Taking of Property (Update 2)

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TAKING OF PROPERTY (Update 2)

The Fifth Amendment includes the command, "nor shall private property be taken for public use, without just compensation."

Putting aside the perhaps puzzling fact that the public use limitation has been largely read out of existence—the government can take property for almost any reason, including the improvement of "slums" or the conveyance of clear title to tenants—the so-called takings clause has been easy enough to apply in most cases. If the government wants property, it can assert its right of eminent domain and take it. But then it must pay just compensation. The hard cases arise when government has not simply appropriated property outright but instead has taken a legislative or regulatory action that lessens the value of private property.

The fountainhead for so-called regulatory takings cases is the Supreme Court's opinion in Pennsylvania Coal Co. v. Mahon (1922), credited as the first to apply the takings clause to government regulation short of complete appropriation. Pennsylvania law prohibited coal companies from mining subsurface coal "in such a way as to cause the subsidence of, among other things, any structure used as a human habitation." Justice oliver wendell holmes, jr. , first held that the law was a proper exercise of the police power. "Government could hardly go on if to some extent values incident to property could not be diminished without paying for every such change in the law." But Holmes also found that such power "must have its limits." Therein lies the rub, for Holmes could not pin down what those limits were to be. "The general rule at least is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." How far is too far? Four years later, the Court held that zoning was not necessarily a taking in euclid v. ambler realty co. (1926), even though the regulation caused the private owner to lose three-quarters of the property's value.

Holmes's majority opinion in Mahon is famous. Far less attention has been paid to the dissent of louis d. brandeis. Brandeis noted that every law affects private values. He would thus emphasize the nature of the government action more than the private party's loss. "[R]estriction imposed to protect the public health, safety or morals from dangers threatened is not a taking."

The Holmes–Brandeis fault line has played itself out over the ensuing decades. It is often hard to understand the law of regulatory takings except in fairly bald, political terms. Liberal advocates of the new deal, such as Brandeis and, later, william j. brennan, jr. , have tended to find no government taking, a trend that reached its high point in penn central transportation co. v. new york city (1978). Conservative and libertarian commentators have long been critical of the takings jurisprudence of the warren court, as epitomized in Penn Central. If government has to pay in order to act, it often will not act. The burger court and rehnquist court have aimed to stem the tide of government expanse, in part by putting teeth in Holmes's takings test.

One front in the battle has been the articulation of per se rules to give greater clarity to the field. One such rule is that any regulation that effects a "permanent physical occupation" will be considered a compensable taking, regardless of how slight the physical intrusion may be. In loretto v. teleprompter, inc. (1982), New York City required landlords to install cable for tenants' televisions. The just compensation for the resulting "taking" of the air space occupied by the cable wires was held to be $1 per building. A second per se takings rule, formalized in lucas v. south carolina coastal council (1992), is triggered whenever a governmental act deprives a landowner of "all economically beneficial or productive use" of land.

The tightening of the takings clause has gone beyond per se rules. The Court in Nollan v. California Coastal Commission (1987) required an "essential nexus" between the harms associated with development and the conditions that government can place on granting a building permit. In dolan v. city of tigard (1994), the Court added a prong to the Nollan test, ruling that such conditional exactions must also satisfy a "rough proportionality" test—the burden on the private party must be loosely in keeping with the impact of the proposed development.

Application of the takings clause has always depended on an understanding of what "property" is in the first place, a point noted by Brandeis in his Mahon dissent. In Phillips v. Washington Legal Foundation (1998), the Court, in a 5–4 decision with Chief Justice william h. rehnquist writing for the majority, held that the interest accrued on lawyer trust-fund accounts was "property" of the client for purposes of the Fifth Amendment. As with Loretto, Phillips may foreshadow another move to tighten the takings clause by finding even relatively minor government actions to be covered in its sweep.

These recent cases have brought with them divided courts, vigorous dissenting opinions, and a plethora of scholarly commentary. Critics charge the majorities of resurrecting Lochner -era substantive due process to invalidate government regulations that are normally accorded only rational basis review. Practical politicians have leapt in to fill what they perceive as a void, advancing legislative proposals to require the government to pay whenever a regulation diminishes private property values by more than a given, objective limit—say one-third. Such proposals have both practical and theoretical difficulties, of course, and have been criticized by legal scholars and others.

Paraphrasing Sigmund Freud, sometimes a question of degree is just a question of degree. Seven decades have not fleshed out Holmes's vague pronouncements in Mahon. Absent some major shift in the political landscape, we may just have to live with uncertainty in the contours of regulatory takings law.

Edward J. Mc Caffery
(2000)