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Use IRAC and brief the 2 short cases, the cases to read are in the file below. double space, 2-3 page total.
- Kelo v. City of New London, Conn. (pg 4)
- Penn Cent. Transp. Co. v. City of New York (pg 1)
Chapter 12: Regulatory Takings
You will recall that the government has the power to take private property and dedicate
it to public uses (broadly construed), but that under the Takings Clause of the Fifth
Amendment, in order to do so the government must provide the owner with “just
compensation.” But what if instead of taking private property to use in the way the
government prefers, the government simply orders the private owner to use their
property in the way the government prefers? So long as title remains in the private
owner, there has been no “taking,” right? And that way the government can get what
it wants without having to pay the “just compensation” the Constitution requires.
This is a sufficiently obvious dodge around the Takings Clause that courts have long
held that some land use regulations that seriously interfere with the rights of property
owners can be tantamount to a taking, even if the government does not literally divest
the property owners of title. But drawing the line between permissible regulation of
land uses and impermissible “regulatory takings” is a complex task that has divided the
Supreme Court for at least a century.
A. General Principles
***
Penn Cent. Transp. Co. v. City of New York
438 U.S. 104 (1978)
Mr. Justice BRENNAN delivered the opinion of the Court.
The question presented is whether a city may, as part of a comprehensive program to
preserve historic landmarks and historic districts, place restrictions on the development
of individual historic landmarks—in addition to those imposed by applicable zoning
ordinances—without effecting a “taking” requiring the payment of “just
compensation.” Specifically, we must decide whether the application of New York
City’s Landmarks Preservation Law to the parcel of land occupied by Grand Central
Terminal has “taken” its owners’ property in violation of the Fifth and Fourteenth
Amendments.
1
I
A
Over the past 50 years, all 50 States and over 500 municipalities have enacted laws to
encourage or require the preservation of buildings and areas with historic or aesthetic
importance. These nationwide legislative efforts have been precipitated by two
concerns. The first is recognition that, in recent years, large numbers of historic
structures, landmarks, and areas have been destroyed without adequate consideration
of either the values represented therein or the possibility of preserving the destroyed
properties for use in economically productive ways. The second is a widely shared belief
that structures with special historic, cultural, or architectural significance enhance the
quality of life for all. Not only do these buildings and their workmanship represent the
lessons of the past and embody precious features of our heritage, they serve as
examples of quality for today. “[H]istoric conservation is but one aspect of the much
larger problem, basically an environmental one, of enhancing—or perhaps developing
for the first time—the quality of life for people.”
New York City, responding to similar concerns and acting pursuant to a New York
State enabling Act, adopted its Landmarks Preservation Law in 1965. See N.Y.C.
Admin. Code, ch. 8–A, § 205–1.0 et seq. (1976). The city acted from the conviction that
“the standing of [New York City] as a world-wide tourist center and world capital of
business, culture and government” would be threatened if legislation were not enacted
to protect historic landmarks and neighborhoods from precipitate decisions to destroy
or fundamentally alter their character. § 205–1.0(a). The city believed that
comprehensive measures to safeguard desirable features of the existing urban fabric
would benefit its citizens in a variety of ways: e. g., fostering “civic pride in the beauty
and noble accomplishments of the past”; protecting and enhancing “the city’s
attractions to tourists and visitors”; “support[ing] and stimul [ating] business and
industry”; “strengthen[ing] the economy of the city”; and promoting “the use of
historic districts, landmarks, interior landmarks and scenic landmarks for the education,
pleasure and welfare of the people of the city.” § 205–1.0(b).
***
2
B
This case involves the application of New York City’s Landmarks Preservation Law to
Grand Central Terminal (Terminal). The Terminal, which is owned by the Penn Central
Transportation Co. and its affiliates (Penn Central), is one of New York City’s most
famous buildings. Opened in 1913, it is regarded not only as providing an ingenious
engineering solution to the problems presented by urban railroad stations, but also as
a magnificent example of the French beaux-arts style.
The Terminal is located in midtown Manhattan…On August 2, 1967, following a
public hearing, the Commission designated the Terminal a “landmark” and designated
the “city tax block” it occupies a “landmark site.” …
On January 22, 1968, appellant Penn Central, to increase its income, entered into a
renewable 50-year lease and sublease agreement with appellant UGP Properties, Inc.
(UGP), a wholly owned subsidiary of Union General Properties, Ltd., a United
Kingdom corporation. Under the terms of the agreement, UGP was to construct a
multistory office building above the Terminal. UGP promised to pay Penn Central $1
million annually during construction and at least $3 million annually thereafter. The
rentals would be offset in part by a loss of some $700,000 to $1 million in net rentals
presently received from concessionaires displaced by the new building.
