Takings
We now address a final method of resolving incompatible property uses. Eminent
domain is the inherent power of the state to transfer title of private property into state
hands. In the United States, when the government “takes” land in this manner, it must
pay the owner “just compensation.” This is a constitutional requirement, as the Fifth
Amendment provides, “nor shall private property be taken for public use, without just
compensation.” This brief constitutional provision encompasses three distinct issues
that we will deal with in this chapter (though not in this order): (1) has there been a
“taking” of private property? (2) Is the taking for “public use”; and (3) has “just
compensation” been provided?
Precedent under the Takings Clause regulates the manner in which the state directly
exercises its eminent domain power. As we will see, however, the clause also limits the
ability of the state to regulate. Property owners sometimes challenge property
regulations as being so onerous that it is as if the state has appropriated property and
compensation is therefore due. Much of the Supreme Court’s takings caselaw concerns
these so-called “regulatory takings.”
The power to take property is recognized (but not granted) by the Constitution and
long historical practice, but what justifies it? Simply calling it an attribute of sovereignty
does not provide a reason for its use. Property ownership usually encompasses the right
to say no. If I want to ship a mobile home across your field, but we don’t agree on a
price, it’s my duty to stay out. I cannot declare your property mine in exchange for a
judicially determined measure of “just compensation.” What makes the state different?
One traditional explanation concerns the transaction costs of government enterprises.
In a normal market, buyers can choose from among competing sellers. If houses in
town A are too expensive, you can look for one in town B, and if you are priced out of
the market, so be it. The state is often more constrained. Imagine a planned road that
will connect two cities. Building the road requires assembling multiple, connected
parcels. The number of plausible routes is finite, and increasingly constrained as plans
progress. Owners along the planned route therefore may hold out for higher sale
values, knowing the state has few alternatives. The absence of a functioning market
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Property
depletes the social surplus of the road and may kill the project altogether. Eminent
domain enables the government to engage in projects like these without the risk that a
single property owner might exercise a veto. 1 Of course private entities sometimes
undertake large projects. Why might they succeed despite lacking the eminent domain
power? For one argument, see Daniel B. Kelly, The “Public Use” Requirement in Eminent
Domain Law: A Rationale Based on Secret Purchases and Private Influence, 92 CORNELL L.
REV. 1, 5 (2006) (“[T]akings for the benefit of private parties are generally unnecessary-even if a private project potentially also has a public benefit--because private parties
can avoid the holdout problem using secret buying agents. These undisclosed agents
overcome the holdout problem by purchasing property without revealing the identity
of the assembler or the nature of the assembly project to existing owners.”).
A second question concerns the requirement of compensation. Why do you think it is
required? Fairness? Perhaps, but life is unfair. Moreover, we have insurance to protect
against life’s calamities. Why couldn’t we insure against government takings? Might the
answer have something to do with the nature of government action? Unlike forces of
nature, it is susceptible to outside influence. Can you think of other rationales? For a
discussion, see Steve P. Calandrillo, Eminent Domain Economics: Should “Just Compensation”
Be Abolished, and Would “Takings Insurance” Work Instead?, 64 OHIO ST. L.J. 451 (2003).
If the government did not have a duty to compensate, how would its behavior change?
A.
Physical Occupations
Loretto v. Teleprompter Manhattan CATV Corp.
458 U.S. 419 (1982)
Justice MARSHALL delivered the opinion of the Court.
This case presents the question whether a minor but permanent physical occupation
of an owner’s property authorized by government constitutes a “taking” of property
for which just compensation is due under the Fifth and Fourteenth Amendments of
And courts sometimes do require property owners to take the money and bear an intrusion. For example, private
condemnation statutes allow landlocked owners to obtain access to public roads so long as they pay
compensation. Likewise, recall that Boomer required nuisance plaintiffs to accept a de facto servitude on their land
upon payment of permanent damages by the defendant cement plant. Both situations may be described as
involving high transaction costs either in the form of bilateral monopoly or problems of coordinating numerous
parties.
1
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the Constitution. New York law provides that a landlord must permit a cable television
company to install its cable facilities upon his property. In this case, the cable
installation occupied portions of appellant’s roof and the side of her building. The New
York Court of Appeals ruled that this appropriation does not amount to a taking.
Because we conclude that such a physical occupation of property is a taking, we reverse.
I
Appellant Jean Loretto purchased a five-story apartment building located at 303 West
105th Street, New York City, in 1971. The previous owner had granted appellees
Teleprompter Corp. and Teleprompter Manhattan CATV (collectively Teleprompter)
permission to install a cable on the building and the exclusive privilege of furnishing
cable television (CATV) services to the tenants. The New York Court of Appeals
described the installation as follows:
“On June 1, 1970 TelePrompter installed a cable slightly less than one-half inch
in diameter and of approximately 30 feet in length along the length of the
building about 18 inches above the roof top, and directional taps, approximately
4 inches by 4 inches by 4 inches, on the front and rear of the roof. By June 8,
1970 the cable had been extended another 4 to 6 feet and cable had been run
from the directional taps to the adjoining building at 305 West 105th Street.”
Teleprompter also installed two large silver boxes along the roof cables. The cables are
attached by screws or nails penetrating the masonry at approximately two-foot intervals,
and other equipment is installed by bolts.
Initially, Teleprompter’s roof cables did not service appellant’s building. They were part
of what could be described as a cable “highway” circumnavigating the city block, with
service cables periodically dropped over the front or back of a building in which a
tenant desired service. Crucial to such a network is the use of so-called “crossovers”—
cable lines extending from one building to another in order to reach a new group of
tenants. Two years after appellant purchased the building, Teleprompter connected a
“noncrossover” line—i.e., one that provided CATV service to appellant’s own
tenants—by dropping a line to the first floor down the front of appellant’s building.
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Prior to 1973, Teleprompter routinely obtained authorization for its installations from
property owners along the cable’s route, compensating the owners at the standard rate
of 5% of the gross revenues that Teleprompter realized from the particular property.
To facilitate tenant access to CATV, the State of New York enacted § 828 of the
Executive Law, effective January 1, 1973. Section 828 provides that a landlord may not
“interfere with the installation of cable television facilities upon his property or
premises,” and may not demand payment from any tenant for permitting CATV, or
demand payment from any CATV company “in excess of any amount which the [State
Commission on Cable Television] shall, by regulation, determine to be reasonable.”
The landlord may, however, require the CATV company or the tenant to bear the cost
of installation and to indemnify for any damage caused by the installation. Pursuant to
§ 828(1)(b), the State Commission has ruled that a one-time $1 payment is the normal
fee to which a landlord is entitled. The Commission ruled that this nominal fee, which
the Commission concluded was equivalent to what the landlord would receive if the
property were condemned pursuant to New York’s Transportation Corporations Law,
satisfied constitutional requirements “in the absence of a special showing of greater
damages attributable to the taking.”
Appellant did not discover the existence of the cable until after she had purchased the
building. She brought a class action against Teleprompter in 1976 on behalf of all
owners of real property in the State on which Teleprompter has placed CATV
components, alleging that Teleprompter’s installation was a trespass and, insofar as it
relied on § 828, a taking without just compensation. She requested damages and
injunctive relief. Appellee City of New York, which has granted Teleprompter an
exclusive franchise to provide CATV within certain areas of Manhattan, intervened.
The Supreme Court, Special Term, granted summary judgment to Teleprompter and
the city, upholding the constitutionality of § 828 in both crossover and noncrossover
situations. The Appellate Division affirmed without opinion.
On appeal, the Court of Appeals, over dissent, upheld the statute.… The court … ruled
that the law serves a legitimate police power purpose—eliminating landlord fees and
conditions that inhibit the development of CATV, which has important educational
and community benefits. Rejecting the argument that a physical occupation authorized
by government is necessarily a taking, the court stated that the regulation does not have
an excessive economic impact upon appellant when measured against her aggregate
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property rights, and that it does not interfere with any reasonable investment-backed
expectations. Accordingly, the court held that § 828 does not work a taking of
appellant’s property. Chief Judge Cooke dissented, reasoning that the physical
appropriation of a portion of appellant’s property is a taking without regard to the
balancing analysis courts ordinarily employ in evaluating whether a regulation is a taking.
In light of its holding, the Court of Appeals had no occasion to determine whether the
$1 fee ordinarily awarded for a noncrossover installation was adequate compensation
for the taking. Judge Gabrielli, concurring, agreed with the dissent that the law works
a taking but concluded that the $1 presumptive award, together with the procedures
permitting a landlord to demonstrate a greater entitlement, affords just compensation.
We noted probable jurisdiction.
II
The Court of Appeals determined that § 828 serves the legitimate public purpose of
“rapid development of and maximum penetration by a means of communication which
has important educational and community aspects,” and thus is within the State’s police
power. We have no reason to question that determination. It is a separate question,
however, whether an otherwise valid regulation so frustrates property rights that
compensation must be paid. We conclude that a permanent physical occupation
authorized by government is a taking without regard to the public interests that it may
serve. Our constitutional history confirms the rule, recent cases do not question it, and
the purposes of the Takings Clause compel its retention.
A
In Penn Central Transportation Co. v. New York City the Court surveyed some of the
general principles governing the Takings Clause. The Court noted that no “set formula”
existed to determine, in all cases, whether compensation is constitutionally due for a
government restriction of property. Ordinarily, the Court must engage in “essentially
ad hoc, factual inquiries.” But the inquiry is not standardless. The economic impact of
the regulation, especially the degree of interference with investment-backed
expectations, is of particular significance. “So, too, is the character of the governmental
action. A ‘taking’ may more readily be found when the interference with property can
be characterized as a physical invasion by government, than when interference arises
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from some public program adjusting the benefits and burdens of economic life to
promote the common good.”
As Penn Central affirms, the Court has often upheld substantial regulation of an owner’s
use of his own property where deemed necessary to promote the public interest. At the
same time, we have long considered a physical intrusion by government to be a
property restriction of an unusually serious character for purposes of the Takings
Clause. Our cases further establish that when the physical intrusion reaches the extreme
form of a permanent physical occupation, a taking has occurred. In such a case, “the
character of the government action” not only is an important factor in resolving
whether the action works a taking but also is determinative.
When faced with a constitutional challenge to a permanent physical occupation of real
property, this Court has invariably found a taking. As early as 1872, in Pumpelly v. Green
Bay Co., 13 Wall. (80 U.S.) 166, this Court held that the defendant’s construction,
pursuant to state authority, of a dam which permanently flooded plaintiff’s property
constituted a taking. A unanimous Court stated, without qualification, that “where real
estate is actually invaded by superinduced additions of water, earth, sand, or other
material, or by having any artificial structure placed on it, so as to effectually destroy or
impair its usefulness, it is a taking, within the meaning of the Constitution.” Id., at 181.
Seven years later, the Court reemphasized the importance of a physical occupation by
distinguishing a regulation that merely restricted the use of private property. In Northern
Transportation Co. v. Chicago, 99 U.S. 635 (1879), the Court held that the city’s
construction of a temporary dam in a river to permit construction of a tunnel was not
a taking, even though the plaintiffs were thereby denied access to their premises,
because the obstruction only impaired the use of plaintiffs’ property. The Court
distinguished earlier cases in which permanent flooding of private property was
regarded as a taking, e.g., Pumpelly, supra, as involving “a physical invasion of the real
estate of the private owner, and a practical ouster of his possession.” In this case, by
contrast, “[n]o entry was made upon the plaintiffs’ lot.”
Since these early cases, this Court has consistently distinguished between flooding cases
involving a permanent physical occupation, on the one hand, and cases involving a
more temporary invasion, or government action outside the owner’s property that
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305
causes consequential damages within, on the other. A taking has always been found
only in the former situation.
In St. Louis v. Western Union Telegraph Co., 148 U.S. 92 (1893), the Court applied the
principles enunciated in Pumpelly to a situation closely analogous to the one presented
today. In that case, the Court held that the city of St. Louis could exact reasonable
compensation for a telegraph company’s placement of telegraph poles on the city’s
public streets.…
Similarly, in Western Union Telegraph Co. v. Pennsylvania R. Co., 195 U.S. 540 (1904), a
telegraph company constructed and operated telegraph lines over a railroad’s right of
way. In holding that federal law did not grant the company the right of eminent domain
or the right to operate the lines absent the railroad’s consent, the Court assumed that
the invasion of the telephone lines would be a compensable taking. Id., at 570 (the
right-of-way “cannot be appropriated in whole or in part except upon the payment of
compensation”). Later cases, relying on the character of a physical occupation, clearly
establish that permanent occupations of land by such installations as telegraph and
telephone lines, rails, and underground pipes or wires are takings even if they occupy
only relatively insubstantial amounts of space and do not seriously interfere with the
landowner’s use of the rest of his land.
More recent cases confirm the distinction between a permanent physical occupation, a
physical invasion short of an occupation, and a regulation that merely restricts the use
of property.…
Although this Court’s most recent cases have not addressed the precise issue before us,
they have emphasized that physical invasion cases are special and have not repudiated
the rule that any permanent physical occupation is a taking. The cases state or imply that
a physical invasion is subject to a balancing process, but they do not suggest that a
permanent physical occupation would ever be exempt from the Takings Clause.…
B
The historical rule that a permanent physical occupation of another’s property is a
taking has more than tradition to commend it. Such an appropriation is perhaps the
most serious form of invasion of an owner’s property interests. To borrow a metaphor,
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the government does not simply take a single “strand” from the “bundle” of property
rights: it chops through the bundle, taking a slice of every strand.
Property rights in a physical thing have been described as the rights “to possess, use
and dispose of it.” United States v. General Motors Corp., 323 U.S. 373, 378 (1945). To the
extent that the government permanently occupies physical property, it effectively
destroys each of these rights. First, the owner has no right to possess the occupied space
himself, and also has no power to exclude the occupier from possession and use of the
space. The power to exclude has traditionally been considered one of the most
treasured strands in an owner’s bundle of property rights. Second, the permanent
physical occupation of property forever denies the owner any power to control the use
of the property; he not only cannot exclude others, but can make no nonpossessory
use of the property. Although deprivation of the right to use and obtain a profit from
property is not, in every case, independently sufficient to establish a taking, it is clearly
relevant. Finally, even though the owner may retain the bare legal right to dispose of
the occupied space by transfer or sale, the permanent occupation of that space by a
stranger will ordinarily empty the right of any value, since the purchaser will also be
unable to make any use of the property.
Moreover, an owner suffers a special kind of injury when a stranger directly invades and
occupies the owner’s property. As Part II–A, supra, indicates, property law has long
protected an owner’s expectation that he will be relatively undisturbed at least in the
possession of his property. To require, as well, that the owner permit another to
exercise complete dominion literally adds insult to injury. See Michelman, Property,
Utility, and Fairness: Comments on the Ethical Foundations of “Just Compensation”
Law, 80 Harv.L.Rev. 1165, 1228, and n. 110 (1967). Furthermore, such an occupation
is qualitatively more severe than a regulation of the use of property, even a regulation
that imposes affirmative duties on the owner, since the owner may have no control
over the timing, extent, or nature of the invasion.
The traditional rule also avoids otherwise difficult line-drawing problems. Few would
disagree that if the State required landlords to permit third parties to install swimming
pools on the landlords’ rooftops for the convenience of the tenants, the requirement
would be a taking. If the cable installation here occupied as much space, again, few
would disagree that the occupation would be a taking. But constitutional protection for
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307
the rights of private property cannot be made to depend on the size of the area
permanently occupied. Indeed, it is possible that in the future, additional cable
installations that more significantly restrict a landlord’s use of the roof of his building
will be made. Section 828 requires a landlord to permit such multiple installations.
Finally, whether a permanent physical occupation has occurred presents relatively few
problems of proof. The placement of a fixed structure on land or real property is an
obvious fact that will rarely be subject to dispute. Once the fact of occupation is shown,
of course, a court should consider the extent of the occupation as one relevant factor in
determining the compensation due. For that reason, moreover, there is less need to
consider the extent of the occupation in determining whether there is a taking in the
first instance.
C
Teleprompter’s cable installation on appellant’s building constitutes a taking under the
traditional test. The installation involved a direct physical attachment of plates, boxes,
wires, bolts, and screws to the building, completely occupying space immediately above
and upon the roof and along the building’s exterior wall.
In light of our analysis, we find no constitutional difference between a crossover and a
noncrossover installation. The portions of the installation necessary for both
crossovers and noncrossovers permanently appropriate appellant’s property.
Accordingly, each type of installation is a taking.
Appellees raise a series of objections to application of the traditional rule here.
Teleprompter notes that the law applies only to buildings used as rental property, and
draws the conclusion that the law is simply a permissible regulation of the use of real
property. We fail to see, however, why a physical occupation of one type of property
but not another type is any less a physical occupation. Insofar as Teleprompter means
to suggest that this is not a permanent physical invasion, we must differ. So long as the
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property remains residential and a CATV company wishes to retain the installation, the
landlord must permit it. 17…
Finally, we do not agree with appellees that application of the physical occupation rule
will have dire consequences for the government’s power to adjust landlord-tenant
relationships. This Court has consistently affirmed that States have broad power to
regulate housing conditions in general and the landlord-tenant relationship in particular
without paying compensation for all economic injuries that such regulation entails. See,
e.g., Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241 (1964) (discrimination in
places of public accommodation); Queenside Hills Realty Co. v. Saxl, 328 U.S. 80 (1946)
(fire regulation); Bowles v. Willingham, 321 U.S. 503 (1944) (rent control); Home Building
& Loan Assn. v. Blaisdell, 290 U.S. 398 (1934) (mortgage moratorium); Edgar A. Levy
Leasing Co. v. Siegel, 258 U.S. 242 (1922) (emergency housing law); Block v. Hirsh, 256
U.S. 135 (1921) (rent control). In none of these cases, however, did the government
authorize the permanent occupation of the landlord’s property by a third party.
Consequently, our holding today in no way alters the analysis governing the State’s
power to require landlords to comply with building codes and provide utility
connections, mailboxes, smoke detectors, fire extinguishers, and the like in the
common area of a building. So long as these regulations do not require the landlord to
suffer the physical occupation of a portion of his building by a third party, they will be
analyzed under the multifactor inquiry generally applicable to nonpossessory
governmental activity. See Penn Central Transportation Co. v. New York City, 438 U.S. 104
(1978). 19
It is true that the landlord could avoid the requirements of § 828 by ceasing to rent the building to tenants. But
a landlord’s ability to rent his property may not be conditioned on his forfeiting the right to compensation for a
physical occupation.…
19 If § 828 required landlords to provide cable installation if a tenant so desires, the statute might present a
different question from the question before us, since the landlord would own the installation. Ownership would
give the landlord rights to the placement, manner, use, and possibly the disposition of the installation. The fact
of ownership is, contrary to the dissent, not simply “incidental”; it would give a landlord (rather than a CATV
company) full authority over the installation except only as government specifically limited that authority. The
landlord would decide how to comply with applicable government regulations concerning CATV and therefore
could minimize the physical, esthetic, and other effects of the installation. Moreover, if the landlord wished to
repair, demolish, or construct in the area of the building where the installation is located, he need not incur the
burden of obtaining the CATV company’s cooperation in moving the cable.
17
Takings
309
III
Our holding today is very narrow. We affirm the traditional rule that a permanent
physical occupation of property is a taking. In such a case, the property owner
entertains a historically rooted expectation of compensation, and the character of the
invasion is qualitatively more intrusive than perhaps any other category of property
regulation. We do not, however, question the equally substantial authority upholding a
State’s broad power to impose appropriate restrictions upon an owner’s use of his
property.
Furthermore, our conclusion that § 828 works a taking of a portion of appellant’s
property does not presuppose that the fee which many landlords had obtained from
Teleprompter prior to the law’s enactment is a proper measure of the value of the
property taken. The issue of the amount of compensation that is due, on which we
express no opinion, is a matter for the state courts to consider on remand. 20…
Justice BLACKMUN, with whom Justice BRENNAN and Justice WHITE join,
dissenting.
.… In my view, the Court’s approach “reduces the constitutional issue to a formalistic
quibble” over whether property has been “permanently occupied” or “temporarily
invaded.” Sax, Takings and the Police Power, 74 Yale L.J. 36, 37 1964). The Court’s
application of its formula to the facts of this case vividly illustrates that its approach is
potentially dangerous as well as misguided.…
Before examining the Court’s new takings rule, it is worth reviewing what was “taken”
in this case. At issue are about 36 feet of cable one-half inch in diameter and two 4″ x
4″ x 4″ metal boxes. Jointly, the cable and boxes occupy only about one-eighth of a
cubic foot of space on the roof of appellant’s Manhattan apartment building. When
In this case, by contrast, appellant suffered injury that might have been obviated if she had owned the cable and
could exercise control over its installation. The drilling and stapling that accompanied installation apparently
caused physical damage to appellant’s building. Appellant, who resides in her building, further testified that the
cable installation is “ugly.” Although § 828 provides that a landlord may require “reasonable” conditions that are
“necessary” to protect the appearance of the premises and may seek indemnity for damage, these provisions are
somewhat limited. Even if the provisions are effective, the inconvenience to the landlord of initiating the repairs
remains a cognizable burden.
20 In light of our disposition of appellant’s takings claim, we do not address her contention that § 828 deprives
her of property without due process of law.
