Source: https://conlawincontext.com/the-takings-clause/
Timestamp: 2019-04-21 10:45:11+00:00

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The 5th Amendment prohibits the taking of private property for public use without just compensation to the owner. The prohibition against taking private property has been incorporated into the Due Process Clause of the 14th Amendment. Originally, the clause seems to have been understood to be limited to physical appropriation (through the exercise of eminent domain), and perhaps invasion, of property by the government. A regulation that diminished the value of property was not understood to be a taking. However, in the 20th Century the Court began to compensate landowners for “regulatory takings,” forcing the government to compensate landowners if regulations significantly diminished the value of the owner’s use of the land, even though title remained in the owner’s name. William Michael Treanor, The Original Understanding of the Takings Clause and the Political Process, 95 Col. L. Rev. 782, 802 (1995). But see, Richard Epstein, History Lean: The Reconciliation of Private Property and Representative Government, 95 Col. L. Rev. 523 (1995) and Richard Epstein, Takings: Private Property and the Power of Eminent Domain (1985).
Historically, the government had been given great deference in the exercise of its police powers for the public good. For example, in Munn v. Illinois (1877), the Court rejected a challenge to a statute limiting the price private grain silo operators could charge because their business affected the public interest. In Mugler v. Kansas (1887), the Court ruled that the forced closure of a brewery (as a result of a state prohibition statute) did not constitute a taking.
But on occasion, the Court has found legislative regulations that dramatically affect the value of property will violate either the Due Process or the Takings Clauses. During the Lochner era, the Court became increasingly skeptical of regulatory legislation.
In Pennsylvania Coal Co v. Mahon (1922), the Court considered a statute which prohibited a mining company from utilizing its mineral rights under a piece of property if the subsurface mining might cause the ground to sink. The Court held the statute passed the point of regulation and was, therefore, a taking. [Note, however, that a modern version of this statute was recently upheld by a 5–4 vote. Keystone Bituminous Coal Association v. Debenedictis (1987).] Until Pennsylvania Coal, the Takings Clause was not understood to apply to regulatory takings, as opposed to physical takings or invasions of property by government.
The Pennsylvania Coal decision allowed the courts to review a wide range of legislative action involving property rights. The balancing test the Court embraced — a regulation was invalid if it “went too far” — was similar to the substantive due process test that allowed the courts to scrutinize decisions by democratically elected branches involving “freedom of contract.” See William Michael Treanor, The Original Understanding of the Takings Clause and the Political Process, 95 Col. L. Rev. 782, 802 (1995). The point at which a “reasonable” exercise of the police powers (e.g., zoning) becomes confiscatory is a subtle one.
The following case, Miller v. Schoene, shows substantial deference to government regulation and the police power.
In Penn Central, the Court held that landmark preservation, as a type of zoning, was not a taking based on the facts of that case, but might be in another setting. As interpreted in later cases, the Court established a three-factor test to decide if a regulation which did not deprive a landowner of substantially all value should be considered a taking: the economic impact of the regulation, the extent to which it interferes with investment-backed expectations, and the character of the governmental action.
In Lucas v. South Carolina Coastal Council (1992), the Court significantly expanded the scope of compensation under the takings clause by holding that regulation that negates the economic value of land constitutes a taking unless it is consistent with common law principles of property and nuisance.
Justice Blackmun also alleged that the Court’s decision violated the principle that a state statute, particularly one that involves economic regulation, is entitled to a presumption of constitutionality.
Although the Court premised its decision on the assumption that the state’s regulation had rendered the plaintiff’s property valueless, Justice Blackmun pointed out that the land could have many economically valuable uses even if the plaintiff could not build homes on it, and Justice Kennedy found the Court’s assumption “a curious finding.” Justice Souter was so convinced that the property retained significant value that he took the unusual step of refusing to join either the majority or to dissent, contending that the case ought to have been dismissed on procedural grounds.
An extended edit of Lucas v. South Carolina Coastal Council is included with the supplemental materials on conlawincontext.com.
Four other Justices in the Eastern Enterprises case held there was not a taking. In a dissenting opinion written by Justice Breyer, they agreed with Justice Kennedy that the claim should be evaluated under economic substantive due process to determine if the arrangement was “fundamentally unfair.” They found it was not, and therefore found no due process violation. These Justices said the claim of arbitrary retroactive means to accomplish the congressional goal implicated the “fair application of law, which…hearkens back to the Magna Carta.” They insisted they were not “resurrect[ing] the long-discredited substantive notions of ‘freedom of contract.'” Still, the test of “fundamental fairness” (perhaps limited to retroactive legislation) seems more similar to heightened rational basis scrutiny (rational basis with bite) than the low level rational basis which was announced by the Court in the years of and following the New Deal Court.
One thing is especially worthy of note as we conclude this chapter on due process analysis. The Lochner Court, the Lochner dissenters, the New Deal Court, and the Justices of the current Court often refer to “rational basis” as the test when evaluating economic legislation. But of course, the words “rational basis,” as used by Justice Peckham in Lochner (1905) and Justice Thomas in FCC v. Beach Communications, Inc. (1993), have very different meanings. This fact shows why understanding constitutional law requires the understanding of constitutional history and the eras in which the Court functions.
As you consider the ebb and flow of judicial activism in the area of substantive due process, recall the excerpt from Mark Twain’s Life on the Mississippi set out in Chapter 2 of this casebook.

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