Regulation Takings: When Does A Law Cross The Line?

The takings issue is addressed in the Fifth Amendment to the U.S. Constitution, which states that private property [shall not] be taken for public use, without just compensation. This has been interpreted in various Supreme Court cases, including Legal Tender Cases (1870), Pennsylvania Coal v. Mahon, and Loretto v. Teleprompter Manhattan CATV Corp. (1982). The Court has held that a land-use regulation constitutes a taking if it does not advance legitimate state interests, diminishes the property's value, interferes with reasonable investment-backed expectations, or denies the owner economically viable use of their land. Determining when a taking has occurred is complex, and courts must examine each case individually.

Explore related products

Is Racial Equality Unconstitutional?

$17.49 $34.99

Fifth Amendment Takings Clause

$30.2 $30.2

Takings: Private Property and the Power of Eminent Domain

$40.21 $52

The Santa Clause

$3.79

The Santa Clause 3: The Escape Clause

$3.79

Santa Claus: 25th Anniversary

$9.74 $14.98

The Fifth Amendment

Determining when a regulation constitutes an "unconstitutional taking" is a complex area of law that has been the subject of much litigation and debate. The Supreme Court has provided some guidance on this issue, establishing a framework for analyzing regulatory takings challenges. The Court has identified two types of regulatory actions that generally will be considered per se takings: physical invasions of property and regulations that deny all economically beneficial use of the property.

In addition to these per se takings, the Court has also recognized that other types of regulatory actions may constitute a taking depending on the specific circumstances. The Court has developed a multi-factor test to evaluate these types of regulatory takings claims, considering the economic impact of the regulation, the extent to which it interferes with investment-backed expectations, and the character of the governmental action. This fact-intensive inquiry requires a case-by-case analysis and often turns on the specific facts and context of each situation.

It's important to note that not all government actions that affect property values or use will rise to the level of a taking. The government generally has broad authority to enact regulations that promote the health, safety, and welfare of the community. However, when these regulations go too far and effectively deprive individuals of their property rights, they may trigger the protections of the Fifth Amendment. Property owners who believe they have been subjected to an unconstitutional taking can seek redress through the courts, asserting a regulatory takings claim and seeking just compensation for the loss of their property rights.

Public health and safety

State agencies have the responsibility to evaluate their regulatory actions to ensure the protection of private property rights. Before implementing an action with constitutional takings implications, agencies must adhere to specific criteria:

• Any conditions imposed on the use of property must directly relate and substantially advance the purpose of the regulation.
• Restrictions on property use must be proportionate to the overall problem being addressed.
• Minimise any permitting processes that interfere with or prohibit private property use.
• Identify the public health or safety risk, establish that the action addresses this risk, ensure restrictions are proportional, and estimate the potential cost of taking action.

The concept of liberty versus safety has been a subject of debate during the COVID-19 pandemic. While governments are authorised to take emergency measures, lockdowns in the long term may be deemed unconstitutional as they infringe on individual liberties. However, the law is clear that individual rights do not override public health needs. For instance, in the 1905 Supreme Court case of Jacobson vs. Massachusetts, the court upheld a Cambridge ordinance requiring residents to be vaccinated against smallpox, protecting public health and safety under the state's police power.

Eminent domain

The Fifth Amendment of the United States Constitution mandates that if the government takes private property for public use, it must provide "just compensation" to the property owners. This compensation is meant to put the owner in the same financial position they would have been in had their property not been taken. However, in practice, courts often limit compensation to the property's fair market value. The Supreme Court has upheld the government's power of eminent domain in cases such as Kohl v. United States (1875) and Kelo v. City of New London (2005).

While eminent domain allows the government to take private property, it does not include the power to transfer ownership of that property from one private owner to another without a valid public purpose. Additionally, eminent domain is not limited to real property; the government can also take personal property, including intangible property such as contract rights, patents, trade secrets, and copyrights.

Explore related products

The Christmas Clause

$16.98

The Santa Clause 2

$3.79

Morals Clause

$10.59

Santa Claus - The Movie

$13.84 $14.98

The Scandal Clause: Can $700,000 Buy a Life?

$17.99 $17.99

Arthur Christmas

$3.99

Regulatory deprivations

The Fifth Amendment of the U.S. Constitution states that "private property [shall not] be taken for public use, without just compensation." This clause, known as the Takings Clause, protects private property rights and ensures that the government provides just compensation when taking private property for public use. Regulatory takings, as interpreted by the courts, extend beyond physical seizures of property and include instances where government regulations substantially interfere with property rights.

The Penn Central balancing test, established in Penn Central Transportation Co. v. New York City, is often applied to distinguish between regulatory takings and deprivations. This test evaluates the economic impact on the owner, the extent of the interference with investment-backed expectations, and the character of the government action. Other cases, such as Loretto v. Teleprompter Manhattan CATV Corp., Lucas v. South Carolina Coastal Council, and Nollan v. California Coastal Commission, have also provided guidance on when a regulation qualifies as a taking.

In practice, regulatory deprivations can involve a range of government actions, such as permit requirements, recordation requirements, or zoning ordinances. For example, in Williams v. Town of Spencer, the court upheld an ordinance that prohibited the reoccupation of vacated lots in a mobile home park by replacement manufactured housing units. The court ruled that this ordinance did not constitute an unconstitutional taking because it allowed the land to be used for other purposes permitted in an industrial zone. Similarly, in JWL Investments, Inc. v. Guilford County Board of Adjustment, the court rejected a claim that residential zoning with a scenic corridor overlay amounted to a taking, as the regulation did not deprive the owner of all economically beneficial or productive uses.

Investment-backed expectations

In the United States, regulatory takings refer to situations where government regulations restrict the use of private property to the extent that the landowner is substantially deprived of the reasonable use or value of their property. The Fifth Amendment stipulates that governments are obligated to provide just compensation in such cases.

The concept of "investment-backed expectations" was first introduced in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). The Supreme Court ruled that takings law does not divide property into discrete segments, and that the property interest in question during a taking case is the whole parcel of land and not a discrete sliver of it. This gave rise to the question of what the "denominator" of the ownership fraction is, i.e., what is the larger ownership whose part is being subjected to confiscatory regulation? The Court has relied on this concept several times to determine whether a taking has occurred.

The Penn Central balancing test considers the economic impact of the regulation, the interference with reasonable investment-backed expectations, and the character of the government action. This test has been criticised for its ambiguity, indeterminacy, and lack of predictable outcomes, as the court failed to provide guidance on what must be proven to establish a taking using this test.

In cases such as Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984), the Court used the concept of investment-backed expectations to determine whether a taking had resulted from the government's disclosure of trade secret information submitted with applications for pesticide registrations. The disclosure of data from 1972 to 1978 would have constituted a taking as it destroyed the property value of the trade secret, and trade secret information submitted during this period was guaranteed confidentiality, forming the basis of a distinct investment-backed expectation.

In another case, Andrus v. Allard, 444 U.S. 51, the Court did not directly address the ban's interference with investment-backed expectations, but nonetheless upheld a federal ban on the sale of artifacts made from eagle feathers.

The Court has formulated general principles to guide its decisions, reiterating two guidelines for determining when government regulation is so onerous that it constitutes a taking. Firstly, a regulation that denies all economically beneficial or productive use of land will require compensation under the Takings Clause. Secondly, if a regulation impedes the use of property without depriving the owner of all economically beneficial use, a taking may still be found based on a complex of factors, including the economic impact of the regulation on the claimant and the extent to which the regulation has interfered with distinct investment-backed expectations.

Frequently asked questions