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appellant purchased that building in 1971, the “physical invasion” she now challenges
had already occurred.…
The Court argues that a per se rule based on “permanent physical occupation” is both
historically rooted, and jurisprudentially sound. I disagree in both respects. The 19thcentury precedents relied on by the Court lack any vitality outside the agrarian context
in which they were decided. But if, by chance, they have any lingering vitality, then, in
my view, those cases stand for a constitutional rule that is uniquely unsuited to the
modern urban age. Furthermore, I find logically untenable the Court’s assertion that §
828 must be analyzed under a per se rule because it “effectively destroys” three of “the
most treasured strands in an owner’s bundle of property rights.”
The Court’s recent Takings Clause decisions teach that nonphysical government
intrusions on private property, such as zoning ordinances and other land-use
restrictions, have become the rule rather than the exception. Modern government
regulation exudes intangible “externalities” that may diminish the value of private
property far more than minor physical touchings.…
Precisely because the extent to which the government may injure private interests now
depends so little on whether or not it has authorized a “physical contact,” the Court
has avoided per se takings rules resting on outmoded distinctions between physical and
nonphysical intrusions. As one commentator has observed, a takings rule based on
such a distinction is inherently suspect because “its capacity to distinguish, even crudely,
between significant and insignificant losses is too puny to be taken seriously.”
Michelman, Property, Utility, and Fairness: Comments on the Ethical Foundations of
“Just Compensation” Law, 80 Harv.L.Rev. 1165, 1227 (1967).
Surprisingly, the Court draws an even finer distinction today—between “temporary
physical invasions” and “permanent physical occupations.” When the government
authorizes the latter type of intrusion, the Court would find “a taking without regard
to the public interests” the regulation may serve. Yet an examination of each of the
three words in the Court’s “permanent physical occupation” formula illustrates that
the newly-created distinction is even less substantial than the distinction between
physical and nonphysical intrusions that the Court already has rejected.
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311
First, what does the Court mean by “permanent”? Since all “temporary limitations on
the right to exclude” remain “subject to a more complex balancing process to
determine whether they are a taking,” the Court presumably describes a government
intrusion that lasts forever. But as the Court itself concedes, § 828 does not require
appellant to permit the cable installation forever, but only “[s]o long as the property
remains residential and a CATV company wishes to retain the installation.” This is far
from “permanent.”
The Court reaffirms that “States have broad power to regulate housing conditions in
general and the landlord-tenant relationship in particular without paying compensation
for all economic injuries that such regulation entails.” Thus, § 828 merely defines one
of the many statutory responsibilities that a New Yorker accepts when she enters the
rental business. If appellant occupies her own building, or converts it into a commercial
property, she becomes perfectly free to exclude Teleprompter from her one-eighth
cubic foot of roof space. But once appellant chooses to use her property for rental
purposes, she must comply with all reasonable government statutes regulating the
landlord-tenant relationship. If § 828 authorizes a “permanent” occupation, and thus
works a taking “without regard to the public interests that it may serve,” then all other
New York statutes that require a landlord to make physical attachments to his rental
property also must constitute takings, even if they serve indisputably valid public
interests in tenant protection and safety.
The Court denies that its theory invalidates these statutes, because they “do not require
the landlord to suffer the physical occupation of a portion of his building by a third
party.” But surely this factor cannot be determinative, since the Court simultaneously
recognizes that temporary invasions by third parties are not subject to a per se rule. Nor
can the qualitative difference arise from the incidental fact that, under § 828,
Teleprompter, rather than appellant or her tenants, owns the cable installation. If
anything, § 828 leaves appellant better off than do other housing statutes, since it
ensures that her property will not be damaged esthetically or physically, without
burdening her with the cost of buying or maintaining the cable.
In any event, under the Court’s test, the “third party” problem would remain even if
appellant herself owned the cable. So long as Teleprompter continuously passed its
electronic signal through the cable, a litigant could argue that the second element of
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the Court’s formula—a “physical touching” by a stranger—was satisfied and that § 828
therefore worked a taking. Literally read, the Court’s test opens the door to endless
metaphysical struggles over whether or not an individual’s property has been
“physically” touched.…
Third, the Court’s talismanic distinction between a continuous “occupation” and a
transient “invasion” finds no basis in either economic logic or Takings Clause
precedent. In the landlord-tenant context, the Court has upheld against takings
challenges rent control statutes permitting “temporary” physical invasions of
considerable economic magnitude. Moreover, precedents record numerous other
“temporary” officially authorized invasions by third parties that have intruded into an
owner’s enjoyment of property far more deeply than did Teleprompter’s longunnoticed cable. While, under the Court’s balancing test, some of these “temporary
invasions” have been found to be takings, the Court has subjected none of them to the
inflexible per se rule now adapted to analyze the far less obtrusive “occupation” at issue
in the present case.
In sum, history teaches that takings claims are properly evaluated under a multifactor
balancing test. By directing that all “permanent physical occupations” automatically are
compensable, “without regard to whether the action achieves an important public
benefit or has only minimal economic impact on the owner,” the Court does not
further equity so much as it encourages litigants to manipulate their factual allegations
to gain the benefit of its per se rule. I do not relish the prospect of distinguishing the
inevitable flow of certiorari petitions attempting to shoehorn insubstantial takings
claims into today’s “set formula.”
Setting aside history, the Court also states that the permanent physical occupation
authorized by § 828 is a per se taking because it uniquely impairs appellant’s powers to
dispose of, use, and exclude others from, her property. In fact, the Court’s discussion
nowhere demonstrates how § 828 impairs these private rights in a manner qualitatively
different from other garden-variety landlord-tenant legislation.
The Court first contends that the statute impairs appellant’s legal right to dispose of
cable-occupied space by transfer and sale. But that claim dissolves after a moment’s
reflection. If someone buys appellant’s apartment building, but does not use it for rental
purposes, that person can have the cable removed, and use the space as he wishes. In
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such a case, appellant’s right to dispose of the space is worth just as much as if § 828
did not exist.
Even if another landlord buys appellant’s building for rental purposes, § 828 does not
render the cable-occupied space valueless. As a practical matter, the regulation ensures
that tenants living in the building will have access to cable television for as long as that
building is used for rental purposes, and thereby likely increases both the building’s
resale value and its attractiveness on the rental market.
In any event, § 828 differs little from the numerous other New York statutory
provisions that require landlords to install physical facilities “permanently occupying”
common spaces in or on their buildings. As the Court acknowledges, the States
traditionally—and constitutionally—have exercised their police power “to require
landlords to ... provide utility connections, mailboxes, smoke detectors, fire
extinguishers, and the like in the common area of a building.” Like § 828, these
provisions merely ensure tenants access to services the legislature deems important,
such as water, electricity, natural light, telephones, intercommunication systems, and
mail service. A landlord’s dispositional rights are affected no more adversely when he
sells a building to another landlord subject to § 828, than when he sells that building
subject only to these other New York statutory provisions.
The Court also suggests that § 828 unconstitutionally alters appellant’s right to control
the use of her one-eighth cubic foot of roof space. But other New York multiple
dwelling statutes not only oblige landlords to surrender significantly larger portions of
common space for their tenants’ use, but also compel the landlord—rather than the
tenants or the private installers—to pay for and to maintain the equipment. For
example, New York landlords are required by law to provide and pay for mailboxes
that occupy more than five times the volume that Teleprompter’s cable occupies on
appellant’s building. If the State constitutionally can insist that appellant make this
sacrifice so that her tenants may receive mail, it is hard to understand why the State
may not require her to surrender less space, filled at another’s expense, so that those same
tenants can receive television signals.
For constitutional purposes, the relevant question cannot be solely whether the State has
interfered in some minimal way with an owner’s use of space on her building. Any
intelligible takings inquiry must also ask whether the extent of the State’s interference is
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so severe as to constitute a compensable taking in light of the owner’s alternative uses
for the property. Appellant freely admitted that she would have had no other use for
the cable-occupied space, were Teleprompter’s equipment not on her building.
The Court’s third and final argument is that § 828 has deprived appellant of her “power
to exclude the occupier from possession and use of the space” occupied by the cable.
This argument has two flaws. First, it unjustifiably assumes that appellant’s tenants have
no countervailing property interest in permitting Teleprompter to use that space.
Second, it suggests that the New York Legislature may not exercise its police power to
affect appellant’s common-law right to exclude Teleprompter even from one-eighth
cubic foot of roof space. But this Court long ago recognized that new social
circumstances can justify legislative modification of a property owner’s common-law
rights, without compensation, if the legislative action serves sufficiently important
public interests.…
In the end, what troubles me most about today’s decision is that it represents an archaic
judicial response to a modern social problem. Cable television is a new and growing,
but somewhat controversial, communications medium. The New York Legislature not
only recognized, but also responded to, this technological advance by enacting a statute
that sought carefully to balance the interests of all private parties. New York’s courts
in this litigation, with only one jurist in dissent, unanimously upheld the
constitutionality of that considered legislative judgment.
This Court now reaches back in time for a per se rule that disrupts that legislative
determination. Like Justice Black, I believe that “the solution of the problems
precipitated by ... technological advances and new ways of living cannot come about
through the application of rigid constitutional restraints formulated and enforced by
the courts.” United States v. Causby, 328 U.S., at 274 (dissenting opinion). I would affirm
the judgment and uphold the reasoning of the New York Court of Appeals.
Notes and Questions
1. Loretto’s victory at the Supreme Court amounted to little. The Commission on
Cable Television decided that $1 sufficed as compensation because cable
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television access enhances property values, and the Court of Appeals held it was
permissible for the compensation to be set by the commission, subject to later
judicial review, rather than a court. Loretto v. Teleprompter Manhattan CATV
Corp., 446 N.E.2d 428, 434 (N.Y. 1983).
2. Categorical Rules. One debate between the majority and the dissent concerns
the merits of rules versus standards. As we will discuss in greater detail, the
Court had developed a balancing test for determining whether government
regulation goes “too far” and becomes a taking. The question thus arose
whether that balancing test applies to all takings inquiries. Even if Loretto had
gone the dissent’s way, it still would be the case that physical invasions would
generally be takings. The dispute was over whether courts have the discretion
to treat certain minor intrusions sufficiently de minimis as not to require
compensation. The Court rejected this approach, clarifying that any permanent
physical occupation by or authorized by the government is a taking as a
categorical, per se, matter.
3. A consequence of the rule is that certain minor intrusions merit compensation,
while more costly regulations may pass muster under the balancing test. That
problem aside, Justice Blackmun claims that the per se occupations rule lacks
the compensating benefit of ease of application, pointing to the difficulty of
distinguishing permanent from temporary occupations. Do you agree?
4. Another point of contention between the majority and dissent is whether it is
sensible to allow the state to require by regulation the installation of cable (or
other) facilities, but prohibit it from directly authorizing their installation. At
some point, might regulation become so extensive that it constitutes a de facto
occupation? Yee v. City of Escondido, 503 U.S. 519 (1992), rejects the argument
that rent control laws fall under Loretto’s categorical rule, concluding that the
decision of the landlord to lease the premises negates the claim of any forced
physical occupation.
5. Personal property. How does Loretto apply to personal property? Horne v.
Department of Agriculture, 135 S.Ct. 2419 (2015), addressed a challenge to a
Department of Agriculture program intended to promote stability in the raisin
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market. The program issued marketing orders that required raisin farmers to set
aside a certain percentage of their annual crop. The government took title to the
reserved raisins and disposed of them in a variety of ways, including sales in
non-competitive markets, returning any net profits to the growers. The Court
held this to be a taking under Loretto.
Raisin growers subject to the reserve requirement thus lose the entire
“bundle” of property rights in the appropriated raisins—”the rights to
possess, use and dispose of” them, Loretto, 458 U.S., at 435 (internal
quotation marks omitted)—with the exception of the speculative hope
that some residual proceeds may be left when the Government is done
with the raisins and has deducted the expenses of implementing all
aspects of the marketing order. The Government’s “actual taking of
possession and control” of the reserve raisins gives rise to a taking as
clearly “as if the Government held full title and ownership,” id., at 431
(internal quotation marks omitted), as it essentially does. The
Government’s formal demand that the [farmers] turn over a percentage
of their raisin crop without charge, for the Government’s control and
use, is “of such a unique character that it is a taking without regard to
other factors that a court might ordinarily examine.” Id., at 432.
135 S. Ct. at 2428. As in Loretto, the Court rejected the argument that the reserve
requirement was permissible given that the government could achieve the same
end by simply prohibiting the farmers from selling a portion of their crop.
[T]hat distinction flows naturally from the settled difference in our
takings jurisprudence between appropriation and regulation. A physical
taking of raisins and a regulatory limit on production may have the same
economic impact on a grower. The Constitution, however, is concerned
with means as well as ends.
Id. The Court likewise determined that the farmers’ retention of a contingent
monetary interest in the sale of the reserved raisins did not negate the physical
taking. Dissenting, Justice Sotomayor argued that Loretto’s per se rule applies only
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when all property rights have been taken, and the farmers’ contingent interest
negates use of the per se rule.
B.
Regulatory Takings
Penn Cent. Transp. Co. v. City of New York
438 U.S. 104 (1978)
Mr. Justice BRENNAN delivered the opinion of the Court.
The question presented is whether a city may, as part of a comprehensive program to
preserve historic landmarks and historic districts, place restrictions on the development
of individual historic landmarks—in addition to those imposed by applicable zoning
ordinances—without effecting a “taking” requiring the payment of “just
compensation.” Specifically, we must decide whether the application of New York
City’s Landmarks Preservation Law to the parcel of land occupied by Grand Central
Terminal has “taken” its owners’ property in violation of the Fifth and Fourteenth
Amendments.
I
A
Over the past 50 years, all 50 States and over 500 municipalities have enacted laws to
encourage or require the preservation of buildings and areas with historic or aesthetic
importance. These nationwide legislative efforts have been precipitated by two
concerns. The first is recognition that, in recent years, large numbers of historic
structures, landmarks, and areas have been destroyed without adequate consideration
of either the values represented therein or the possibility of preserving the destroyed
properties for use in economically productive ways. The second is a widely shared belief
that structures with special historic, cultural, or architectural significance enhance the
quality of life for all. Not only do these buildings and their workmanship represent the
lessons of the past and embody precious features of our heritage, they serve as
examples of quality for today. “[H]istoric conservation is but one aspect of the much
larger problem, basically an environmental one, of enhancing—or perhaps developing
for the first time—the quality of life for people.”
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New York City, responding to similar concerns and acting pursuant to a New York
State enabling Act, adopted its Landmarks Preservation Law in 1965. See N.Y.C.
Admin. Code, ch. 8–A, § 205–1.0 et seq. (1976). The city acted from the conviction that
“the standing of [New York City] as a world-wide tourist center and world capital of
business, culture and government” would be threatened if legislation were not enacted
to protect historic landmarks and neighborhoods from precipitate decisions to destroy
or fundamentally alter their character. § 205–1.0(a). The city believed that
comprehensive measures to safeguard desirable features of the existing urban fabric
would benefit its citizens in a variety of ways: e. g., fostering “civic pride in the beauty
and noble accomplishments of the past”; protecting and enhancing “the city’s
attractions to tourists and visitors”; “support[ing] and stimul [ating] business and
industry”; “strengthen[ing] the economy of the city”; and promoting “the use of
historic districts, landmarks, interior landmarks and scenic landmarks for the education,
pleasure and welfare of the people of the city.” § 205–1.0(b).
The New York City law is typical of many urban landmark laws in that its primary
method of achieving its goals is not by acquisitions of historic properties, 6 but rather
by involving public entities in land-use decisions affecting these properties and
providing services, standards, controls, and incentives that will encourage preservation
by private owners and users. While the law does place special restrictions on landmark
properties as a necessary feature to the attainment of its larger objectives, the major
theme of the law is to ensure the owners of any such properties both a “reasonable
return” on their investments and maximum latitude to use their parcels for purposes
not inconsistent with the preservation goals.
The operation of the law can be briefly summarized. The primary responsibility for
administering the law is vested in the Landmarks Preservation Commission
(Commission), a broad based, 11-member agency assisted by a technical staff. The
Commission first performs the function, critical to any landmark preservation effort,
of identifying properties and areas that have “a special character or special historical or
The consensus is that widespread public ownership of historic properties in urban settings is neither feasible
nor wise. Public ownership reduces the tax base, burdens the public budget with costs of acquisitions and
maintenance, and results in the preservation of public buildings as museums and similar facilities, rather than as
economically productive features of the urban scene. See Wilson & Winkler, The Response of State Legislation
to Historic Preservation, 36 Law & Contemp. Prob. 329, 330–331, 339–340 (1971).
6
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319
aesthetic interest or value as part of the development, heritage or cultural characteristics
of the city, state or nation.” If the Commission determines, after giving all interested
parties an opportunity to be heard, that a building or area satisfies the ordinance’s
criteria, it will designate a building to be a “landmark,” situated on a particular
“landmark site,” or will designate an area to be a “historic district.” After the
Commission makes a designation, New York City’s Board of Estimate, after
considering the relationship of the designated property “to the master plan, the zoning
resolution, projected public improvements and any plans for the renewal of the area
involved,” may modify or disapprove the designation, and the owner may seek judicial
review of the final designation decision. Thus far, 31 historic districts and over 400
individual landmarks have been finally designated, and the process is a continuing one.
Final designation as a landmark results in restrictions upon the property owner’s
options concerning use of the landmark site. First, the law imposes a duty upon the
owner to keep the exterior features of the building “in good repair” to assure that the
law’s objectives not be defeated by the landmark’s falling into a state of irremediable
disrepair. Second, the Commission must approve in advance any proposal to alter the
exterior architectural features of the landmark or to construct any exterior
improvement on the landmark site, thus ensuring that decisions concerning
construction on the landmark site are made with due consideration of both the public
interest in the maintenance of the structure and the landowner’s interest in use of the
property.
In the event an owner wishes to alter a landmark site, three separate procedures are
available through which administrative approval may be obtained. First, the owner may
apply to the Commission for a “certificate of no effect on protected architectural
features”: that is, for an order approving the improvement or alteration on the ground
that it will not change or affect any architectural feature of the landmark and will be in
harmony therewith. Denial of the certificate is subject to judicial review.
Second, the owner may apply to the Commission for a certificate of “appropriateness.”
Such certificates will be granted if the Commission concludes—focusing upon
aesthetic, historical, and architectural values—that the proposed construction on the
landmark site would not unduly hinder the protection, enhancement, perpetuation, and
use of the landmark. Again, denial of the certificate is subject to judicial review.
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Moreover, the owner who is denied either a certificate of no exterior effect or a
certificate of appropriateness may submit an alternative or modified plan for approval.
The final procedure—seeking a certificate of appropriateness on the ground of
“insufficient return,”—provides special mechanisms, which vary depending on
whether or not the landmark enjoys a tax exemption, to ensure that designation does
not cause economic hardship.
Although the designation of a landmark and landmark site restricts the owner’s control
over the parcel, designation also enhances the economic position of the landmark
owner in one significant respect. Under New York City’s zoning laws, owners of real
property who have not developed their property to the full extent permitted by the
applicable zoning laws are allowed to transfer development rights to contiguous parcels
on the same city block. A 1968 ordinance gave the owners of landmark sites additional
opportunities to transfer development rights to other parcels. Subject to a restriction
that the floor area of the transferee lot may not be increased by more than 20% above
its authorized level, the ordinance permitted transfers from a landmark parcel to
property across the street or across a street intersection. In 1969, the law governing the
conditions under which transfers from landmark parcels could occur was liberalized,
apparently to ensure that the Landmarks Law would not unduly restrict the
development options of the owners of Grand Central Terminal. The class of recipient
lots was expanded to include lots “across a street and opposite to another lot or lots
which except for the intervention of streets or street intersections f [or]m a series
extending to the lot occupied by the landmark building [, provided that] all lots [are] in
the same ownership.” New York City Zoning Resolution 74–79 (emphasis deleted). In
addition, the 1969 amendment permits, in highly commercialized areas like midtown
Manhattan, the transfer of all unused development rights to a single parcel.
B
This case involves the application of New York City’s Landmarks Preservation Law to
Grand Central Terminal (Terminal). The Terminal, which is owned by the Penn Central
Transportation Co. and its affiliates (Penn Central), is one of New York City’s most
famous buildings. Opened in 1913, it is regarded not only as providing an ingenious
engineering solution to the problems presented by urban railroad stations, but also as
a magnificent example of the French beaux-arts style.
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The Terminal is located in midtown Manhattan. Its south facade faces 42d Street and
that street’s intersection with Park Avenue. At street level, the Terminal is bounded on
the west by Vanderbilt Avenue, on the east by the Commodore Hotel, and on the north
by the Pan-American Building. Although a 20-story office tower, to have been located
above the Terminal, was part of the original design, the planned tower was never
constructed. The Terminal itself is an eight-story structure which Penn Central uses as
a railroad station and in which it rents space not needed for railroad purposes to a
variety of commercial interests. The Terminal is one of a number of properties owned
by appellant Penn Central in this area of midtown Manhattan.… At least eight of these
are eligible to be recipients of development rights afforded the Terminal by virtue of
landmark designation.
On August 2, 1967, following a public hearing, the Commission designated the
Terminal a “landmark” and designated the “city tax block” it occupies a “landmark
site.” The Board of Estimate confirmed this action on September 21, 1967. Although
appellant Penn Central had opposed the designation before the Commission, it did not
seek judicial review of the final designation decision.
