Monday, August 23, 2021

Takings Litigation in the Court of Federal Claims and the Federal Circuit

Earlier this year, in his dissenting opinion in Cedar Point Nursery v. Hassid, Justice Breyer wrote that “most government action affecting property rights is analyzed case by case under Penn Central’s fact-intensive test.” That statement reflects conventional wisdom. Supreme Court justices have often said similar things, as have many academics. They tend to assume—with some exceptions—that the most prevalent cases and the most intellectually challenging and important questions arise from regulatory takings jurisprudence, with the Penn Central standard governing most of the action.

But for takings cases against the federal government, that conventional wisdom is wrong. I recently compiled a database of takings claims filed in the United States Court of Federal Claims—which hears almost all takings claims against the federal government—between 2000 and 2014. The database tracks cases from filing to completion, and it includes data on numbers of plaintiffs, numbers of different types of claims, case outcomes, and the amount of money paid by the federal government, sometimes through court judgments but usually as part of settlements. The resulting study is now available here. It will be published next year in the BYU Law Review.

The resulting findings confirm conventional wisdom in some ways, but in others they contradict it. Among the findings I found most interesting:

  • During the study period, the overwhelming majority of takings claims filed against the federal government were for alleged physical takings.
  • Three categories of cases—rails-to-trails conversions, military overflight cases involving a single base in Virginia, and flooding cases—accounted for 91% of all of the takings claims filed. More than half of the plaintiffs were involved in rails-to-trails cases.

Numbers of takings plaintiffs (total n = 11,693)

Plaintiffs chart

  • Almost three quarters of the just compensation paid to date was in rails-to-trails cases. I found documentation of 336 million dollars in just compensation (normalized to 2020 dollars) from those cases, with some cases still ongoing and some settlements that I was unable to find and that the Department of Justice could not produce.

Just compensation payments (total = $453,058,985)

Payments chart

  • Penn Central and Lucas analyses were relatively rare, and plaintiff victories on regulatory takings claims were exceedingly rare. I found only four successful regulatory takings claims.
  • I did not find any cases in which a plaintiff succeeded under a Nollan-Dolan-Koontz exactions analysis. Discussion of those cases hardly ever came up.
  • An issue that arises frequently in Court of Federal Claims cases—and much less frequently in United States Supreme Court jurisprudence—is whether the plaintiff actually holds a property interest in the thing that was allegedly taken. That means the Court of Claims often addresses questions—some of them intriguing—about what counts as property, and how courts should decide.
  • Another recurring issue is what mode of takings analysis should be applied. In a range of fields—most notably, litigation over regulation of water use and litigation over post-Great-Recession management of Fannie Mae and Freddie Mac—a key threshold question has been whether to analyze claims as regulatory restrictions, which would receive a Penn Central analysis, or as appropriations, which would likely mean a categorical analysis.

Another finding sweeps more broadly. In the 1980s and 1990s, many conservative activists hoped, and many liberals feared, that takings litigation would hobble the regulatory state. The goal, or the worry, was that widespread litigation would force government to pay compensation for much of its regulatory work, which would make regulation a whole lot less likely. At the federal level, and during the time period I studied, there is scant evidence that takings litigation has played that role. Most federal regulatory agencies have been largely untouched by takings litigation, and big business brings very few takings cases. Struggles over the extent of government regulation remain central to our political and legal systems, of course, but the most important struggles are not playing out through takings litigation.

I think the study raises as many questions as it answers, and the biggest unanswered question is whether a similar study of takings litigation against state and local governments would produce similar results. For this study, I could not answer that question; databases of state-court complaints were very incomplete, which meant I could not search for state-court takings complaints in any sort of systematic way.  James Krier and Stewart Sterk’s excellent study of state-court takings decisions suggests that regulatory takings cases are more prevalent in state court than they are in federal court, though it is possible the numbers might shift (in either direction) if one looked at the numbers of plaintiffs who file cases rather than at numbers of published decisions.  But even if the Court of Federal Claims’ takings docket may be an outlier, it’s a big, important outlier. The federal government is an influential regulator, to say the least, and takings litigation against it should be a focus of academic and judicial interest.

Again, the full study is available here. It still is in draft form, and comments are welcome.

- Dave Owen

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