Appellants UGP and Penn Central then applied to the Commission for permission to
construct an office building atop the Terminal. Two separate plans, both designed by
architect Marcel Breuer and both apparently satisfying the terms of the applicable
zoning ordinance, were submitted to the Commission for approval. The first, Breuer
I, provided for the construction of a 55-story office building, to be cantilevered above
the existing facade and to rest on the roof of the Terminal. The second, Breuer II
Revised, called for tearing down a portion of the Terminal that included the 42d Street
facade, stripping off some of the remaining features of the Terminal’s facade, and
constructing a 53-story office building. The Commission denied a certificate of no
exterior effect on September 20, 1968. Appellants then applied for a certificate of
3
“appropriateness” as to both proposals. After four days of hearings at which over 80
witnesses testified, the Commission denied this application as to both proposals.[ *]
The Commission’s reasons for rejecting certificates respecting Breuer II Revised are
summarized in the following statement: “To protect a Landmark, one does not tear it
down. To perpetuate its architectural features, one does not strip them off.” Breuer I,
which would have preserved the existing vertical facades of the present structure,
received more sympathetic consideration. The Commission first focused on the effect
that the proposed tower would have on one desirable feature created by the present
structure and its surroundings: the dramatic view of the Terminal from Park Avenue
South. Although appellants had contended that the Pan-American Building had already
destroyed the silhouette of the south facade and that one additional tower could do no
further damage and might even provide a better background for the facade, the
Commission disagreed, stating that it found the majestic approach from the south to
be still unique in the city and that a 55-story tower atop the Terminal would be far
more detrimental to its south facade than the Pan-American Building 375 feet away.
Moreover, the Commission found that from closer vantage points the Pan Am Building
and the other towers were largely cut off from view, which would not be the case of
[*] [Eds.—Reproductions of the proposals appear below:]
(From: http://www.architakes.com/?p=13036).
4
the mass on top of the Terminal planned under Breuer I. In conclusion, the
Commission stated:
“[We have] no fixed rule against making additions to designated buildings—it
all depends on how they are done . . . . But to balance a 55-story office tower
above a flamboyant Beaux-Arts facade seems nothing more than an aesthetic
joke. Quite simply, the tower would overwhelm the Terminal by its sheer mass.
The ‘addition’ would be four times as high as the existing structure and would
reduce the Landmark itself to the status of a curiosity.
“Landmarks cannot be divorced from their settings—particularly when the
setting is a dramatic and integral part of the original concept. The Terminal, in
its setting, is a great example of urban design. Such examples are not so plentiful
in New York City that we can afford to lose any of the few we have. And we
must preserve them in a meaningful way—with alterations and additions of such
character, scale, materials and mass as will protect, enhance and perpetuate the
original design rather than overwhelm it.”
Appellants… filed suit in New York Supreme Court …claiming, inter alia, that the
application of the Landmarks Preservation Law had “taken” their property without just
compensation in violation of the Fifth and Fourteenth Amendments and arbitrarily
deprived them of their property without due process of law in violation of the
Fourteenth Amendment. Appellants sought a declaratory judgment, injunctive relief
barring the city from using the Landmarks Law to impede the construction of any
structure that might otherwise lawfully be constructed on the Terminal site, and
damages for the “temporary taking” that occurred between August 2, 1967, the
designation date, and the date when the restrictions arising from the Landmarks Law
would be lifted. The trial court granted the injunctive and declaratory relief, but severed
the question of damages for a “temporary taking.” [The New York Supreme Court,
Appellate Division, reversed, and this ruling was affirmed by the state Court of
Appeals.]
II
The issues presented by appellants are (1) whether the restrictions imposed by New
York City’s law upon appellants’ exploitation of the Terminal site effect a “taking” of
5
appellants’ property for a public use within the meaning of the Fifth Amendment,
which of course is made applicable to the States through the Fourteenth Amendment,
and, (2), if so, whether the transferable development rights afforded appellants
constitute “just compensation” within the meaning of the Fifth Amendment. We need
only address the question whether a “taking” has occurred.
