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Thursday, March 30, 2006

Why Singling Out Should Have No Role in the Regulatory Takings Analysis

One of the central points in my recent essay on Lingle v. Chevron is that post-Lingle the character of the governmental act at issue should have no relevance to the regulatory takings inquiry:

More broadly, the analysis in Lingle illustrates why the character of the government act generally should have no role in the takings analysis.  Penn Central described the character of the government act as being relevant to the takings analysis, noting that “A ‘taking’ may more readily be found when the interference with property can be characterized as a physical invasion by government than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good.”   This, of course, is an uncontroversial statement as made:  physical invasions are now seen as per se takings, where most regulatory actions are not.   Similarly, government actions that can be characterized as abatements of common-law nuisances are per se not takings.   Beyond these relatively narrow circumstances, however, the character of the government act should have no role in the takings analysis whatsoever.

As Lingle explained, the focus of the takings analysis is on whether the government act takes property, not on whether the government has a good or bad reason for its action.  Understanding that the character of the government act in the later sense – whether the government is acting for a really important reason as opposed to a really silly reason – is a substantive due process question, not a takings question, further helps clarify existing takings precedent.  Indeed, this understanding requires the effective deletion of eight pages from the U.S. Reports of Justice Stevens’ opinion Keystone Bituminous Coal Association v. DeBenedictis,  where the Court held that the government act was not a taking in part because it furthered a really important public purpose.   Justice Stevens’ analysis is rife with citation to Euclid and Goldblatt,  and post-Lingle it is clear that takings law presumes that the government is not affecting property for a really silly reason.

In my initial draft, I had used "half-assed" rather than "really-silly", but allowed the editors to talk me into being a bit more polite.  In any event, this point is tied to the broader holding in Lingle -- which is entirely correct in my view -- that the regulatory takings inquiry should focus on whether the government act takes private property.  Imagine that -- a takings clause test that is concerned with whether something is taken.

As I note in footnote 56 of the essay, however,

The Court’s opinion in Lingle regrettably preserved the suggestion from prior caselaw that a taking is more likely to be found to be a taking if the government act singles-out a relatively small number of property owners.  Because the focus of the regulatory takings analysis is on the impact of the government act on the property owner (or, put simply, whether the government through regulation effectively has taken property), it should not matter one bit whether the government has taken property for a good or bad reason, or whether the government has taken property from many owners or few.  Rather, if property has been taken, then what should matter is whether compensation has been paid or not.  If a local municipality took 90% of its residents’ property through an explicit exercise of eminent domain, compensation clearly would be due.  The result should not be different if the local municipality effectively took 90% of its residents’ property through regulation.  It may be that in the case of a broadly-applicable regulation, property owners are more likely to benefit from the restrictions placed on their neighbors.  But in many circumstances, the affected property owner will not obtain a proportional benefit from the regulation.

Indeed, the fallacy of the argument that a broadly applicable regulation will benefit the affected property owner is well illustrated by the Michigan Court of Appeals’ analysis in the recent K & K Const., Inc. v. Dep’t of Environ. Equality, 2005 WL 1753805 (Michigan Ct. of Appeal 2005).  K & K involved a property owner’s challenge to Michigan’s wetland regulations.  In rejecting that challenge, the court made the following unsupported assertion:  “All property owners in this state share these benefits relatively equally, and all property owners, and, importantly, all prospective owners, are relatively equally subject to the burdens placed on much of the property in this state by the wetlands regulations.” Id. at *15; see also R & Y, Inc. v. Anchorage, 34 P.3d 289, 298 (Alaska 2001) (rejecting a challenge to a wetlands regulation “which applies broadly to all landowners and which benefits both the public generally and the landowners in particular”).  This assertion is complete bunk.  The regulations certainly create a public benefit to the environment, but the burden is not shared equally by all property owners.  Rather, the burden is imposed only on property owners who have wetlands.  These property owners bear all of the burdens of the regulation while obtaining only a fraction of the public benefit.

In any event, if a regulatory impact is so severe that it actually constitutes the equivalent of a physical expropriation, the owners are not going to be in a position to benefit from such an average reciprocity of advantage.  Political process theorists would argue that singling-out makes it more likely that a process failure has occurred.  But any time the government takes property (through regulation or otherwise) without compensation, the political process has failed.  The Just Compensation Clause provides a remedy for such process failures, and compensation should be due regardless how narrowly or broadly the government focused its action.

This last point builds on an argument I made in this article at pages 515-17 as part of a discussion of Bill Treanor's process-oriented view of the takings clause.  While I agree that the framers generally and Madison in particular were concerned about process failure,

the text of the Just Compensation Clause makes it clear that it is not a process-oriented provision.  Unlike a provision directed at avoiding process failures detrimental to property owners--for example, a property qualification for voters--the Just Compensation Clause simply provides a remedy for the victim of the process failure.  The text requires compensation for every taking of property, and does not require an examination of the political process that led to the taking.  As Treanor himself notes: "[T]he original understanding did not involve making the individuals who were likely to suffer process failure better off than those protected by the political process.  Rather, the Takings Clause was intended to put everyone who suffered the same injury on the same footing: Everyone whose property was physically taken received compensation."  The Just Compensation Clause, then, is not concerned with how or why the process failure occurred.  Instead, it is concerned with the impact a government action has on the property owner.  If the impact is sufficiently severe (which necessarily could only result from a process failure), then compensation is due.

Ben Barros

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I think your argument that takings analysis after Lingle shouldn't consider "the character of the government act" except for in the "physical invasion" or "abatement of a common law nuisance" situation "goes too far" (as it were). The Lingle Court cites the Armstrong case (at 2080) for the proposition that takings is still really about "fairness." And in your footnote 56 your argument appears to require that the court be able to compare the effect of a regulation on one property owner with the effect of the same regulation on other property owners. (Otherwise it would seem you are arguing that the court could somehow analyze the "absolute" effect of a general regulation on one property without reference to its relative effect on others, which would ignore Armstrong.) So, while Lingle properly read and consistently applied may mean that courts shouldn't consider the purpose or goal of regulation, it appears to still require that they consider "the character of the governmental act" in some (other) sense, i.e. with regard to the fairness of the regulation.

Posted by: Tim Iglesias | Mar 31, 2006 4:33:19 PM

Fair point re: Armstrong. So add it to "singling out" as another part of the substantive-due-process related ideas that unfortunately lingered in Lingle. In footnote 56 I'm arguing that yes, the court should consider the absolute impact on the property owner without reference to the relative effect on others. The Just Compensation Clause has nothing to do with relative fairness. Rather, it asks whether property has been taken. If yes, compensation is due. If no, then not. Put another way, the JCC says that a taking is unfair, regardless of how broadly or narrowly the regulation applies.

I particularly like the "consistently applied" part of your comment -- since this is takings law, the smart bet is that it won't be. Which, of course, keeps law professors fully occupied.

Posted by: Ben Barros | Apr 2, 2006 7:45:39 PM

Some important context for the above post -- part of the reason that I like Lingle so much is that it describes the regulatory takings inquiry as whether the regulation is the functional equivalent of a physical taking. I completely agree with this, so I think that regulatory takings should be found only for regulations that amount to near or total deprivations of value (or maybe use). So when I say "take", I really mean take, not just deprive of some use or value.

Posted by: Ben Barros | Apr 2, 2006 7:51:32 PM

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