Regulatory Takings

Regulatory Takings

We live in an increasingly crowded society. To promote the general welfare, land uses need to be restricted in some cases. Zoning policies that separate industrial zones from residential housing are enacted to protect health and property values. State and federal laws can be used to restrict land uses in environmentally sensitive areas. However, these restrictions can greatly diminish the usefulness of a property that is subject to a regulatory action. What happens when these restrictions hinder the use of your land?

Landowners have the right to receive compensation for the value of their land in some extreme cases where government regulations render their property effectively worthless. This right stems from the 5th and 14th Amendments, which require property owners receive “just compensation” when their property is taken by the government. The “Takings Clause” is typically applied in instances where a government condemns property through eminent domain or causes some type of physical invasion (flooding, loss of access, etc.) as a result of a public project. However, property does not have to be physically impaired to be considered “taken” under the law.

A “regulatory taking” occurs when governmental regulation of the use of property goes “too far.” I am quoting the Supreme Court and not paraphrasing when I say the standard in these cases is “too far.” In the legal world, a simple standard of “too far” is a recipe for chaos.

Courts struggle with determining what constitutes “too far” in these cases. Instead of establishing a general proposition, this analysis requires consideration of the facts in each individual case. Courts consider these three factors when determining whether a regulatory taking has occurred: 

  • the economic impact of the regulation on the claimant; 
  • the extent to which the regulation has interfered with investment-backed expectations; and 
  • the character of the governmental action. 

Any one of these factors can lend weight to an argument supporting a finding of a regulatory taking, but courts place the greatest weight on the first two.

A court is most likely to find a regulatory taking has occurred if a government regulation prevents all economically viable uses of the property. For instance, the Supreme Court has held a state conservation law that prohibited future construction of permanent structures on beachfront property was a taking because it deprived prospective homebuilders of any productive use of their land. Courts will also find a taking has occurred if a government attaches an unreasonable condition on a permit or license not related to the government’s regulatory interest.

Courts are less likely to find a regulatory taking has occurred if a property owner is left with some economically productive use for the property, even if it is reduced. For instance, a zoning ordinance prohibiting construction of animal confinement facilities in certain areas is generally not considered a taking if the property can be used for other lower value agricultural purposes. Furthermore, setbacks from planting crops or harvesting trees in riparian zones or near wetlands are not considered takings, even though they reduce the economic productivity of the property.

Proving a regulatory taking has occurred is an uphill battle. However, as farmers increasingly clash with state and local governments, it can be an essential tool of last resort.

This column is not a substitute for legal advice.  

This column is the final installment of a three-part series on eminent domain. To read them all, visit eminent_domain 



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