11.1 The Takings Clause

11.1 The Takings Clause

Takings questions ask three things in order: Was there a taking—physical, total regulatory, partial regulatory, or an exaction? Was it for a public use? And was just compensation paid? Zoning and land-use rules that do not amount to regulatory takings are covered in Real Property.

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Threshold Prerequisites: "Public Use" and "Just Compensation"

The Public Use Requirement

The Supreme Court interprets "public use" expansively as equivalent to public purpose:

• Rational Basis Review: The public use requirement is satisfied if the government rationally believes that the taking will generate a public benefit, utility, or purpose (Kelo v. City of New London).
• Economic Development (Kelo): Condemning unblighted private residential homes to transfer the real estate to a private commercial pharmaceutical developer to promote local economic development, generate municipal tax revenues, and create jobs constitutes a valid public use.
• Blight Elimination (Berman v. Parker): Seizing blighted or non-blighted properties within a redevelopment zone to revitalize an urban area is a valid public use.
• Breaking Land Oligopolies (Hawaii Housing Authority v. Midkiff): Condemning land from a handful of private landowners to resell it to sitting residential tenants to eliminate a statewide land oligopoly satisfies the public use standard.

Just Compensation: Valuation and Rules of Recovery

• Fair Market Value (FMV): Just compensation requires payment of the fair market value of the property at the time of the taking.
• Measured by Owner's Loss, NOT Government's Gain: Just compensation is measured strictly by the economic loss sustained by the property owner, not the value or benefit gained by the government or the taker (Brown v. Legal Foundation of Washington).
• Sentimental Value Excluded: The owner is not entitled to compensation for subjective emotional attachment, unique sentimental value, or personal relocation stress.
• Consequential Damages Excluded: Absent statutory provisions, losses such as goodwill, attorney's fees, and lost commercial profits are generally not compensable under the Fifth Amendment.

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Forms of Takings: Physical vs. Regulatory

                               ┌───────────────────────────────────┐
                               │ Has the government physically     │
                               │ entered or regulated the property?│
                               └─────────────────┬─────────────────┘
                                                 │
                       PHYSICAL                  │            REGULATORY
                       ▼                         │             ▼
             ┌───────────────────┐               │   ┌───────────────────┐
             │ Per Se Taking     │               │   │ Deprives ALL      │
             │ (Loretto,         │               │   │ economic use?     │
             │  Cedar Point)     │               │   └─────────┬─────────┘
             └───────────────────┘               │             │
                                                               │
                                          YES                  │             NO
                                          ▼                    │              ▼
                                ┌───────────────────┐          │    ┌───────────────────┐
                                │ Per Se Regulatory │          │    │ Penn Central      │
                                │ Taking (Lucas)    │          │    │ Balancing Test    │
                                └───────────────────┘          │    └───────────────────┘

1. Physical Takings (Per Se Takings)

Whenever the government authorizes or effects a permanent physical invasion of private property, a taking occurs per se, entitling the owner to just compensation regardless of how minor the intrusion or how important the public goal (Loretto v. Teleprompter Manhattan CATV Corp.).

• Minimal Physical Intrusions (Loretto): A state statute requiring residential apartment landlords to permit a private cable company to install a small cable box and wires occupying only 1.5 cubic feet on the roof was held to be a compensable per se taking.
• Appropriation of Access Easements (Cedar Point Nursery v. Hassid): A state regulation granting agricultural labor union organizers access to private farmland for up to 3 hours per day, 120 days per year, constitutes a per se physical taking. The government appropriated a temporary right of physical access, which is equivalent to a physical easement.
• Flooding and Temporary Invasions (Arkansas Game & Fish Commission v. United States): Government-induced flooding of private timberland, even though temporary and recurring, can constitute a compensable physical taking depending on duration, intent, and foreseeability.

2. Total Regulatory Takings (The Lucas Wipeout)

Under Lucas v. South Carolina Coastal Council (1992), when a governmental land-use regulation deprives a property owner of all economically beneficial or productive use of their land, it constitutes a per se regulatory taking.

• The Total Deprivation Rule: A regulation that denies all economically beneficial or productive use of land is compensable per se. A regulation that leaves some meaningful economic use, even a small fraction of the land's former value, is analyzed under Penn Central.
• The Background Principles Exception: No compensation is owed if the prohibited use was never part of the owner's title because background principles of the state's law of property and nuisance already forbade it (e.g., filling land in a way that would flood neighboring property). A regulation enacted before the owner acquired the land is not itself a background principle, so a later purchaser may still bring a takings claim (Palazzolo v. Rhode Island, 2001).

