Regulatory taking
From Wikipedia, the free encyclopedia
Regulatory taking refers to a situation in which a government regulates a property to such a degree that the regulation effectively amounts to an exercise of the government's eminent domain power without actually divesting the property's owner of title to the property.
In recent years, the concept of regulatory taking has been used more loosely by property rights groups, extending to include regulations that reduce property values by lesser amounts. Ballot initiatives based on this interpretation have been advanced in at least seven states in the years 2000 to 2006. All these states are in the American west, but a significant portion of the funding for the initiatives has come the east coast.
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[edit] Examples
Suppose a piece of property is situated within a residential subdivision and is twenty meters deep. If the zoning for the property prohibits the construction of structures within the front ten meters or the rear five meters, and the building code requires one room in every house to be at least six meters deep, no house can be built consistent with all applicable law. The owner could argue that the government has taken the property with its zoning regulation. The government's defense would have to show that the owner has retained some economic value in the ownership of the land.
While this example represents a pure form of regulatory taking, it does not fully reflect the sense in which property rights activists currently use the term. According to this view (promoted by libertarian groups like Americans for Limited Government), nearly all land use regulations constitute regulatory taking, to the degree that they reduce a piece of property's value. For example, a zoning ordinance that prevents a property owner from opening a 24-hour gas station in a residential neighborhood restricts the use of the land, thereby negatively impacting the property's value. This line of reasoning constitutes the foundation of ballot initiatives like Oregon Ballot Measure 37 (2004).[1]
[edit] Political Significance
The concept of regulatory taking has drawn much attention in recent years, as legislation - mostly by ballot initiative, and mostly funded by New York businessman and libertarian Howie Rich - restricting land use regulation has been promoted in western states.
The concept allows proponents to tap into populist sentiments among the electorate. John Tillman, president of Americans for Limited Government, says the group's interest is in "…restoring property rights for the average citizen."[2]
Others argue that this legislation would benefit large corporate interests, often at the expense of private citizens.[3]
[edit] Legal status and consequences
[edit] United States law
In common law jurisdictions, governments traditionally enjoy the police power, under which a governments may regulate a variety of aspects of the lives of its subjects. Under American law, however, this power does not extend to the outright divestiture of title to private property. Instead, the power of eminent domain is a separate and distinct power which allows a government to divest a property owner of title to such property for public use, and with just compensation. This power is defined in the Fifth Amendment to the United States Constitution, and extended to the states under the Fourteenth Amendment. (The Fifth Amendment prohibits the federal government from taking property for public use without "just compensation," which American courts have interpreted to mean "fair market value;" under the substantive due process interpretation of the Fourteenth Amendment, this prohibition extends to the states, although in somewhat different form.)
The issue of regulatory takings arises from the interaction between exercise of the traditional police power and exercise of eminent domain. That is, a government action effects a regulatory taking when it burdens property to such a degree that it cannot be justified entirely under the police power, but instead under the power of eminent domain. When a claimaint believes that a government regulation effects a taking of her property, she may initiate inverse condemnation proceedings to recover the value of property taken. The United States Supreme Court has established a number of tests under which a state regulation constitutes a taking per se; when an action does not fall into a category addressed by one of these tests, the Court avoids bright-line rules and relies primarily on an ad hoc inquiry into the specifics of such individual case.
[edit] Diminution-of-value test
The Supreme Court first held that state regulations may effect a taking in the 1922 case of Pennsylvania Coal Co. v. Mahon. There, Justice Holmes wrote for the majority that "[t]he general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." The majority promulgated the diminution-of-value test.
In Penn Central Transportation Co. v. New York City, the court identified the following as being of particular importance to their investigation: (1) The economic impact of the regulation on the property owner, (2) the extent to which the regulation interferes with the owner’s reasonable investment-backed expectation interest, and (3) the character of the regulation. When inquiring into the character of the regulation, the court will look to the magnitude of the regulation, how the regulation distributes the burdens and benefits among property owners, and whether it violates any of the owner’s essential attributes of property ownership, such as the right to exclude.
[edit] Permanent physical presence test
In Loretto v. Teleprompter Manhattan CATV Corp., the Supreme Court ruled that a regulation is generally considered a per se taking when it forces an owner to endure a permanent physical occupation on the owner’s land, such as the permanent physical presence of cable lines on a residential building. The Court argued that any permanent physical presence destroyed the property owner's right to exclude, long recognized as one of the key rights in the "bundle of rights" commonly characterized as property.
[edit] Total takings test
In Lucas v. South Carolina Coastal Council, the Supreme Court ruled that a regulation that deprives an owner of all economically beneficial uses of land constitutes a per se taking unless the proscribed use interests were not part of the title to begin with. In other words, a law or decree with the effect of depriving all economically beneficial use must do no more than duplicate the result that could have been achieved in the courts under the law of nuisance.
[edit] The denominator problem and conceptual severance
One ambiguity of the takings doctrine is the "denominator problem," or the issue of "conceptual severance." The basis of the takings doctrine is relational: when a regulation takes away a certain proportion of rights in a piece of property, such regulation effects a taking. The question then arises: What is the denominator of that proportion? For example: in Pennsylvania Coal Co. v. Mahon, Pennsylvania Coal owned the mineral rights to a property, and Mahon owned the surface rights to that property. If one takes the denominator to be a person's individual property interest, or a particular marketable interest or portion of property, then Pennsylvania Coal suffered a 100% taking, because all of its property rights had been effectively extinguished by the regulation. The majority took this position, referred to as conceptual severance because the various interests had been conceptually severed from one another; takings analysis is conducted on each interest individually. On the other hand, if one defines the denominator as the total property rights in a particular parcel of property, then Pennsylvania Coal suffered only a minor taking, because the mineral rights were only a small proportion of the total rights in the property (even if those rights were distributed between two owners). The minority took this position, arguing that allowing conceptual severance would lead individuals and companies to divide the interests in land into smaller pieces to enhance the claim of a regulatory taking for each.
[edit] See also
[edit] References
[edit] External Links
- Property (Casebook) (ISBN 0-7355-2437-8).
- Reason magazine article from 1995, concerning political strategies for passing takings initiatives
