Regulatory Takings
Government regulation that goes “too far” in restricting private property use constitutes a taking requiring just compensation under the Fifth Amendment’s Takings Clause, even without physical appropriation. Pennsylvania Coal Co. v. Mahon (1922) established the principle: “while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”
Categories
1. Per Se Takings (Automatic Compensation Required)
Physical occupation — any government-authorized permanent physical occupation of property, however minor, is a taking. Loretto v. Teleprompter Manhattan CATV Corp. (1982) (cable box installation on building exterior).
Total wipeout — regulation that deprives owner of all economically beneficial use is a taking unless the proscribed use would be a nuisance under background principles of state property law. Lucas v. South Carolina Coastal Council (1992).
2. Penn Central Balancing (Partial Diminutions)
For regulations that reduce but do not eliminate value, courts apply the three-factor Penn Central Transportation Co. v. New York City (1978) balancing test:
- Economic impact on the claimant — how much has property value been reduced?
- Interference with investment-backed expectations — did the owner have reasonable expectations that this use would be permitted?
- Character of the government action — physical invasion weighs more heavily than adjustment of benefits and burdens; regulation to prevent public harm weighs against a taking finding.
No single factor is dispositive; courts weigh all three.
Elements (Takings Claim)
- Government action (federal, state, or local)
- Affecting private property
- Goes “too far” — either per se category applies, or Penn Central balancing favors claimant
- No just compensation paid
Exceptions and Edge Cases
- Temporary takings: Even temporary deprivations of all use can be compensable. First English Evangelical Lutheran Church v. County of Los Angeles (1987).
- Partial takings: Elimination of one of many uses is not automatically a total wipeout; must look at the parcel as a whole. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency (2002).
- Background principles defense to Lucas: State can defeat total-wipeout claim by showing the use was never a lawful property right (nuisance, background principles of property law).
- Exactions: Government conditions on development permits must have essential nexus (Nollan) and rough proportionality (Dolan) to the development’s impact. Nollan v. California Coastal Commission (1987); Dolan v. City of Tigard (1994).
- Eminent domain vs. regulatory takings: Government may always take property outright (eminent domain) with just compensation; regulatory takings doctrine addresses indirect deprivations through regulation.
Policy Rationale
- Fairness: Forces the public at large to bear the cost of benefits it secures rather than placing the entire burden on individual property owners. Armstrong v. United States (1960).
- Security of property: Protects investment-backed expectations; owners need assurance that regulations won’t arbitrarily destroy value.
- Counter-policy (police power): Government retains broad authority to regulate for health, safety, and welfare without compensation; not every diminution in value is a taking.
Key Cases
| Case | Rule |
|---|---|
| Pennsylvania Coal Co. v. Mahon (1922) | Established regulatory takings doctrine; regulation that goes “too far” is a taking |
| Penn Central Transportation Co. v. New York City (1978) | Three-factor balancing test for partial economic impact cases |
| Loretto v. Teleprompter Manhattan CATV Corp. (1982) | Permanent physical occupation is a per se taking |
| Nollan v. California Coastal Commission (1987) | Exaction must have essential nexus to development’s impact |
| First English Evangelical Lutheran Church v. County of Los Angeles (1987) | Temporary takings are compensable |
| Lucas v. South Carolina Coastal Council (1992) | Deprivation of all economic value is per se taking unless nuisance under background principles |
| Dolan v. City of Tigard (1994) | Exaction must be roughly proportional to development’s impact |
| Palazzolo v. Rhode Island (2001) | Taking claim not automatically barred because regulation predated purchase |
| Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency (2002) | Temporary moratorium on development analyzed under Penn Central, not Lucas |
| Kelo v. City of New London (2005) | Economic development qualifies as “public use” for eminent domain purposes |