...nor shall private property be taken for public use, without just compensation.Amendment V
The drafter of this clause, James Madison, opined: "A Government is instituted to protect property of every sort...This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own." Against the proposition that the singular purpose of our government is the protection of property, there is the curiosity that the original Constitution scarcely mentions the term. Although at least two states demanded every other provision that we know today as the Bill of Rights, not one requested the Takings Clause. What explains the anomaly?
The beginning of an answer can be found in Alexander Hamilton's observation that "the true protection of men's rights are to be found not among old parchments, or musty records. They are written...in the whole volume of human nature...and can never be erased or obscured." Alexander Hamilton was, of course, referring to the natural law, which is one of the doctrinal foundations of the United States set out in the Declaration of Independence.
As a matter of original understanding, the American Founders viewed the natural right to acquire or possess property as embedded in the common law, which they regarded as the natural law applied to specific facts. Thus, the Framers thought that there was little need to create a "parchment protection" against the states, which were, after all, carrying on the common-law tradition. Many early colonial and state charters had explicitly protected "the means of acquiring and possessing property" as part of the common-law rights of Englishmen brought over at the time of the first settlements. Nonetheless, Madison apparently believed that the federal government, which, of course, had no long-standing tradition of supporting property rights, should be explicitly restricted to follow the common-law form. It was not until the late nineteenth century that the clause would be judicially applied to the states through the Due Process Clause of the Fourteenth Amendment. Chicago, Burlington & Quincey Railroad Co. (1897).
Property is not, however, entirely a natural right. The Founders understood that it would need to be further defined in statute. Particular rights of sale or use might well vary from place to place. For example, Thomas Jefferson introduced legislation in Virginia that would abolish landed estates (so-called entails) that were inheritable only through limited bloodlines. Similar restrictions were present in the common law through the rule against perpetuities, which prevents an owner from leaving property with ultimate ownership uncertain for too long a period after his death.
Because the Fifth Amendment places a restriction on the ability and manner of taking property by the federal government, this begs a central question: what is the source of the federal government's power of eminent domain in the first place? The states clearly had that power through their longstanding common-law tradition. How did the new federal government come to possess it as well? Two answers have been proposed. The first suggests that the power to take property is inherent in any sovereign. Jones v. United States (1883); Mississippi & Rum River Boom Co. v. Patterson (1878). Although Hugo Grotius, who coined the phrase "eminent domain" in 1625, disagreed, a sovereign in certain very limited—usually war-time—situations, has been allowed to take property without the obligation to compensate. In another rare circumstance, where property is physically taken, if the taking results in no net loss to the owner, compensation is not due. Brown v. Legal Foundation of Washington (2003). Putting these rarities aside, it is frequently said that the very institution of the federal government brings with it the power of eminent domain.
A second answer is that the federal power of eminent domain resides in, and is limited by, the Necessary and Proper Clause (Article I, Section 8, Clause 18), or by Congress's implied powers as confirmed by the Necessary and Proper Clause. McCulloch v. Maryland (1819); United States v. Gettysburg Electric Railway Co. (1896). Under this perspective, Congress may exercise the power of eminent domain only in order to effectuate one of its delegated powers. Similarly, the executive is limited to property takings allowable only under Article II executive powers, but they are far more restricted. Youngstown Sheet & Tube Co. v. Sawyer (1952). Inasmuch as James Madison came to support and propose a Bill of Rights because he realized the range of congressional power under the Necessary and Proper Clause, and inasmuch as the Takings Clause is primarily his offering, such a reading has historical credence.
What changes to the definition of property, then, can the federal government—and since incorporation of the Fifth Amendment, a state or local government—legislate without offending the natural right to property that underlies the common law? Justice Oliver Wendell Holmes initially opined that regulation must not go "too far": a judicial limit, but not a very formidable one. Pennsylvania Coal Co. v. Mahon (1922). Worse, the test actually looked at the wrong question. It focused on whether the regulation diminished the value of the property, rather than asking whether the regulation actually was consistent with common-law limitations on the use of property. The confusion between restrictions on use and diminution of value continues to affect the judicial interpretation of the clause.
So what limits have the modern cases placed on the regulation of property? In other words, what is "too far"? The Supreme Court easily determined that a regulation that authorizes the physical occupation of property was a taking. Loretto v. Teleprompter Manhattan CATV Corp. (1982). This categorical protection of the right to exclude emerged from the ancient protection against trespass. But Loretto's significance was not great as a practical matter, because few regulations have the brazenness, short of formal condemnation, to authorize third parties to station themselves on other's property. Occasionally, regulation comes close to outright physical occupation, by conditioning the grant of a governmental permit upon some forfeiture of a property interest. For example, one homeowner was told that he could expand his home, but only if he provided a beach easement to the public. Nollan v. California Coastal Commission (1987). Another was told that she could enlarge a retail plumbing store if she set aside property for a bike path. Dolan v. City of Tigard (1994).
