The Powers That Be, 0714 SCBJ, SC Lawyer, July 2014, #1

Author:William C. Dillard Jr.
 
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The Powers That Be

Vol. 26 Issue 1 Pg. 18

South Carolina Bar Journal

July, 2014

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Delineating the Role of the Eminent Domain and Police Powers in Physical Takings Analysis

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0 William C. Dillard Jr.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0When government actions result in physical damage to private property, compensation is often sought through inverse condemnation suits. South Carolina courts analyzing such claims frequently cite to the proposition that "there is a distinction between the exercise of the police power and the exercise of the power of eminent domain; that just compensation is required in the case of the exercise of eminent domain but not for the loss by the property owner which results from the constitutional exercise of the police power."[1] Language to that effect has been cited in opinions involving a wide variety of property losses, from slum redevelopment projects[2] to seizure of property used in criminal enterprises.[3] Does this language, seemingly clear cut on its face, actually provide a bright-line test for resolving physical inverse condemnation claims? A survey of South Carolina case law reveals more of a context-specific approach.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The eminent domain and police powers defined

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Eminent domain is "[t]he inherent power of a governmental entity to take privately owned property, [especially] land, and convert it to public use, subject to reasonable compensation for the taking."4 While the Just Compensation clauses in the federal and state constitutions restrain the exercise of the eminent domain power,5 the source of the power is not found in either text.6 Instead, the power of eminent domain "resides in the state of right and by necessity; the Constitution did not create it, but has only affirmed it ... and limited its exercise."7 The power is "based upon the theory that when the state originally granted lands to individuals the grant was made under the implied condition that the state might resume dominion over the property whenever the interest of the public or welfare of the state made it necessary"[8]

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The police power, on the other hand, is "the inherent and plenary power of a sovereign to make all laws necessary and proper to preserve the public security, order, health, morality, and justice."9 "[Although not clearly defined ...[it] is an extensive power, distinguished not only from the power of taxation, but also from that of eminent domain, and, in its widest sense, is said to be the general power of a government to preserve and promote the general welfare, even at the expense of private rights."10 "[F]rom its very nature [the police power] has no well-defined limits,"[11]and "[t]he concept of the public welfare is broad and inclusive."[12]"Statutes and municipal ordinances calculated to better the health, safety and welfare of the people have long and universally been recognized to be within the police power."13 The first use of the phrase "police power" is attributed to Chief Justice John Marshall in 1827,14 at which time "[t]he term ['police'] was used to refer broadly to civilization or civil organization, and 'public police' meant the equivalent of public policy"15

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Takings claims

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Direct condemnation actions are governed by the South Carolina Eminent Domain Procedure Act.16 In a variety of situations, however, a government invasion of private property interests can occur without the initiation of a condemnation action beforehand and without voluntary compensation afterwards. Property owners damaged by certain government invasions of property rights have recourse to an inverse condemnation cause of action, also referred to as a takings claim. Inverse condemnation cases can be generally categorized either as physical takings claims or as regulatory takings claims.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0In physical takings claims, the property owner "must prove 'an affirmative, aggressive, and positive act' by the government entity that caused the alleged damage to the . . . property"17 For example, the allegation that a city ruptured a gas line during a road widening project, resulting in an explosion on nearby private property, is sufficient to state a claim for a physical taking.18 On the other hand, particularly burdensome regulations, such as an environmental regulation that deprives affected property of all economically beneficial use,19 can also result in takings requiring compensation. These cases are referred to as regulatory takings claims.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0One deceptively simple element of both physical and regulatory takings claims is the existence of a property right. In Lucas v. South Carolina Coastal Council, the U.S. Supreme Court explained that "our 'takings' jurisprudence ... has traditionally been guided by the understandings of our citizens regarding the content of, and the State's power over, the 'bundle of rights' that they acquire when they obtain title to property"20 The Lucas Court held that where a land use regulation deprives property of all economic use, the state "may resist compensation only if the logically antecedent inquiry into the nature of the owner's estate shows that the proscribed use interests were not part of his title to begin with,"21 such as where a regulation merely prohibits a nuisance or enforces a preexisting navigational servitude. This analysis requires consideration of "background principles" of state property and nuisance law22 and, as discussed further below, bears relevance to physical as well as regulatory takings cases.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Justice Holmes and the overlapping powers

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0In order to understand the role of the eminent domain and police powers in physical takings cases, it is useful to have an understanding of the theory of government powers underlying regulatory takings claims. In the regulatory case of Pennsylvania Coal Co. v. Mahon,23 Justice Oliver Wendell Holmes Jr., writing for the U.S. Supreme Court, first recognized that the two powers are not mutually exclusive. Prior to Mahon, "exercise of the police power was not seen as overlapping with the power of eminent domain."24 To Justice Holmes, however, the proper question was how far the police power could be stretched before resulting in an exercise of eminent domain: "while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking."25 Mahon "rejected the formalistic distinction . . . between exercises of eminent domain, which were considered takings, and exercises of the police power, which were not,"26 thus becoming "the first case to hold that an exercise of the police power could be a taking."27 Since Mahon, the Court has developed an extensive body of jurisprudence identifying regulations that go "too far" and become regulatory takings.28

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0In physical takings claims, too, federal jurisprudence reflects an acknowledgement of the potential for overlap between the two powers. For example, government action taken in the name of flood control, a purpose within the broad scope of the police power,29 can nonetheless result in a taking.30 The U.S. Supreme Court has directly acknowledged the interplay between the powers, stating that "[o]nce the object is within the authority of [the police power], the right to realize it through the exercise of eminent domain is clear. For the power of eminent domain is merely the means to the end."31

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Physical takings claims in South Carolina

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0As noted above, South Carolina courts analyzing physical takings claims often explain that "there is a distinction between the exercise of the police power and the exercise of the power of eminent domain; that just compensation is required in the case of the exercise of eminent domain but not for the loss by the property owner which results from the constitutional exercise of the police power."32 At first glance, this language appears to set forth a clearly demarcated test for deciding physical takings claims: the eminent domain and police powers are mutually exclusive, and a property owner's right to compensation on an inverse condemnation theory depends on which of these two distinct, non-overlapping powers was exercised. Under that interpretation, the central legal issue in a physical taking claim would become a black and white determination of whether the government acted pursuant to its police power or, on the other hand, its eminent domain power.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Does the South Carolina case law analyzing physical takings claims actually apply such a tidy analysis? That approach would be an anomaly in the broader body of just compensation jurisprudence.33 As discussed above, federal appellate courts have devoted a great deal of energy to sorting out the interplay of the eminent domain and police powers in regulatory takings cases (South Carolina courts have followed suit in state regulatory cases34 ). This overlapping view of governmental powers is also seen in the U.S. Supreme Court's physical takings jurisprudence.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0It stands to reason that South Carolina's physical takings opinions would reflect a similar view. There is no apparent reason why the fundamental theory of governmental powers underlying physical takings analysis would be different from that in regulatory takings claims. As it turns out, review of the South Carolina case law in several different categories of physical takings claims (discussed in turn below) reveals a similar conception of the interplay between the eminent domain and police powers.

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