Property II Professor Donald J. Kochan

Property IIProfessor Donald J. Kochan Spring 2009 Class 52 8 April 2009

Today’s Readings • Regulatory Takings Issues • Loretto • Penn Coal • Penn Central • Pages 960-1006

Underlying Principle “The Fifth Amendment's guarantee that private property shall not be taken for a public use without just compensation was 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, 364 U.S. 40, 49 (1960).

Loretto • Cable wire case • Any physical invasion constitutes a per se taking, no matter how minor – first categorical rule • Minimal impact can be taken into account at the compensation stage • Underscores the three-part test: decide if it is a taking, then decide if it was for a public use, then decide just compensation

Penn Coal • Deeds and Private Agreements • Reservations and Split Estates • Subsidence regulations limiting full extraction of coal and interference with deed provisions • Police Power v. Takings • Holding: “So far as private persons or communities have seen fit to take the risk of acquiring only surface rights, we cannot see that the fact that their risk has become a danger warrants the giving to them greater rights than they bought.”

Penn Coal • Most influential regulatory takings case in history precisely because it has shaped all subsequent takings law and contributed to takings struggles and confusion • Consider the ambiguities in the test applied • What is a regulatory taking? Alternatively, when does a regulation of property rise to the level of a taking, or when is a regulation just a regulation (the “yes we realize the regulations are reducing your dominion and taking away sticks – deal with it!”)? For a web version of the case from FindLaw: http://laws.lp.findlaw.com/getcase/US/260/393.html

Mr. Justice Holmes and Penn Coal http://www.supremecourthistory.org/02_history/subs_timeline/images_associates/049.html

Penn Coal From the majority opinion (emphasis added): “As applied to this case the statute is admitted to destroy previously existing rights of property and contract. The question is whether the police power can be stretched so far. Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law. As long recognized some values are enjoyed under an implied limitation and must yield to the police power. But obviously the implied limitation must have its limits or the contract and due process clauses are gone. One fact for consideration in determining such limits is the extent of the diminution. When it reaches a certain magnitude, in most if not in all cases there must be an exercise of eminent domain and compensation to sustain the act. So the question depends upon the particular facts. The greatest weight is given to the judgment of the legislature but it always is open to interested parties to contend that the legislature has gone beyond its constitutional power.”

Penn Coal From the majority opinion (emphasis added): “The general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. It may be doubted how far exceptional cases, like the blowing up of a house to stop a conflagration, go-and if they go beyond the general rule, whether they do not stand as much upon tradition as upon principle. In general it is not plain that a man's misfortunes or necessities will justify his shifting the damages to his neighbor's shoulders.” *Sets up the “ad hoc, factual inquiry”

Penn Coal (cont.) • Brandeis Dissent • Police Power focus • “Reciprocity of Advantage” Issues and the “Civilized Community” • Diminution in Value Issues • Conceptual Severance Issues • The TaftCourtwithHolmes andBrandeis:

Penn Central • NYC’s Grand Central Terminal and the application to build an office building atop the terminal • Landmarks and Historic Preservation Regulations that restrict use of property • Zoning Issues • TDR Issues • Precursor to later cases – majority and dissent inform the later regulatory takings cases For a web version of the case from FindLaw: http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=438&invol=104

Penn Central • Case attempts to define further Penn Coal’s “too far” test – describes the “struggle” and “considerable difficulty” with “no set formula” to decide if a regulatory act is a taking • Focus on Court’s discussion of: • Interference with Reasonable/Distinct Investment-Backed Expectations • Character of the Governmental Action • Benefits and Burdens • The Common Good

Penn Central From the majority opinion: “In engaging in these essentially ad hoc, factual inquiries, the Court's decisions have identified several factors that have particular significance. The economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations are, of course, relevant considerations. So, too, is the character of the governmental action. A "taking" may more readily be found when the interference with property can be characterized as a physical invasion by government . . . than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good.”

Concluding Remarks • Realize the distinction between express condemnation and eminent domain and what are termed “regulatory takings” • Examine soft standards and how they affect judicial discretion and the separation of powers • Understand the difference between “categorical” and “ad hoc”

Property II Professor Donald J. Kochan