The Fifth Amendment of the United States Constitution includes a provision known as the Takings Clause, which states that "private property [shall not] be taken for public use, without just compensation." While the Fifth Amendment by itself only applies to actions by the federal government, the Fourteenth Amendment extends the Takings Clause to actions by state and local government as well. When the government wishes to acquire property, for example, to build a new courthouse, it first attempts to buy the property on the open market. However, if the owner refuses to sell, the government can go to court and exercise the power of eminent domain, by having the court condemn the property in favor of the government. The Takings Clause imposes two requirements on government in order to exercise this power. First, the property to be acquired must be "for public use," and second, the government must pay "just compensation" to the owner of the property that is taken. The Supreme Court has long construed the term "public use" to include not only cases in which the public can arguably use the property, for example, as a public road, but also cases in which the property is not literally used by the public but the use of the property will serve a public purpose, such as redevelopment of a blighted area. Often when the government regulates the use of a person's property, the effect on the particular person is adverse. For example, when the government zones an area for residential use, the owner of a particular property might like to open a convenience store or dog kennel, which might bring a greater economic return than a residential structure. Until 1922, the Supreme Court did not consider such diminution of the value of a particular person's property incidental to a general regulation as raising an issue under the Takings Clause. In that year, however, in a celebrated opinion by Justice Oliver Wendell Holmes, the Court held that if a regulation went "too far," it could constitute a taking that would require just compensation by the government. Since that time the question has remained, how far is too far. An initial question is whether the regulation interferes with a legitimate property right or whether the regulation merely reflects a "background understanding" of the limits of one's property right. For example, because one's property right does not include the right to interfere unreasonably with another person's property right – the definition of a private nuisance – a regulation that merely codifies that background understanding cannot go too far. The regulation deprives the person of nothing to which he has a right. Two Supreme Court decisions offer clear guidance on situations that will categorically constitute a taking. In one decision, the Court held that regulations that deprive a person of all ability to develop or utilize his or her property for any economic purposes goes too far and requires just compensation. Another line of Supreme Court cases establishes that if the government effects a permanent physical invasion of the person's property, for example by requiring the owner to allow public access to the property, this constitutes a taking. Absent one of these two circumstances, however, the Court has said that the question whether a regulation goes too far is a contextual, ad hoc determination that involves the weighing of a number of factors. Foremost among these factors is the magnitude of the regulation's economic impact and the degree to which it interferes with legitimate property interests. A particularly important issue that has been raised is whether a person who acquires property after the institution of the regulatory regime should have any claim whatsoever. Some argue that such a landowner should not, having acquired the property knowing the restrictions to which it was subject and presumably at a price that reflected those restrictions. Others argue that to eliminate any such claim would enable government effectively to extinguish substantial value of the property without any recourse for the owner. The Supreme Court has concluded that the timing of the acquisition of the property – before or after the initiation of the regulatory restriction – is one of the factors to be considered in the ad hoc determination of whether the restriction has gone "too far" and become a taking requiring just compensation.
In the wake of the decision, critics have persuaded some states to enact laws prohibiting the use of eminent domain by state agencies and local governments for the purpose of economic development. CPR's PerspectiveThe Constitution's Takings Clause establishes only the basic floor of protection for property rights, both in terms of when eminent domain can be used and the requirement for just compensation. Therefore, there may be particular instances in which some people, or even many people, may feel that the Takings Clause does not go far enough to protect private property. It is this sentiment that fuels interests in statutory or state constitutional amendments to require compensation in a broader set of situations and to prohibit the exercise of eminent domain for economic development. With respect to concerns about government regulation of land use, because the Takings Clause provides only general guidance on when government action goes "too far," it is not surprising that individual cases may raise issues. Many of these cases, however, involve situations in which the property owner's actions would cause a real harm to the environment. In some cases, these harms might be of sufficient magnitude to constitute a nuisance, thus eliminating any claim for compensation. But even when the harm does not rise to the level of a nuisance, the equitable claim for compensation by a land owner who wishes to take action harming the environment may be exceptionally weak because of the modest nature of his legitimate expectations and the limited diminution of value. Thus, any statutory amendment that would grant compensation whenever there is any adverse effect from a government regulation paints much too broadly. Some reforms intended to mitigate possible incidental adverse effects of government regulation may themselves interfere with the accomplishment of the underlying public purpose of the government regulation. For example, some suggested statutory amendments would in essence require the government agency either to pay compensation for any adverse effect on the value of private property or to grant a waiver from the regulatory law. Because the agency's appropriations do not include funds for paying compensation in advance, the agency is effectively required to grant an exemption from the regulation, thereby thwarting the effectiveness of the government regulation, perhaps irreparably harming the environment. In addition, many government regulations are of long standing. While they may restrict today what a property owner can do with his property, the actual adverse effect caused by the regulation, if any, may already be reflected in the value of the property, perhaps even when the present owner acquired the land. Consequently, any "compensation" for the restriction would actually be a windfall to the present owner. These considerations suggest extreme caution in statutory amendments to provide compensation whenever compliance with environmental laws limits the use of property.
The Constitution erects safeguards against government taking private property for improper purposes and provides compensation for government regulation of private property that goes "too far." In some situations, the safeguards and compensation requirements of the Constitution may appear inadequate, so that additional safeguards or compensation requirements might be justified as a political matter. However, care should be taken in formulating any such additional safeguards or compensation requirements, because many possible responses can be highly counterproductive, frustrating the ability of governments to act or regulate in the public interest. Connect with CPR on your favorite social media platform |