On January 22, 1968, appellant Penn Central, to increase its income, entered into a
renewable 50-year lease and sublease agreement with appellant UGP Properties, Inc.
(UGP), a wholly owned subsidiary of Union General Properties, Ltd., a United
Kingdom corporation. Under the terms of the agreement, UGP was to construct a
multistory office building above the Terminal. UGP promised to pay Penn Central $1
million annually during construction and at least $3 million annually thereafter. The
rentals would be offset in part by a loss of some $700,000 to $1 million in net rentals
presently received from concessionaires displaced by the new building.
Appellants UGP and Penn Central then applied to the Commission for permission to
construct an office building atop the Terminal. Two separate plans, both designed by
architect Marcel Breuer and both apparently satisfying the terms of the applicable
zoning ordinance, were submitted to the Commission for approval. The first, Breuer I,
provided for the construction of a 55-story office building, to be cantilevered above
the existing facade and to rest on the roof of the Terminal. The second, Breuer II
Revised, called for tearing down a portion of the Terminal that included the 42d Street
facade, stripping off some of the remaining features of the Terminal’s facade, and
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constructing a 53-story office building. The Commission denied a certificate of no
exterior effect on September 20, 1968. Appellants then applied for a certificate of
“appropriateness” as to both proposals. After four days of hearings at which over 80
witnesses testified, the Commission denied this application as to both proposals.[ 2]
The Commission’s reasons for rejecting certificates respecting Breuer II Revised are
summarized in the following statement: “To protect a Landmark, one does not tear it
down. To perpetuate its architectural features, one does not strip them off.” Breuer I,
which would have preserved the existing vertical facades of the present structure,
received more sympathetic consideration. The Commission first focused on the effect
that the proposed tower would have on one desirable feature created by the present
structure and its surroundings: the dramatic view of the Terminal from Park Avenue
South. Although appellants had contended that the Pan-American Building had already
destroyed the silhouette of the south facade and that one additional tower could do no
further damage and might even provide a better background for the facade, the
Commission disagreed, stating that it found the majestic approach from the south to
be still unique in the city and that a 55-story tower atop the Terminal would be far
more detrimental to its south facade than the Pan-American Building 375 feet away.
Moreover, the Commission found that from closer vantage points the Pan Am Building
[2] Reproductions of the proposals appear below:
(From: http://www.architakes.com/?p=13036).
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and the other towers were largely cut off from view, which would not be the case of
the mass on top of the Terminal planned under Breuer I. In conclusion, the
Commission stated:
“[We have] no fixed rule against making additions to designated buildings—it
all depends on how they are done . . . . But to balance a 55-story office tower
above a flamboyant Beaux-Arts facade seems nothing more than an aesthetic
joke. Quite simply, the tower would overwhelm the Terminal by its sheer mass.
The ‘addition’ would be four times as high as the existing structure and would
reduce the Landmark itself to the status of a curiosity.
“Landmarks cannot be divorced from their settings—particularly when the
setting is a dramatic and integral part of the original concept. The Terminal, in
its setting, is a great example of urban design. Such examples are not so plentiful
in New York City that we can afford to lose any of the few we have. And we
must preserve them in a meaningful way—with alterations and additions of such
character, scale, materials and mass as will protect, enhance and perpetuate the
original design rather than overwhelm it.”
Appellants did not seek judicial review of the denial of either certificate.… Further,
appellants did not avail themselves of the opportunity to develop and submit other
plans for the Commission’s consideration and approval. Instead, appellants filed suit
in New York Supreme Court, Trial Term, claiming, inter alia, that the application of the
Landmarks Preservation Law had “taken” their property without just compensation in
violation of the Fifth and Fourteenth Amendments and arbitrarily deprived them of
their property without due process of law in violation of the Fourteenth Amendment.
Appellants sought a declaratory judgment, injunctive relief barring the city from using
the Landmarks Law to impede the construction of any structure that might otherwise
lawfully be constructed on the Terminal site, and damages for the “temporary taking”
that occurred between August 2, 1967, the designation date, and the date when the
restrictions arising from the Landmarks Law would be lifted. The trial court granted
the injunctive and declaratory relief, but severed the question of damages for a
“temporary taking.” [The New York Supreme Court, Appellate Division, reversed, and
this ruling was affirmed by the state Court of Appeals.]
II
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The issues presented by appellants are (1) whether the restrictions imposed by New
York City’s law upon appellants’ exploitation of the Terminal site effect a “taking” of
appellants’ property for a public use within the meaning of the Fifth Amendment,
which of course is made applicable to the States through the Fourteenth Amendment,
and, (2), if so, whether the transferable development rights afforded appellants
constitute “just compensation” within the meaning of the Fifth Amendment. We need
only address the question whether a “taking” has occurred.
A
…. The question of what constitutes a “taking” for purposes of the Fifth Amendment
has proved to be a problem of considerable difficulty. While this Court has recognized
that the “Fifth Amendment’s guarantee . . . [is] designed to bar Government from
forcing some people alone to bear public burdens which, in all fairness and justice,
should be borne by the public as a whole,” Armstrong v. United States, 364 U.S. 40, 49
(1960), this Court, quite simply, has been unable to develop any “set formula” for
determining when “justice and fairness” require that economic injuries caused by public
action be compensated by the government, rather than remain disproportionately
concentrated on a few persons. Indeed, we have frequently observed that whether a
particular restriction will be rendered invalid by the government’s failure to pay for any
losses proximately caused by it depends largely “upon the particular circumstances [in
that] case.” United States v. Central Eureka Mining Co., 357 U.S. 155, 168 (1958).
In engaging in these essentially ad hoc, factual inquiries, the Court’s decisions have
identified several factors that have particular significance. The economic impact of the
regulation on the claimant and, particularly, the extent to which the regulation has
interfered with distinct investment-backed expectations are, of course, relevant
considerations. So, too, is the character of the governmental action. A “taking” may
more readily be found when the interference with property can be characterized as a
physical invasion by government, than when interference arises from some public
program adjusting the benefits and burdens of economic life to promote the common
good.
“Government hardly could go on if to some extent values incident to property could
not be diminished without paying for every such change in the general law,” Pennsylvania
Coal Co. v. Mahon, 260 U.S. 393, 413 (1922), and this Court has accordingly recognized,
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in a wide variety of contexts, that government may execute laws or programs that
adversely affect recognized economic values. Exercises of the taxing power are one
obvious example. A second are the decisions in which this Court has dismissed “taking”
challenges on the ground that, while the challenged government action caused
economic harm, it did not interfere with interests that were sufficiently bound up with
the reasonable expectations of the claimant to constitute “property” for Fifth
Amendment purposes. See, e. g., United States v. Willow River Power Co., 324 U.S. 499
(1945) (interest in high-water level of river for runoff for tailwaters to maintain power
head is not property); United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53 (1913).
More importantly for the present case, in instances in which a state tribunal reasonably
concluded that “the health, safety, morals, or general welfare” would be promoted by
prohibiting particular contemplated uses of land, this Court has upheld land-use
regulations that destroyed or adversely affected recognized real property interests.
Zoning laws are, of course, the classic example, see Euclid v. Ambler Realty Co., 272 U.S.
365 (1926) (prohibition of industrial use); Gorieb v. Fox, 274 U.S. 603, 608 (1927)
(requirement that portions of parcels be left unbuilt); Welch v. Swasey, 214 U.S. 91 (1909)
(height restriction), which have been viewed as permissible governmental action even
when prohibiting the most beneficial use of the property.
Zoning laws generally do not affect existing uses of real property, but “taking”
challenges have also been held to be without merit in a wide variety of situations when
the challenged governmental actions prohibited a beneficial use to which individual
parcels had previously been devoted and thus caused substantial individualized harm.
Miller v. Schoene, 276 U.S. 272 (1928), is illustrative. In that case, a state entomologist,
acting pursuant to a state statute, ordered the claimants to cut down a large number of
ornamental red cedar trees because they produced cedar rust fatal to apple trees
cultivated nearby. Although the statute provided for recovery of any expense incurred
in removing the cedars, and permitted claimants to use the felled trees, it did not
provide compensation for the value of the standing trees or for the resulting decrease
in market value of the properties as a whole. A unanimous Court held that this latter
omission did not render the statute invalid. The Court held that the State might
properly make “a choice between the preservation of one class of property and that of
the other” and since the apple industry was important in the State involved, concluded
that the State had not exceeded “its constitutional powers by deciding upon the
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Property
destruction of one class of property [without compensation] in order to save another
which, in the judgment of the legislature, is of greater value to the public.”
Again, Hadacheck v. Sebastian, 239 U.S. 394 (1915), upheld a law prohibiting the claimant
from continuing his otherwise lawful business of operating a brickyard in a particular
physical community on the ground that the legislature had reasonably concluded that
the presence of the brickyard was inconsistent with neighboring uses.…
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), is the leading case for the
proposition that a state statute that substantially furthers important public policies may
so frustrate distinct investment-backed expectations as to amount to a “taking.” There
the claimant had sold the surface rights to particular parcels of property, but expressly
reserved the right to remove the coal thereunder. A Pennsylvania statute, enacted after
the transactions, forbade any mining of coal that caused the subsidence of any house,
unless the house was the property of the owner of the underlying coal and was more
than 150 feet from the improved property of another. Because the statute made it
commercially impracticable to mine the coal, and thus had nearly the same effect as the
complete destruction of rights claimant had reserved from the owners of the surface
land, the Court held that the statute was invalid as effecting a “taking” without just
compensation.
Finally, government actions that may be characterized as acquisitions of resources to
permit or facilitate uniquely public functions have often been held to constitute
“takings.” United States v. Causby, 328 U.S. 256 (1946), is illustrative. In holding that
direct overflights above the claimant’s land, that destroyed the present use of the land
as a chicken farm, constituted a “taking,” Causby emphasized that Government had not
“merely destroyed property [but was] using a part of it for the flight of its planes.” Id.,
328 U.S., at 262–263, n. 7.
B
…. Because this Court has recognized, in a number of settings, that States and cities
may enact land-use restrictions or controls to enhance the quality of life by preserving
the character and desirable aesthetic features of a city, appellants do not contest that
New York City’s objective of preserving structures and areas with special historic,
architectural, or cultural significance is an entirely permissible governmental goal. They
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also do not dispute that the restrictions imposed on its parcel are appropriate means of
securing the purposes of the New York City law. Finally, appellants do not challenge
any of the specific factual premises of the decision below. They accept for present
purposes both that the parcel of land occupied by Grand Central Terminal must, in its
present state, be regarded as capable of earning a reasonable return, and that the
transferable development rights afforded appellants by virtue of the Terminal’s
designation as a landmark are valuable, even if not as valuable as the rights to construct
above the Terminal. In appellants’ view none of these factors derogate from their claim
that New York City’s law has effected a “taking.”
They first observe that the airspace above the Terminal is a valuable property interest,
citing United States v. Causby, supra. They urge that the Landmarks Law has deprived
them of any gainful use of their “air rights” above the Terminal and that, irrespective
of the value of the remainder of their parcel, the city has “taken” their right to this
superadjacent airspace, thus entitling them to “just compensation” measured by the
fair market value of these air rights.
Apart from our own disagreement with appellants’ characterization of the effect of the
New York City law, the submission that appellants may establish a “taking” simply by
showing that they have been denied the ability to exploit a property interest that they
heretofore had believed was available for development is quite simply untenable. Were
this the rule, this Court would have erred not only in upholding laws restricting the
development of air rights, see Welch v. Swasey, supra, but also in approving those
prohibiting both the subjacent, see Goldblatt v. Hempstead, 369 U.S. 590 (1962), and the
lateral, see Gorieb v. Fox, 274 U.S. 603 development of particular parcels. 27 “Taking”
jurisprudence does not divide a single parcel into discrete segments and attempt to
determine whether rights in a particular segment have been entirely abrogated. In
deciding whether a particular governmental action has effected a taking, this Court
focuses rather both on the character of the action and on the nature and extent of the
These cases dispose of any contention that might be based on Pennsylvania Coal Co. v. Mahon, 260 U.S. 393
(1922), that full use of air rights is so bound up with the investment-backed expectations of appellants that
governmental deprivation of these rights invariably—i. e., irrespective of the impact of the restriction on the
value of the parcel as a whole—constitutes a “taking.” Similarly, Welch, Goldblatt, and Gorieb illustrate the fallacy
of appellants’ related contention that a “taking” must be found to have occurred whenever the land-use restriction
may be characterized as imposing a “servitude” on the claimant’s parcel.
27
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interference with rights in the parcel as a whole—here, the city tax block designated as
the “landmark site.”
Secondly, appellants, focusing on the character and impact of the New York City law,
argue that it effects a “taking” because its operation has significantly diminished the
value of the Terminal site. Appellants concede that the decisions sustaining other landuse regulations, which, like the New York City law, are reasonably related to the
promotion of the general welfare, uniformly reject the proposition that diminution in
property value, standing alone, can establish a “taking,” see Euclid v. Ambler Realty Co.,
272 U.S. 365 (1926) (75% diminution in value caused by zoning law); Hadacheck v.
Sebastian, 239 U.S. 394 (1915) (87 1/2 % diminution in value), and that the “taking”
issue in these contexts is resolved by focusing on the uses the regulations permit.…
[B]ut appellants argue that New York City’s regulation of individual landmarks is
fundamentally different from zoning or from historic-district legislation because the
controls imposed by New York City’s law apply only to individuals who own selected
properties.
Stated baldly, appellants’ position appears to be that the only means of ensuring that
selected owners are not singled out to endure financial hardship for no reason is to
hold that any restriction imposed on individual landmarks pursuant to the New York
City scheme is a “taking” requiring the payment of “just compensation.” Agreement
with this argument would, of course, invalidate not just New York City’s law, but all
comparable landmark legislation in the Nation. We find no merit in it.
It is true, as appellants emphasize, that both historic-district legislation and zoning laws
regulate all properties within given physical communities whereas landmark laws apply
only to selected parcels. But, contrary to appellants’ suggestions, landmark laws are not
like discriminatory, or “reverse spot,” zoning: that is, a land-use decision which
arbitrarily singles out a particular parcel for different, less favorable treatment than the
neighboring ones. In contrast to discriminatory zoning, which is the antithesis of landuse control as part of some comprehensive plan, the New York City law embodies a
comprehensive plan to preserve structures of historic or aesthetic interest wherever
they might be found in the city, and as noted, over 400 landmarks and 31 historic
districts have been designated pursuant to this plan.
Takings
329
Equally without merit is the related argument that the decision to designate a structure
as a landmark “is inevitably arbitrary or at least subjective, because it is basically a matter
of taste,” Reply Brief for Appellants 22, thus unavoidably singling out individual
landowners for disparate and unfair treatment. The argument has a particularly hollow
ring in this case. For appellants not only did not seek judicial review of either the
designation or of the denials of the certificates of appropriateness and of no exterior
effect, but do not even now suggest that the Commission’s decisions concerning the
Terminal were in any sense arbitrary or unprincipled. But, in any event, a landmark
owner has a right to judicial review of any Commission decision, and, quite simply,
there is no basis whatsoever for a conclusion that courts will have any greater difficulty
identifying arbitrary or discriminatory action in the context of landmark regulation than
in the context of classic zoning or indeed in any other context.
Next, appellants observe that New York City’s law differs from zoning laws and
historic-district ordinances in that the Landmarks Law does not impose identical or
similar restrictions on all structures located in particular physical communities. It
follows, they argue, that New York City’s law is inherently incapable of producing the
fair and equitable distribution of benefits and burdens of governmental action which
is characteristic of zoning laws and historic-district legislation and which they maintain
is a constitutional requirement if “just compensation” is not to be afforded. It is, of
course, true that the Landmarks Law has a more severe impact on some landowners
than on others, but that in itself does not mean that the law effects a “taking.”
Legislation designed to promote the general welfare commonly burdens some more
than others. The owners of the brickyard in Hadacheck, of the cedar trees in Miller v.
Schoene, and of the gravel and sand mine in Goldblatt v. Hempstead, were uniquely
burdened by the legislation sustained in those cases. 30 Similarly, zoning laws often
Appellants attempt to distinguish these cases on the ground that, in each, government was prohibiting a
“noxious” use of land and that in the present case, in contrast, appellants’ proposed construction above the
Terminal would be beneficial. We observe that the uses in issue in Hadacheck, Miller, and Goldblatt were perfectly
lawful in themselves. They involved no “blameworthiness, . . . moral wrongdoing or conscious act of dangerous
risk-taking which induce[d society] to shift the cost to a pa[rt]icular individual.” Sax, Takings and the Police Power,
74 Yale L.J. 36, 50 (1964). These cases are better understood as resting not on any supposed “noxious” quality
of the prohibited uses but rather on the ground that the restrictions were reasonably related to the implementation
of a policy—not unlike historic preservation—expected to produce a widespread public benefit and applicable
to all similarly situated property.
30
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affect some property owners more severely than others but have not been held to be
invalid on that account. For example, the property owner in Euclid who wished to use
its property for industrial purposes was affected far more severely by the ordinance
than its neighbors who wished to use their land for residences.
In any event, appellants’ repeated suggestions that they are solely burdened and
unbenefited is factually inaccurate. This contention overlooks the fact that the New
York City law applies to vast numbers of structures in the city in addition to the
Terminal—all the structures contained in the 31 historic districts and over 400
individual landmarks, many of which are close to the Terminal. Unless we are to reject
the judgment of the New York City Council that the preservation of landmarks benefits
all New York citizens and all structures, both economically and by improving the
quality of life in the city as a whole—which we are unwilling to do—we cannot
conclude that the owners of the Terminal have in no sense been benefited by the
Landmarks Law. Doubtless appellants believe they are more burdened than benefited
by the law, but that must have been true, too, of the property owners in Miller,
Hadacheck, Euclid, and Goldblatt.
Appellants’ final broad-based attack would have us treat the law as an instance, like that
in United States v. Causby, in which government, acting in an enterprise capacity, has
appropriated part of their property for some strictly governmental purpose. Apart from
the fact that Causby was a case of invasion of airspace that destroyed the use of the farm
beneath and this New York City law has in nowise impaired the present use of the
Terminal, the Landmarks Law neither exploits appellants’ parcel for city purposes nor
facilitates nor arises from any entrepreneurial operations of the city. The situation is
not remotely like that in Causby where the airspace above the property was in the flight
pattern for military aircraft. The Landmarks Law’s effect is simply to prohibit
appellants or anyone else from occupying portions of the airspace above the Terminal,
while permitting appellants to use the remainder of the parcel in a gainful fashion. This
is no more an appropriation of property by government for its own uses than is a
Nor, correlatively, can it be asserted that the destruction or fundamental alteration of a historic landmark
is not harmful. The suggestion that the beneficial quality of appellants’ proposed construction is established by
the fact that the construction would have been consistent with applicable zoning laws ignores the development
in sensibilities and ideals reflected in landmark legislation like New York City’s.
Takings
331
zoning law prohibiting, for “aesthetic” reasons, two or more adult theaters within a
specified area, or a safety regulation prohibiting excavations below a certain level.
C
Rejection of appellants’ broad arguments is not, however, the end of our inquiry, for
all we thus far have established is that the New York City law is not rendered invalid
by its failure to provide “just compensation” whenever a landmark owner is restricted
in the exploitation of property interests, such as air rights, to a greater extent than
provided for under applicable zoning laws. We now must consider whether the
interference with appellants’ property is of such a magnitude that “there must be an
exercise of eminent domain and compensation to sustain [it].” Pennsylvania Coal Co. v.
Mahon, 260 U.S., at 413. That inquiry may be narrowed to the question of the severity
of the impact of the law on appellants’ parcel, and its resolution in turn requires a
careful assessment of the impact of the regulation on the Terminal site.
…[T]he New York City law does not interfere in any way with the present uses of the
Terminal. Its designation as a landmark not only permits but contemplates that
appellants may continue to use the property precisely as it has been used for the past
65 years: as a railroad terminal containing office space and concessions. So the law does
not interfere with what must be regarded as Penn Central’s primary expectation
concerning the use of the parcel. More importantly, on this record, we must regard the
New York City law as permitting Penn Central not only to profit from the Terminal
but also to obtain a “reasonable return” on its investment.
Appellants, moreover, exaggerate the effect of the law on their ability to make use of
the air rights above the Terminal in two respects. First, it simply cannot be maintained,
on this record, that appellants have been prohibited from occupying any portion of the
airspace above the Terminal. While the Commission’s actions in denying applications
to construct an office building in excess of 50 stories above the Terminal may indicate
that it will refuse to issue a certificate of appropriateness for any comparably sized
structure, nothing the Commission has said or done suggests an intention to prohibit
any construction above the Terminal. The Commission’s report emphasized that
whether any construction would be allowed depended upon whether the proposed
addition “would harmonize in scale, material and character with [the Terminal].” Since
appellants have not sought approval for the construction of a smaller structure, we do
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not know that appellants will be denied any use of any portion of the airspace above
the Terminal.
Second, to the extent appellants have been denied the right to build above the Terminal,
it is not literally accurate to say that they have been denied all use of even those preexisting air rights. Their ability to use these rights has not been abrogated; they are
made transferable to at least eight parcels in the vicinity of the Terminal, one or two of
which have been found suitable for the construction of new office buildings. Although
appellants and others have argued that New York City’s transferable developmentrights program is far from ideal, the New York courts here supportably found that, at
least in the case of the Terminal, the rights afforded are valuable. While these rights
may well not have constituted “just compensation” if a “taking” had occurred, the
rights nevertheless undoubtedly mitigate whatever financial burdens the law has
imposed on appellants and, for that reason, are to be taken into account in considering
the impact of regulation.
