Developments in Takings Law
By: MARK W. VYVYAN, MARY S. RANUM & DANIEL A. PIPER
August 2005
Two recent decisions by the United States Supreme Court have substantially clarified and changed the law related to the taking of private property by the government. Under the United States Constitution, a taking is only permitted for a "public use" and, if a taking occurs, the government is required to compensate the property owner.
Supreme Court Clarifies Test for Regulatory Takings
In Lingle v. Chevron U.S.A., Inc., the United States Supreme Court clarified the test for determining whether a municipal regulation amounts to a taking. Previously, courts had found a taking when the application of a general zoning law to a particular property did not substantially advance legitimate state interests. This inquiry is now improper in takings cases.
Instead, the Court suggested that there is a taking when one of four tests is met:
- the government causes an owner to suffer a permanent physical invasion of her property;
- a regulation completely deprives an owner of all economically beneficial use of her property;
- the government has interfered with distinct investment-backed expectations so that the resulting economic impact practically results in a physical or total regulatory taking; or
- a governmental entity conditions the grant of a permit upon the concession of an easement or some other dedication of property.
Supreme Court Rules Promoting Economic Development Is a "Public Use"
In Kelo v. City of New London, the Supreme Court ruled that a city does not violate the Fifth Amendment when it takes private property to promote economic development. The Fifth Amendment states that private property shall not be taken for "public use" without "just compensation." Previously, the Court had found a "public use" when a municipality took private land in a blighted area for the purpose of promoting economic development. The Court has now extended its holding to include non-blighted areas as well. Municipalities are no longer constitutionally constrained from taking property as long as the taking results in, for example, higher tax revenues or the creation of more jobs.
The Court was sharply divided, however. Had the condemnation plan not been the product of a careful deliberative process or had there been any evidence of an illicit purpose, the decision may have come out differently.