthermore, insofar as human nature predates the origin of the American republic, the manifestation of that nature in private property has a claim to special solicitude.(19) Madison made this point when he described a primary purpose of the newly formed government of the United States to be the protection or preservation of property.(20) If all property rights originated with legislative enactment, Madison's statement would be nonsensical or at best tautological--the primary purpose of government would then be to protect or preserve whatever government determined to be its primary purpose.
To be sure, property is an admixture of natural and positive law. The natural law reality of property's common law manifestation, however, does supply the judiciary with an independent basis for evaluating the fairness of legislative enactment. The Court understood this early in this century, but regretfully wandered. For example, in Village of Euclid v. Ambler Realty Co.,(21) the Court accepted, at the level of general theory, that police power regulation is to be linked to the prevention of harm, defined in terms of common law nuisance principles.(22) The Court would give local legislatures a level of latitude in interpreting what is and is not harmful, but the Court reassuringly and wisely said that it would not forsake its role of determining where regulation as applied to particular parcels exceeded flexible, yet still perceptible, limits on government power.(23) Immediately after Euclid, the Court kept its word,(24) but perhaps frightened or confused by Lochner and by a president threatening to remake the Court in his own image,(25) the Justices abandoned this duty of limiting government encroachment for a half-century.
During that extended period, establishing a regulatory taking was precluded effectively by the skewed deference of the rational basis standard or the insuperable difficulty of proving that regulation deprives property of all value. Prior to recent case developments in the Supreme Court, a regulatory taking would be found largely where regulation could not be conceived as bearing any relationship to a legitimate state interest or where the taking denied its owner all economically viable use of the land.(26) Given the weak nature of the rational basis standard, some courts merged the standards into the single proposition that only regulation that renders property valueless is subject to takings challenges.(27) A few courts held that even land-use regulation contrary to state law may advance "legitimate state interests,"(28) perhaps as a corollary to the proposition that the federal constitution does not supply remedies for state law violations.(29)
Physical Occupations and the Common Law Right To Exclude
The rediscovery of the natural law objective reality of the common law features of property now offers the Court the prospect of better resolving takings claims. The first analytical trace of this rediscovery of the reality of private property occurred, neither in Nollan nor its rhyming sibling Dolan, but in Loretto v. Teleprompter Manhattan CATV Corp.(30) Here, the categorical protection of the right to exclude emerged from the ancient protection against trespass.(31) At first, Loretto seemed both startling and trivial. The constitutional need to compensate for a four-inch-square box and accompanying cable wire(32) seemed downright silly in the face of the million dollar diminutions that had not merited compensation. Yet, Loretto's significance was great because it reminded the Court that no matter how high-minded the justifications for a public regulatory scheme might be, in a democratic republic with a natural law foundation, the objective reality of privately-held property resources limits those schemes.
As important as was Loretto's reminder, its practical significance was less: not much land-use regulation depends directly upon physical occupation. And, at first, neither the Court nor land-use players generally realized how directly the analytical line based upon the common law of property connected Loretto with Nollan, and later Lucas with Dolan. Nevertheless, with Nollan, the Court returned more explicitly to the sounder course of defining property and police power reciprocally in relation to a state's background principles of property law, especially the common law of nuisance.(33) With heightened scrutiny, now arguably (or at least possibly) to be applied in all land-use takings cases,(34) the Court gave genuine adverbial and adjectival strength to the previously feeble recital of "substantially advancing a legitimate governmental interest," which had become indistinct from the reasonableness or mere rational basis standards applied in other economic contexts.(35)
Essential Nexus--The Proper, Partial Eclipse of Diminution-in--Value
Although some complained that Nollan broke from precedent,(36) in actuality the intervening diminution-in-value cases were the aberrations. Not surprisingly, the inventor of the diminution-in-value standard, Oliver Wendell Holmes, disavowed America's natural law tradition,(37) a trait shared by Justice David Souter.(38) Yet, it is surely ironic that Justice Holmes's decision in Pennsylvania Coal Co. v. Mahon(39) has been lionized so long for assisting individual property rights.(40) This is deception. Holmes's "too far" formulation is about as helpful to a correct takings outcome as someone--say, on his way to the kitchen during a commercial break--inserting into a puzzle-in-progress a piece that deceivingly appears to, but does not, fit. Having abjured properly Herbert Spencer's Social Statics in his famous Lochner dissent,(41) Holmes flayed about for an...