The Fifth Amendment includes the command, "nor shall private property be taken for public use, without just compensation."
Putting aside the perhaps puzzling fact that the PUBLIC USE limitation has been largely read out of existence?the government can take PROPERTY for almost any reason, including the improvement of "slums" or the conveyance of clear title to tenants?the so-called takings clause has been easy enough to apply in most cases. If the government wants property, it can assert its right of EMINENT DOMAIN and take it. But then it must pay JUST COMPENSATION. The hard cases arise when government has not simply appropriated property outright but instead has taken a legislative or regulatory action that lessens the value of private property.
The fountainhead for so-called REGULATORY TAKINGS cases is the Supreme Court's opinion in Pennsylvania Coal Co. v. Mahon (1922), credited as the first to apply the takings clause to government regulation short of complete appropriation. Pennsylvania law prohibited coal companies from mining subsurface coal "in such a way as to cause the subsidence of, among other things, any structure used as a human habitation." Justice OLIVER WENDELL HOLMES, JR. , first held that the law was a proper exercise of the POLICE POWER. "Government could hardly go on if to some extent values incident to property could not be diminished without paying for every such change in the law." But Holmes also found that such power "must have its limits." Therein lies the rub, for Holmes could not pin down what those limits were to be. "The general rule at least is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." How far is too far? Four years later, the Court held that ZONING was not necessarily a taking in EUCLID V. AMBLER REALTY CO. (1926), even though the regulation caused the private owner to lose three-quarters of the property's value.
Holmes's majority opinion in Mahon is famous. Far less attention has been paid to the dissent of LOUIS D. BRANDEIS. Brandeis noted that every law affects private values. He would thus emphasize the nature of the government action more than the private party's loss. "[R]estriction imposed to protect the public health, safety or morals from dangers threatened is not a taking."
The Holmes?Brandeis fault line has played itself out over the ensuing decades. It is often hard to understand the law...