On the Twenty-Fifth Anniversary of Lucas: Making or Breaking the Takings Claim

Author:Carol Necole Brown & Dwight H. Merriam
Position::Professor of Law, University of Richmond School of Law/Robinson & Cole LLP, Hartford, Connecticut
Pages:1847-1896
SUMMARY

In Lucas v. South Carolina Coastal Council, the United States Supreme Court established the premier categorical regulatory takings standard with certain limited exceptions. The Lucas rule establishes that private property owners are entitled to compensation for a taking under the Fifth Amendment Takings Clause when a government regulation "denies all economically beneficial or productive use of... (see full summary)

 
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1847
On the Twenty-Fifth Anniversary of Lucas:
Making or Breaking the Takings Claim
Carol Necole Brown* & Dwight H. Merriam**
ABSTRACT: In Lucas v. South Carolina Coastal Council, the United
States Supreme Court established the premier categorical regulatory takings
standard with certain limited exceptions. The Lucas rule establishes that
private property owners are entitled to compensation for a taking under the
Fifth Amendment Takings Clause when a government regulation “denies all
economically beneficial or productive use of land.” Today, Lucas remains the
controlling law on categorical regulatory takings. But in application, how
much does Lucas still matter?
In reviewing more than 1,700 cases in state and federal courts, we identified
that Lucas claims were successful in just 1.6% of the cases. This does not
mean Lucas is unimportant, however. The small Lucas claim success rate
suggests the importance of being strategic in pleading takings claims. The
problem of defining the denominator in the regulatory takings equation is
essential to understand for litigants pursuing the Lucas categorical
regulatory takings analysis. Based upon our research, we argue that Lucas’s
holding incentivizes the private contractual agreements entered into by
property owners to shrink the takings denominator and tilt the scales slightly
in favor of the plaintiff. The ability of a property owner to reduce the
denominator remains the loadstar for a Lucas case-winning strategy.
This is important for not only theorists but also for practitioners to know as
they litigate and conduct transactions in Lucas’s shadow.
*
Professor of Law, University of R ichmond School of Law. Special th anks to Suzanne B.
Corriell, Associate Director for Reference, R esearch and Instructional Services at the University of
Richmond School of Law and to my research assistants, Jessica Barile and William Stroud. Thanks
to Professor Vada Lindsey and the ent ire Marquette University Law School faculty for allowing me
to workshop this paper and for their invaluable assistance. Thank you also to Professors Daniel R.
Mandelker, Corinna Barrett Lain, and David L. Callies, and to the University of Richmond School
of Law and Dean Wendy Perdue for her support of this project. Thank you to my parents, the late
Allen S. Brown, Jr., and the late Valerie J. Brown, as well as to my husband, Paul Clinton Harris, Sr.,
and my daughters, Reagan Mackenzie Harris and Hannah Madison Harris.
**
Robinson & Cole LLP, Hartford, Connecticut. Mr. Merriam is past president and a
fellow of the American Institute of Certified Planners and is also a member of the American
Coll ege o f Rea l Est ate L awyer s as w ell a s a co unse lor o f real esta te. H e is a co-au thor of The Takings
Issue and co-editor of Rathkopf’s The Law of Zoning and Planning, 4th edition.
1848 IOWA LAW REVIEW [Vol. 102:1847
I. INTRODUCTION ........................................................................... 1848
II. TAKINGS CLAIMS À LA LUCAS ....................................................... 1850
A. LUCAS AND ITS HOLDING ...................................................... 1850
B. THE CATEGORICAL REGULATORY TAKINGS RULE ................... 1851
1. The Nuisance and Background Principles
Defenses ....................................................................... 1852
2. The Denominator Question ....................................... 1853
C. COMPLICATING THE PICTURE: THE DISSENTING AND
SEPARATE OPINIONS .............................................................. 1853
D. AMBIGUITIES ABOUND ........................................................... 1855
1. The Categorical Regulatory Takings Rule ................. 1856
2. The Nuisance Defense ................................................ 1858
3. The Denominator Question and the Parcel as a
Whole ........................................................................... 1859
III. SUCCESSFUL LUCAS TAKINGS CASES: EMPIRICAL DATA ............... 1862
A. THE NUISANCE ABATEMENT CASES (THE LUCAS
EXCEPTION) .......................................................................... 1863
B. PRIVATE AGREEMENTS AND THE DENOMINATOR ..................... 1866
C. PYRAMIDAL SEGMENTATION AND PUBLIC LAW IMPACT ........... 1875
D. DELAY THEORY ..................................................................... 1884
