#11547 - Eminent Domain And Regulatory Takings - Property

EMINENT DOMAIN & REGULATORY TAKINGS

I. Police Power: the underlying govt power. With its police power, the state can:

1. go through eminent domain process and take title. The govt physically takes (occupy) land, and transfers the title from the owner to itself. Must be for public use. Compensation required

2. Pass Regulation, and not pay any compensation. But they can’t get title to your property, they just pass some regulation requiring you to do or not do something.

   1. If a court finds the regulation goes too far, then the court says it is a takingthen govt has a choice.

      1. Can maintain regulation, go through eminent domain process, (e.g., in Lucas change the title of the beachfront property from Lucas to state of South Carolina and compensate Lucas), or

      2. Kill the regulation

II. Eminent Domain

1. Main issues: public use and due process. Court is very deferential to states, unless it looks arbitrary and capricious. Must be for the general welfare of the state.

2. Broad Categories:

   1. private property to public ownership, as for a road

   2. transfers to private parties as part of programs to serve a public purpose---like curing of oligopoly of land ownership (Hawaii Housing Authority v. Midkiff) or blight (Berman). O’Connor describes these as to “cure public harms” in Kelo dissent

   3. Transfers to private parties such as utitlies, where private entity comes under control of the public

   4. Cases in which collective action is needed to acquire land for vital instrumentalities of commerce, like railroads

3. Economic Development (Kelo v City of New London)—City in bad shape. City Council approved a redevelopment plan and authorized Development Corporation to purchase property or acquire through eminent domain on its behalf. A few property owners challenge in court. SCOTUS upholds the plan.

   1. Promoting economic development is a traditional and long accepted function of government. It’s ok that government pursuit of a public purpose will often benefit individuals.

   2. Court looks at comprehensive nature of the plan and that it serves a public use.

   3. Court defers to state legislatures on public use within reason, given different and evolving circumstances and values in different parts of the nation

   4. O’Connor dissent: this case doesn’t fit the prior categories we’ve permitted Midkiff and Berman were treating public harms. This is not a public harm—creating a benefit. There’s always going to be some public use, and beneficiaries are usually the rich and powerful.

4. Economic Growth—Govt in Michigan bought out homes in thriving Poletown, Detroit to build a GM for fair market value to build a Cadillac plant (that worked out well!)

5. Urban Renewal (Berman): the concept of the public justice is broad and inclusive; aesthetic as well as monetary; spiritual as well as physical; if the people of DC decide that the streets should be clean and sanitary, that’s fine.

6. Distribution of Land Ownership (Midkiff)—Hawaii exercised eminent domain to take land from landowners who had large concentrations of land (oligopoly) and distribute it in smaller portions to many smaller landowners

   1. **PROF sees this as archetypical instance of why you should defend property rights, but the court didn’t do it. Maybe you could see this as preoperty rights being used to protect the weak.

7. Compensation

   1. General principle in U.S. is fair market value (presumably, for the use before the government changed demand)

      1. Is this economically efficient? If not, would it lead to windfalls for lucky owners of property where the govt one day decides to build something?

8. Policy on ED

   1. Land-intensive public works generate bilateral monopoly situations that lead to holdoutsED or similar powers are necessary to get land to highest-valued use (although restricted to public use).

   2. Why should we require compensation? Economic efficiency rationale—if we didn’t, gov’t would exercise it too much, even where not highest value use.

      1. But Levinson argues that govt is motivated by power, not by money

   3. Maybe compensation requirement helps protect expectations around property rights

1. Regulatory Takings.

When a regulation crosses a certain line, court calls it a taking. How to know when it’s gone too far?

1. Categorical Rules

   1. Permanent Physical Occupation (Loretto, Causby)

      1. Loretto challenged NY statute that requires landlords to permit cable companies to install cables and boxes on their roofs, and drape wires down the front of the building to get to units

         1. Rule: While temporary physical occupations are subject to balancing test, permanent physical occupations are categorically takings.

         2. Blackmun dissent: how do you know something is permanent? Lots of other regs require landlords to make some physical changes for the duration of a tenancy, for health and safety of tenant.