In these cases, the Court has held that the Takings Clause prohibits the regulating agencies from using the permit process to leverage their governmental power to achieve what they wish without cost. To survive review, regulatory conditions must "substantially advance" a legitimate governmental interest and be reasonably "proportionate" to the external effects likely to be caused by the property owner's proposal. In Nollan, the landowner was freed of the beach-easement requirement because it was unnecessary to the government's stated purposes. In Dolan, the store owner did not have to facilitate the bike path, because, however desirable that might be, the need for it was not caused by the activity being regulated (the expansion of a plumbing store).
The Court has also applied the Takings Clause to invalidate regulations that deprive property of all of its economic use. Lucas v. South Carolina Coastal Council (1992). This, too, is a taking unless the regulation parallels the limitations in the background principles of the state's law of property and nuisance. In Lucas, the desired property use was for residential construction, and the regulating state could not show that the common-law nuisance principles prohibited that use of the property.
The significance of the common-law/natural-right backdrop of property continues to shape constitutional doctrine. But what happens if modern regulation does not just mimic the common law but imposes far greater restrictions, based perhaps on modern environmental considerations? Recent judicial pronouncements indicate that the courts would regard at least a certain amount of environmental restriction as a reasonable extension of the common-law principle. But if one knowingly purchases land in a jurisdiction with an expansive environmental regime, the landowner is not automatically precluded from a takings claim. Rather, that knowledge is only one additional factor for the court to consider in judging whether the regulation can justifiably be considered a taking. Palazzolo v. Rhode Island (2001).
Other factual matters do play a significant role in keeping most takings cases out of court. State administrative and judicial determinations regarding the final application of regulations to individual parcels and the availability of compensation to owners are prolonged and expensive. Until these processes are completed, a "ripeness doctrine" prevents owners from seeking relief in federal court. Williamson County Regional Planning Commission v. Hamilton Bank (1985). The Court has occasionally expressed frustration with the bureaucratic games that result in protracted litigation, Monterey v. Del Monte Dunes at Monterey, Ltd. (1999), but most often property owners are turned away from the courts and told to keep working through the prescribed processes.
The most difficult Takings Clause cases are the most common ones. In these, the regulation has not physically invaded or precipitated a total loss, or even been employed to gain undue leverage. Rather, regulation reduces, often significantly but not totally, the economic prospects for property, and an owner asks to be compensated. The governing case here remains Penn Central Transportation Co. v. City of New York (1978). In Penn Central, which dealt with an ordinance that preserved a historic landmark by imposing a large loss on the property owner by forbidding construction of an office tower above it, the Court admitted that the takings issue was "a problem of considerable difficulty." "There was," said the Court, "no ‘set formula' for determining when ‘justice and fairness' require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons." The Court admitted that in the typical case it would apply an ad hoc balancing test that would consider (1) the economic impact on the property owner, (2) the extent to which the regulation interfered with investment-backed expectations, and (3) the character or extent of the government action.
In the weighing of these factors, most property owners have lost their claims for compensation. A few have prevailed by recharacterizing the portion taken as a complete deprivation of a part, rather than a partial deprivation of a whole. The Court has said that, where there is a regulation that is terminated after a court has concluded that it constituted a taking, the owner's deprivation during the temporary period in which the regulation was effective is compensable. First English Evangelical Lutheran Church of Glendale v. County of Los Angeles (1987). However, whether a planned moratorium (even if it lasts for years) constitutes a taking must be determined by using the Penn Central multifactor test. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency (2002).
Despite the frustration and cost of litigation of enforcing the Takings Clause, property owners remain indefatigable, and they are especially so when they perceive regulation to exceed a reasonable scope and invade that which may fairly be thought to be one of the natural rights of ownership. The ultimate purpose of the Takings Clause was well described by the Court more than forty years ago as "designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Armstrong v. United States (1960). That is the central principle that prompted the Framers to add the Takings Clause to the Bill of Rights.
[Editors' Note: In Kelo v. City of New London (2005) the city of New London planned to use eminent domain to acquire property for a redevelopment project that would replace existing private homes in good condition with private office space and parking lots. The property owners argued that the taking was not "for [a] public use," and thus violated the Fifth Amendment. In a 5–4 opinion, the Court upheld the taking, holding that where a government presents a "comprehensive development plan" with "public benefits" that are not merely "incidental or pretextual," the Court will apply a deferential, rational-basis–like standard to determine whether the asserted public benefit of the taking satisfies the public use requirement. In dissent, Justice Sandra Day O'Connor argued that taking of a private property for the benefit of another private party does not constitute public use, unless there is a direct public benefit, such as the elimination of a blighted area.]
- Douglas W. Kmiec
- Professor of Constitutional Law
- Caruso Family Chair in Constitutional Law
- Pepperdine University School of Law