Opinion ID: 2604678
Heading Depth: 2
Heading Rank: 2

Heading: Temporary Regulatory Taking

Text: Challenges to federal, state, and local government restrictions on development have proliferated in recent years in both state and federal courts. The formerly well-established jurisprudence of eminent domain has been pushed into the background by claims of inverse condemnation, regulatory taking, and substantive due process, creating an utterly confusing mish mash. Recounting the history and development of temporary regulatory taking law helps inform an understanding of the present case.
The United States Supreme Court has struggled mightily with the basis for compensation for temporary regulatory takings. Justice Brennan's dissent in San Diego Gas & Electric Co. v. City of San Diego, 450 U.S. 621, 658, 101 S.Ct. 1287, 1307, 67 L.Ed.2d 551 (1981), argued monetary loss from a temporary regulatory taking ought to be compensable under the Just Compensation clause of the Fifth Amendment. The Court so held in First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 107 S.Ct. 2378, 96 L.Ed.2d 250 (1987) (mere invalidation of a regulation is not enough). See also Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987) (employing multifactor test to determine a compensable regulatory taking had not occurred), and Nollan v. California Coastal Comm'n, 483 U.S. 825, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987) (holding compensable regulatory taking had occurred because of lack of essential nexus between regulation and asserted public interest). In Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992), the Court further refined regulatory takings law by holding where a regulation takes all economically beneficial use of property there is a taking per se, and no balancing of interests is permitted. Most recently, in Dolan v. City of Tigard, 512 U.S. 374, 114 S.Ct. 2309, 129 L.Ed.2d 304 (1994), the Court held there must be rough proportionality between the cost of the taking and the public benefit. The Court placed the burden of proving rough proportionality on the regulatory agency; in the absence of such rough proportionality, the statute, regulation, or ordinance effects a taking.
Washington's temporary regulatory taking jurisprudence starts with the analysis of the state's police power. In Conger v. Pierce County, 116 Wash. 27, 198 P. 377, 18 ALR 393 (1921), we held the police power is an inherent attribute of government and, to the extent the police power is properly exercised in furtherance of safety, morals, health, or the general welfare of the public, an action cannot be a compensable taking, even if there is damage to property. [8] See also State v. Dexter, 32 Wash.2d 551, 202 P.2d 906, 13 ALR 2d 1081 (1949). Subsequent cases refined this approach by requiring a case-by-case analysis balancing of the public interest in regulating the use of private property against the interests of private landowners not to be encumbered by restrictions on the use of their property. Maple Leaf Investors, Inc. v. State, Department of Ecology, 88 Wash.2d 726, 731, 565 P.2d 1162 (1977). We cited in Maple Leaf to the well-known opinion in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 160, 67 L.Ed. 322, 28 ALR 1321 (1922), where Justice Holmes wrote: The protection of private property in the Fifth Amendment presupposes that it is wanted for public use, but provides that it shall not be taken for such use without compensation. A similar assumption is made in the decisions upon the Fourteenth Amendment. Hairston v. Danville & Western Ry. Co., 208 U.S. 598, 605, 28 Sup.Ct. 331 [334], 52 L.Ed. 637, 13 Ann. Cas. 1008. When this seemingly absolute protection is found to be qualified by the police power, the natural tendency of human nature is to extend the qualification more and more until at last private property disappears. But that cannot be accomplished in this way under the Constitution of the United States. The general rule at least is that while property may be regulated to a certain extent [without compensating the owner], if regulation goes too far it will be recognized as a taking. See also Kennedy v. City of Seattle, 94 Wash.2d 376, 617 P.2d 713 (1980); State ex rel. Randall v. Snohomish County, 79 Wash.2d 619, 623, 488 P.2d 511 (1971) (Unless the controls would deprive plaintiffs of a previously existing usage right, the burden is on plaintiffs to establish the unreasonableness of an otherwise permissible legislative zoning enactment.); Granat v. Keasler, 99 Wash.2d 564, 663 P.2d 830 (1983) (ordinance limiting right of landlord to evict houseboat tenants from moorage was deprivation of property without just compensation). The application of substantive due process principles to government regulation of land created even more doctrinal murkiness. The concept of substantive due process as a constitutional theory upon which to base challenges to governmental actions first appeared in our cases with little fanfare and even less authority in Norco Constr., Inc. v. King County, 97 Wash.2d 680, 649 P.2d 103 (1982), where we suggested due process