On this record, we conclude that the application of New York City’s Landmarks Law
has not effected a “taking” of appellants’ property. The restrictions imposed are
substantially related to the promotion of the general welfare and not only permit
reasonable beneficial use of the landmark site but also afford appellants opportunities
further to enhance not only the Terminal site proper but also other properties.
Affirmed.
Mr. Justice REHNQUIST, with whom THE CHIEF JUSTICE and Mr. Justice
STEVENS join, dissenting.
Of the over one million buildings and structures in the city of New York, appellees
have singled out 400 for designation as official landmarks. The owner of a building
might initially be pleased that his property has been chosen by a distinguished
committee of architects, historians, and city planners for such a singular distinction.
But he may well discover, as appellant Penn Central Transportation Co. did here, that
the landmark designation imposes upon him a substantial cost, with little or no
offsetting benefit except for the honor of the designation. The question in this case is
whether the cost associated with the city of New York’s desire to preserve a limited
number of “landmarks” within its borders must be borne by all of its taxpayers or
whether it can instead be imposed entirely on the owners of the individual properties.
Takings
333
Only in the most superficial sense of the word can this case be said to involve “zoning.”
Typical zoning restrictions may, it is true, so limit the prospective uses of a piece of
property as to diminish the value of that property in the abstract because it may not be
used for the forbidden purposes. But any such abstract decrease in value will more than
likely be at least partially offset by an increase in value which flows from similar
restrictions as to use on neighboring properties. All property owners in a designated
area are placed under the same restrictions, not only for the benefit of the municipality
as a whole but also for the common benefit of one another. In the words of Mr. Justice
Holmes, speaking for the Court in Pennsylvania Coal Co. v. Mahon, there is “an average
reciprocity of advantage.”
Where a relatively few individual buildings, all separated from one another, are singled
out and treated differently from surrounding buildings, no such reciprocity exists. The
cost to the property owner which results from the imposition of restrictions applicable
only to his property and not that of his neighbors may be substantial—in this case,
several million dollars—with no comparable reciprocal benefits. And the cost
associated with landmark legislation is likely to be of a completely different order of
magnitude than that which results from the imposition of normal zoning restrictions.
Unlike the regime affected by the latter, the landowner is not simply prohibited from
using his property for certain purposes, while allowed to use it for all other purposes.
Under the historic-landmark preservation scheme adopted by New York, the property
owner is under an affirmative duty to preserve his property as a landmark at his own
expense. To suggest that because traditional zoning results in some limitation of use of
the property zoned, the New York City landmark preservation scheme should likewise
be upheld, represents the ultimate in treating as alike things which are different. The
rubric of “zoning” has not yet sufficed to avoid the well-established proposition that
the Fifth Amendment bars the “Government from forcing some people alone to bear
public burdens which, in all fairness and justice, should be borne by the public as a
whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960).…
I
The Fifth Amendment provides in part: “nor shall private property be taken for public
use, without just compensation.” In a very literal sense, the actions of appellees violated
this constitutional prohibition. Before the city of New York declared Grand Central
Terminal to be a landmark, Penn Central could have used its “air rights” over the
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Terminal to build a multistory office building, at an apparent value of several million
dollars per year. Today, the Terminal cannot be modified in any form, including the
erection of additional stories, without the permission of the Landmark Preservation
Commission, a permission which appellants, despite good-faith attempts, have so far
been unable to obtain. Because the Taking Clause of the Fifth Amendment has not
always been read literally, however, the constitutionality of appellees’ actions requires
a closer scrutiny of this Court’s interpretation of the three key words in the Taking
Clause—“property,” “taken,” and “just compensation.”
A
Appellees do not dispute that valuable property rights have been destroyed. And the
Court has frequently emphasized that the term “property” as used in the Taking Clause
includes the entire “group of rights inhering in the citizen’s [ownership].” United States
v. General Motors Corp., 323 U.S. 373 (1945).…
While neighboring landowners are free to use their land and “air rights” in any way
consistent with the broad boundaries of New York zoning, Penn Central, absent the
permission of appellees, must forever maintain its property in its present state. The
property has been thus subjected to a nonconsensual servitude not borne by any
neighboring or similar properties.
B
….[A]n examination of the two exceptions where the destruction of property does not
constitute a taking demonstrates that a compensable taking has occurred here.
1
As early as 1887, the Court recognized that the government can prevent a property
owner from using his property to injure others without having to compensate the
owner for the value of the forbidden use.…
The nuisance exception to the taking guarantee is not coterminous with the police
power itself. The question is whether the forbidden use is dangerous to the safety,
health, or welfare of others. Thus, in Curtin v. Benson, 222 U.S. 78 (1911), the Court held
that the Government, in prohibiting the owner of property within the boundaries of
Yosemite National Park from grazing cattle on his property, had taken the owner’s
Takings
335
property. The Court assumed that the Government could constitutionally require the
owner to fence his land or take other action to prevent his cattle from straying onto
others’ land without compensating him.…
Appellees are not prohibiting a nuisance. The record is clear that the proposed addition
to the Grand Central Terminal would be in full compliance with zoning, height
limitations, and other health and safety requirements. Instead, appellees are seeking to
preserve what they believe to be an outstanding example of beaux-arts architecture.
Penn Central is prevented from further developing its property basically because too
good a job was done in designing and building it. The city of New York, because of its
unadorned admiration for the design, has decided that the owners of the building must
preserve it unchanged for the benefit of sightseeing New Yorkers and tourists.
Unlike land-use regulations, appellees’ actions do not merely prohibit Penn Central from
using its property in a narrow set of noxious ways. Instead, appellees have placed an
affirmative duty on Penn Central to maintain the Terminal in its present state and in
“good repair.” Appellants are not free to use their property as they see fit within broad
outer boundaries but must strictly adhere to their past use except where appellees
conclude that alternative uses would not detract from the landmark. While Penn
Central may continue to use the Terminal as it is presently designed, appellees
otherwise “exercise complete dominion and control over the surface of the land,”
United States v. Causby, 328 U.S. 256, 262 (1946), and must compensate the owner for
his loss. “Property is taken in the constitutional sense when inroads are made upon an
owner’s use of it to an extent that, as between private parties, a servitude has been
acquired.” United States v. Dickinson, 331 U.S. 745, 748 (1947).
2
Even where the government prohibits a noninjurious use, the Court has ruled that a
taking does not take place if the prohibition applies over a broad cross section of land
and thereby “secure[s] an average reciprocity of advantage.” Pennsylvania Coal Co. v.
Mahon, 260 U.S., at 415. It is for this reason that zoning does not constitute a “taking.”
While zoning at times reduces individual property values, the burden is shared relatively
evenly and it is reasonable to conclude that on the whole an individual who is harmed
by one aspect of the zoning will be benefited by another.
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Here, however, a multimillion dollar loss has been imposed on appellants; it is uniquely
felt and is not offset by any benefits flowing from the preservation of some 400 other
“landmarks” in New York City. Appellees have imposed a substantial cost on less than
one one-tenth of one percent of the buildings in New York City for the general benefit
of all its people. It is exactly this imposition of general costs on a few individuals at
which the “taking” protection is directed.…
As Mr. Justice Holmes pointed out in Pennsylvania Coal Co. v. Mahon, “the question at
bottom” in an eminent domain case “is upon whom the loss of the changes desired
should fall.” The benefits that appellees believe will flow from preservation of the
Grand Central Terminal will accrue to all the citizens of New York City. There is no
reason to believe that appellants will enjoy a substantially greater share of these benefits.
If the cost of preserving Grand Central Terminal were spread evenly across the entire
population of the city of New York, the burden per person would be in cents per
year—a minor cost appellees would surely concede for the benefit accrued. Instead,
however, appellees would impose the entire cost of several million dollars per year on
Penn Central. But it is precisely this sort of discrimination that the Fifth Amendment
prohibits.
Appellees in response would argue that a taking only occurs where a property owner is
denied all reasonable value of his property. The Court has frequently held that, even
where a destruction of property rights would not otherwise constitute a taking, the
inability of the owner to make a reasonable return on his property requires
compensation under the Fifth Amendment. But the converse is not true. A taking does
not become a noncompensable exercise of police power simply because the
government in its grace allows the owner to make some “reasonable” use of his
property.…
C
Appellees, apparently recognizing that the constraints imposed on a landmark site
constitute a taking for Fifth Amendment purposes, do not leave the property owner
empty-handed. As the Court notes, the property owner may theoretically “transfer” his
previous right to develop the landmark property to adjacent properties if they are under
his control. Appellees have coined this system “Transfer Development Rights,” or
TDR’s.
Takings
337
Of all the terms used in the Taking Clause, “just compensation” has the strictest
meaning. The Fifth Amendment does not allow simply an approximate compensation
but requires “a full and perfect equivalent for the property taken.” Monongahela
Navigation Co. v. United States, 148 U.S., at 326.…
Appellees contend that, even if they have “taken” appellants’ property, TDR’s
constitute “just compensation.” Appellants, of course, argue that TDR’s are highly
imperfect compensation. Because the lower courts held that there was no “taking,”
they did not have to reach the question of whether or not just compensation has already
been awarded.…
Because the record on appeal is relatively slim, I would remand to the Court of Appeals
for a determination of whether TDR’s constitute a “full and perfect equivalent for the
property taken.”
II
Over 50 years ago, Mr. Justice Holmes, speaking for the Court, warned that the courts
were “in danger of forgetting that a strong public desire to improve the public
condition is not enough to warrant achieving the desire by a shorter cut than the
constitutional way of paying for the change.” Pennsylvania Coal Co. v. Mahon, 260 U.S.,
at 416. The Court’s opinion in this case demonstrates that the danger thus foreseen has
not abated. The city of New York is in a precarious financial state, and some may
believe that the costs of landmark preservation will be more easily borne by
corporations such as Penn Central than the overburdened individual taxpayers of New
York. But these concerns do not allow us to ignore past precedents construing the
Eminent Domain Clause to the end that the desire to improve the public condition is,
indeed, achieved by a shorter cut than the constitutional way of paying for the change.
Notes and Questions
1. The Penn Central test. The Penn Central factors are generally listed as an
inquiry into “[1] the regulation’s economic effect on the landowner, [2] the
extent to which the regulation interferes with reasonable investment-backed
expectations, and [3] the character of the government action.” Palazzolo v.
Rhode Island, 533 U.S. 606, 617 (2001). The first factor concerns diminution of
value, an issue raised by Pennsylvania Coal. As you see, the Court resisted the
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conceptual severance claim, rejecting the notion that “air rights” were
something to be evaluated independently of the property as a whole.
2. Distinct Investment-Backed Expectations. The meaning of the second
factor as something distinct from the first is a matter of debate. Unhelpfully,
the Court later described the question as being one of “reasonable” investmentbacked expectations in Kaiser Aetna v. United States, 444 U.S. 164, 175 (1979).
The idea is frequently credited to an article by Frank Michelman, who argued
that the principle more accurately captures what may rise to the level of a taking
than simple diminution of value:
The customary labels—magnitude of the harm test, or diminution of
value test—obscure the test’s foundations by conveying the idea that it
calls for an arbitrary pinpointing of a critical proportion (probably lying
somewhere between fifty and one hundred percent). More
sympathetically perceived, however, the test poses not nearly so loose a
question of degree; it does not ask “how much,” but rather (like the
physical-occupation test) it asks “whether or not”: whether or not the
measure in question can easily be seen to have practically deprived the
claimant of some distinctly perceived, sharply crystallized, investmentbacked expectation.
The nature and relevance of this inquiry may emerge more clearly if we
notice one other familiar line of doctrine … when a new zoning scheme
is instituted, for “established” uses which would be violations were the
scheme applied with full retrospective vigor. The standard practice of
granting dispensations for such “nonconforming uses” seems to imply
an understanding that simply to ban them without payment of
compensation, thus seriously reducing the property’s market value,
would be wrong and perhaps unconstitutional. But a ban on potential
uses not yet established may destroy market value as effectively as does
a ban on activity already in progress. The ban does not shed its
retrospective quality simply because it affects only prospective uses.
What explains, then, the universal understanding that only those
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339
nonconforming uses are protected which were demonstrably afoot by
the time the regulation was adopted? The answer seems to be that actual
establishment of the use demonstrates that the prospect of continuing it
is a discrete twig out of his fee simple bundle to which the owner makes
explicit reference in his own thinking, so that enforcement of the
restriction would, as he looks at the matter, totally defeat a distinctly
crystallized expectation.
Frank I. Michelman, Property, Utility, and Fairness: Comments on the Ethical
Foundations of “Just Compensation” Law, 80 HARV. L. REV. 1165, 1232-34 (1967)
(footnotes omitted); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005-06
(1984) (“A ‘reasonable investment-backed expectation’ must be more than a
“unilateral expectation or an abstract need.” (citing Webb’s Fabulous Pharmacies,
Inc. v. Beckwith, 449 U.S. 155, 161 (1980)). As the excerpted text notes, the
principle of nonconforming uses in zoning law reflects the importance of
property owner expectations in uses that preexist the arrival of new zoning
rules.
Michelman’s argument, and some precedent, suggests that investment-backed
expectations are less likely to be found where the property in question is
purchased against a backdrop of regulation. Does that mean that takings
challenges are doomed whenever the property is acquired after the offending
regulations are in place? In Palazzolo v. Rhode Island, 533 U.S. 606 (2001), the
Court held in the negative. Ever straining for eloquence, Justice Kennedy
concluded that “[t]he State may not put so potent a Hobbesian stick into the
Lockean bundle.… Were we to accept the State’s rule, the postenactment
transfer of title would absolve the State of its obligation to defend any action
restricting land use, no matter how extreme or unreasonable. A State would be
allowed, in effect, to put an expiration date on the Takings Clause. This ought
not to be the rule. Future generations, too, have a right to challenge
unreasonable limitations on the use and value of land.” Id. at 627.
3. Character of the Governmental Action. Here, too, the Court is less than clear,
as its example of how this factor might be weighed in the property owner’s
favor, a permanent physical invasion, was later held to be a taking as a
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categorical matter in Loretto. That sort of invasion is juxtaposed against an
interference “from some public program adjusting the benefits and burdens of
economic life to promote the common good,” suggesting room for judgment
when a program falls short (e.g., when someone is unfairly singled out for the
burdens, whether there is a reciprocity of advantage, etc.). See, e.g., Thomas W.
Merrill, The Character of the Governmental Action, 36 VT. L. REV. 649, 664 (2012)
(“Several lower courts have picked up on the idea that the character factor is
designed to measure the distributional impact of the challenged governmental
action. These courts favor broad-based laws that offer reciprocity of advantage
and find suspect laws that single out particular owners for severe burdens while
conferring benefits on others.”).
4. Takings and Due Process inquiries distinguished. The question whether a
regulation amounts to a taking is distinct from the issue of whether it violates a
liberty or property interest under the Due Process Clause. The latter asks
whether the government may impose the challenged regulation at all. The
former identifies a subset of cases in which the government regulation is such
an intrusion as to require compensation.
In takings cases, you may encounter citations to Agins v. City of Tiburon for the
proposition that “[t]he application of a general zoning law to particular property
effects a taking if the ordinance does not substantially advance legitimate state
interests.” 447 U.S. 255, 260 (1980). Does this mean that compensation must
be paid if the state cannot meet a higher burden than the one required for
regulation under the Due Process Clause? No. In Lingle v. Chevron U.S.A. Inc.,
544 U.S. 528, 540-42 (2005), the Court observed the phrase was “regrettably
imprecise” and clarified that “it has no proper place in our takings
jurisprudence.”
5. Several articles report that the government generally prevails under the Penn
Central test in the lower courts. F. Patrick Hubbard et al., Do Owners Have A
Fair Chance of Prevailing Under the Ad Hoc Regulatory Takings Test of Penn
Central Transportation Company? 14 DUKE ENVTL. L. & POL’Y F. 121 (2003);
Basil H. Mattingly, Forum Over Substance: The Empty Ritual of Balancing in
Regulatory Takings Jurisprudence, 36 WILLAMETTE L. REV. 695 (2000). One
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341
such study argues that calling the factors a balancing test misstates what is
actually going on.
The analysis reveals that the Courts of Appeals for the First, Ninth, and
Federal Circuits, and the trial courts within the Ninth Circuit, all decided
Penn Central cases utilizing fewer than three factors in a majority of the
cases reaching the merits: on average, the circuit courts of appeals
utilized three factors only slightly more than one-third of the time
(37.8%). Complementing these findings is data on how often the courts
actually applied Penn Central as a balancing test. The data shows that
applying Penn Central as a balancing test is statistically rare. Averaging the
cases that reached the merits of a takings claim, the courts applied Penn
as a balancing test less than 7% of the time. As an average percentage of
cases applying all three Penn Central factors (cases that themselves are less
than half of all cases reaching the merits), courts applied it as a balancing
test less than 14% of the time. Together this data indicates that the
predominant practice of the federal courts is not to use Penn Central as a
balancing test.
Adam R. Pomeroy, Penn Central After 35 Years: A Three Part Balancing Test or A
One Strike Rule?, 22 FED. CIRCUIT B.J. 677, 704 (2013). Pomeroy argues that
regulatory takings claims prevail only when the court concludes that the
regulation looks like an act that is normally a taking as a categorical matter. Id.
at 696 (“It seems that instead of balancing factual situations, the courts of
appeals have found regulatory takings under Penn Central only when a claim falls
barely short being a taking under one of the categorical rules.”). We have already
discussed one such categorical rule in Loretto. We now turn to the second.
C.
“Wipeouts”
Lucas v. South Carolina Coastal Council
505 U.S. 1003 (1992)
Justice SCALIA delivered the opinion of the Court.
In 1986, petitioner David H. Lucas paid $975,000 for two residential lots on the Isle of
Palms in Charleston County, South Carolina, on which he intended to build single-
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family homes. In 1988, however, the South Carolina Legislature enacted the Beachfront
Management Act, S.C.Code Ann. § 48–39–250 et seq. (Supp.1990), which had the direct
effect of barring petitioner from erecting any permanent habitable structures on his
two parcels. See § 48–39–290(A). A state trial court found that this prohibition
rendered Lucas’s parcels “valueless.” App. to Pet. for Cert. 37. This case requires us to
decide whether the Act’s dramatic effect on the economic value of Lucas’s lots
accomplished a taking of private property under the Fifth and Fourteenth
Amendments requiring the payment of “just compensation.” U.S. Const., Amdt. 5.
I
A
South Carolina’s expressed interest in intensively managing development activities in
the so-called “coastal zone” dates from 1977 when, in the aftermath of Congress’s
passage of the federal Coastal Zone Management Act of 1972, 86 Stat. 1280, as
amended, 16 U.S.C. § 1451 et seq., the legislature enacted a Coastal Zone Management
Act of its own. See S.C.Code Ann. § 48–39–10 et seq. (1987). In its original form, the
South Carolina Act required owners of coastal zone land that qualified as a “critical
area” (defined in the legislation to include beaches and immediately adjacent sand
dunes, § 48–39–10(J)) to obtain a permit from the newly created South Carolina Coastal
Council (Council) (respondent here) prior to committing the land to a “use other than
the use the critical area was devoted to on [September 28, 1977].” § 48–39–130(A).
In the late 1970’s, Lucas and others began extensive residential development of the Isle
of Palms, a barrier island situated eastward of the city of Charleston. Toward the close
of the development cycle for one residential subdivision known as “Beachwood East,”
Lucas in 1986 purchased the two lots at issue in this litigation for his own account. No
portion of the lots, which were located approximately 300 feet from the beach, qualified
as a “critical area” under the 1977 Act; accordingly, at the time Lucas acquired these
parcels, he was not legally obliged to obtain a permit from the Council in advance of
any development activity. His intention with respect to the lots was to do what the
owners of the immediately adjacent parcels had already done: erect single-family
residences. He commissioned architectural drawings for this purpose.
The Beachfront Management Act brought Lucas’s plans to an abrupt end. Under that
1988 legislation, the Council was directed to establish a “baseline” connecting the
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343
landward-most “point[s] of erosion ... during the past forty years” in the region of the
Isle of Palms that includes Lucas’s lots. S.C.Code Ann. § 48–39–280(A)(2) (Supp.1988).
In action not challenged here, the Council fixed this baseline landward of Lucas’s
parcels. That was significant, for under the Act construction of occupiable
improvements was flatly prohibited seaward of a line drawn 20 feet landward of, and
parallel to, the baseline. § 48–39–290(A). The Act provided no exceptions.
B
Lucas promptly filed suit in the South Carolina Court of Common Pleas, contending
that the Beachfront Management Act’s construction bar effected a taking of his
property without just compensation. Lucas did not take issue with the validity of the
Act as a lawful exercise of South Carolina’s police power, but contended that the Act’s
complete extinguishment of his property’s value entitled him to compensation
regardless of whether the legislature had acted in furtherance of legitimate police power
objectives. Following a bench trial, the court agreed. Among its factual determinations
was the finding that “at the time Lucas purchased the two lots, both were zoned for
single-family residential construction and ... there were no restrictions imposed upon
such use of the property by either the State of South Carolina, the County of Charleston,
or the Town of the Isle of Palms.” The trial court further found that the Beachfront
Management Act decreed a permanent ban on construction insofar as Lucas’s lots were
concerned, and that this prohibition “deprive[d] Lucas of any reasonable economic use
of the lots, ... eliminated the unrestricted right of use, and render[ed] them valueless.”
