Shawn has a masters of public administration, JD, and a BA in political science.
Bryce is a bit of a loner who owns some land on a secluded part of a river next to his city where he plans to build a private retreat. Unfortunately for Bryce, his state legislature passed a conservation law that applies to his riverfront property that prohibits him from building any structures on it or altering the natural habitat in any artificial manner.
The government has not physically taken the property, and Bryce still legally owns the land. However, the new law drastically effects how Bryce may use his property. In fact, he doesn't even know why anyone would be willing to buy the dirt from him since no one can do anything with it. Bryce goes to a lawyer to find out what he can do to stop the government's interference with his property. His lawyer has both good news and bad news for Bryce.
The bad news is that the state has the power to enact the conservation law pursuant its police power. Police power is the power that state and local governments have to protect and advance the general welfare, health and safety of the public. The good news for Bryce is that the new law may constitute a regulatory taking, which requires the government to give 'just' compensation for a taking of property pursuant to the Fifth Amendment of the United States Constitution.
Tests to Determine Regulatory Taking
A regulatory taking doesn't happen just because a piece of dirt is subject to regulations. If a regulation results in a total invasion of the land by the government or deprives the owner of all economic use of the land, courts will find a regulatory taking under the Supreme Court's decision in Lucas v. South Carolina Coastal Council. This type of regulatory taking is often referred to as a total taking.
If there is no total regulatory taking, courts will utilize the criteria set forth in the Supreme Court's opinion in Penn Central Transportation Company v. New York City. In that case, the court announced three factors to determine whether a taking had occurred. First, the character of the regulation must be examined - does it amount to a physical intrusion or occupation of the property, or does it merely regulate the use for the public good, like pollution regulations? Second, the degree of economic impact the regulation has on the owner must be examined. Finally, in the context of economic impact, the court examines the level of interference the regulations has on the owner's 'investment-backed expectations.' Does the regulation unduly interfere with the reasonable expectations that the owner had for the property? Unfortunately, there is no bright line rule, and courts have to make decisions on a case-by-case basis applying the factors to the facts.
A regulatory taking can occur in other circumstances as well. If the government regulation results in a permanent occupation of part of the land, a partial taking has taken place. A regulatory taking may even occur if it's just temporary and the government will have to compensate for the temporary taking.
Inverse Condemnation Proceeding
Since the state hasn't coughed up the money to compensate Bryce, he's going to commence an inverse condemnation proceeding to force the government to do so. An inverse condemnation proceeding is a lawsuit commenced by an owner of private property seeking compensation from the government for an alleged taking of the owner's property for a public purpose. The court will determine whether a government taking has occurred. If the court finds a taking, the government will be required to compensate the owner. In our example, if the regulatory taking has taken away all economic use of the Bryce's property, the government will be required pay Bryce its fair market value.
Let's review what we've learned. A regulatory taking occurs when a governmental regulation sufficient adversely affects the value or use of private property to constitute a government taking. The Fifth Amendment requires that the government provide just compensation for any taking of private property for public use.
There are different means of determining whether a regulatory taking has occurred. A total taking occurs if the regulation deprives the owner of all economically viable use of the property. If there's not a total taking, courts will consider:
- The character of the regulation
- The economic impact of the regulation on the owner
- The degree to which the regulation interferes with the owner's 'investment-backed expectations'
A partial regulatory taking occurs if the government regulation results in a permanent occupation of part of the property. Finally, even a temporary taking that meets the standard requires compensation.
Owners of private property who have been subjected to an uncompensated taking can commence an inverse condemnation proceeding, where a court will determine if a taking has occurred requiring the government to compensate the property owner.
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