was a limiting principle for zoning ordinances. In West Main Assocs. v. City of Bellevue, 106 Wash.2d 47, 52, 720 P.2d 782 (1986), we stated this court has often ruled that due process considerations limit how local governments use their police power, and then stated categorically: Thus a land use ordinance satisfies due process standards only if it (1) is aimed at achieving a legitimate public purpose, and (2) uses means to achieve that purpose that are reasonably necessary and not unduly oppressive upon individuals. Id.; Goldblatt, 369 U.S. at 594-95, 82 S.Ct. at 990; Lawton v. Steele, 152 U.S. 133, 137, 14 S.Ct. 499, 501, 38 L.Ed. 385 (1894). [9] In Orion Corp. v. State, 109 Wash.2d 621, 747 P.2d 1062 (1987), cert. denied, 486 U.S. 1022, 108 S.Ct. 1996, 100 L.Ed.2d 227 (1988), this Court tried to harmonize the complex and conflicting Washington case law on takings rooted in the police power analysis and the balancing of interests. The Orion court adopted the three-part test for police power excess stated in Goldblatt for substantive due process violations in land use cases. Orion, 109 Wash.2d at 647-48, 747 P.2d 1062. The Orion court correctly pointed out that examining an allegedly excessive regulation either as a due process violation or as an excessive use of the police power asks the same question: Is the landowner being forced to shoulder an economic burden that, in justice and fairness, the public at large should bear? Id. at 648-49, 747 P.2d 1062. Nevertheless, Orion recognized two alternate remedies for excessive regulation: a violation of substantive due process, allowing invalidation of the regulation; or a taking, requiring just compensation. Id. at 649, 747 P.2d 1062. The Court's approach in not allowing damages for substantive due process claims was practical: If all excessive regulations require just compensation, rather than invalidation, land-use decision makers, who adopt regulations in a good faith attempt to prevent a public harm, will nevertheless be held strictly liable for regulations that result in a taking. Undoubtedly, the specter of financial liability will intimidate legislative bodies from making the difficult, but necessary choices presented by the most sensitive environmental land-use problems.... Strict liability would not result for all excessive regulations, however, under the approach developed in our own regulatory takings jurisprudence. Orion, 109 Wash.2d at 649, 747 P.2d 1062. See also Presbytery of Seattle v. King County, 114 Wash.2d 320, 787 P.2d 907, cert. denied, 498 U.S. 911, 111 S.Ct. 284, 112 L.Ed.2d 238 (1990). But all excessive land-use regulations do require just compensation. Merely labeling the cause of action as a violation of substantive due process rather than a regulatory taking does not change the nature of the wrong, or eliminate the constitutional imperative to provide a remedy. No matter how we describe the cause of action challenging a regulation, if a regulation goes too far, it is a taking requiring just compensation. [10] I have difficulty conceiving of a situation in the context of land-use regulation where a regulation is not a taking, but is constitutionally infirm as a denial of due process. Always, the challenged regulation places some restriction on the use of property, resulting in economic deprivation. If a regulation exceeds the permissible boundaries of the police power, and thereby causes a tangible economic diminution in the value of property, then the aggrieved landowner is entitled to just compensation. If a court holds a challenged regulation to be within the permissible boundaries of the police power, on the other hand, then even though some diminution in value might have occurred, compensation is not required. Always, the central inquiry must be: does the regulation go too far? We have adopted various tests for this central inquiry. For instance, in analyzing whether a taking has occurred, we first ask if the regulation substantially advances legitimate state interests. Presbytery, 114 Wash.2d at 333, 787 P.2d 907. If it does, then we consider whether a facial or an asapplied challenge is involved. For a facial challenge, the landowner must show that the regulation denies all economically viable use of any parcel of regulated property in order to constitute a taking. Id. at 333-34, 787 P.2d 907. For a challenge to the specific application of the regulation, the Court employs a three-part test: (1) the economic impact of the regulation on the property; (2) the extent of the regulation's interference with investment-backed expectations; and (3) the character of the government action. Id. at 335-36, 787 P.2d 907. The standard of review for an alleged substantive due process violation also employs a three-part test: (1) whether the regulation is aimed at achieving a legitimate public purpose; (2) whether it uses means that are reasonably necessary to achieve that purpose; and (3) whether it is unduly oppressive on the landowner. Id. at 330, 787 P.2d 907. As inspection shows, all of these tests can be reduced to the central inquirydoes the regulation go too far.