The court thus concluded that Lucas’s properties had been “taken” by operation of the
Act, and it ordered respondent to pay “just compensation” in the amount of
$1,232,387.50.
[The Supreme Court of South Carolina reversed, concluding that regulation “to prevent
serious public harm” is not a taking regardless no matter the effect on property
values.].…
III
A
Prior to Justice Holmes’s exposition in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393
(1922), it was generally thought that the Takings Clause reached only a “direct
appropriation” of property, Legal Tender Cases, 12 Wall. 457, 551 (1871), or the
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Property
functional equivalent of a “practical ouster of [the owner’s] possession,” Transportation
Co. v. Chicago, 99 U.S. 635 (1879). Justice Holmes recognized in Mahon, however, that
if the protection against physical appropriations of private property was to be
meaningfully enforced, the government’s power to redefine the range of interests
included in the ownership of property was necessarily constrained by constitutional
limits. If, instead, the uses of private property were subject to unbridled,
uncompensated qualification under the police power, “the natural tendency of human
nature [would be] to extend the qualification more and more until at last private
property disappear[ed].” These considerations gave birth in that case to the oft-cited
maxim that, “while property may be regulated to a certain extent, if regulation goes too
far it will be recognized as a taking.”
Nevertheless, our decision in Mahon offered little insight into when, and under what
circumstances, a given regulation would be seen as going “too far” for purposes of the
Fifth Amendment. In 70–odd years of succeeding “regulatory takings” jurisprudence,
we have generally eschewed any “ ‘set formula’ “ for determining how far is too far,
preferring to “engag[e] in ... essentially ad hoc, factual inquiries.” Penn Central
Transportation Co. v. New York City, 438 U.S. 104, 124 (1978) (quoting Goldblatt v.
Hempstead, 369 U.S. 590, 594 (1962)). We have, however, described at least two discrete
categories of regulatory action as compensable without case-specific inquiry into the
public interest advanced in support of the restraint. The first encompasses regulations
that compel the property owner to suffer a physical “invasion” of his property. In
general (at least with regard to permanent invasions), no matter how minute the
intrusion, and no matter how weighty the public purpose behind it, we have required
compensation. For example, in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S.
419 (1982), we determined that New York’s law requiring landlords to allow television
cable companies to emplace cable facilities in their apartment buildings constituted a
taking even though the facilities occupied at most only 1 ½ cubic feet of the landlords’
property.
The second situation in which we have found categorical treatment appropriate is
where regulation denies all economically beneficial or productive use of land. As we
have said on numerous occasions, the Fifth Amendment is violated when land-use
regulation “does not substantially advance legitimate state interests or denies an owner
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345
economically viable use of his land.” Agins, supra, 447 U.S., at 260 (citations omitted)
(emphasis added). 7
We have never set forth the justification for this rule. Perhaps it is simply, as Justice
Brennan suggested, that total deprivation of beneficial use is, from the landowner’s
point of view, the equivalent of a physical appropriation. See San Diego Gas & Electric
Co. v. San Diego, 450 U.S., at 652 (dissenting opinion). “[F]or what is the land but the
profits thereof[?]” 1 E. Coke, Institutes, ch. 1, § 1 (1st Am. ed. 1812). Surely, at least,
in the extraordinary circumstance when no productive or economically beneficial use
of land is permitted, it is less realistic to indulge our usual assumption that the legislature
is simply “adjusting the benefits and burdens of economic life,” Penn Central
Transportation Co., 438 U.S., at 124, in a manner that secures an “average reciprocity of
advantage” to everyone concerned, Pennsylvania Coal Co. v. Mahon, 260 U.S., at 415. And
the functional basis for permitting the government, by regulation, to affect property
values without compensation—that “Government hardly could go on if to some extent
values incident to property could not be diminished without paying for every such
Regrettably, the rhetorical force of our “deprivation of all economically 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. When, for example, a regulation requires a developer to leave 90% of a rural tract in its natural state,
it is unclear whether we would analyze the situation as one in which the owner has been deprived of all
economically beneficial use of the burdened portion of the tract, or as one in which the owner has suffered a
mere diminution in value of the tract as a whole. (For an extreme—and, we think, unsupportable—view of the
relevant calculus, see Penn Central Transportation Co. v. New York City, 42 N.Y.2d 324, 333–334, 366 N.E.2d 1271,
1276–1277 (1977), aff’d, 438 U.S. 104 (1978), where the state court examined the diminution in a particular
parcel’s value produced by a municipal ordinance in light of total value of the takings claimant’s other holdings
in the vicinity.) Unsurprisingly, this uncertainty regarding the composition of the denominator in our “deprivation”
fraction has produced inconsistent pronouncements by the Court. Compare Pennsylvania Coal Co. v. Mahon, 260
U.S. 393, 414 (1922) (law restricting subsurface extraction of coal held to effect a taking), with Keystone Bituminous
Coal Assn. v. DeBenedictis, 480 U.S. 470, 497–502 (1987) (nearly identical law held not to effect a taking); see also
id., at 515–520 (REHNQUIST, C.J., dissenting); Rose, Mahon Reconstructed: Why the Takings Issue is Still a
Muddle, 57 S.Cal.L.Rev. 561, 566–569 (1984). The answer to this difficult question may lie in how the owner’s
reasonable expectations have been shaped by the State’s law of property—i.e., whether and to what degree the
State’s law has accorded legal recognition and protection to the particular interest in land with respect to which
the takings claimant alleges a diminution in (or elimination of) value. In any event, we avoid this difficulty in the
present case, since the “interest in land” that Lucas has pleaded (a fee simple interest) is an estate with a rich
tradition of protection at common law, and since the South Carolina Court of Common Pleas found that the
Beachfront Management Act left each of Lucas’s beachfront lots without economic value.
7
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Property
change in the general law,” id., at 413—does not apply to the relatively rare situations
where the government has deprived a landowner of all economically beneficial uses.
On the other side of the balance, affirmatively supporting a compensation requirement,
is the fact that regulations that leave the owner of land without economically beneficial
or productive options for its use—typically, as here, by requiring land to be left
substantially in its natural state—carry with them a heightened risk that private property
is being pressed into some form of public service under the guise of mitigating serious
public harm.…
We think, in short, that there are good reasons for our frequently expressed belief that
when the owner of real property has been called upon to sacrifice all economically
beneficial uses in the name of the common good, that is, to leave his property
economically idle, he has suffered a taking. 8
B
The trial court found Lucas’s two beachfront lots to have been rendered valueless by
respondent’s enforcement of the coastal-zone construction ban. 9 Under Lucas’s theory
of the case, which rested upon our “no economically viable use” statements, that
finding entitled him to compensation. Lucas believed it unnecessary to take issue with
either the purposes behind the Beachfront Management Act, or the means chosen by
the South Carolina Legislature to effectuate those purposes. The South Carolina
Supreme Court, however, thought otherwise. In its view, the Beachfront Management
Justice STEVENS criticizes the “deprivation of all economically beneficial use” rule as “wholly arbitrary,” in
that “[the] landowner whose property is diminished in value 95% recovers nothing,” while the landowner who
suffers a complete elimination of value “recovers the land’s full value.” This analysis errs in its assumption that
the landowner whose deprivation is one step short of complete is not entitled to compensation. Such an owner
might not be able to claim the benefit of our categorical formulation, but, as we have acknowledged time and
again, “[t]he economic impact of the regulation on the claimant and ... the extent to which the regulation has
interfered with distinct investment-backed expectations” are keenly relevant to takings analysis generally. Penn
Central Transportation Co. v. New York City, 438 U.S. 104, 124 (1978). It is true that in at least some cases the
landowner with 95% loss will get nothing, while the landowner with total loss will recover in full. But that
occasional result is no more strange than the gross disparity between the landowner whose premises are taken
for a highway (who recovers in full) and the landowner whose property is reduced to 5% of its former value by
the highway (who recovers nothing). Takings law is full of these “all-or-nothing” situations.…
9 This finding was the premise of the petition for certiorari, and since it was not challenged in the brief in
opposition we decline to entertain the argument in respondent’s brief on the merits that the finding was erroneous.
8
Takings
347
Act was no ordinary enactment, but involved an exercise of South Carolina’s “police
powers” to mitigate the harm to the public interest that petitioner’s use of his land
might occasion.… [and] within a long line of this Court’s cases sustaining against Due
Process and Takings Clause challenges the State’s use of its “police powers” to enjoin
a property owner from activities akin to public nuisances. See Mugler v. Kansas, 123 U.S.
623 (1887) (law prohibiting manufacture of alcoholic beverages); Hadacheck v. Sebastian,
239 U.S. 394 (1915) (law barring operation of brick mill in residential area); Miller v.
Schoene, 276 U.S. 272 (1928) (order to destroy diseased cedar trees to prevent infection
of nearby orchards); Goldblatt v. Hempstead, 369 U.S. 590 (1962) (law effectively
preventing continued operation of quarry in residential area).
It is correct that many of our prior opinions have suggested that “harmful or noxious
uses” of property may be proscribed by government regulation without the
requirement of compensation. For a number of reasons, however, we think the South
Carolina Supreme Court was too quick to conclude that that principle decides the
present case. The “harmful or noxious uses” principle was the Court’s early attempt to
describe in theoretical terms why government may, consistent with the Takings Clause,
affect property values by regulation without incurring an obligation to compensate—a
reality we nowadays acknowledge explicitly with respect to the full scope of the State’s
police power.…
The transition from our early focus on control of “noxious” uses to our contemporary
understanding of the broad realm within which government may regulate without
compensation was an easy one, since the distinction between “harm-preventing” and
“benefit-conferring” regulation is often in the eye of the beholder. It is quite possible,
for example, to describe in either fashion the ecological, economic, and esthetic
concerns that inspired the South Carolina Legislature in the present case. One could
say that imposing a servitude on Lucas’s land is necessary in order to prevent his use
of it from “harming” South Carolina’s ecological resources; or, instead, in order to
achieve the “benefits” of an ecological preserve. Whether one or the other of the
competing characterizations will come to one’s lips in a particular case depends
primarily upon one’s evaluation of the worth of competing uses of real estate. A given
restraint will be seen as mitigating “harm” to the adjacent parcels or securing a “benefit”
for them, depending upon the observer’s evaluation of the relative importance of the
use that the restraint favors. Whether Lucas’s construction of single-family residences
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Property
on his parcels should be described as bringing “harm” to South Carolina’s adjacent
ecological resources thus depends principally upon whether the describer believes that
the State’s use interest in nurturing those resources is so important that any competing
adjacent use must yield. 12
When it is understood that “prevention of harmful use” was merely our early
formulation of the police power justification necessary to sustain (without
compensation) any regulatory diminution in value; and that the distinction between
regulation that “prevents harmful use” and that which “confers benefits” is difficult, if
not impossible, to discern on an objective, value-free basis; it becomes self-evident that
noxious-use logic cannot serve as a touchstone to distinguish regulatory “takings”—
which require compensation—from regulatory deprivations that do not require
compensation. A fortiori the legislature’s recitation of a noxious-use justification cannot
be the basis for departing from our categorical rule that total regulatory takings must
be compensated. If it were, departure would virtually always be allowed. The South
Carolina Supreme Court’s approach would essentially nullify Mahon’s affirmation of
limits to the noncompensable exercise of the police power. Our cases provide no
support for this: None of them that employed the logic of “harmful use” prevention
to sustain a regulation involved an allegation that the regulation wholly eliminated the
value of the claimant’s land.
Where the State seeks to sustain regulation that deprives land of all economically
beneficial use, we think it 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. This accords, we think, with our “takings”
jurisprudence, which 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. It seems to us that the property owner
necessarily expects the uses of his property to be restricted, from time to time, by
various measures newly enacted by the State in legitimate exercise of its police powers;
In Justice BLACKMUN’s view, even with respect to regulations that deprive an owner of all developmental
or economically beneficial land uses, the test for required compensation is whether the legislature has recited a
harm-preventing justification for its action. Since such a justification can be formulated in practically every case,
this amounts to a test of whether the legislature has a stupid staff. We think the Takings Clause requires courts
to do more than insist upon artful harm-preventing characterizations.
12
Takings
349
“[a]s long recognized, some values are enjoyed under an implied limitation and must
yield to the police power.” Pennsylvania Coal Co. v. Mahon, 260 U.S., at 413. And in the
case of personal property, by reason of the State’s traditionally high degree of control
over commercial dealings, he ought to be aware of the possibility that new regulation
might even render his property economically worthless (at least if the property’s only
economically productive use is sale or manufacture for sale). See Andrus v. Allard, 444
U.S. 51, 66–67 (1979) (prohibition on sale of eagle feathers). In the case of land,
however, we think the notion pressed by the Council that title is somehow held subject
to the “implied limitation” that the State may subsequently eliminate all economically
valuable use is inconsistent with the historical compact recorded in the Takings Clause
that has become part of our constitutional culture.
Where “permanent physical occupation” of land is concerned, we have refused to allow
the government to decree it anew (without compensation), no matter how weighty the
asserted “public interests” involved—though we assuredly would permit the
government to assert a permanent easement that was a pre-existing limitation upon the
land owner’s title. We believe similar treatment must be accorded confiscatory
regulations, i.e., regulations that prohibit all economically beneficial use of land: Any
limitation so severe cannot be newly legislated or decreed (without compensation), but
must inhere in the title itself, in the restrictions that background principles of the State’s
law of property and nuisance already place upon land ownership. A law or decree with
such an effect must, in other words, do no more than duplicate the result that could
have been achieved in the courts—by adjacent landowners (or other uniquely affected
persons) under the State’s law of private nuisance, or by the State under its
complementary power to abate nuisances that affect the public generally, or otherwise.
On this analysis, the owner of a lake-bed, for example, would not be entitled to
compensation when he is denied the requisite permit to engage in a landfilling
operation that would have the effect of flooding others’ land. Nor the corporate owner
of a nuclear generating plant, when it is directed to remove all improvements from its
land upon discovery that the plant sits astride an earthquake fault. Such regulatory
action may well have the effect of eliminating the land’s only economically productive
use, but it does not proscribe a productive use that was previously permissible under
relevant property and nuisance principles. The use of these properties for what are now
expressly prohibited purposes was always unlawful, and (subject to other constitutional
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Property
limitations) it was open to the State at any point to make the implication of those
background principles of nuisance and property law explicit. In light of our traditional
resort to “existing rules or understandings that stem from an independent source such
as state law” to define the range of interests that qualify for protection as “property”
under the Fifth and Fourteenth Amendments, this recognition that the Takings Clause
does not require compensation when an owner is barred from putting land to a use
that is proscribed by those “existing rules or understandings” is surely unexceptional.
When, however, a regulation that declares “off-limits” all economically productive or
beneficial uses of land goes beyond what the relevant background principles would
dictate, compensation must be paid to sustain it.
The “total taking” inquiry we require today will ordinarily entail (as the application of
state nuisance law ordinarily entails) analysis of, among other things, the degree of harm
to public lands and resources, or adjacent private property, posed by the claimant’s
proposed activities, see, e.g., Restatement (Second) of Torts §§ 826, 827, the social value
of the claimant’s activities and their suitability to the locality in question, see, e.g., id., §§
828(a) and (b), 831, and the relative ease with which the alleged harm can be avoided
through measures taken by the claimant and the government (or adjacent private
landowners) alike, see, e.g., id., §§ 827(e), 828(c), 830. The fact that a particular use has
long been engaged in by similarly situated owners ordinarily imports a lack of any
common-law prohibition (though changed circumstances or new knowledge may make
what was previously permissible no longer so, see id., § 827, Comment g. So also does
the fact that other landowners, similarly situated, are permitted to continue the use
denied to the claimant.
It seems unlikely that common-law principles would have prevented the erection of
any habitable or productive improvements on petitioner’s land; they rarely support
prohibition of the “essential use” of land. The question, however, is one of state law
to be dealt with on remand. We emphasize that to win its case South Carolina must do
more than proffer the legislature’s declaration that the uses Lucas desires are
inconsistent with the public interest, or the conclusory assertion that they violate a
common-law maxim such as sic utere tuo ut alienum non laedas. As we have said, a “State,
by ipse dixit, may not transform private property into public property without
compensation....” Instead, as it would be required to do if it sought to restrain Lucas
in a common-law action for public nuisance, South Carolina must identify background
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351
principles of nuisance and property law that prohibit the uses he now intends in the
circumstances in which the property is presently found. Only on this showing can the
State fairly claim that, in proscribing all such beneficial uses, the Beachfront
Management Act is taking nothing.…
Justice KENNEDY, concurring in the judgment.
…. In my view, reasonable expectations must be understood in light of the whole of
our legal tradition. The common law of nuisance is too narrow a confine for the
exercise of regulatory power in a complex and interdependent society. The State should
not be prevented from enacting new regulatory initiatives in response to changing
conditions, and courts must consider all reasonable expectations whatever their source.
The Takings Clause does not require a static body of state property law; it protects
private expectations to ensure private investment. I agree with the Court that nuisance
prevention accords with the most common expectations of property owners who face
regulation, but I do not believe this can be the sole source of state authority to impose
severe restrictions. Coastal property may present such unique concerns for a fragile
land system that the State can go further in regulating its development and use than the
common law of nuisance might otherwise permit.
The Supreme Court of South Carolina erred, in my view, by reciting the general
purposes for which the state regulations were enacted without a determination that
they were in accord with the owner’s reasonable expectations and therefore sufficient
to support a severe restriction on specific parcels of property.…
Justice BLACKMUN, dissenting.
Today the Court launches a missile to kill a mouse.
The State of South Carolina prohibited petitioner Lucas from building a permanent
structure on his property from 1988 to 1990. Relying on an unreviewed (and
implausible) state trial court finding that this restriction left Lucas’ property valueless,
this Court granted review to determine whether compensation must be paid in cases
where the State prohibits all economic use of real estate. According to the Court, such
an occasion never has arisen in any of our prior cases, and the Court imagines that it
will arise “relatively rarely” or only in “extraordinary circumstances.” Almost certainly
it did not happen in this case.
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Property
Nonetheless, the Court presses on to decide the issue, and as it does, it ignores its
jurisdictional limits, remakes its traditional rules of review, and creates simultaneously
a new categorical rule and an exception (neither of which is rooted in our prior case
law, common law, or common sense). I protest not only the Court’s decision, but each
step taken to reach it. More fundamentally, I question the Court’s wisdom in issuing
sweeping new rules to decide such a narrow case.…
My fear is that the Court’s new policies will spread beyond the narrow confines of the
present case. For that reason, I, like the Court, will give far greater attention to this case
than its narrow scope suggests—not because I can intercept the Court’s missile, or save
the targeted mouse, but because I hope perhaps to limit the collateral damage.…
The South Carolina Supreme Court found that the Beachfront Management Act did
not take petitioner’s property without compensation. The decision rested on two
premises that until today were unassailable—that the State has the power to prevent
any use of property it finds to be harmful to its citizens, and that a state statute is
entitled to a presumption of constitutionality.
The Beachfront Management Act includes a finding by the South Carolina General
Assembly that the beach/dune system serves the purpose of “protect[ing] life and
property by serving as a storm barrier which dissipates wave energy and contributes to
shoreline stability in an economical and effective manner.” The General Assembly also
found that “development unwisely has been sited too close to the [beach/dune] system.
This type of development has jeopardized the stability of the beach/dune system,
accelerated erosion, and endangered adjacent property.”
If the state legislature is correct that the prohibition on building in front of the setback
line prevents serious harm, then, under this Court’s prior cases, the Act is constitutional.
“Long ago it was recognized that all property in this country is held under the implied
obligation that the owner’s use of it shall not be injurious to the community, and the
Takings Clause did not transform that principle to one that requires compensation
whenever the State asserts its power to enforce it.” Keystone Bituminous Coal Assn. v.
DeBenedictis, 480 U.S. 470, 491–492 (1987) (internal quotation marks omitted). The
Court consistently has upheld regulations imposed to arrest a significant threat to the
common welfare, whatever their economic effect on the owner.…
Takings
353
The Court creates its new takings jurisprudence based on the trial court’s finding that
the property had lost all economic value. This finding is almost certainly erroneous.
Petitioner still can enjoy other attributes of ownership, such as the right to exclude
others, “one of the most essential sticks in the bundle of rights that are commonly
characterized as property.” Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979).
Petitioner can picnic, swim, camp in a tent, or live on the property in a movable trailer.
State courts frequently have recognized that land has economic value where the only
residual economic uses are recreation or camping. Petitioner also retains the right to
alienate the land, which would have value for neighbors and for those prepared to enjoy
proximity to the ocean without a house.…
Clearly, the Court was eager to decide this case.…
The Court does not reject the South Carolina Supreme Court’s decision simply on the
basis of its disbelief and distrust of the legislature’s findings. It also takes the
opportunity to create a new scheme for regulations that eliminate all economic value.
From now on, there is a categorical rule finding these regulations to be a taking unless
the use they prohibit is a background common-law nuisance or property principle.