A
…. The question of what constitutes a “taking” for purposes of the Fifth Amendment
has proved to be a problem of considerable difficulty. While this Court has recognized
that the “Fifth Amendment’s guarantee . . . [is] 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,” Armstrong v. United States, 364 U.S. 40, 49
(1960), this Court, quite simply, has been unable to develop any “set formula” for
determining when “justice and fairness” require that economic injuries caused by public
action be compensated by the government, rather than remain disproportionately
concentrated on a few persons. Indeed, we have frequently observed that whether a
particular restriction will be rendered invalid by the government’s failure to pay for any
losses proximately caused by it depends largely “upon the particular circumstances [in
that] case.” United States v. Central Eureka Mining Co., 357 U.S. 155, 168 (1958).
***
…. Because this Court has recognized, in a number of settings, that States and cities
may enact land-use restrictions or controls to enhance the quality of life by preserving
the character and desirable aesthetic features of a city, appellants do not contest that
New York City’s objective of preserving structures and areas with special historic,
architectural, or cultural significance is an entirely permissible governmental goal. They
also do not dispute that the restrictions imposed on its parcel are appropriate means of
securing the purposes of the New York City law. Finally, appellants do not challenge
any of the specific factual premises of the decision below. They accept for present
purposes both that the parcel of land occupied by Grand Central Terminal must, in its
present state, be regarded as capable of earning a reasonable return, and that the
transferable development rights afforded appellants by virtue of the Terminal’s
designation as a landmark are valuable, even if not as valuable as the rights to construct
6
above the Terminal. In appellants’ view none of these factors derogate from their claim
that New York City’s law has effected a “taking.”
They first observe that the airspace above the Terminal is a valuable property interest,
citing United States v. Causby, supra. They urge that the Landmarks Law has deprived
them of any gainful use of their “air rights” above the Terminal and that, irrespective
of the value of the remainder of their parcel, the city has “taken” their right to this
superadjacent airspace, thus entitling them to “just compensation” measured by the
fair market value of these air rights.
Apart from our own disagreement with appellants’ characterization of the effect of the
New York City law, the submission that appellants may establish a “taking” simply by
showing that they have been denied the ability to exploit a property interest that they
heretofore had believed was available for development is quite simply untenable. Were
this the rule, this Court would have erred not only in upholding laws restricting the
development of air rights, see Welch v. Swasey, supra, but also in approving those
prohibiting both the subjacent, see Goldblatt v. Hempstead, 369 U.S. 590 (1962), and the
lateral, see Gorieb v. Fox, 274 U.S. 603 development of particular parcels. 27 “Taking”
jurisprudence does not divide a single parcel into discrete segments and attempt to
determine whether rights in a particular segment have been entirely abrogated. In
deciding whether a particular governmental action has effected a taking, this Court
focuses rather both on the character of the action and on the nature and extent of the
interference with rights in the parcel as a whole—here, the city tax block designated as
the “landmark site.”
Secondly, appellants, focusing on the character and impact of the New York City law,
argue that it effects a “taking” because its operation has significantly diminished the
value of the Terminal site. Appellants concede that the decisions sustaining other landuse regulations, which, like the New York City law, are reasonably related to the
promotion of the general welfare, uniformly reject the proposition that diminution in
These cases dispose of any contention that might be based on Pennsylvania Coal Co. v. Mahon, 260 U.S. 393
(1922), that full use of air rights is so bound up with the investment-backed expectations of appellants that
governmental deprivation of these rights invariably—i. e., irrespective of the impact of the restriction on the
value of the parcel as a whole—constitutes a “taking.” Similarly, Welch, Goldblatt, and Gorieb illustrate the fallacy
of appellants’ related contention that a “taking” must be found to have occurred whenever the land-use restriction
may be characterized as imposing a “servitude” on the claimant’s parcel.
27
7
property value, standing alone, can establish a “taking,” see Euclid v. Ambler Realty Co.,
272 U.S. 365 (1926) (75% diminution in value caused by zoning law); Hadacheck v.
Sebastian, 239 U.S. 394 (1915) (87 1/2 % diminution in value), and that the “taking”
issue in these contexts is resolved by focusing on the uses the regulations permit.…
[B]ut appellants argue that New York City’s regulation of individual landmarks is
fundamentally different from zoning or from historic-district legislation because the
controls imposed by New York City’s law apply only to individuals who own selected
properties.
Stated baldly, appellants’ position appears to be that the only means of ensuring that
selected owners are not singled out to endure financial hardship for no reason is to
hold that any restriction imposed on individual landmarks pursuant to the New York
City scheme is a “taking” requiring the payment of “just compensation.” Agreement
with this argument would, of course, invalidate not just New York City’s law, but all
comparable landmark legislation in the Nation. We find no merit in it.