IV. IMPLICATIONS ............................................................................. 1887
A. JURISPRUDENTIAL IMPLICATIONS............................................ 1887
B. PRACTICAL IMPLICATIONS ..................................................... 1890
V. CONCLUSION .............................................................................. 1892
I. INTRODUCTION
In Lucas v. South Carolina Coastal Council, the Supreme Court established
the premier categorical regulatory takings standard with certain limited
exceptions.1 The Lucas rule establishes that private property owners are
entitled to compensation for a taking under the Fifth Amendment Takings
Clause when a government “regulation denies all economically beneficial or
productive use of land.”2 The Fifth Amendment Takings Clause states that
“private property [shall not] be taken for public use, without just
compensation.”3 In determining whether the regulation at issue meets this
1. See generally Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992).
2. Id. at 1015.
3. U.S. CONST. amend. V.
2017] MAKING OR BREAKING THE TAKINGS CLAIM 1849
standard, courts have traditionally used an “economic value fraction.”4 The
numerator is the diminution in value of the private property attributable to
the impact of the government regulation.5 The denominator is the entirety of
the owner’s rights in the “parcel as a whole.”6 For a Lucas categorical taking,
the denominator must be at least virtually equal to the numerator such that
there is a deprivation of “all economically beneficial or productive use of
land.”7 As a result, property owners seek to characterize their property rights
narrowly for as small a denominator as possible.8 The smaller the
denominator, the more likely it is to be equal to the numerator. On the other
hand, government regulators seek to characterize the property owner’s
property rights broadly for as large a denominator as possible.9 This creates a
denominator that is much larger than the numerator signaling that the land
still has economic benefit to the property owner.
Today, Lucas remains the controlling law on categorical regulatory
takings.10 But in application, how much does Lucas matter? Our review of
more than 1,700 cases in state and federal courts reveals only 27 cases in 25
years in which courts found a categorical taking under Lucas.11 By percentage,
4. Walcek v. United States, 49 Fed. Cl. 248, 261–62 (2001), aff’d, 303 F.3d 1349 (Fed. Cir.
2002).
5. Lost Tree Vill. Corp. v. United States (Lost Tree CFC II), 115 Fed. Cl. 219, 258, 262
(2014), aff’d, 787 F.3d 1111 (Fed. Cir. 2015); see also Lucas, 505 U.S. at 1016 n.7 (“Regrettably,
the rhetorical force of our ‘deprivation of all economical ly feasible use’ rule is greater than its
precision, since the rule does not make clear the ‘property interest’ against which the loss of value
is to be measured.”).
6. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 130–31 (1978); see also Luc as,
505 U.S. at 1016 n.7 (describing “the ‘property interest’ against which the loss of value is to be
measured”). For a discussion on the Penn Central test, see infra Part IV.
7. Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992); see also Palazzolo v. Rhode
Island, 533 U.S. 606, 631 (2001) (stating in the context of the Lucas total-takings analysis that
“[a]ssuming a taking is otherwise established, a State may not evade the duty to compensate on
the premise that the landowner is left with a token interest”); Lost Tree Vill. Corp., 787 F.3d at 1113
(finding that a taking resulted from 99.4% diminishment in value in clai mant’s land and
“affirm[ing] that a Lucas taking occurred because the government’s permit denial eliminated all
value stemming from Plat 57’s possible economic uses”).
8. DOUGLAS T. KENDALL ET AL., TAKINGS LITIGATION HANDBOOK: DEFENDING TAKINGS
CHALLENGES TO LAND USE REGULATIONS 170 (2000).
9. See Danaya C. Wright, A New Time for Denominators: Toward a Dynamic Theory of Property in
the Regulatory Takings Relevant Parcel Analysis, 34 ENVTL. L. 175, 188 (2004) (“[W]hen the
numerator is a small toothpick and the denominator is the entire bundle, the likelihood of the
Court requiring compensation is small. Where the numerator is a large portion of the bundle, or
cuts across every stick in the bundle, the likelihood of compensation increases until it become s
mandatory if certain core sticks or the entire bundle is taken.”).
10. Wendie L. Kellington, New Takes on Old Takes: A Takings Law Update, LAND USE L.,
http://landuselaw.wustl.edu/takings_update.htm (last visited Apr. 29, 2017).
11. These 1,700 cases represent all cases availa ble in the two major online databases (Lexis
Advance and WestlawNext) that cited Lucas v. South Carolina Coastal Council, 505 U.S. 1003
(1992), through March 23, 2017. A total of 1,808 cases were drawn from a Lexis Shepard’s report
and 1,713 cases were drawn from a Westlaw Keycite report. Compare Citing References for Lucas v.

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