I first question the Court’s rationale in creating a category that obviates a “case-specific
inquiry into the public interest advanced” if all economic value has been lost. If one
fact about the Court’s takings jurisprudence can be stated without contradiction, it is
that “the particular circumstances of each case” determine whether a specific restriction
will be rendered invalid by the government’s failure to pay compensation. United States
v. Central Eureka Mining Co., 357 U.S. 155, 168 (1958). This is so because although we
have articulated certain factors to be considered, including the economic impact on the
property owner, the ultimate conclusion “necessarily requires a weighing of private and
public interests.” Agins, 447 U.S., at 261. When the government regulation prevents the
owner from any economically valuable use of his property, the private interest is
unquestionably substantial, but we have never before held that no public interest can
outweigh it. Instead the Court’s prior decisions “uniformly reject the proposition that
diminution in property value, standing alone, can establish a ‘taking.’ “ Penn Central
Transp. Co. v. New York City, 438 U.S. 104, 131 (1978).…
The Court recognizes that “our prior opinions have suggested that ‘harmful or noxious
uses’ of property may be proscribed by government regulation without the requirement
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Property
of compensation,” but seeks to reconcile them with its categorical rule by claiming that
the Court never has upheld a regulation when the owner alleged the loss of all economic
value. Even if the Court’s factual premise were correct, its understanding of the Court’s
cases is distorted. In none of the cases did the Court suggest that the right of a State to
prohibit certain activities without paying compensation turned on the availability of
some residual valuable use. Instead, the cases depended on whether the government
interest was sufficient to prohibit the activity, given the significant private cost.
These cases rest on the principle that the State has full power to prohibit an owner’s
use of property if it is harmful to the public.…
Ultimately even the Court cannot embrace the full implications of its per se rule: It
eventually agrees that there cannot be a categorical rule for a taking based on economic
value that wholly disregards the public need asserted. Instead, the Court decides that it
will permit a State to regulate all economic value only if the State prohibits uses that
would not be permitted under “background principles of nuisance and property law.” 15
Until today, the Court explicitly had rejected the contention that the government’s
power to act without paying compensation turns on whether the prohibited activity is
a common-law nuisance. The brewery closed in Mugler itself was not a common-law
nuisance, and the Court specifically stated that it was the role of the legislature to
determine what measures would be appropriate for the protection of public health and
safety.…
The Court rejects the notion that the State always can prohibit uses it deems a harm to
the public without granting compensation because “the distinction between ‘harmpreventing’ and ‘benefit-conferring’ regulation is often in the eye of the beholder.”
Since the characterization will depend “primarily upon one’s evaluation of the worth
of competing uses of real estate,” the Court decides a legislative judgment of this kind
Although it refers to state nuisance and property law, the Court apparently does not mean just any state
nuisance and property law. Public nuisance was first a common-law creation, see Newark, The Boundaries of
Nuisance, 65 L.Q.Rev. 480, 482 (1949) (attributing development of nuisance to 1535), but by the 1800’s in both
the United States and England, legislatures had the power to define what is a public nuisance, and particular uses
often have been selectively targeted. See Prosser, Private Action for Public Nuisance, 52 Va.L.Rev. 997, 999–
1000 (1966); J. Stephen, A General View of the Criminal Law of England 105–107 (2d ed. 1890). The Court’s
references to “common-law” background principles, however, indicate that legislative determinations do not
constitute “state nuisance and property law” for the Court.
15
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355
no longer can provide the desired “objective, value-free basis” for upholding a
regulation. The Court, however, fails to explain how its proposed common-law
alternative escapes the same trap.
The threshold inquiry for imposition of the Court’s new rule, “deprivation of all
economically valuable use,” itself cannot be determined objectively. As the Court
admits, whether the owner has been deprived of all economic value of his property will
depend on how “property” is defined. The “composition of the denominator in our
‘deprivation’ fraction” is the dispositive inquiry. Yet there is no “objective” way to
define what that denominator should be.…
The Court’s decision in Keystone Bituminous Coal illustrates this principle perfectly. In
Keystone, the Court determined that the “support estate” was “merely a part of the entire
bundle of rights possessed by the owner.” 480 U.S., at 501. Thus, the Court concluded
that the support estate’s destruction merely eliminated one segment of the total
property. The dissent, however, characterized the support estate as a distinct property
interest that was wholly destroyed. The Court could agree on no “value-free basis” to
resolve this dispute.
Even more perplexing, however, is the Court’s reliance on common-law principles of
nuisance in its quest for a value-free takings jurisprudence. In determining what is a
nuisance at common law, state courts make exactly the decision that the Court finds so
troubling when made by the South Carolina General Assembly today: They determine
whether the use is harmful. Common-law public and private nuisance law is simply a
determination whether a particular use causes harm. There is nothing magical in the
reasoning of judges long dead. They determined a harm in the same way as state judges
and legislatures do today. If judges in the 18th and 19th centuries can distinguish a
harm from a benefit, why not judges in the 20th century, and if judges can, why not
legislators? There simply is no reason to believe that new interpretations of the hoary
common-law nuisance doctrine will be particularly “objective” or “value free.” Once
one abandons the level of generality of sic utere tuo ut alienum non laedas, one searches in
vain, I think, for anything resembling a principle in the common law of nuisance.
Finally, the Court justifies its new rule that the legislature may not deprive a property
owner of the only economically valuable use of his land, even if the legislature finds it
to be a harmful use, because such action is not part of the “ ‘long recognized’
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“ “understandings of our citizens.” These “understandings” permit such regulation
only if the use is a nuisance under the common law. Any other course is “inconsistent
with the historical compact recorded in the Takings Clause.” It is not clear from the
Court’s opinion where our “historical compact” or “citizens’ understanding” comes
from, but it does not appear to be history.
The principle that the State should compensate individuals for property taken for
public use was not widely established in America at the time of the Revolution.…
Even into the 19th century, state governments often felt free to take property for roads
and other public projects without paying compensation to the owners.…
Nor does history indicate any common-law limit on the State’s power to regulate
harmful uses even to the point of destroying all economic value. Nothing in the
discussions in Congress concerning the Takings Clause indicates that the Clause was
limited by the common-law nuisance doctrine.…
In short, I find no clear and accepted “historical compact” or “understanding of our
citizens” justifying the Court’s new takings doctrine. Instead, the Court seems to treat
history as a grab bag of principles, to be adopted where they support the Court’s theory,
and ignored where they do not.…
I dissent.
Justice STEVENS, dissenting.
…. In my opinion, the Court is doubly in error. The categorical rule the Court
establishes is an unsound and unwise addition to the law and the Court’s formulation
of the exception to that rule is too rigid and too narrow.…
Although in dicta we have sometimes recited that a law “effects a taking if [it] ... denies
an owner economically viable use of his land,” Agins v. City of Tiburon, 447 U.S. 255,
260 (1980), our rulings have rejected such an absolute position. We have frequently—
and recently—held that, in some circumstances, a law that renders property valueless
may nonetheless not constitute a taking.…
In addition to lacking support in past decisions, the Court’s new rule is wholly arbitrary.
A landowner whose property is diminished in value 95% recovers nothing, while an
owner whose property is diminished 100% recovers the land’s full value. The case at
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hand illustrates this arbitrariness well. The Beachfront Management Act not only
prohibited the building of new dwellings in certain areas, it also prohibited the
rebuilding of houses that were “destroyed beyond repair by natural causes or by fire.”
1988 S.C. Acts 634, § 3. Thus, if the homes adjacent to Lucas’ lot were destroyed by a
hurricane one day after the Act took effect, the owners would not be able to rebuild,
nor would they be assured recovery. Under the Court’s categorical approach, Lucas
(who has lost the opportunity to build) recovers, while his neighbors (who have lost
both the opportunity to build and their homes) do not recover. The arbitrariness of such
a rule is palpable.
Moreover, because of the elastic nature of property rights, the Court’s new rule will
also prove unsound in practice. In response to the rule, courts may define “property”
broadly and only rarely find regulations to effect total takings. This is the approach the
Court itself adopts in its revisionist reading of venerable precedents. We are told that—
notwithstanding the Court’s findings to the contrary in each case—the brewery in
Mugler, the brickyard in Hadacheck, and the gravel pit in Goldblatt all could be put to
“other uses” and that, therefore, those cases did not involve total regulatory takings. 3
On the other hand, developers and investors may market specialized estates to take
advantage of the Court’s new rule. The smaller the estate, the more likely that a
regulatory change will effect a total taking. Thus, an investor may, for example,
purchase the right to build a multifamily home on a specific lot, with the result that a
zoning regulation that allows only single- family homes would render the investor’s
property interest “valueless.” In short, the categorical rule will likely have one of two
effects: Either courts will alter the definition of the “denominator” in the takings
“fraction,” rendering the Court’s categorical rule meaningless, or investors will
manipulate the relevant property interests, giving the Court’s rule sweeping effect. To
3 Of
course, the same could easily be said in this case: Lucas may put his land to “other uses”—fishing or camping,
for example—or may sell his land to his neighbors as a buffer. In either event, his land is far from “valueless.”
This highlights a fundamental weakness in the Court’s analysis: its failure to explain why only the impairment of
“economically beneficial or productive use” (emphasis added) of property is relevant in takings analysis. I should
think that a regulation arbitrarily prohibiting an owner from continuing to use her property for bird watching or
sunbathing might constitute a taking under some circumstances; and, conversely, that such uses are of value to
the owner. Yet the Court offers no basis for its assumption that the only uses of property cognizable under the
Constitution are developmental uses.
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my mind, neither of these results is desirable or appropriate, and both are distortions
of our takings jurisprudence.
Finally, the Court’s justification for its new categorical rule is remarkably thin. The
Court mentions in passing three arguments in support of its rule; none is convincing.
First, the Court suggests that “total deprivation of feasible use is, from the landowner’s
point of view, the equivalent of a physical appropriation.” This argument proves too
much. From the “landowner’s point of view,” a regulation that diminishes a lot’s value
by 50% is as well “the equivalent” of the condemnation of half of the lot. Yet, it is well
established that a 50% diminution in value does not by itself constitute a taking. See
Euclid v. Ambler Realty Co., 272 U.S. 365, 384 (1926) (75% diminution in value). Thus,
the landowner’s perception of the regulation cannot justify the Court’s new rule.
Second, the Court emphasizes that because total takings are “relatively rare” its new
rule will not adversely affect the government’s ability to “go on.” This argument proves
too little. Certainly it is true that defining a small class of regulations that are per se
takings will not greatly hinder important governmental functions—but this is true of
any small class of regulations. The Court’s suggestion only begs the question of why
regulations of this particular class should always be found to effect takings.
Finally, the Court suggests that “regulations that leave the owner ... without
economically beneficial ... use ... carry with them a heightened risk that private property
is being pressed into some form of public service.” … I agree that the risks of such
singling out are of central concern in takings law. However, such risks do not justify a
per se rule for total regulatory takings. There is no necessary correlation between
“singling out” and total takings: A regulation may single out a property owner without
depriving him of all of his property; and it may deprive him of all of his property
without singling him out. What matters in such cases is not the degree of diminution
of value, but rather the specificity of the expropriating act. For this reason, the Court’s
third justification for its new rule also fails.
In short, the Court’s new rule is unsupported by prior decisions, arbitrary and unsound
in practice, and theoretically unjustified. In my opinion, a categorical rule as important
as the one established by the Court today should be supported by more history or more
reason than has yet been provided.
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The Nuisance Exception
Like many bright-line rules, the categorical rule established in this case is only
“categorical” for a page or two in the U.S. Reports. No sooner does the Court state
that “total regulatory takings must be compensated,” than it quickly establishes an
exception to that rule.
The exception provides that a regulation that renders property valueless is not a taking
if it prohibits uses of property that were not “previously permissible under relevant
property and nuisance principles.” The Court thus rejects the basic holding in Mugler v.
Kansas, 123 U.S. 623 (1887). There we held that a state-wide statute that prohibited the
owner of a brewery from making alcoholic beverages did not effect a taking, even
though the use of the property had been perfectly lawful and caused no public harm
before the statute was enacted.…
Under our reasoning in Mugler, a State’s decision to prohibit or to regulate certain uses
of property is not a compensable taking just because the particular uses were previously
lawful. Under the Court’s opinion today, however, if a State should decide to prohibit
the manufacture of asbestos, cigarettes, or concealable firearms, for example, it must
be prepared to pay for the adverse economic consequences of its decision. One must
wonder if government will be able to “go on” effectively if it must risk compensation
“for every such change in the general law.” Mahon, 260 U.S., at 413.
The Court’s holding today effectively freezes the State’s common law, denying the
legislature much of its traditional power to revise the law governing the rights and uses
of property. Until today, I had thought that we had long abandoned this approach to
constitutional law. More than a century ago we recognized that “the great office of
statutes is to remedy defects in the common law as they are developed, and to adapt it
to the changes of time and circumstances.” Munn v. Illinois, 94 U.S. 113 (1877).…
Arresting the development of the common law is not only a departure from our prior
decisions; it is also profoundly unwise. The human condition is one of constant
learning and evolution—both moral and practical. Legislatures implement that new
learning; in doing so they must often revise the definition of property and the rights of
property owners. Thus, when the Nation came to understand that slavery was morally
wrong and mandated the emancipation of all slaves, it, in effect, redefined “property.”
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On a lesser scale, our ongoing self-education produces similar changes in the rights of
property owners: New appreciation of the significance of endangered species, the
importance of wetlands, and the vulnerability of coastal, shapes our evolving
understandings of property rights.
Of course, some legislative redefinitions of property will effect a taking and must be
compensated—but it certainly cannot be the case that every movement away from
common law does so. There is no reason, and less sense, in such an absolute rule. We
live in a world in which changes in the economy and the environment occur with
increasing frequency and importance.…
The Court’s categorical approach rule will, I fear, greatly hamper the efforts of local
officials and planners who must deal with increasingly complex problems in land-use
and environmental regulation. As this case—in which the claims of an individual
property owner exceed $1 million—well demonstrates, these officials face both
substantial uncertainty because of the ad hoc nature of takings law and unacceptable
penalties if they guess incorrectly about that law.…
In analyzing takings claims, courts have long recognized the difference between a
regulation that targets one or two parcels of land and a regulation that enforces a
statewide policy.…
In considering Lucas’ claim, the generality of the Beachfront Management Act is
significant. The Act does not target particular landowners, but rather regulates the use
of the coastline of the entire State.… Moreover, the Act did not single out owners of
undeveloped land. The Act also prohibited owners of developed land from rebuilding
if their structures were destroyed, and what is equally significant, from repairing erosion
control devices, such as seawalls.… In addition, in some situations, owners of
developed land were required to “renouris[h] the beach ... on a yearly basis with an
amount ... of sand ... not ... less than one and one-half times the yearly volume of sand
lost due to erosion.” In short, the South Carolina Act imposed substantial burdens on
owners of developed and undeveloped land alike. This generality indicates that the Act
is not an effort to expropriate owners of undeveloped land.
Admittedly, the economic impact of this regulation is dramatic and petitioner’s
investment-backed expectations are substantial. Yet, if anything, the costs to and
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expectations of the owners of developed land are even greater: I doubt, however, that
the cost to owners of developed land of renourishing the beach and allowing their
seawalls to deteriorate effects a taking. The costs imposed on the owners of
undeveloped land, such as petitioner, differ from these costs only in degree, not in
kind.…
In view of all of these factors, even assuming that petitioner’s property was rendered
valueless, the risk inherent in investments of the sort made by petitioner, the generality
of the Act, and the compelling purpose motivating the South Carolina Legislature
persuade me that the Act did not effect a taking of petitioner’s property.…
Statement of Justice SOUTER.
I would dismiss the writ of certiorari in this case as having been granted improvidently.
After briefing and argument it is abundantly clear that an unreviewable assumption on
which this case comes to us is both questionable as a conclusion of Fifth Amendment
law and sufficient to frustrate the Court’s ability to render certain the legal premises on
which its holding rests.
The petition for review was granted on the assumption that the State by regulation had
deprived the owner of his entire economic interest in the subject property. Such was
the state trial court’s conclusion, which the State Supreme Court did not review. It is
apparent now that … the trial court’s conclusion is highly questionable. While the
respondent now wishes to contest the point the Court is certainly right to refuse to
take up the issue, which is not fairly included within the question presented, and has
received only the most superficial and one-sided treatment before us.…
Notes and Questions
1. For some before-and-after photos of the Lucas lot, visit
http://www.dartmouth.edu/~wfischel/lucasupdate.html. Writing about Lucas,
Carol Rose observes that much of what made the case seem unfair to the
reviewing courts—the “singling out” of Lucas’s lot—was a byproduct of an
effort to limit political opposition to the state’s coastal preservation program by
curtailing its regulatory reach. It also limited the ability of the regulations to
combat the problems of development. Carol M. Rose, The Story of Lucas:
Environmental Land Use Regulation Between Developers and the Deep Blue Sea at 24, in
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ENVIRONMENTAL STORIES (Richard J. Lazarus and Oliver A. Houck, eds.,
Foundation Press, 2005), available at http://ssrn.com/abstract=706637. Bad
optics notwithstanding, Rose notes that the impacts of development do not
accumulate in a linear manner. It may very well make sense to impose
restrictions after a period of unchecked growth.
…Environmental resources typically have some threshold below which use is
not harmful, but beyond which marginal costs rise not just additively but
exponentially. Bodies of water, for example, can tolerate some organic materials,
but over a threshold, each increment of additional waste is not just additively
but exponentially more damaging to wildlife, vegetation, and water quality. The
smoke from an old-fashioned house furnace or two will dissipate without
damage, but if you burn enough, you run the risk of a killer fog. Beachfront
management is another clear example of this pattern of exponentially rising
costs. A single revetment or seawall would have had little impact on South
Carolina’s beaches or their ability to replenish themselves; what threatened to
become devastating was the accumulation of ever more armored structures ….
That is why a conventional notion of equality is inadequate with respect to
environmental uses, including land uses. If early uses are relatively harmless, it
would be pointless and overly intrusive to try to regulate them. But something
has to be done when later uses slice far enough out on the salami. At that later
point, it can be an invitation to environmental disaster to look around at preexisting uses, and to say that new users should all receive the same old lax
treatment, as Scalia suggested in Lucas. (Id. at 38.)
2. What if someone “comes to” the regulation by purchasing a property after the
objected-to regulation has been imposed. Does that preclude a takings
challenge? As noted previously, the Court held that takings claims remain
available lest the state “put an expiration date on the Takings Clause.” Palazzolo
v. Rhode Island, 533 U.S. 606, 627 (2001).
3. Can judges take? On the question of nuisance definition, what if the state
actor declaring/redefining property interests is a court? In Stop the Beach
Renourishment, Inc. v. Florida Dep’t of Envtl. Prot., a four-Justice plurality opinion
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would have recognized judicial takings as a viable claim (though in the case at
hand it would have found no taking). 560 U.S. 702, 715 (2010) (plurality) (“[T]he
Takings Clause bars the State from taking private property without paying for
it, no matter which branch is the instrument of the taking.”). But don’t judges
adjust the contours of property law all the time? How could this basic function
of the courts continue if challengeable as a taking? Some of these issues were
taken up in the concurrences in Stop the Beach and the (extensive) academic
commentary that followed.
4. “Inverse condemnation” procedures. In regulatory takings cases, the
government typically denies that a taking has occurred, so there is no
condemnation proceeding. Instead, the property owner brings suit seeking relief.
The Tucker Act provides an avenue for federal claimants. The statute waives
United States sovereign immunity for claims founded on the Constitution, a
statute, a regulation, or an express or implied-in-fact contract. 28 U.S.C. §
1491(a)(1). The “Little Tucker Act,” § 1346(a)(2), establishes concurrent
jurisdiction in the district courts for claims of less than $10,000. If a state
government is the offending regulator, the property owner may look to available
state remedies, but may also proceed under the federal civil rights statute. 42
U.S.C. § 1983; see, e.g., City of Monterey v. Del Monte Dunes at Monterey, Ltd.,
526 U.S. 687 (1999) (holding that inverse condemnation claim under § 1983
could be submitted to a jury).
5. First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S.
304 (1987), held that compensation is required for temporary takings. This
opened the door to the argument that regulations temporarily suspending
certain land uses are takings under the Lucas categorical rule. The Court
addressed the claim in the following case.
Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency
535 U.S. 302 (2002)
Justice STEVENS delivered the opinion of the Court.
The question presented is whether a moratorium on development imposed during the
process of devising a comprehensive land-use plan constitutes a per se taking of property
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requiring compensation under the Takings Clause of the United States Constitution.
This case actually involves two moratoria ordered by respondent Tahoe Regional
Planning Agency (TRPA) to maintain the status quo while studying the impact of
development on Lake Tahoe and designing a strategy for environmentally sound
growth. The first, Ordinance 81–5, was effective from August 24, 1981, until August
26, 1983, whereas the second more restrictive Resolution 83–21 was in effect from
August 27, 1983, until April 25, 1984. As a result of these two directives, virtually all
development on a substantial portion of the property subject to TRPA’s jurisdiction
was prohibited for a period of 32 months. Although the question we decide relates only
to that 32–month period, a brief description of the events leading up to the moratoria
and a comment on the two permanent plans that TRPA adopted thereafter will clarify
the narrow scope of our holding.
I
The relevant facts are undisputed. The Court of Appeals, while reversing the District
Court on a question of law, accepted all of its findings of fact, and no party challenges
those findings. All agree that Lake Tahoe is “uniquely beautiful,” 34 F.Supp.2d 1226,
1230 (D.Nev.1999), that President Clinton was right to call it a “ ‘national treasure that
must be protected and preserved,’ “ ibid., and that Mark Twain aptly described the
clarity of its waters as “ ‘not merely transparent, but dazzlingly, brilliantly so,’ “ ibid.
