Vol. 9 No. 7 (July 1999) pp. 336-339.

THE TAKINGS ISSUE: CONSTITUTIONAL LIMITS ON LAND-USE CONTROL AND ENVIRONMENTAL REGULATION by Robert Meltz, Dwight H. Merriam, and Richard M. Frank. Washington, DC: Island Press, 1999. 595 pp.

Reviewed by William A. Fischel, Department of Economics, Dartmouth College.

 

The constitutions of the United States and each state require that the government pay "just compensation" when private property is taken for public use. The interesting edge of that command arises when the government applies a regulation that devalues property without acquiring title to it. The regulatory side of takings law has burst from the academy to the courts, and the present book is an ambitious and successful survey of the law--not the scholarship--of this field.

THE TAKINGS ISSUE is the successor to a 1973 book, THE TAKING ISSUE, by Bosselman, Callies and Banta, who wrote an introduction for Meltz, Merriam and Frank's work. Why the gerundive has become "Takings" instead of "Taking" in the past quarter century is about the only takings-related question that the much longer 1999 book does not address. Takings litigation has indeed exploded since the 1970s.

The organization of THE TAKINGS ISSUE is informed by the sequence of issues that a lawyer with a takings claim must deal with. It does not treat the development of the law in a historical sequence or offer much about the theory of property. Nor is it a collection of cases, though many are briefly summarized. The book has chapter numbers on the top of each page, which makes the case that "was discussed in chapter 4" so much easier to find, and its index is superior to those of most other law books.

Part I points out the sources of the law, which are the aforementioned constitutional principles and state (not federal) property law. The absence of federal property law is one of the major complications in takings jurisprudence. The Fifth Amendment is a right to a remedy--just compensation--but it relies on state-court interpretations of what constitutes property. This makes it much easier for a state court dissatisfied with the regulatory takings doctrine to avoid its application. Nothing was taken, goes the argument, because we don't recognize the claimed right as property. The "public trust" doctrine, which denies the government's ability to sell certain resources, is a similar shield from takings claims.

Part II tells lawyers how to get their cases into court, which is a lot harder for a regulatory takings claim than for almost any other constitutional right. A plaintiff alleging racial discrimination, for example, would not have to exhaust all state-court remedies before getting into federal courts. Nor would she be turned away from court because she had failed to apply for every possible exception from an administrative board, regardless of how unlikely her chances. The feedback that this provides regulators, as the authors point out, is never to say never. Just keep stringing potential litigants along--"not this time, but maybe next year"--and the takings claim will never ripen.

Part III attempts to delineate the substantive rules for determining whether a compensable taking has occurred. Your client's case is strongest--but not airtight--if the government has caused his property to be physically invaded, even if the invasion does not obviously devalue it. Absent that supposedly bright-line instance, the rules overwhelmingly favor the government. Following PENN CENTRAL V. NEW YORK (1978), courts applied a vague, "multi-factor balancing test" about economic impact, expectations, and character of the government action, all rolled into "ad-hoc" inquiries. The government almost invariably wins when these criteria are invoked, especially since the plaintiff bears the burden of proof. It's hard to knock out jello.

While they do criticize some aspects of the PENN CENTRAL standard, the authors prefer them to the more recent test, derived from AGINS V. TIBURON (1980) but successfully invoked only after 1987. The AGINS test asks whether the regulation advances some legitimate government purpose and whether the property owner has any economic use left over after the regulation is applied. If the answer to either part is no, a taking may be found.

It would seem easy for the government to pass the AGINS test, too, but sometimes it actually loses. The turning point was LUCAS V. SOUTH CAROLINA COASTAL COUNCIL (1992). The owner of a beachside lot was denied a building permit as a result of a newly passed coastal protection law. The law provided for no exceptions or variances. (Earth to South Carolina: never say never.) Mr. Lucas won his case in the U.S. Supreme Court and actually received just compensation for the burdens of the regulation. The authors unfortunately do not report the denouement. South Carolina bought Lucas's two small lots outright to settle the litigation. The state then turned around and sold them to a developer to recover its expenses. As the state's spokesperson pointed out in justifying the sale, the Lucas property was not environmentally important because it was already surrounded by other homes. Funny how they didn't notice that before, when the property at stake was someone else's.

Parts IV and V deal with specific areas of law that raise takings claims. Part IV is devoted to land-use issues, ranging from airports to zoning, with historic preservation, rent control, and exactions all nicely covered. Land use exactions, in which the regulators allow development but impose monetary or in-kind conditions, have received unusual scrutiny from the U.S. Supreme Court. A major case is DOLAN V. CITY OF TIGARD (1994), which struck down the Oregon city's attempt to obtain a bike-path easement over commercial land owned by Mrs. Dolan. The problem was that the city was using its permitting power as the currency for acquiring the easement. Mrs. Dolan was not allowed to expand her hardware store unless she agreed to the exaction.

Some of this goes on all the time, of course, and developers would be worse off if such trades were forbidden. The Court sensibly required a "rough proportionality" between the size of the exaction and the purposes of the regulation being traded. More important was that the DOLAN opinion shifted the burden of proof from the landowner to the city when it was acting in an "adjudicative" way, which is how the Court characterized Tigard's exaction process. Meltz, Merriam and Frank's apparent dislike for this rule may have caused them to overlook something that land-use lawyers should know. After Dolan's court victory, the unrepentant city tried to get its easement by means of a minor variation on the same exaction scheme. Dolan sued again, and this time the City settled out of court for a cool $1.5 million. For that amount, it could have bought all of Mrs. Dolan's store, not just an easement for a bike path.

