Per Se Takings and Exactions

prev | next

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Penn Central is not the only guide to when an inverse condemnation has occurred; other criteria have emerged from other cases before and after Penn Central. The Court has long recognized a per se takings rule for certain physical invasions: when government permanently1 occupies property (or authorizes someone else to do so), the action constitutes a taking regardless of the public interests served or the extent of damage to the parcel as a whole.2 One modern case dealt with a law that required landlords to permit a cable television company to install its cable facilities upon their buildings; although the equipment occupied only about one and a half cubic feet of space on the exterior of each building and had only a de minimis economic impact, a divided Court held that the regulation authorized a permanent physical occupation of the property and thus constituted a taking.3 The Court further sharpened the distinction between regulatory takings and permanent physical occupations by declaring it “inappropriate” to use case law from either realm as controlling precedent in the other.4

A second per se taking rule is of more recent vintage. In Agins v. City of Tiburon, the Court stated that land use controls constitute takings if they do not “substantially advance legitimate governmental interests,” or if they deny a property owner “economically viable use of his land.” 5 The Court later erased the Agins “substantially advances” test, explaining that regulatory takings law concerns the magnitude, character, and distribution of burdens that a regulation imposes on property rights.6 The second Agins criterion, however, has persisted as a categorical rule: when the landowner “has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle, he has suffered a taking.” 7 The only exceptions, the Court explained in Lucas v. South Carolina Coastal Council, are for those restrictions that come with the property as title encumbrances or other legally enforceable limitations in place prior to acquisition of the property. Regulations “so severe” as to prohibit all economically beneficial use of land, the Court stated, “cannot be newly legislated or decreed (without compensation), but must inhere in the title itself, in the restrictions that background principles of the State’s law of property and nuisance already place upon land ownership. A law or decree with such an effect must, in other words, do no more than duplicate the result that could have been achieved in the courts—by adjacent land owners (or other uniquely affected persons) under the State’s law of private nuisance, or by the State under its complementary power to abate [public] nuisances . . . , or otherwise.” 8

The “or otherwise” reference, the Court explained in Lucas,9 was principally directed to cases holding that in times of great public peril, such as war, spreading municipal fires, and the like, property may be taken and destroyed without necessitating compensation. Thus, in United States v. Caltex, Inc.,10 the Court held owners of property destroyed by retreating United States armies in Manila during World War II were not entitled to compensation, and in United States v. Central Eureka Mining Co.,11 the Court held that a federal order suspending the operations of a nonessential gold mine for the duration of the war in order to redistribute the miners, unaccompanied by governmental possession and use or a forced sale of the facility, was not a taking entitling the owner to compensation for loss of profits. Similarly, in Juragua Iron Co. v. United States,12 the Court found that the destruction of a U.S. company’s property within enemy territory, done to prevent the spread of yellow fever, did not constitute a taking. The Court noted that property held by domestic interests in enemy territory is considered enemy property and thus not entitled to the protections of the Constitution.13 Finally, the Court held that when federal troops occupied several buildings during a riot in order to dislodge rioters and looters who had already invaded the buildings, the action was taken as much for the owners’ benefit as for the general public benefit and the owners must bear the costs of damage inflicted on the buildings subsequent to the occupation.14

With the investment-backed expectations factor of Penn Central, many lower courts employed a “notice rule” under which a taking claim was absolutely barred if it was based on a restriction imposed under a regulatory regime predating plaintiff’s acquisition of the property. In Palazzolo v. Rhode Island,15 the Court forcefully rejected the absolute version of the notice rule. Under such a rule, it said, “[a] State would be allowed, in effect, to put an expiration date on the Takings Clause.” 16 Whether any role is left for pre-acquisition regulation in the takings analysis, however, the Court’s majority opinion did not say, leaving the issue to dueling concurrences from Justice Sandra Day O’Connor (who argued that prior regulation remains a factor) and Justice Antonin Scalia (who would have held that prior regulation is irrelevant). Less than a year later, Justice O’Connor’s concurrence was reflected in the Court’s extended dicta in Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency,17 though the decision failed to elucidate the factors affecting the weighting to be accorded the pre-existing regime.

A third type of inverse condemnation, in addition to regulatory and physical takings, is the exaction taking. An “exaction” is a government-imposed requirement that a project developer provide certain public benefits to offset the impacts of the project on the public. A two-part test has emerged to evaluate alleged exaction takings. The first part debuted in Nollan v. California Coastal Commission18 and holds that in order not to be a taking, an exaction condition on a development permit approval must substantially advance a purpose related to the underlying permit. There must, in short, be an “essential nexus” between the two; otherwise the condition is “an out-and-out plan of extortion.” 19 The second part of the exaction-takings test, announced in Dolan v. City of Tigard,20 specifies that the condition, to not be a taking, must be related to the proposed development not only in nature, per Nollan, but also in degree. Government must establish a “rough proportionality” between the burden imposed by such conditions on the property owner and the impact of the property owner’s proposed development on the community—at least in the context of adjudicated (rather than legislated) conditions. To the argument that nothing is “taken” when a permit is denied for failure to agree to a condition precedent, the Court stated that what is at stake is not whether a taking has occurred, but whether the right not to have property taken without just compensation has been burdened impermissibly.21