(emphasis added) (quoting M. Twain, Roughing It 174–175 (1872)).
Lake Tahoe’s exceptional clarity is attributed to the absence of algae that obscures the
waters of most other lakes. Historically, the lack of nitrogen and phosphorous, which
nourish the growth of algae, has ensured the transparency of its waters. Unfortunately,
the lake’s pristine state has deteriorated rapidly over the past 40 years; increased land
development in the Lake Tahoe Basin (Basin) has threatened the “ ‘noble sheet of blue
water’ “ beloved by Twain and countless others. As the District Court found,
“[d]ramatic decreases in clarity first began to be noted in the late 1950’s/early 1960’s,
shortly after development at the lake began in earnest.” The lake’s unsurpassed beauty,
it seems, is the wellspring of its undoing.
The upsurge of development in the area has caused “increased nutrient loading of the
lake largely because of the increase in impervious coverage of land in the Basin resulting
from that development.”…
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Given this trend, the District Court predicted that “unless the process is stopped, the
lake will lose its clarity and its trademark blue color, becoming green and opaque for
eternity.”
Those areas in the Basin that have steeper slopes produce more runoff; therefore, they
are usually considered “high hazard” lands. Moreover, certain areas near streams or
wetlands known as “Stream Environment Zones” (SEZs) are especially vulnerable to
the impact of development because, in their natural state, they act as filters for much
of the debris that runoff carries. Because “[t]he most obvious response to this
problem ... is to restrict development around the lake—especially in SEZ lands, as well
as in areas already naturally prone to runoff,” conservation efforts have focused on
controlling growth in these high hazard areas.
In the 1960’s, when the problems associated with the burgeoning development began
to receive significant attention, jurisdiction over the Basin, which occupies 501 square
miles, was shared by the States of California and Nevada, five counties, several
municipalities, and the Forest Service of the Federal Government. In 1968, the
legislatures of the two States adopted the Tahoe Regional Planning Compact. The
compact set goals for the protection and preservation of the lake and created TRPA
….
The 1980 Tahoe Regional Planning Compact (Compact) redefined the structure,
functions, and voting procedures of TRPA and directed it to develop regional
“environmental threshold carrying capacities”—a term that embraced “standards for
air quality, water quality, soil conservation, vegetation preservation and noise.”… The
Compact also contained a finding by the legislatures of California and Nevada “that in
order to make effective the regional plan as revised by [TRPA], it is necessary to halt
temporarily works of development in the region which might otherwise absorb the
entire capability of the region for further development or direct it out of harmony with
the ultimate plan.” Accordingly, for the period prior to the adoption of the final plan
(“or until May 1, 1983, whichever is earlier”), the Compact itself prohibited the
development of new subdivisions, condominiums, and apartment buildings, and also
prohibited each city and county in the Basin from granting any more permits in 1981,
1982, or 1983 than had been granted in 1978.
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During this period TRPA was also working on the development of a regional water
quality plan to comply with the Clean Water Act, 33 U.S.C. § 1288 (1994 ed.). [Because
it could not meet the Compact’s timetables,] “[o]n June 25, 1981, it therefore enacted
Ordinance 81–5 imposing the first of the two moratoria on development that
petitioners challenge in this proceeding. The ordinance provided that it would become
effective on August 24, 1981, and remain in effect pending the adoption of the
permanent plan required by the Compact.
The District Court made a detailed analysis of the ordinance, noting that it might even
prohibit hiking or picnicking on SEZ lands, but construed it as essentially banning any
construction or other activity that involved the removal of vegetation or the creation
of land coverage on all SEZ lands, as well as on class 1, 2, and 3 lands in California.
Some permits could be obtained for such construction in Nevada if certain findings
were made. It is undisputed, however, that Ordinance 81–5 prohibited the construction
of any new residences on SEZ lands in either State and on class 1, 2, and 3 lands in
California.…
[TRPA later] adopted Resolution 83–21, “which completely suspended all project
reviews and approvals, including the acceptance of new proposals,” and which
remained in effect until a new regional plan was adopted on April 26, 1984. Thus,
Resolution 83–21 imposed an 8–month moratorium prohibiting all construction on
high hazard lands in either State. In combination, Ordinance 81–5 and Resolution 83–
21 effectively prohibited all construction on sensitive lands in California and on all SEZ
lands in the entire Basin for 32 months, and on sensitive lands in Nevada (other than
SEZ lands) for eight months. It is these two moratoria that are at issue in this case.…
II
Approximately two months after the adoption of the 1984 plan, petitioners filed
parallel actions against TRPA and other defendants in federal courts in Nevada and
California that were ultimately consolidated for trial in the District of Nevada. The
petitioners include the Tahoe–Sierra Preservation Council, Inc., a nonprofit
membership corporation representing about 2,000 owners of both improved and
unimproved parcels of real estate in the Lake Tahoe Basin, and a class of some 400
individual owners of vacant lots located either on SEZ lands or in other parts of
districts 1, 2, or 3. Those individuals purchased their properties prior to the effective
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367
date of the 1980 Compact primarily for the purpose of constructing “at a time of their
choosing” a single-family home “to serve as a permanent, retirement or vacation
residence.” When they made those purchases, they did so with the understanding that
such construction was authorized provided that “they complied with all reasonable
requirements for building.”
Petitioners’ complaints gave rise to protracted litigation that has produced four
opinions by the Court of Appeals for the Ninth Circuit and several published District
Court opinions. For present purposes, however, we need only describe those courts’
disposition of the claim that three actions taken by TRPA—Ordinance 81–5,
Resolution 83–21, and the 1984 regional plan—constituted takings of petitioners’
property without just compensation. Indeed, the challenge to the 1984 plan is not
before us …. Thus, we limit our discussion to the lower courts’ disposition of the
claims based on the 2–year moratorium (Ordinance 81–5) and the ensuing 8–month
moratorium (Resolution 83–21).
The District Court began its constitutional analysis by identifying the distinction
between a direct government appropriation of property without just compensation and
a government regulation that imposes such a severe restriction on the owner’s use of
her property that it produces “nearly the same result as a direct appropriation.” The
court noted that all of the claims in this case “are of the ‘regulatory takings’ variety.”…
[The District Court concluded that there was no taking under the Penn Central factors.]
The District Court had more difficulty with the “total taking” issue. Although it was
satisfied that petitioners’ property did retain some value during the moratoria, it found
that they had been temporarily deprived of “all economically viable use of their land.”
The court concluded that those actions therefore constituted “categorical” takings
under our decision in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). It
rejected TRPA’s response that Ordinance 81–5 and Resolution 83–21 were
“reasonable temporary planning moratoria” that should be excluded from Lucas’
categorical approach. The court thought it “fairly clear” that such interim actions would
not have been viewed as takings prior to our decisions in Lucas and First English
Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304 (1987)….
After expressing uncertainty as to whether those cases required a holding that
moratoria on development automatically effect takings, the court concluded that
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TRPA’s actions did so, partly because neither the ordinance nor the resolution, even
though intended to be temporary from the beginning, contained an express termination
date. Accordingly, it ordered TRPA to pay damages to most petitioners for the 32–
month period from August 24, 1981, to April 25, 1984, and to those owning class 1, 2,
or 3 property in Nevada for the 8–month period from August 27, 1983, to April 25,
1984.
Both parties appealed. TRPA successfully challenged the District Court’s takings
determination…. Petitioners did not, however, challenge the District Court’s findings
or conclusions concerning its application of Penn Central.… Accordingly, the only
question before the court was “whether the rule set forth in Lucas applies—that is,
whether a categorical taking occurred because Ordinance 81–5 and Resolution 83–21
denied the plaintiffs ‘all economically beneficial or productive use of land.’ “ Moreover,
because petitioners brought only a facial challenge, the narrow inquiry before the Court
of Appeals was whether the mere enactment of the regulations constituted a taking.
Contrary to the District Court, the Court of Appeals held that because the regulations
had only a temporary impact on petitioners’ fee interest in the properties, no categorical
taking had occurred.…
III
Petitioners make only a facial attack on Ordinance 81–5 and Resolution 83–21. They
contend that the mere enactment of a temporary regulation that, while in effect, denies
a property owner all viable economic use of her property gives rise to an unqualified
constitutional obligation to compensate her for the value of its use during that period.
Hence, they “face an uphill battle,” Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S.
470, 495 (1987), that is made especially steep by their desire for a categorical rule
requiring compensation whenever the government imposes such a moratorium on
development. Under their proposed rule, there is no need to evaluate the landowners’
investment-backed expectations, the actual impact of the regulation on any individual,
the importance of the public interest served by the regulation, or the reasons for
imposing the temporary restriction. For petitioners, it is enough that a regulation
imposes a temporary deprivation—no matter how brief—of all economically viable
use to trigger a per se rule that a taking has occurred. Petitioners assert that our opinions
in First English and Lucas have already endorsed their view, and that it is a logical
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application of the principle that the Takings Clause was “designed to bar Government
from forcing some people alone to bear burdens which, in all fairness and justice,
should be borne by the public as a whole.” Armstrong v. United States, 364 U.S. 40, 49
(1960).
We shall first explain why our cases do not support their proposed categorical rule—
indeed, fairly read, they implicitly reject it. Next, we shall explain why the Armstrong
principle requires rejection of that rule as well as the less extreme position advanced by
petitioners at oral argument. In our view the answer to the abstract question whether a
temporary moratorium effects a taking is neither “yes, always” nor “no, never”; the
answer depends upon the particular circumstances of the case.…
IV
…. When the government physically takes possession of an interest in property for
some public purpose, it has a categorical duty to compensate the former owner
regardless of whether the interest that is taken constitutes an entire parcel or merely a
part thereof. Thus, compensation is mandated when a leasehold is taken and the
government occupies the property for its own purposes, even though that use is
temporary.… But a government regulation that merely prohibits landlords from
evicting tenants unwilling to pay a higher rent, Block v. Hirsh, 256 U.S. 135 (1921); that
bans certain private uses of a portion of an owner’s property, Village of Euclid v. Ambler
Realty Co., 272 U.S. 365 (1926); or that forbids the private use of certain airspace, Penn
Central Transp. Co. v. New York City, 438 U.S. 104 (1978), does not constitute a
categorical taking. “The first category of cases requires courts to apply a clear rule; the
second necessarily entails complex factual assessments of the purposes and economic
effects of government actions.” Yee v. Escondido, 503 U.S. 519, 523 (1992).
This longstanding distinction between acquisitions of property for public use, on the
one hand, and regulations prohibiting private uses, on the other, makes it inappropriate
to treat cases involving physical takings as controlling precedents for the evaluation of
a claim that there has been a “regulatory taking,” and vice versa. For the same reason
that we do not ask whether a physical appropriation advances a substantial government
interest or whether it deprives the owner of all economically valuable use, we do not
apply our precedent from the physical takings context to regulatory takings claims.
Land-use regulations are ubiquitous and most of them impact property values in some
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tangential way—often in completely unanticipated ways. Treating them all as per se
takings would transform government regulation into a luxury few governments could
afford. By contrast, physical appropriations are relatively rare, easily identified, and
usually represent a greater affront to individual property rights. “This case does not
present the ‘classi[c] taking’ in which the government directly appropriates private
property for its own use,” Eastern Enterprises v. Apfel, 524 U.S. 498, 522 (1998); instead
the interference with property rights “arises from some public program adjusting the
benefits and burdens of economic life to promote the common good,” Penn Central,
438 U.S., at 124.
Perhaps recognizing this fundamental distinction, petitioners wisely do not place all
their emphasis on analogies to physical takings cases. Instead, they rely principally on
our decision in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992)—a regulatory
takings case that, nevertheless, applied a categorical rule—to argue that the Penn Central
framework is inapplicable here.…
As we noted in Lucas, it was Justice Holmes’ opinion in Pennsylvania Coal Co. v. Mahon,
260 U.S. 393 (1922), that gave birth to our regulatory takings jurisprudence. In
subsequent opinions we have repeatedly and consistently endorsed Holmes’
observation that “if regulation goes too far it will be recognized as a taking.”…
In the decades following that decision, we have “generally eschewed” any set formula
for determining how far is too far, choosing instead to engage in “ ‘essentially ad hoc,
factual inquiries.’ “ Lucas, 505 U.S., at 1015 (quoting Penn Central, 438 U.S., at 124).
Indeed, we still resist the temptation to adopt per se rules in our cases involving partial
regulatory takings, preferring to examine “a number of factors” rather than a simple
“mathematically precise” formula. Justice Brennan’s opinion for the Court in Penn
Central did, however, make it clear that even though multiple factors are relevant in the
analysis of regulatory takings claims, in such cases we must focus on “the parcel as a
whole”:
“ ‘Taking’ jurisprudence does not divide a single parcel into discrete segments
and attempt to determine whether rights in a particular segment have been
entirely abrogated. In deciding whether a particular governmental action has
effected a taking, this Court focuses rather both on the character of the action
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and on the nature and extent of the interference with rights in the parcel as a
whole—here, the city tax block designated as the ‘landmark site.’ “
This requirement that “the aggregate must be viewed in its entirety” explains why, for
example, a regulation that prohibited commercial transactions in eagle feathers, but did
not bar other uses or impose any physical invasion or restraint upon them, was not a
taking. Andrus v. Allard, 444 U.S. 51 (1979). It also clarifies why restrictions on the use
of only limited portions of the parcel, such as setback ordinances, Gorieb v. Fox, 274
U.S. 603 (1927), or a requirement that coal pillars be left in place to prevent mine
subsidence, Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S., at 498, were not
considered regulatory takings. In each of these cases, we affirmed that “where an owner
possesses a full ‘bundle’ of property rights, the destruction of one ‘strand’ of the bundle
is not a taking.” Andrus, 444 U.S., at 65–66.
While the foregoing cases considered whether particular regulations had “gone too far”
and were therefore invalid, none of them addressed the separate remedial question of
how compensation is measured once a regulatory taking is established. In his dissenting
opinion in San Diego Gas & Elec. Co. v. San Diego, 450 U.S. 621, 636 (1981), Justice
Brennan identified that question and explained how he would answer it:
“The constitutional rule I propose requires that, once a court finds that a police
power regulation has effected a ‘taking,’ the government entity must pay just
compensation for the period commencing on the date the regulation first
effected the ‘taking,’ and ending on the date the government entity chooses to
rescind or otherwise amend the regulation.”
Justice Brennan’s proposed rule was subsequently endorsed by the Court in First English,
482 U.S., at 315, 318, 321. First English was certainly a significant decision, and nothing
that we say today qualifies its holding. Nonetheless, it is important to recognize that we
did not address in that case the quite different and logically prior question whether the
temporary regulation at issue had in fact constituted a taking.
In First English, the Court unambiguously and repeatedly characterized the issue to be
decided as a “compensation question” or a “remedial question.” And the Court’s
statement of its holding was equally unambiguous: “We merely hold that where the
government’s activities have already worked a taking of all use of property, no subsequent
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action by the government can relieve it of the duty to provide compensation for the
period during which the taking was effective.” (emphasis added). In fact, First English
expressly disavowed any ruling on the merits of the takings issue because the California
courts had decided the remedial question on the assumption that a taking had been
alleged.…
Similarly, our decision in Lucas is not dispositive of the question presented. Although
Lucas endorsed and applied a categorical rule, it was not the one that petitioners
propose. Lucas purchased two residential lots in 1988 for $975,000. These lots were
rendered “valueless” by a statute enacted two years later. The trial court found that a
taking had occurred and ordered compensation of $1,232,387.50, representing the
value of the fee simple estate, plus interest. As the statute read at the time of the trial,
it effected a taking that “was unconditional and permanent.”…
The categorical rule that we applied in Lucas states that compensation is required when
a regulation deprives an owner of “all economically beneficial uses” of his land. Under
that rule, a statute that “wholly eliminated the value” of Lucas’ fee simple title clearly
qualified as a taking. But our holding was limited to “the extraordinary circumstance
when no productive or economically beneficial use of land is permitted.” The emphasis
on the word “no” in the text of the opinion was, in effect, reiterated in a footnote
explaining that the categorical rule would not apply if the diminution in value were 95%
instead of 100%. Anything less than a “complete elimination of value,” or a “total loss,”
the Court acknowledged, would require the kind of analysis applied in Penn Central.
Certainly, our holding that the permanent “obliteration of the value” of a fee simple
estate constitutes a categorical taking does not answer the question whether a regulation
prohibiting any economic use of land for a 32–month period has the same legal effect.
Petitioners seek to bring this case under the rule announced in Lucas by arguing that
we can effectively sever a 32–month segment from the remainder of each landowner’s
fee simple estate, and then ask whether that segment has been taken in its entirety by
the moratoria. Of course, defining the property interest taken in terms of the very
regulation being challenged is circular. With property so divided, every delay would
become a total ban; the moratorium and the normal permit process alike would
constitute categorical takings. Petitioners’ “conceptual severance” argument is
unavailing because it ignores Penn Central’s admonition that in regulatory takings cases
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we must focus on “the parcel as a whole.” We have consistently rejected such an
approach to the “denominator” question. Thus, the District Court erred when it
disaggregated petitioners’ property into temporal segments corresponding to the
regulations at issue and then analyzed whether petitioners were deprived of all
economically viable use during each period. The starting point for the court’s analysis
should have been to ask whether there was a total taking of the entire parcel; if not,
then Penn Central was the proper framework.
An interest in real property is defined by the metes and bounds that describe its
geographic dimensions and the term of years that describes the temporal aspect of the
owner’s interest. See Restatement of Property §§ 7–9 (1936). Both dimensions must be
considered if the interest is to be viewed in its entirety. Hence, a permanent deprivation
of the owner’s use of the entire area is a taking of “the parcel as a whole,” whereas a
temporary restriction that merely causes a diminution in value is not. Logically, a fee
simple estate cannot be rendered valueless by a temporary prohibition on economic
use, because the property will recover value as soon as the prohibition is lifted.…
V
Considerations of “fairness and justice” arguably could support the conclusion that
TRPA’s moratoria were takings of petitioners’ property based on any of seven different
theories. First, even though we have not previously done so, we might now announce
a categorical rule that, in the interest of fairness and justice, compensation is required
whenever government temporarily deprives an owner of all economically viable use of
her property. Second, we could craft a narrower rule that would cover all temporary
land-use restrictions except those “normal delays in obtaining building permits,
changes in zoning ordinances, variances, and the like” which were put to one side in
our opinion in First English. Third, we could adopt a rule like the one suggested by an
amicus supporting petitioners that would “allow a short fixed period for deliberations
to take place without compensation—say maximum one year—after which the just
compensation requirements” would “kick in.” Fourth, with the benefit of hindsight,
we might characterize the successive actions of TRPA as a “series of rolling moratoria”
that were the functional equivalent of a permanent taking. Fifth, were it not for the
findings of the District Court that TRPA acted diligently and in good faith, we might
have concluded that the agency was stalling in order to avoid promulgating the
environmental threshold carrying capacities and regional plan mandated by the 1980
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Compact. Sixth, apart from the District Court’s finding that TRPA’s actions
represented a proportional response to a serious risk of harm to the lake, petitioners
might have argued that the moratoria did not substantially advance a legitimate state
interest. Finally, if petitioners had challenged the application of the moratoria to their
individual parcels, instead of making a facial challenge, some of them might have
prevailed under a Penn Central analysis.
As the case comes to us, however, none of the last four theories is available. The
“rolling moratoria” theory was presented in the petition for certiorari, but our order
granting review did not encompass that issue; the case was tried in the District Court
and reviewed in the Court of Appeals on the theory that each of the two moratoria was
a separate taking, one for a 2–year period and the other for an 8–month period. And,
as we have already noted, recovery on either a bad faith theory or a theory that the state
interests were insubstantial is foreclosed by the District Court’s unchallenged findings
of fact. Recovery under a Penn Central analysis is also foreclosed both because
petitioners expressly disavowed that theory, and because they did not appeal from the
District Court’s conclusion that the evidence would not support it. Nonetheless, each
of the three per se theories is fairly encompassed within the question that we decided to
answer.
With respect to these theories, the ultimate constitutional question is whether the
concepts of “fairness and justice” that underlie the Takings Clause will be better served
by one of these categorical rules or by a Penn Central inquiry into all of the relevant
circumstances in particular cases. From that perspective, the extreme categorical rule
that any deprivation of all economic use, no matter how brief, constitutes a
compensable taking surely cannot be sustained. Petitioners’ broad submission would
apply to numerous “normal delays in obtaining building permits, changes in zoning
ordinances, variances, and the like,” [First English,] 482 U.S., at 321, as well as to orders
temporarily prohibiting access to crime scenes, businesses that violate health codes,
fire-damaged buildings, or other areas that we cannot now foresee. Such a rule would
undoubtedly require changes in numerous practices that have long been considered
permissible exercises of the police power. As Justice Holmes warned in Mahon,
“[g]overnment hardly could go on if to some extent values incident to property could
not be diminished without paying for every such change in the general law.” A rule that
required compensation for every delay in the use of property would render routine
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government processes prohibitively expensive or encourage hasty decisionmaking.
Such an important change in the law should be the product of legislative rulemaking
rather than adjudication.…
In rejecting petitioners’ per se rule, we do not hold that the temporary nature of a landuse restriction precludes finding that it effects a taking; we simply recognize that it
should not be given exclusive significance one way or the other.