***
…[T]he New York City law does not interfere in any way with the present uses of the
Terminal. Its designation as a landmark not only permits but contemplates that
appellants may continue to use the property precisely as it has been used for the past
65 years: as a railroad terminal containing office space and concessions. So the law does
not interfere with what must be regarded as Penn Central’s primary expectation
concerning the use of the parcel. More importantly, on this record, we must regard the
New York City law as permitting Penn Central not only to profit from the Terminal
but also to obtain a “reasonable return” on its investment.
Appellants, moreover, exaggerate the effect of the law on their ability to make use of
the air rights above the Terminal in two respects. First, it simply cannot be maintained,
on this record, that appellants have been prohibited from occupying any portion of the
airspace above the Terminal. While the Commission’s actions in denying applications
to construct an office building in excess of 50 stories above the Terminal may indicate
that it will refuse to issue a certificate of appropriateness for any comparably sized
structure, nothing the Commission has said or done suggests an intention to prohibit
any construction above the Terminal. The Commission’s report emphasized that
whether any construction would be allowed depended upon whether the proposed
8
addition “would harmonize in scale, material and character with [the Terminal].” Since
appellants have not sought approval for the construction of a smaller structure, we do
not know that appellants will be denied any use of any portion of the airspace above
the Terminal.
Second, to the extent appellants have been denied the right to build above the
Terminal, it is not literally accurate to say that they have been denied all use of even
those pre-existing air rights. Their ability to use these rights has not been abrogated;
they are made transferable to at least eight parcels in the vicinity of the Terminal, one
or two of which have been found suitable for the construction of new office buildings.
Although appellants and others have argued that New York City’s transferable
development-rights program is far from ideal, the New York courts here supportably
found that, at least in the case of the Terminal, the rights afforded are valuable. While
these rights may well not have constituted “just compensation” if a “taking” had
occurred, the rights nevertheless undoubtedly mitigate whatever financial burdens the
law has imposed on appellants and, for that reason, are to be taken into account in
considering the impact of regulation.
On this record, we conclude that the application of New York City’s Landmarks Law
has not effected a “taking” of appellants’ property. The restrictions imposed are
substantially related to the promotion of the general welfare and not only permit
reasonable beneficial use of the landmark site but also afford appellants opportunities
further to enhance not only the Terminal site proper but also other properties.
Affirmed.
Mr. Justice REHNQUIST, with whom THE CHIEF JUSTICE and Mr. Justice
STEVENS join, dissenting.
Of the over one million buildings and structures in the city of New York, appellees
have singled out 400 for designation as official landmarks. The owner of a building
might initially be pleased that his property has been chosen by a distinguished
committee of architects, historians, and city planners for such a singular distinction.
But he may well discover, as appellant Penn Central Transportation Co. did here, that
the landmark designation imposes upon him a substantial cost, with little or no
offsetting benefit except for the honor of the designation. The question in this case is
9
whether the cost associated with the city of New York’s desire to preserve a limited
number of “landmarks” within its borders must be borne by all of its taxpayers or
whether it can instead be imposed entirely on the owners of the individual properties.
Only in the most superficial sense of the word can this case be said to involve “zoning.”
Typical zoning restrictions may, it is true, so limit the prospective uses of a piece of
property as to diminish the value of that property in the abstract because it may not be
used for the forbidden purposes. But any such abstract decrease in value will more than
likely be at least partially offset by an increase in value which flows from similar
restrictions as to use on neighboring properties. All property owners in a designated
area are placed under the same restrictions, not only for the benefit of the municipality
as a whole but also for the common benefit of one another. In the words of Mr. Justice
Holmes, speaking for the Court in Pennsylvania Coal Co. v. Mahon, there is “an average
reciprocity of advantage.”
Where a relatively few individual buildings, all separated from one another, are singled
out and treated differently from surrounding buildings, no such reciprocity exists. The
cost to the property owner which results from the imposition of restrictions applicable
only to his property and not that of his neighbors may be substantial—in this case,
several million dollars—with no comparable reciprocal benefits. And the cost
associated with landmark legislation is likely to be of a completely different order of
magnitude than that which results from the imposition of normal zoning restrictions.
Unlike the regime affected by the latter, the landowner is not simply prohibited from
using his property for certain purposes, while allowed to use it for all other purposes.