      2. Causby was a chicken farmer. Planes from nearby airport scared, killed his chickens, deprived family of sleep, and reduced value of land. Court says planes flying 80 ft above the house amounts to an easement on his property. Interference was so constant and drastic that it’s equivalent to a physical occupation.

   2. Restricting Noxious Use (as opposed to creating public benefit) is not a taking (Hadacheck)

      1. Hadacheck owned brick kiln outside LA. Property worth $800K as brickyard, $60K ordinarily. At the time he bought it, the land wasn’t part of the City of Los Angeles, and he didn’t expect it to be. But LA later grew out there, and passed statute banning brick kilns.

         1. Rule: Nuisance regulations are not takings

         2. Rationale: There must be progress, and if in its march private interests are in the way they must yield to the good of the community

         3. Alternatives to regulation

            1. Just buy him out (Coase). But transaction costs high

            2. Nuisance suit. But might not have won. The use seems reasonable and he was there first.

         4. Difference w/ Spur. It was probably foreseeable that the city of LA would naturally grow out in that direction. Not the case w/ Spur.

   3. Noxious Use but 100% destruction of economic value is a taking (Lucas)

      1. Lucas v SC Coastal Council—SC reg prevented Lucas from building on his beachfront property in front of some “setback line.” SCOTUS rule that State action that eliminates all uses of a property that provide any economic value is a taking unless the use they prohibit is a background common-law nuisance or property principle

         1. Stevens dissent thinks this is stupid and arbitrary (if it’s 98%, deprivation it’s not a taking). Prof thinks it’ll never apply in practice anyway.

         2. Stevens also says this prevents legislature from updating policy.

         3. State argues prevents public harm (erosion). Scalia points out really hard to draw line b/w preventing harm to state’s ecological resources and creating the public benefit of a new ecological resource preserve.

         4. Opinion (Scalia) carves exception for

         5. Exception for uses that background principles of the state’s law of property and nuisance already place upon land ownership. If the banned use would already subject the owner to liability in nuisance or another claim and the statute just makes it easier to charge, that’s fine

2. Balancing Factors—more like throwing a bunch of stuff into a pot than putting them on scales

1. Is it preventing a harm (OK) or creating a benefit (requires compensation)?

   1. Prof says Holmes language in Penn Coal speaks of creating the public benefit of improving the public condition

   2. Are they just trying to get a public benefit w/o paying it, and trying to pin the costs on an unlucky few?

2. Extent of the diminution of value (Penn Coal, Penn Central)

3. Distinctive Investment-Backed Expectations (Penn Coal)

4. Character of Invasion / Right to Exclude (Loretto)

5. Reciprocity of Advantage (Penn Cen, zoning)

6. Enterprise or arbitral (Schoene)

   1. Is the state trying to promote an enterprise, or was it forced to step in and make a choice?

7. Comprehensive / individualized nature (usually only comes up in zoning)

3. Balancing Cases

   1. Diminution in Value (Penn Coal Co v Mahon)—Coal company sold the surface land to Mahon but expressly retained the underground coal rights in the deed. PA passed statute that prohibited mining where it would cause subsidence of ground underneath any residential building.

      1. Establishes principle that while property may be regulated to a certain extent, if regulation of a non-nuisance use goes too far it will be recognized as a taking.

      2. To make it commercially impracticable to mine certain coal has very nearly the same effect for constitutional purposes as appropriating or destroying it.

      3. Court looks at the extent of diminution as one of the factors to throw in the pot in asking whether it’s a taking.

      4. Recognizes distinct investment-backed expectations.

      5. Conceptual Severance: They can still mine plenty of coal here. Just not in the part that’s the support estate. If you look at that support estate by itself, you might find 100% diminution in value in the support estate. Brandeis looks at estate as a whole.

         1. You can make a conceptual severance argument just about anywhere. But it will be more credible where the right you’re talking about severing is actually alienable. Here, the support estate to mine is recognized as a separate right by statute.

         2. If 100% diminution is relevant, then Penn Coal has greater rights when analyzed under conceptual severance than when property viewed as a whole. Brandeis doesn’t like that whole of parts > sum.

      6. Does Holmes see a public harm here? No. Why not?

         1. This is not a matter of personal safety. And the damage to the house is not public, so the public interest in...