A narrower rule that excluded the normal delays associated with processing permits, or
that covered only delays of more than a year, would certainly have a less severe impact
on prevailing practices, but it would still impose serious financial constraints on the
planning process.… [M]oratoria like Ordinance 81–5 and Resolution 83–21 are used
widely among land-use planners to preserve the status quo while formulating a more
permanent development strategy.…
The interest in facilitating informed decisionmaking by regulatory agencies counsels
against adopting a per se rule that would impose such severe costs on their deliberations.
Otherwise, the financial constraints of compensating property owners during a
moratorium may force officials to rush through the planning process or to abandon
the practice altogether.…
It may well be true that any moratorium that lasts for more than one year should be
viewed with special skepticism. But given the fact that the District Court found that
the 32 months required by TRPA to formulate the 1984 Regional Plan was not
unreasonable, we could not possibly conclude that every delay of over one year is
constitutionally unacceptable. Formulating a general rule of this kind is a suitable task
for state legislatures. In our view, the duration of the restriction is one of the important
factors that a court must consider in the appraisal of a regulatory takings claim .… We
conclude, therefore, that the interest in “fairness and justice” will be best served by
relying on the familiar Penn Central approach when deciding cases like this, rather than
by attempting to craft a new categorical rule.
[The dissenting opinions of Chief Justice Rehnquist (joined by Justice Scalia and Justice
Thomas) and of Justice Thomas (joined by Justice Scalia) are omitted.]
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Notes and Questions
1. Oral argument for the planning agency was handled by John Roberts, the
current Chief Justice, while in private practice.
2. How do you reconcile Tahoe with the fact that holders of future interests and
leaseholders may be entitled to compensation when land is condemned? 2-5
NICHOLS ON EMINENT DOMAIN § 5.02.
3. What’s left of conceptual severance? The last word from the Supreme Court
on conceptual severance is a negative one. To what extent is the concept still
viable? Even if a court focuses on the “parcel as a whole,” it must still define
the parcel. What if the claimant owns multiple lots? In Lost Tree Vill. Corp. v.
United States, the Federal Circuit described its approach as focusing on the extent
to which the owner treated distinct parcels as “a single economic unit.”
In this inquiry, the critical issue is the economic expectations of the
claimant with regard to the property. When a developer treats several
legally distinct parcels as a single economic unit, together they may
constitute the relevant parcel. Conversely, even when contiguous land is
purchased in a single transaction, the relevant parcel may be a subset of
the original purchase where the owner develops distinct parcels at
different times and treats the parcels as distinct economic units.
707 F.3d 1286, 1293 (Fed. Cir. 2013) (internal citations and quotations omitted).
D.
Exactions
The state has broad powers to regulate land use. What if a state regulator agrees to limit
regulation power in return for a strip of land? The transaction is voluntary, but had the
state just taken the land, it would have had to pay just compensation. Since the
government isn’t obligated to allow the project, doesn’t the offer leave the landowner
better off? Or is this a form of extortion?
These types of conditional grants of permits or other dispensations under land use
regulations are called exactions. In Nollan v. California Coastal Com’n, 483 U.S. 825
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(1987) the Court opened the door to closer scrutiny of these exchanges, declaring that
permit conditions must serve the same purpose as the reason to withhold permission
in the first place. Absent an “essential nexus” between the condition and the reason
for the restriction, the demand is a taking. Id. at 837.
Nollan involved a permit request to tear down and rebuild a beachfront house. Because
the project would reduce views of the ocean, the California Coastal Commission
conditioned the permit on the Nollans’ granting a public easement on their property
to access the beach. The Court ruled this condition lacked the requisite nexus. To the
extent that the project would impair sightlines to the beach, the state could condition
permit approval on ameliorative steps, like size restrictions, limits on fencing, or
provision of a platform to improve the public’s view of the beach. But the majority
found it “quite impossible to understand how a requirement that people already on the
public beaches be able to walk across the Nollans’ property reduces any obstacles to
viewing the beach created by the new house.” Id. at 838.
The outcome of Nollan rested on the majority’s conclusion that there was no logical
relationship between the condition demanded by the Coastal Commission and the
harm it claimed to be regulating: a right to cross the Nollan’s land wouldn’t improve
the public’s view of the beach from behind their house. What if there is some logical
relationship, but it is (at least arguably) somewhat attenuated?
Dolan v. City of Tigard
512 U.S. 374 (1994)
Chief Justice REHNQUIST delivered the opinion of the Court.
Petitioner challenges the decision of the Oregon Supreme Court which held that the
city of Tigard could condition the approval of her building permit on the dedication of
a portion of her property for flood control and traffic improvements. We granted
certiorari to resolve a question left open by our decision in Nollan v. California Coastal
Comm’n, 483 U.S. 825 (1987), of what is the required degree of connection between the
exactions imposed by the city and the projected impacts of the proposed development.
I
The State of Oregon enacted a comprehensive land use management program in
1973.… Pursuant to the State’s requirements, the city of Tigard, a community of some
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30,000 residents on the southwest edge of Portland, developed a comprehensive plan
and codified it in its Community Development Code (CDC). The CDC requires
property owners in the area zoned Central Business District to comply with a 15%
open space and landscaping requirement, which limits total site coverage, including all
structures and paved parking, to 85% of the parcel.…
The city also adopted a Master Drainage Plan (Drainage Plan). The Drainage Plan
noted that flooding occurred in several areas along Fanno Creek, including areas near
petitioner’s property. The Drainage Plan also established that the increase in
impervious surfaces associated with continued urbanization would exacerbate these
flooding problems.…
Petitioner Florence Dolan owns a plumbing and electric supply store located on Main
Street in the Central Business District of the city. The store covers approximately 9,700
square feet on the eastern side of a 1.67-acre parcel, which includes a gravel parking lot.
Fanno Creek flows through the southwestern corner of the lot and along its western
boundary. The year-round flow of the creek renders the area within the creek’s 100year floodplain virtually unusable for commercial development. The city’s
comprehensive plan includes the Fanno Creek floodplain as part of the city’s greenway
system.
Petitioner applied to the city for a permit to redevelop the site. Her proposed plans
called for nearly doubling the size of the store to 17,600 square feet and paving a 39space parking lot. The existing store, located on the opposite side of the parcel, would
be razed in sections as construction progressed on the new building. In the second
phase of the project, petitioner proposed to build an additional structure on the
northeast side of the site for complementary businesses and to provide more parking.
The proposed expansion and intensified use are consistent with the city’s zoning
scheme in the Central Business District.
The City Planning Commission (Commission) granted petitioner’s permit application
subject to conditions imposed by the city’s CDC. The CDC establishes the following
standard for site development review approval:
“Where landfill and/or development is allowed within and adjacent to the 100year floodplain, the City shall require the dedication of sufficient open land area
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for greenway adjoining and within the floodplain. This area shall include
portions at a suitable elevation for the construction of a pedestrian/bicycle
pathway within the floodplain in accordance with the adopted
pedestrian/bicycle plan.”
Thus, the Commission required that petitioner dedicate the portion of her property
lying within the 100-year floodplain for improvement of a storm drainage system along
Fanno Creek and that she dedicate an additional 15-foot strip of land adjacent to the
floodplain as a pedestrian/bicycle pathway. The dedication required by that condition
encompasses approximately 7,000 square feet, or roughly 10% of the property. In
accordance with city practice, petitioner could rely on the dedicated property to meet
the 15% open space and landscaping requirement mandated by the city’s zoning
scheme. The city would bear the cost of maintaining a landscaped buffer between the
dedicated area and the new store.
Petitioner requested variances from the CDC standards. Variances are granted only
where it can be shown that, owing to special circumstances related to a specific piece
of the land, the literal interpretation of the applicable zoning provisions would cause
“an undue or unnecessary hardship” unless the variance is granted.… The Commission
denied the request.
The Commission made a series of findings concerning the relationship between the
dedicated conditions and the projected impacts of petitioner’s project. First, the
Commission noted that “[i]t is reasonable to assume that customers and employees of
the future uses of this site could utilize a pedestrian/bicycle pathway adjacent to this
development for their transportation and recreational needs.” The Commission noted
that the site plan has provided for bicycle parking in a rack in front of the proposed
building and “[i]t is reasonable to expect that some of the users of the bicycle parking
provided for by the site plan will use the pathway adjacent to Fanno Creek if it is
constructed.” In addition, the Commission found that creation of a convenient, safe
pedestrian/bicycle pathway system as an alternative means of transportation “could
offset some of the traffic demand on [nearby] streets and lessen the increase in traffic
congestion.”
The Commission went on to note that the required floodplain dedication would be
reasonably related to petitioner’s request to intensify the use of the site given the
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Property
increase in the impervious surface. The Commission stated that the “anticipated
increased storm water flow from the subject property to an already strained creek and
drainage basin can only add to the public need to manage the stream channel and
floodplain for drainage purposes.” Based on this anticipated increased storm water
flow, the Commission concluded that “the requirement of dedication of the floodplain
area on the site is related to the applicant’s plan to intensify development on the site.”
The Tigard City Council approved the Commission’s final order, subject to one minor
modification; the city council reassigned the responsibility for surveying and marking
the floodplain area from petitioner to the city’s engineering department.
Petitioner appealed to the Land Use Board of Appeals (LUBA) on the ground that the
city’s dedication requirements were not related to the proposed development, and,
therefore, those requirements constituted an uncompensated taking of her property
under the Fifth Amendment. In evaluating the federal taking claim, LUBA assumed
that the city’s findings about the impacts of the proposed development were supported
by substantial evidence. Given the undisputed fact that the proposed larger building
and paved parking area would increase the amount of impervious surfaces and the
runoff into Fanno Creek, LUBA concluded that “there is a ‘reasonable relationship’
between the proposed development and the requirement to dedicate land along Fanno
Creek for a greenway.” With respect to the pedestrian/bicycle pathway, LUBA noted
the Commission’s finding that a significantly larger retail sales building and parking lot
would attract larger numbers of customers and employees and their vehicles. It again
found a “reasonable relationship” between alleviating the impacts of increased traffic
from the development and facilitating the provision of a pedestrian/bicycle pathway as
an alternative means of transportation.
[The Oregon Court of Appeals and the Oregon Supreme Court both affirmed.]
II
The Takings Clause of the Fifth Amendment of the United States Constitution, made
applicable to the States through the Fourteenth Amendment, provides: “[N]or shall
private property be taken for public use, without just compensation.” One of the
principal purposes of the Takings Clause is “to bar Government from forcing some
people alone to bear public burdens which, in all fairness and justice, should be borne
by the public as a whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960). Without
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381
question, had the city simply required petitioner to dedicate a strip of land along Fanno
Creek for public use, rather than conditioning the grant of her permit to redevelop her
property on such a dedication, a taking would have occurred. Such public access would
deprive petitioner of the right to exclude others, “one of the most essential sticks in
the bundle of rights that are commonly characterized as property.” Kaiser Aetna v. United
States, 444 U.S. 164, 176 (1979).
On the other side of the ledger, the authority of state and local governments to engage
in land use planning has been sustained against constitutional challenge as long ago as
our decision in Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926). “Government
hardly could go on if to some extent values incident to property could not be
diminished without paying for every such change in the general law.” Pennsylvania Coal
Co. v. Mahon, 260 U.S. 393, 413 (1922).…
The sort of land use regulations discussed in the cases just cited, however, differ in two
relevant particulars from the present case. First, they involved essentially legislative
determinations classifying entire areas of the city, whereas here the city made an
adjudicative decision to condition petitioner’s application for a building permit on an
individual parcel. Second, the conditions imposed were not simply a limitation on the
use petitioner might make of her own parcel, but a requirement that she deed portions
of the property to the city. In Nollan, supra, we held that governmental authority to
exact such a condition was circumscribed by the Fifth and Fourteenth Amendments.
Under the well-settled doctrine of “unconstitutional conditions,” the government may
not require a person to give up a constitutional right-here the right to receive just
compensation when property is taken for a public use-in exchange for a discretionary
benefit conferred by the government where the benefit sought has little or no
relationship to the property.
Petitioner contends that the city has forced her to choose between the building permit
and her right under the Fifth Amendment to just compensation for the public
easements. Petitioner does not quarrel with the city’s authority to exact some forms of
dedication as a condition for the grant of a building permit, but challenges the showing
made by the city to justify these exactions.…
III
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In evaluating petitioner’s claim, we must first determine whether the “essential nexus”
exists between the “legitimate state interest” and the permit condition exacted by the
city. Nollan, 483 U.S., at 837. If we find that a nexus exists, we must then decide the
required degree of connection between the exactions and the projected impact of the
proposed development. We were not required to reach this question in Nollan, because
we concluded that the connection did not meet even the loosest standard. Here,
however, we must decide this question.
A
We addressed the essential nexus question in Nollan.… The California Coastal
Commission demanded a lateral public easement across the Nollans’ beachfront lot in
exchange for a permit to demolish an existing bungalow and replace it with a threebedroom house.…
We agreed that the Coastal Commission’s concern with protecting visual access to the
ocean constituted a legitimate public interest.… We resolved, however, that the Coastal
Commission’s regulatory authority was set completely adrift from its constitutional
moorings when it claimed that a nexus existed between visual access to the ocean and
a permit condition requiring lateral public access along the Nollans’ beachfront lot.…
The absence of a nexus left the Coastal Commission in the position of simply trying to
obtain an easement through gimmickry ….
No such gimmicks are associated with the permit conditions imposed by the city in this
case. Undoubtedly, the prevention of flooding along Fanno Creek and the reduction
of traffic congestion in the Central Business District qualify as the type of legitimate
public purposes we have upheld. It seems equally obvious that a nexus exists between
preventing flooding along Fanno Creek and limiting development within the creek’s
100-year floodplain. Petitioner proposes to double the size of her retail store and to
pave her now-gravel parking lot, thereby expanding the impervious surface on the
property and increasing the amount of storm water runoff into Fanno Creek.
The same may be said for the city’s attempt to reduce traffic congestion by providing
for alternative means of transportation. In theory, a pedestrian/bicycle pathway
provides a useful alternative means of transportation for workers and shoppers ….
B
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383
The second part of our analysis requires us to determine whether the degree of the
exactions demanded by the city’s permit conditions bears the required relationship to
the projected impact of petitioner’s proposed development.…
The city required that petitioner dedicate “to the City as Greenway all portions of the
site that fall within the existing 100-year floodplain [of Fanno Creek] ... and all property
15 feet above [the floodplain] boundary.” In addition, the city demanded that the retail
store be designed so as not to intrude into the greenway area. The city relies on the
Commission’s rather tentative findings that increased storm water flow from
petitioner’s property “can only add to the public need to manage the [floodplain] for
drainage purposes” to support its conclusion that the “requirement of dedication of
the floodplain area on the site is related to the applicant’s plan to intensify development
on the site.”
The city made the following specific findings relevant to the pedestrian/bicycle
pathway:
“In addition, the proposed expanded use of this site is anticipated to generate
additional vehicular traffic thereby increasing congestion on nearby collector
and arterial streets. Creation of a convenient, safe pedestrian/bicycle pathway
system as an alternative means of transportation could offset some of the traffic
demand on these nearby streets and lessen the increase in traffic congestion.”
The question for us is whether these findings are constitutionally sufficient to justify
the conditions imposed by the city on petitioner’s building permit. Since state courts
have been dealing with this question a good deal longer than we have, we turn to
representative decisions made by them.
In some States, very generalized statements as to the necessary connection between the
required dedication and the proposed development seem to suffice. We think this
standard is too lax to adequately protect petitioner’s right to just compensation if her
property is taken for a public purpose.
Other state courts require a very exacting correspondence, described as the “specifi[c]
and uniquely attributable” test. The Supreme Court of Illinois first developed this test
in Pioneer Trust & Savings Bank v. Mount Prospect, 22 Ill.2d 375, 380, 176 N.E.2d 799, 802
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Property
(1961). Under this standard, if the local government cannot demonstrate that its
exaction is directly proportional to the specifically created need, the exaction becomes
“a veiled exercise of the power of eminent domain and a confiscation of private
property behind the defense of police regulations.” Id., at 381, 176 N.E.2d, at 802. We
do not think the Federal Constitution requires such exacting scrutiny, given the nature
of the interests involved.
A number of state courts have taken an intermediate position, requiring the
municipality to show a “reasonable relationship” between the required dedication and
the impact of the proposed development. Typical is the Supreme Court of Nebraska’s
opinion in Simpson v. North Platte, 206 Neb. 240, 245, 292 N.W.2d 297, 301 (1980),
where that court stated:
“The distinction, therefore, which must be made between an appropriate
exercise of the police power and an improper exercise of eminent domain is
whether the requirement has some reasonable relationship or nexus to the use
to which the property is being made or is merely being used as an excuse for
taking property simply because at that particular moment the landowner is
asking the city for some license or permit.”
Thus, the court held that a city may not require a property owner to dedicate private
property for some future public use as a condition of obtaining a building permit when
such future use is not “occasioned by the construction sought to be permitted.” Id., at
248, 292 N.W.2d, at 302.
Some form of the reasonable relationship test has been adopted in many other
jurisdictions. Despite any semantical differences, general agreement exists among the
courts “that the dedication should have some reasonable relationship to the needs
created by the [development].”
We think the “reasonable relationship” test adopted by a majority of the state courts is
closer to the federal constitutional norm than either of those previously discussed. But
we do not adopt it as such, partly because the term “reasonable relationship” seems
confusingly similar to the term “rational basis” which describes the minimal level of
scrutiny under the Equal Protection Clause of the Fourteenth Amendment. We think
a term such as “rough proportionality” best encapsulates what we hold to be the
Takings
385
requirement of the Fifth Amendment. No precise mathematical calculation is required,
but the city must make some sort of individualized determination that the required
dedication is related both in nature and extent to the impact of the proposed
development.…
.…We turn now to analysis of whether the findings relied upon by the city here, first
with respect to the floodplain easement, and second with respect to the
pedestrian/bicycle path, satisfied these requirements.
It is axiomatic that increasing the amount of impervious surface will increase the
quantity and rate of storm water flow from petitioner’s property. Therefore, keeping
the floodplain open and free from development would likely confine the pressures on
Fanno Creek created by petitioner’s development. In fact, because petitioner’s property
lies within the Central Business District, the CDC already required that petitioner leave
15% of it as open space and the undeveloped floodplain would have nearly satisfied
that requirement. But the city demanded more-it not only wanted petitioner not to
build in the floodplain, but it also wanted petitioner’s property along Fanno Creek for
its greenway system. The city has never said why a public greenway, as opposed to a
private one, was required in the interest of flood control.
The difference to petitioner, of course, is the loss of her ability to exclude others. As
we have noted, this right to exclude others is “one of the most essential sticks in the
bundle of rights that are commonly characterized as property.” Kaiser Aetna, 444 U.S.,
at 176. It is difficult to see why recreational visitors trampling along petitioner’s
floodplain easement are sufficiently related to the city’s legitimate interest in reducing
flooding problems along Fanno Creek, and the city has not attempted to make any
individualized determination to support this part of its request.…
If petitioner’s proposed development had somehow encroached on existing greenway
space in the city, it would have been reasonable to require petitioner to provide some
alternative greenway space for the public either on her property or elsewhere. But that
is not the case here. We conclude that the findings upon which the city relies do not
show the required reasonable relationship between the floodplain easement and the
petitioner’s proposed new building.
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Property
With respect to the pedestrian/bicycle pathway, we have no doubt that the city was
correct in finding that the larger retail sales facility proposed by petitioner will increase
traffic on the streets of the Central Business District. The city estimates that the
proposed development would generate roughly 435 additional trips per day.
Dedications for streets, sidewalks, and other public ways are generally reasonable
exactions to avoid excessive congestion from a proposed property use. But on the
record before us, the city has not met its burden of demonstrating that the additional
number of vehicle and bicycle trips generated by petitioner’s development reasonably
relate to the city’s requirement for a dedication of the pedestrian/bicycle pathway
easement. The city simply found that the creation of the pathway “could offset some
of the traffic demand ... and lessen the increase in traffic congestion.”
As Justice Peterson of the Supreme Court of Oregon explained in his dissenting
opinion, however, “[t]he findings of fact that the bicycle pathway system ‘could offset
some of the traffic demand’ is a far cry from a finding that the bicycle pathway system
will, or is likely to, offset some of the traffic demand.” 317 Ore., at 127, 854 P.2d, at 447
(emphasis in original). No precise mathematical calculation is required, but the city
must make some effort to quantify its findings in support of the dedication for the
pedestrian/bicycle pathway beyond the conclusory statement that it could offset some
of the traffic demand generated.
IV
Cities have long engaged in the commendable task of land use planning, made
necessary by increasing urbanization, particularly in metropolitan areas such as
Portland. The city’s goals of reducing flooding hazards and traffic congestion, and
providing for public greenways, are laudable, but there are outer limits to how this may
be done. “A strong public desire to improve the public condition [will not] warrant
achieving the desire by a shorter cut than the constitutional way of paying for the
change.” Pennsylvania Coal, 260 U.S., at 416.
The judgment of the Supreme Court of Oregon is reversed, and the case is remanded
for further proceedings not inconsistent with this opinion.
It is so ordered.
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[The dissenting opinions of Justices Stevens (joined by Justices Blackmun and
Ginsburg) and of Justice Souter are omitted.]