Under the historic-landmark preservation scheme adopted by New York, the property
owner is under an affirmative duty to preserve his property as a landmark at his own
expense. To suggest that because traditional zoning results in some limitation of use of
the property zoned, the New York City landmark preservation scheme should likewise
be upheld, represents the ultimate in treating as alike things which are different. The
rubric of “zoning” has not yet sufficed to avoid the well-established proposition that
the Fifth Amendment bars the “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.” Armstrong v. United States, 364 U.S. 40, 49 (1960).…
10
I
The Fifth Amendment provides in part: “nor shall private property be taken for public
use, without just compensation.” In a very literal sense, the actions of appellees violated
this constitutional prohibition. Before the city of New York declared Grand Central
Terminal to be a landmark, Penn Central could have used its “air rights” over the
Terminal to build a multistory office building, at an apparent value of several million
dollars per year. Today, the Terminal cannot be modified in any form, including the
erection of additional stories, without the permission of the Landmark Preservation
Commission, a permission which appellants, despite good-faith attempts, have so far
been unable to obtain. Because the Taking Clause of the Fifth Amendment has not
always been read literally, however, the constitutionality of appellees’ actions requires
a closer scrutiny of this Court’s interpretation of the three key words in the Taking
Clause—“property,” “taken,” and “just compensation.”
A
Appellees do not dispute that valuable property rights have been destroyed. And the
Court has frequently emphasized that the term “property” as used in the Taking Clause
includes the entire “group of rights inhering in the citizen’s [ownership].” United States
v. General Motors Corp., 323 U.S. 373 (1945).…
While neighboring landowners are free to use their land and “air rights” in any way
consistent with the broad boundaries of New York zoning, Penn Central, absent the
permission of appellees, must forever maintain its property in its present state. The
property has been thus subjected to a nonconsensual servitude not borne by any
neighboring or similar properties.
B
….[A]n examination of the two exceptions where the destruction of property does not
constitute a taking demonstrates that a compensable taking has occurred here.
11
1
As early as 1887, the Court recognized that the government can prevent a property
owner from using his property to injure others without having to compensate the
owner for the value of the forbidden use.…
The nuisance exception to the taking guarantee is not coterminous with the police
power itself. The question is whether the forbidden use is dangerous to the safety,
health, or welfare of others. Thus, in Curtin v. Benson, 222 U.S. 78 (1911), the Court held
that the Government, in prohibiting the owner of property within the boundaries of
Yosemite National Park from grazing cattle on his property, had taken the owner’s
property. The Court assumed that the Government could constitutionally require the
owner to fence his land or take other action to prevent his cattle from straying onto
others’ land without compensating him.…
Appellees are not prohibiting a nuisance. The record is clear that the proposed addition
to the Grand Central Terminal would be in full compliance with zoning, height
limitations, and other health and safety requirements. Instead, appellees are seeking to
preserve what they believe to be an outstanding example of beaux-arts architecture.
Penn Central is prevented from further developing its property basically because too
good a job was done in designing and building it. The city of New York, because of its
unadorned admiration for the design, has decided that the owners of the building must
preserve it unchanged for the benefit of sightseeing New Yorkers and tourists.
Unlike land-use regulations, appellees’ actions do not merely prohibit Penn Central from
using its property in a narrow set of noxious ways. Instead, appellees have placed an
affirmative duty on Penn Central to maintain the Terminal in its present state and in
“good repair.” Appellants are not free to use their property as they see fit within broad
outer boundaries but must strictly adhere to their past use except where appellees
conclude that alternative uses would not detract from the landmark. While Penn
Central may continue to use the Terminal as it is presently designed, appellees
otherwise “exercise complete dominion and control over the surface of the land,”
United States v. Causby, 328 U.S. 256, 262 (1946), and must compensate the owner for
his loss. “Property is taken in the constitutional sense when inroads are made upon an
owner’s use of it to an extent that, as between private parties, a servitude has been
acquired.” United States v. Dickinson, 331 U.S. 745, 748 (1947).
12
2
Even where the government prohibits a noninjurious use, the Court has ruled that a
taking does not take place if the prohibition applies over a broad cross section of land
and thereby “secure[s] an average reciprocity of advantage.” Pennsylvania Coal Co. v.
Mahon, 260 U.S., at 415. It is for this reason that zoning does not constitute a “taking.”
While zoning at times reduces individual property values, the burden is shared relatively
evenly and it is reasonable to conclude that on the whole an individual who is harmed
by one aspect of the zoning will be benefited by another.