We began our analysis in Presbytery by equating inverse condemnation with excessive regulation. Equating these two different concepts was unfortunate, however, because doing so causes unnecessary confusion. The term inverse condemnation is better left to its original association as the inverse of eminent domain: an `action brought against a governmental entity having the power of eminent domain to recover the value of property which has been appropriated in fact, but with no formal exercise of the power.' Martin v. Port of Seattle, 64 Wash.2d 309, 310 n. 1, 391 P.2d 540 (1964), cert. denied, 379 U.S. 989, 85 S.Ct. 701, 13 L.Ed.2d 610 (1965). Presbytery, 114 Wash.2d at 323 n. 2, 787 P.2d 907. What makes inverse condemnation inverse is that the compensation for the taking occurs after the taking, and at the instance of the property owner, who sues for the value of the taking. Condemnation by eminent domain means an actual physical occupation or taking of property, or damage to it. Condemnation does not occur until the landowner receives compensation through the eminent domain process. A regulatory taking is not a physical occupation of land, or damage to land, but simply a regulatory limitation of the owner's use of land. [11] Damages from a regulatory taking will almost always be in the nature of economic loss, rather than in the form of monetary loss resulting from physical occupation of or damage to land. The allegation in a regulatory taking case will be that owner's land diminished in economic value as a result of restrictions the regulation placed on its use. The law should maintain a robust distinction between eminent domain and inverse condemnation on the one hand, and regulatory taking on the other. In defining a regulatory taking, we would be wise to cut the Gordian Knot by scrapping the conflicting lines of authority and start afresh to describe when a regulatory limitation of the owner's use of land, which is not a physical occupation of the land or damage to the land, constitutes a taking. We should abandon substantive due process as an analytical tool and avoid the alternate remedies for excessive government regulation set forth in Orion and subsequent cases. We should rely instead on Dolan, which provides a workable framework for assessing an allegation of excessive regulation of land. We have adopted the Dolan approach in two recent cases. In Trimen Dev. v. King County, 124 Wash.2d 261, 877 P.2d 187 (1994), we upheld the county's imposition of a park impact fee on a developer as being reasonably necessary to offset the direct detrimental results of the development, citing to Dolan's rough proportionality test. Id. at 274, 877 P.2d 187. Similarly, in Sparks v. Douglas County, 127 Wash.2d 901, 904 P.2d 738 (1995), where Douglas County conditioned approval of the Sparkses' short plat applications upon dedication of rights of way for road improvements, we applied a Dolan analysis, asking whether the exactions demanded by Douglas County are roughly proportional to the impact of the Sparkses' proposed developments. Sparks, 127 Wash.2d at 915, 904 P.2d 738. We concluded they were, and reversed the Court of Appeals. Id. at 917, 904 P.2d 738. [12] The Dolan rough proportionality test now provides the appropriate analytical framework for deciding when a regulation goes too far. To prove a regulatory taking in Washington, the plaintiff must allege a lack of rough proportionality between the cost of the taking to the property owner and the benefit to the public. The agency has the burden of proving the existence of rough proportionality. That is, the agency must show (1) the challenged regulation advances a legitimate state interest; (2) there is an essential nexus between the interest advanced and the requirement exacted, Nollan, 483 U.S. at 834, 107 S.Ct. at 3147-48; The Luxembourg Group, Inc. v. Snohomish County, 76 Wash. App. 502, 505, 887 P.2d 446, review denied, 127 Wash.2d 1005, 898 P.2d 307 (1995); (3) there is a roughly proportional relationship between the benefit to the public and the cost to the landowner; and (4) damages were proximately caused by the governmental action. The Court in Sintra I appeared inclined to hold the demolition fee goes too far: The economic impact on Sintra is enormous. It was asked to pay a $219,000 fee to develop a $670,000 piece of property. Sintra, 119 Wash.2d at 22, 829 P.2d 765. Plainly, the Court could only express its shock at the size of the demolition fee. By contrast, had Dolan been available at the time of the Sintra I decision, the Court would have been able to assess whether the City had carried its burden of showing the demolition fee was roughly proportional to the public benefit. In summary, Dolan provides a sturdy analytical framework for cases such as this. By placing the burden of proving rough proportionality on the administrative agency, Dolan protects property owners by providing quantitatively-based administrative and judicial review of land use regulations.