Nollan and Dolan occasioned considerable debate over the breadth of what became known as the “heightened scrutiny” test. Where heightened scrutiny applies, it lessens the traditional judicial deference to local police power and places the burden of proof as to rough proportionality on the government. In City of Monterey v. Del Monte Dunes at Monterey, Ltd.,22 the Court unanimously confined the Dolan rough proportionality test, and, by implication, the Nollan nexus test, to the exaction context that gave rise to those cases. The Court did not resolve in Monterey, however, whether Dolan applies to exactions of a purely monetary nature, or only to physically invasive dedication conditions.23 The Court clarified this uncertainty in Koontz v. St. Johns River Water Management District by holding that monetary exactions imposed under land use permitting were subject to essential nexus/rough proportionality analysis.24

The Court’s announcement following Penn Central of the per se rules in Loretto (physical occupations), Agins and Lucas (total elimination of economic use), and Nollan and Dolan (exaction conditions) prompted speculation that the Court was replacing its ad hoc Penn Central approach with a more categorical takings jurisprudence. Such speculation was put to rest, however, by three decisions from 2001 to 2005 expressing distaste for categorical regulatory takings analysis. These decisions endorsed Penn Central as the dominant mode of analysis for inverse condemnation claims, confining the Court’s per se rules to the “relatively narrow” physical occupation and total loss of value circumstances, and the “special context” of exactions.25

1: By contrast, the per se rule is inapplicable to temporary physical occupations of land. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 428, 434 (1982); PruneYard Shopping Ctr. v. Robins, 447 U.S. 74, 84 (1980).
2: The rule emerged from cases involving flooding of lands and erection of poles for telegraph lines, e.g., Pumpelly v. Green Bay Co., 80 U.S. (13 Wall.) 166 (1872); City of St. Louis v. W. Union Tel. Co., 148 U.S. 92 (1893); W. Union Tel. Co. v. Pa. R.R., 195 U.S. 540 (1904).
3: Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982). The Court distinguished Loretto in FCC v. Florida Power Corp., 480 U.S. 245 (1987), holding that the regulation of the rates that utilities may charge cable companies for pole attachments does not constitute a taking without any requirement that utilities allow attachment and acquiesce in physical occupation of their property. See also Yee v. City of Escondido, 503 U.S. 519 (1992) (no physical occupation was occasioned by regulations in effect preventing mobile home park owners from setting rents or determining who their tenants would be; owners could still determine whether their land would be used for a trailer park and could evict tenants in order to change the use of their land); Cedar Point Nursery v. Hassid, No. 20-107 (U.S. June 23, 2021) (state law requiring agricultural employers to allow union organizers on their business properties for up to three hours per day, 120 days per year, constituted a per se taking requiring just compensation).
4: Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 323 (2002). Tahoe-Sierra's sharp physical-regulatory dichotomy is hard to reconcile with dicta in Lingle v. Chevron United States Inc., 544 U.S. 528, 539 (2005), to the effect that the Penn Central regulatory takings test, like the physical occupations rule of Loretto, “aims to identify regulatory actions that are functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain.”
5: 447 U.S. 255, 260 (1980).
6: Lingle, 544 U.S. at 542 (noting that the first Agins test—whether land use controls “substantially advance legitimate governmental interests” —addresses the means-end efficacy of a regulation more in the nature of a due process inquiry).
7: Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1019 (1992). The Agins/Lucas total deprivation rule does not create an all-or-nothing situation, since “the landowner whose deprivation is one step short of complete” may still be able to recover through application of the Penn Central economic impact and “distinct [or reasonable] investment-backed expectations” criteria. Id. at 1019 n.8. See also Palazzolo v. Rhode Island, 533 U.S. 606, 632 (2001).
8: 505 U.S. at 1029.
9: Id. at 1029 n.16.
10: 344 U.S. 149 (1952). In dissent, Justices Hugo Black and William Douglas advocated the applicability of a test formulated by Justice Louis Brandeis in Nashville, Chattanooga & St. Louis Railway. v. Walters,, 294 U.S. 405, 429 (1935), a regulation case, to the effect that “when particular individuals are singled out to bear the cost of advancing the public convenience, that imposition must bear some reasonable relation to the evils to be eradicated or the advantages to be secured.” See also United States v. Pac. R.R., 120 U.S. 227 (1887) (government did not owe property power for damage to property during Civil War, but also could not charge landowners for wartime improvements to property).
11: 357 U.S. 155 (1958).
12: 212 U.S. 297 (1909).
13: Id. at 308.
14: Nat’l Bd. of YMCA v. United States, 395 U.S. 85 (1969); United States v. Sponenbarger, 308 U.S. 256, 265 (1939) ( “An undertaking by the government to reduce the menace from flood damages which were inevitable but for the Government’s work does not constitute the Government a taker of all lands not fully and wholly protected. When undertaking to safeguard a large area from existing flood hazards, the government does not owe compensation under the Fifth Amendment to every landowner which it fails to or cannot protect.” ).
15: 533 U.S. 606 (2001).
16: Id. at 627.
17: Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 335 (2002).
18: 483 U.S. 825 (1987).
19: Id. at 837.
20: 512 U.S. 374 (1994).
21: Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595, 606–07 (2013).
22: 526 U.S. 687 (1999).
23: A strong hint that monetary exactions are indeed outside Nollan/Dolan was provided in Lingle v. Chevron United States Inc., 544 U.S. 528, 546 (2005), explaining that these decisions were grounded on the doctrine of unconstitutional conditions as applied to easement conditions that would have been per se physical takings if condemned directly.
24: Koontz, 570 U.S. 595.
25: Lingle, 544 U.S. at 538. The other decisions are Palazzolo v. Rhode Island, 533 U.S. 606 (2001), and Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002).