Here, however, a multimillion dollar loss has been imposed on appellants; it is uniquely
felt and is not offset by any benefits flowing from the preservation of some 400 other
“landmarks” in New York City. Appellees have imposed a substantial cost on less than
one one-tenth of one percent of the buildings in New York City for the general benefit
of all its people. It is exactly this imposition of general costs on a few individuals at
which the “taking” protection is directed.…
As Mr. Justice Holmes pointed out in Pennsylvania Coal Co. v. Mahon, “the question at
bottom” in an eminent domain case “is upon whom the loss of the changes desired
should fall.” The benefits that appellees believe will flow from preservation of the
Grand Central Terminal will accrue to all the citizens of New York City. There is no
reason to believe that appellants will enjoy a substantially greater share of these benefits.
If the cost of preserving Grand Central Terminal were spread evenly across the entire
population of the city of New York, the burden per person would be in cents per
year—a minor cost appellees would surely concede for the benefit accrued. Instead,
however, appellees would impose the entire cost of several million dollars per year on
Penn Central. But it is precisely this sort of discrimination that the Fifth Amendment
prohibits.
Appellees in response would argue that a taking only occurs where a property owner is
denied all reasonable value of his property. The Court has frequently held that, even
where a destruction of property rights would not otherwise constitute a taking, the
inability of the owner to make a reasonable return on his property requires
compensation under the Fifth Amendment. But the converse is not true. A taking does
not become a noncompensable exercise of police power simply because the
13
government in its grace allows the owner to make some “reasonable” use of his
property.…
C
Appellees, apparently recognizing that the constraints imposed on a landmark site
constitute a taking for Fifth Amendment purposes, do not leave the property owner
empty-handed. As the Court notes, the property owner may theoretically “transfer” his
previous right to develop the landmark property to adjacent properties if they are under
his control. Appellees have coined this system “Transfer Development Rights,” or
TDR’s.
Of all the terms used in the Taking Clause, “just compensation” has the strictest
meaning. The Fifth Amendment does not allow simply an approximate compensation
but requires “a full and perfect equivalent for the property taken.” Monongahela
Navigation Co. v. United States, 148 U.S., at 326.…
Appellees contend that, even if they have “taken” appellants’ property, TDR’s
constitute “just compensation.” Appellants, of course, argue that TDR’s are highly
imperfect compensation. Because the lower courts held that there was no “taking,”
they did not have to reach the question of whether or not just compensation has already
been awarded.…
Because the record on appeal is relatively slim, I would remand to the Court of Appeals
for a determination of whether TDR’s constitute a “full and perfect equivalent for the
property taken.”
II
Over 50 years ago, Mr. Justice Holmes, speaking for the Court, warned that the courts
were “in danger of forgetting that a strong public desire to improve the public
condition is not enough to warrant achieving the desire by a shorter cut than the
constitutional way of paying for the change.” Pennsylvania Coal Co. v. Mahon, 260 U.S.,
at 416. The Court’s opinion in this case demonstrates that the danger thus foreseen has
not abated. The city of New York is in a precarious financial state, and some may
believe that the costs of landmark preservation will be more easily borne by
corporations such as Penn Central than the overburdened individual taxpayers of New
14
York. But these concerns do not allow us to ignore past precedents construing the
Eminent Domain Clause to the end that the desire to improve the public condition is,
indeed, achieved by a shorter cut than the constitutional way of paying for the change.
Notes and Questions
1. The Penn Central test. The Penn Central factors are generally listed as an
inquiry into “[1] the regulation’s economic effect on the landowner, [2] the
extent to which the regulation interferes with reasonable investment-backed
expectations, and [3] the character of the government action.” Palazzolo v.
Rhode Island, 533 U.S. 606, 617 (2001). The first factor concerns diminution of
value, an issue raised by Pennsylvania Coal. As you see, the Court resisted the
conceptual severance claim, rejecting the notion that “air rights” were
something to be evaluated independently of the property as a whole.
2. Distinct Investment-Backed Expectations. The meaning of the second
factor as something distinct from the first is a matter of debate. Unhelpfully,
the Court later described the question as being one of “reasonable” investmentbacked expectations in Kaiser Aetna v. United States, 444 U.S. 164, 175 (1979).
The idea is frequently credited to an article by Frank Michelman, who argued
that the principle more accurately captures what may rise to the level of a taking
than simple diminution of value:
The customary labels—magnitude of the harm test, or diminution of
value test—obscure the test’s foundations by conveying the idea that it
calls for an arbitrary pinpointing of a critical proportion (probably lying
somewhere between fifty and one hundred percent). More
sympathetically perceived, however, the test poses not nearly so loose a
question of degree; it does not ask “how much,” but rather (like the
physical-occupation test) it asks “whether or not”: whether or not the
measure in question can easily be seen to have practically deprived the
claimant of some distinctly perceived, sharply crystallized, investmentbacked expectation.