3. Partial Regulatory Takings: The Penn Central Balancing Test

When a government regulation severely diminishes the value of property but does not leave it completely economically valueless (e.g., an 80% or 90% diminution in value), courts evaluate whether a taking occurred under the three-factor balancing test established in Penn Central Transportation Co. v. New York City (1978):

1. The Economic Impact of the Regulation on the Claimant: The severity of the financial loss resulting from the regulation;
2. Interference with Reasonable Investment-Backed Expectations: The extent to which the regulation frustrates the owner's distinct, primary, and reasonable investment expectations formed when purchasing the asset; and
3. The Character of the Governmental Action: Whether the interference arises from a physical invasion/appropriation (weighs heavily toward a taking) or from a general public program adjusting the benefits and burdens of economic life to promote the common good (weighs against a taking).

MBE Tip: Mere diminution in property value alone—even a 75% to 90% reduction caused by downzoning from commercial to residential—is almost never enough by itself to establish a regulatory taking under Penn Central if the owner retains some economically viable use.

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Land-Use Exactions and Development Permits

Government often conditions the grant of a building permit, rezoning request, or variance on the property owner dedicating land for public use (e.g., dedicating land for road widening or bike paths) or paying impact fees. Under the Unconstitutional Conditions Doctrine, such land-use exactions constitute unconstitutional takings unless the government satisfies a two-part test:

1. Essential Nexus (Nollan v. California Coastal Commission): There must be an essential, logical nexus between the permit condition (the exaction) and the legitimate government interest that would justify denying the permit entirely. In Nollan, conditioning a beachfront rebuilding permit on granting a public pedestrian easement along the beach lacked an essential nexus to the California Coastal Commission's stated interest in protecting the public's view of the beach from the street.
2. Rough Proportionality (Dolan v. City of Tigard): If an essential nexus exists, the government must also demonstrate that the required dedication is roughly proportional in both nature and extent to the projected impact of the proposed development. The government must make an individualized determination showing that the exaction offsets the specific burden created by the new construction.
3. Application to Monetary Exactions (Koontz v. St. Johns River Water Management District): The Nollan/Dolan essential nexus and rough proportionality requirements apply not only to physical land dedications, but also to monetary exactions (e.g., demanding money for public infrastructure offsite) and situations where the government denies the permit because the owner refused the condition.

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The Emergency Destruction Exception

When the government destroys private property during a bona fide public emergency to avert an imminent public peril, no taking occurs and no compensation is constitutionally required under the police power:

• Spreading Urban Conflagration: Demolishing buildings to create a firebreak to stop a raging city fire (Bowditch v. Boston).
• Agricultural Pest / Disease Outbreak (Miller v. Schoene): The state ordered the destruction of uninfected red cedar trees on private land without compensation to prevent cedar apple rust from infecting and devastating commercial apple orchards.
• Military Necessity in War (United States v. Caltex): Destroying oil terminal facilities in the face of an advancing enemy army to prevent strategic assets from falling into enemy hands is not a compensable taking.

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More Takings Rules

• Temporary moratoria: A 32-month moratorium on development while a planning agency studied environmental effects was not a per se taking; temporary restrictions are evaluated under Penn Central (Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 2002).
• Temporary takings still require compensation: If a regulation is ultimately held to be a taking, the government must pay for the period during which it was in effect, even if the regulation is later withdrawn (First English Evangelical Lutheran Church v. County of Los Angeles, 1987).
• The parcel as a whole: Courts evaluate the effect of a regulation on the property as a whole, not just the regulated portion. When lots are under common ownership and merged under state law, they may be treated as one parcel (Murr v. Wisconsin, 2017).
• Personal property: The per se physical-taking rule also applies to personal property, such as a requirement that raisin growers turn over part of their crop to the government (Horne v. Department of Agriculture, 2015).
• Tax-foreclosure surplus: A county that sold a home for more than the taxes owed and kept the surplus took the owner's property without just compensation (Tyler v. Hennepin County, 2023).
• Legislative exactions: The Nollan/Dolan tests apply to conditions imposed by legislation, such as a county-wide traffic impact fee, as well as to conditions set by administrators in individual cases (Sheetz v. County of El Dorado, 2024).
• Not a means-end test: Whether a regulation "substantially advances" a legitimate interest is a due process question, not part of takings analysis (Lingle v. Chevron U.S.A. Inc., 2005).
• Timing of suit: A property owner has a Fifth Amendment claim as soon as the government takes property without paying for it and may sue in federal court under 42 U.S.C. § 1983 without first seeking compensation in state court (Knick v. Township of Scott, 2019).

Applying the Takings Framework

A city rezones a 20-acre parcel from commercial to residential use, reducing its value by 70%. The owner can still build homes. Because the owner retains economically beneficial use, Lucas does not apply, and the court weighs the economic impact, interference with reasonable investment-backed expectations, and the character of the government action under Penn Central; a large loss in value alone usually is not enough. If instead the city requires the owner to let the public walk across a strip of the land, the physical appropriation is a per se taking. If the city grants a building permit only on condition that the owner deed part of the land for a public road, the city must show an essential nexus and rough proportionality between that condition and the traffic the project will generate.

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Takings Doctrine: Per Se vs. Balancing vs. Exactions