Takings Doctrine

Introduction

The Takings Clause of the Fifth Amendment, made applicable to the states through the Fourteenth Amendment, provides that private property shall not be taken for public use without just compensation. The Takings Clause serves as a limitation on government power, requiring that the government compensate property owners when it takes their property for public purposes. The doctrine has been extended to regulatory takings —government regulations that restrict property use so severely that they require compensation.

Public Use Requirement

The Takings Clause requires that property be taken for a public use, not merely for private benefit. The Supreme Court interpreted public use broadly in Kelo v. City of New London (2005), holding that the government may take property for economic development purposes and transfer it to private developers if the taking serves a public purpose.

Justice Stevens’s majority opinion in Kelo held that the public use requirement is satisfied if the taking rationally serves a legitimate public purpose. The Court deferred to local governments’ determinations of what constitutes a public purpose. The Kelo decision was controversial and prompted many states to enact legislation restricting the use of eminent domain for economic development.

Regulatory Takings

A regulatory taking occurs when a government regulation goes too far in restricting the use of property, requiring compensation even though the government has not formally exercised eminent domain. The Supreme Court in Pennsylvania Coal Co. v. Mahon (1922) announced that “while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”

The Penn Central test from Penn Central Transportation Co. v. City of New York (1978) provides the multifactor framework for evaluating regulatory takings claims: the economic impact of the regulation on the claimant; the extent to which the regulation has interfered with distinct investment-backed expectations; and the character of the government action.

Lucas and Total Takings

In Lucas v. South Carolina Coastal Council (1992), the Supreme Court held that a regulation that deprives property of all economically beneficial use is a per se taking, unless the restriction is inherent in the background principles of state property law. The Court required compensation for a developer who was denied a permit to build on beachfront property that was designated as a protected area.

The Lucas rule applies only to total takings —regulations that render the property valueless. The Court acknowledged that background principles of nuisance and property law may justify restrictions that eliminate all value without requiring compensation.

Exactions

An exaction is a condition that the government imposes on a development permit that requires the developer to dedicate property or pay fees for public improvements. The Supreme Court in Nollan v. California Coastal Commission (1987) and Dolan v. City of Tigard (1994) held that exactions must have a nexus and rough proportionality to the impacts of the proposed development.

Just Compensation

The measure of just compensation for a taking is the fair market value of the property at the time of the taking. The owner is entitled to the value of what was taken, not the value of the property to the government. Compensation must be measured by the loss to the owner, not the gain to the taker.

Conclusion

The Takings Doctrine requires the government to compensate property owners when it takes property for public use. The Kelo decision broadly interpreted public use, while Lucas established a per se rule for total regulatory takings. The Penn Central test provides the balancing framework for partial regulatory takings. Exactions must meet nexus and proportionality requirements.