15
The nature and relevance of this inquiry may emerge more clearly if we
notice one other familiar line of doctrine … when a new zoning scheme
is instituted, for “established” uses which would be violations were the
scheme applied with full retrospective vigor. The standard practice of
granting dispensations for such “nonconforming uses” seems to imply
an understanding that simply to ban them without payment of
compensation, thus seriously reducing the property’s market value,
would be wrong and perhaps unconstitutional. But a ban on potential
uses not yet established may destroy market value as effectively as does
a ban on activity already in progress. The ban does not shed its
retrospective quality simply because it affects only prospective uses.
What explains, then, the universal understanding that only those
nonconforming uses are protected which were demonstrably afoot by
the time the regulation was adopted? The answer seems to be that actual
establishment of the use demonstrates that the prospect of continuing it
is a discrete twig out of his fee simple bundle to which the owner makes
explicit reference in his own thinking, so that enforcement of the
restriction would, as he looks at the matter, totally defeat a distinctly
crystallized expectation.
Frank I. Michelman, Property, Utility, and Fairness: Comments on the Ethical
Foundations of “Just Compensation” Law, 80 HARV. L. REV. 1165, 1232-34 (1967)
(footnotes omitted); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005-06
(1984) (“A ‘reasonable investment-backed expectation’ must be more than a
“unilateral expectation or an abstract need.” (citing Webb’s Fabulous Pharmacies,
Inc. v. Beckwith, 449 U.S. 155, 161 (1980)). As the excerpted text notes, the
principle of nonconforming uses in zoning law reflects the importance of
property owner expectations in uses that preexist the arrival of new zoning
rules.
Michelman’s argument, and some precedent, suggests that investment-backed
expectations are less likely to be found where the property in question is
purchased against a backdrop of regulation. Does that mean that takings
challenges are doomed whenever the property is acquired after the offending
regulations are in place? In Palazzolo v. Rhode Island, 533 U.S. 606 (2001), the
16
Court held in the negative. Ever straining for eloquence, Justice Kennedy
concluded that “[t]he State may not put so potent a Hobbesian stick into the
Lockean bundle.… Were we to accept the State’s rule, the postenactment
transfer of title would absolve the State of its obligation to defend any action
restricting land use, no matter how extreme or unreasonable. A State would be
allowed, in effect, to put an expiration date on the Takings Clause. This ought
not to be the rule. Future generations, too, have a right to challenge
unreasonable limitations on the use and value of land.” Id. at 627.
3. Character of the Governmental Action. Here, too, the Court is less than clear,
as its example of how this factor might be weighed in the property owner’s
favor, a permanent physical invasion, was later held to be a taking as a
categorical matter in Loretto. That sort of invasion is juxtaposed against an
interference “from some public program adjusting the benefits and burdens of
economic life to promote the common good,” suggesting room for judgment
when a program falls short (e.g., when someone is unfairly singled out for the
burdens, whether there is a reciprocity of advantage, etc.). See, e.g., Thomas W.
Merrill, The Character of the Governmental Action, 36 VT. L. REV. 649, 664 (2012)
(“Several lower courts have picked up on the idea that the character factor is
designed to measure the distributional impact of the challenged governmental
action. These courts favor broad-based laws that offer reciprocity of advantage
and find suspect laws that single out particular owners for severe burdens while
conferring benefits on others.”).
4. The Denominator Problem Revisited. Note that Justice Brennan has shifted
the Court’s position on the “denominator problem” closer to that of Justice
Brandeis in Pennsylvania Coal. “‘Taking’ jurisprudence,” he says, “does not divide
a single parcel into discrete segments and attempt to determine whether rights
in a particular segment have been entirely abrogated.”
If the appropriate denominator for regulatory takings analysis is “a single
parcel,” how do we define what a parcel is? Justice Brandeis argued that it would
be absurd to allow a property owner to frustrate otherwise permissible land-use
regulation by unilaterally dividing his interest into small enough pieces that one
of them would be sufficiently diminished in value to entitle the owner to
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compensation. But what about the reverse? Could a state treat multiple
contiguous lots under common ownership as a single “parcel” for purposes of
takings analysis? Under certain conditions, the answer seems to be yes. In Murr
v. Wisconsin, 137 S.Ct. 1933 (2017), the Court held that where a land use
regulation mandating minimum buildable area requirements for sale or
development of waterfront lots provided that non-conforming contiguous lots
would be “merged” into a single parcel if they should come under common
ownership, the “merged” parcel, rather than the separate undersized parcel,
should serve as the denominator. Writing for a five-Justice majority, Justice
Kennedy explained how the Court reached this result:
“[N]o single consideration can supply the exclusive test for determining
the denominator. Instead, courts must consider a number of factors.