Part V addresses environmental issues, which are largely a variation on the land-use theme but involve more recent sensibilities about wetlands, billboards, and endangered species. But the conclusion is the same as in zoning cases: the landowner usually loses. One exception is the "rails-to-trails" litigation, which illustrates the creative ways by which government can substitute regulations for physical acquisition.

Rather than allow abandoned railroad rights-of-way to revert to the owners of the underlying land (where the railroad did not own it in fee), Rails-to-Trails legislation sought to keep it in the public domain as a bike path (again!). But instead of paying the feeholders for the path, the legislation invoked the proposition that bicycling was the evolutionary successor to a commuter train (well, I've always thought so) or that the path was merely an interim use until railroads come back, as urban planners keep insisting they will. That way the government would not have to pay for the right-of-way easement. Does it work? As the authors show, sometimes yes and sometimes no. Depends on state law interpretations of what constitutes property, which in turn illustrates the difficulties of getting a national rule on such issues.

Remedies for takings are discussed in Part VI. The Constitution calls for "just compensation," which means dollars, not a promise not to do it any more. But the latter, injunctive remedy is in fact what several state courts have tried to interpret their constitutions as saying. This was supposedly resolved in favor of monetary damages in the U.S. Supreme Court's FIRST ENGLISH (1987) decision, but many courts remain recalcitrant. In fact, the most striking aspect of THE TAKINGS ISSUE is that the plaintiffs keep coming even though they usually lose. An attorney who set up a practice specializing in regulatory takings would earn considerably less from contingency fees than lawyers who specialize in coffee spills. Why is there so much resistance to applying this doctrine?

The reason is suggested by the enormous range of claims, however unsuccessful they are, that THE TAKINGS ISSUE reviews. One of its few gaps in coverage is what I think is the most startling claim: By deregulating the electric utility industry, the government has "taken" property from the regulated monopoly. (Promoting competition is a taking?) The problem with the unvarnished principle of just compensation for regulatory takings is that it is, as the authors say, a genie let out of a bottle. A more modern metaphor might be a nuclear bomb that can potentially devastate all government action. Its overwhelming power explains its appeal to libertarian conservatives (who are, however, perplexed by the idea of a deregulatory taking) and its horror to those who favor an expanded government.

Meltz, Merriam and Frank probably lean more toward the latter camp. They wish that Justice Holmes had not invoked (some say invented) the doctrine in 1922 in PENNSYLVANIA COAL V. MAHON. But, to their credit, they don't simply rail against it. They conclude with a plea for the U.S. Supreme Court to resolve issues like ripeness and the amount of value that must be lost before property is deemed to have been taken. That's fair enough. The authors address practicing lawyers, and they should expect the legal hierarchy to do better. But, for reasons the authors have made clear in their book, we should not expect too much progress from fine-tuning the rules. The dimensions of property and the role of government are too vast to be contained by judge-made rules, even if we were to cut government by half.

How then to resolve the cases that do seem particularly appropriate for the courts to address under the Takings Clause? It is almost universally conceded among judges and commentators (including the authors, p. 103) that the essence of the takings issue was expressed in ARMSTRONG V. UNITED STATES (1960). Justice Hugo Black wrote, "The Fifth Amendment's guarantee...was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." (364 U.S. at 49).

I once lampooned this as "platitudinous poster" language (Fischel 1995, p. 141), but now I'm not so sure. Maybe it would be better if judges approached the problem as a tax issue, as Justice Black implied. Any judge disposing of a takings claim in the government's favor should explain why the plaintiff must bear a public burden that would otherwise be spread among the taxpayers at large. Or, if the plaintiff prevails, why she should be entitled to take some of the taxpayers' money as a result of the government's action. To dismiss such analysis as the authors do by saying that "government coffers are finite" (p. 559) is to miss the statement's logical implication: If the burden of payment would bankrupt a whole government, what must the uncompensated burden be doing to the property owner? And maybe such analysis would help those promoting regulations to decide which are necessary and which might easily be dispensed with, as South Carolina's behavior after LUCAS so starkly illustrated.

There are many "fairness and justice" reasons to let regulatory burdens usually rest with owners. A good reason is that the landowner benefited from a wider set of regulations of which his complained-of burden is just one, so that the "tax" is offset by related benefits. (A bad reason is that the landowner bought the land after the regulation was in place. That just shifts the burden back to the seller!) My point here is that exclusive attention to legal rules has often let serious injustices go without remedy. Maybe takings questions would be more satisfactorily addressed if judges and lawyers looked up from their screens and asked, who should bear this tax?


 

References

Bosselman, Fred P., David Callies and John Banta. THE TAKING ISSUE. Washington: Council on Environmental Quality, 1973.


Fischel, William A. REGULATORY TAKINGS. Cambridge: Harvard University Press, 1995.

 

Cases

AGINS V. TIBURON, 447 U.S. 255 (1980).


ARMSTRONG V. UNITED STATES, 364 U.S. 40 (1960).


DOLAN V. CITY OF TIGARD, 512 U.S. 687 (1994).


FIRST ENGLISH EVANGELICAL LUTHERAN CHURCH V. COUNTY OF LOS ANGELES, 482 U.S. 304 (1987).


LUCAS V. SOUTH CAROLINA COASTAL COUNCIL, 505 U.S. 1003 (1992).


PENN CENTRAL V. NEW YORK, 438 U.S. 104 (1978).


PENNSYLVANIA COAL V. MAHON, 260 U.S. 393 (1922).


Copyright 1995