The Takings Line is Bent

Posted on June 26, 2017 by Brian Rosenthal

In an expansive review of regulatory takings, the Supreme Court reiterates governments must pay when overly impinging individual property rights by regulatory means, resulting in compensable takings.  The Court announces a flexible approach to analyze the private party’s parcel deemed taken by regulatory action (past or present).  Particularly, but not exclusively, when more than one parcel is involved as was the case before the Court, a new test emerges to define the taken parcel. The test includes consideration of the landowner’s expectations.  

The dissenters believe the Court for the first time strays away from its precedential findings on the whole parcel in issue as defined under state law, and predict the new multi-factor parcel review test will “tip the scales in favor of the government” for uncompensated takings by allowing the government to frame the taking as reasonable as it relates to the defined parcel and burden.

The majority is equally passionate, noting its test mitigates against the government’s unchecked usurpation and sometimes over-eager use of private property rights in the guise of the greater good.  The Court suggests “[p]roperty rights are necessary to preserve freedom” and supports its test as best suited for that protection.

The case involved a state’s restricting the development of lots on a protected river to those of a certain size, and resulted from unique circumstances where the property owners had come into possession of adjacent lots, each individually failing the development requirement.  Analyzing the facts under a multi-step review, the Court found the lots retained their economic value as a whole and supported a “no compensable taking” finding by looking at the following factors:

  1. No complete loss of economic value [might be non-compensable even if a complete loss where state property and nuisance laws would be deemed legitimately and commonly understood as a fair counterbalance to the regulatory taking (perhaps like wetlands restrictions)];

  2. Land treatment under governing state and local real estate law (how and where bounded);

  3. Physical characteristics (including topography and both its human and ecological features, such as if it were a coastal property or, as  here, a scenic river);

  4. Value (including any opportunities the burden may create, such as preserving a vista or greenspace or relationship of the lots); and

  5. Reasonable expectations of the landowners.

This case has been closely watched by both land use practitioners and regulating governments and municipalities.  Its implications reach squarely to environmental laws and regulations such as water regulations and use and development restrictions.



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