These include the treatment of the land under state and local law; the
physical characteristics of the land; and the prospective value of the
regulated land. The endeavor should determine whether reasonable
expectations about property ownership would lead a landowner to
anticipate that his holdings would be treated as one parcel, or, instead,
as separate tracts. The inquiry is objective, and the reasonable
expectations at issue derive from background customs and the whole of
our legal tradition.”
137 S. Ct. at 1945. How (if at all) does this test differ from the approach of Penn
Central? From Pennsylvania Coal?
5. Takings and Due Process inquiries distinguished. The question whether a
regulation amounts to a taking is distinct from the issue of whether it violates a
liberty or property interest under the Due Process Clause. The latter asks
whether the government may impose the challenged regulation at all. The
former identifies a subset of cases in which the government regulation is such
an intrusion as to require compensation.
In takings cases, you may encounter citations to Agins v. City of Tiburon for the
proposition that “[t]he application of a general zoning law to particular property
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effects a taking if the ordinance does not substantially advance legitimate state
interests.” 447 U.S. 255, 260 (1980). Does this mean that compensation must
be paid if the state cannot meet a higher burden than the one required for
regulation under the Due Process Clause? No. In Lingle v. Chevron U.S.A. Inc.,
544 U.S. 528, 540-42 (2005), the Court observed the phrase was “regrettably
imprecise” and clarified that “it has no proper place in our takings
jurisprudence.”
6. Several articles report that the government generally prevails under the Penn
Central test in the lower courts. F. Patrick Hubbard et al., Do Owners Have A
Fair Chance of Prevailing Under the Ad Hoc Regulatory Takings Test of Penn Central
Transportation Company? 14 DUKE ENVTL. L. & POL’Y F. 121 (2003); Basil H.
Mattingly, Forum Over Substance: The Empty Ritual of Balancing in Regulatory Takings
Jurisprudence, 36 WILLAMETTE L. REV. 695 (2000). One such study argues that
calling the factors a balancing test misstates what is actually going on.
The analysis reveals that the Courts of Appeals for the First, Ninth, and
Federal Circuits, and the trial courts within the Ninth Circuit, all decided
Penn Central cases utilizing fewer than three factors in a majority of the
cases reaching the merits: on average, the circuit courts of appeals
utilized three factors only slightly more than one-third of the time
(37.8%). Complementing these findings is data on how often the courts
actually applied Penn Central as a balancing test. The data shows that
applying Penn Central as a balancing test is statistically rare. Averaging the
cases that reached the merits of a takings claim, the courts applied Penn
as a balancing test less than 7% of the time. As an average percentage of
cases applying all three Penn Central factors (cases that themselves are less
than half of all cases reaching the merits), courts applied it as a balancing
test less than 14% of the time. Together this data indicates that the
predominant practice of the federal courts is not to use Penn Central as a
balancing test.
Adam R. Pomeroy, Penn Central After 35 Years: A Three Part Balancing Test or A
One Strike Rule?, 22 FED. CIRCUIT B.J. 677, 704 (2013). Pomeroy argues that
regulatory takings claims prevail only when the court concludes that the
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regulation looks like an act that is normally a taking as a categorical matter. Id.
at 696 (“It seems that instead of balancing factual situations, the courts of
appeals have found regulatory takings under Penn Central only when a claim falls
barely short being a taking under one of the categorical rules.”).
***
20
How to Brief or IRAC a case:
Issue:
A good issue statement includes the party names, the name of the rule
of law the brief is analyzing, and a key fact. What is the issue before the court?
What Problem is the court trying to solve? The issue should be one or two
sentences, state the party names and the relevant legal terms.
Rule:
The rule is the law that governs the outcome of the case. It should be
stated as a general principle and not include any party names or facts. The
rule should be stated as a list or an outline- not in paragraph form.
Application:
The application is a discussion of how the rule applies to the facts of a case.
The application shows how you can analyze arguments on both sides and
is the most important skill you will learn. The application is normally paragraphs long.
It should be a written debate – not simply a statement of the conclusion. Whenever possible,
present both sides of any issue.
Conclusion:
What was the result of the case? Did the appellate or supreme court affirm,
reverse or reverse and remand the lower court’s decision? The case gives you a background
of the facts along with the judge’s reasoning and conclusion. When you brief cases,
you are summarizing the judge’s opinion.
