Conventionally understood, regulatory takings doctrine protects prop- erty owners from significant, adverse changes in the law. The paradigmatic example of a regulatory taking involves a new regulation-environmental protection, zoning limit, and so forth-that interferes with owners' settled and reasonable expectations. In formal terms, the Takings Clause1 provides at least occasional relief from the costs and consequences of legal transi- tions. 2 But what about regulatory inaction? Can the government's failure to regulate, or its failure to act to protect private property, ever amount to an unconstitutional taking? This Article argues that it can.
The claim should appear quite startling. The Constitution is typically thought to create only negative rights-rights that constrain the government from acting in certain proscribed ways.3 Takings liability for regulatory inac- tion- what this Article calls passive takings-means that property owners could be constitutionally entitled either to governmental intervention on their behalf or to compensation if the government fails to act. This Article ultimately illustrates the new category of passive takings through the exam- ple of sea-level rise, but the concept potentially applies to property more broadly, in settings as diverse as copyright law and financial regulation.4
While the idea of imposing affirmative constitutional duties on the state is unorthodox as a matter of general constitutional law, it is surprisingly consonant with underlying justifications for the Takings Clause. For exam- ple, from a consequentialist perspective focused on regulatory incentives, the Takings Clause is supposed to induce efficient regulatory activity by forcing the government to internalize the costs of its actions.5 But holding the gov- ernment liable only for its affirmative actions can distort governmental deci- sionmaking. In some contexts, governmental inaction is the most costly choice of all. Where that is true, forcing the government to pay for its regu- latory actions but not its omissions will have the perverse effect of deterring the government from doing anything at all, even if a regulatory response could dramatically increase overall societal well-being. Similarly, distributive theories of property concerned with the fair or just allocation of burdens and benefits in society view the Takings Clause as preventing disproportion- ate regulatory burdens.6 But burdens can be unfairly distributed in society through governmental inaction as well. Passive takings liability requires ex- amining the extent of the government's complicity in distributional out- comes rather than focusing exclusively on the categorical but ultimately porous distinctions between regulatory acts and omissions.
Existing takings law and theory extend with surprising ease to reach previously unrecognized passive takings claims, but this new category then requires fundamentally reconceptualizing the nature of constitutional pro- tection for private property. It means that constitutional protection is not merely negative-not merely a restriction on governmental action-but can create affirmative duties for the government to respond to changing condi- tions in the world. This is not freestanding liability; the government is not an insurer of last resort whenever property is threatened. But such liability does arise whenever the government is so entangled in the substantive con- tent of property that the line between acts and omissions becomes especially blurry-for example, in cases where the government has acted to disable property owners' self-help.7
Indeed, there are contexts in which no principled basis exists for distin- guishing between regulatory acts and omissions. In tort law, theorists have famously contrasted a passerby who fails to throw a rope to a drowning man with a driver who fails to avoid someone in the road.8 While both involve inaction, there is a critical difference: the driver, by getting into the car, has created the conditions giving rise to the ultimate injury. Analogously, by exerting substantial control over property, the government sometimes as- sumes the role of the driver who has a duty to hit the brakes when a pedes- trian appears in the road. Although regulations may be perfectly constitutional when enacted, they can trigger a duty for the government to respond to changes in the world. At least when it comes to property, then, the Constitution-through the Takings Clause-will sometimes compel governmental action. What initially appears to be a small lacuna in takings doctrine therefore amounts to much more.
Sea-level rise provides an important real-world illustration of the poten- tial payoff of this Article's central normative claim. Some governments- both state and local-are failing to take aggressive steps to address the risks of sea-level rise at least partly because they worry that regulatory responses might trigger takings liability.9 Establishing new setbacks from the ocean or prohibiting sea walls, for example, implicate traditional takings analysis, and the threat of takings liability may well be discouraging some governments from adopting these and other measures that could minimize the impacts of rising seas.10 But allowing governments to escape liability so easily seems strange when coastal property is already subject to comprehensive and over- lapping land-use and environmental regulations. Preexisting regulatory in- tervention means that the government should not be able to wash its hands of responsibility now. In fact, immunizing the government from the conse- quences of inaction actually discourages action. The category of passive tak- ings therefore creates an important counterbalance to the threat of traditional takings liability and encourages governments to reduce the over- all costs of sea-level rise.
Part I describes the conventional view that takings liability applies only to moments of legal change. It then argues that such liability can also arise from changes in the world, even during times of legal stability. Part I also discusses the conventional understanding of affirmative constitutional obli- gations, arguing that the status of property rights in the Constitution makes passive takings claims surprisingly feasible, both doctrinally and politically. Part II turns to underlying takings doctrine and property theory, arguing that efficiency and fairness concerns, as well as normative property theory, support extending takings liability to passive takings. Part III then sets out the proposed doctrine of passive takings in more detail, defining the specific contexts in which passive takings claims may arise and addressing several of the strongest counterarguments. Finally, Part IV puts the theory to the test, applying the category of passive takings to the problem of sea-level rise and speculating about additional contexts in which passive takings claims might arise.
The Takings Clause and Legal Transitions
Courts and commentators frequently assert-and even more frequently assume-that the Takings Clause is implicated only when the government changes the law.11 The compensation requirement for regulatory takings serves to protect property owners from the effects of legal transitions by compensating them for regulatory interference with their reasonable expec- tations. 12 This Part explores those assumptions and then sets up the doctri- nal problem of creating liability for regulatory inaction. The balance of the Article defines and defends this category of passive takings.
The Takings Clause and the Protection of Expectations
The Takings Clause protects property from regulatory burdens that "go[ ] too far."13 The nature and extent of that protection remain fiercely contested. Difficult conceptual and doctrinal problems have bedeviled courts and commentators for decades, and the controversies need no rehearsal here.14 But the core cases and the broad outlines of regulatory takings doc- trine all involve protecting property owners' expectations-expectations often reflected in existing uses of property.15
The polestar for regulatory takings liability remains Penn Central Trans- portation Co. v. New York City.16 There, the Supreme Court articulated a three-part ad hoc balancing test, focusing on the character of the regulation, the extent to which the regulation interferes with property owners' invest- ment- backed expectations, and the resulting diminution in value.17 Together, these factors ask whether-and to what extent-a governmental action or regulation has interfered with owners' reasonable and settled expectations surrounding the use of their property.
Imagine, for example, that someone bought beachfront property expect- ing to build a single-family home, a permitted use at the time of the purchase. If the government subsequently changes its setback rules, making it impossible to build on the lot, the property owner may have a takings claim. The legal issues will include whether the property owner's expecta- tions of building a single-family home were reasonable and, perhaps, whether they were sufficiently investment backed.18 If the answer to these questions is yes, the success of the takings claim will then depend on the extent of the government's interference with those expectations. A regula- tion that only partially interferes-that requires the owner to build a slightly smaller house, for example, or to build a house a bit farther from the water-is almost certainly not a taking. But if the interference is more sub- stantial, it may trigger takings liability.19
Takings claims therefore fundamentally depend on the divergence be- tween an owner's expectations and what the law will allow. If an owner reasonably expects to put property to a use worth $100, and a new regula- tion permits a use worth only $15, the government may well have to com- pensate the owner or withdraw the regulation (or both).20