Our colleague Mark M. Murakami was able to attend a lecture on regulatory takings at the University of Hawaii law school last week. Mark usually blogs at hawaiioceanlaw, but we convinced him to write up a guest post on his observations about the presentation.
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Last week, I attended the 2012 Distinguished GiffordLectureship in Real Property presentation by Professor Barton H. Thompson, Jr.of the Stanford Law School, entitled “In All Fairness and Justice.”
Professor Thompsondiscussed his thoughts on “allocative fairness” and different ways courts useto analyze regulatory takings. Hissource for this test is the oft quoted language from Armstrong v. United States, 364 U.S. 40 , 49 (1960) (“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.”). [
for more on “distributive justice” and the Takings Clause, see this article]
Allocative fairness is a doctrine underpinning the TakingsClause. It is useful to analyze issuesof when government makes determinations about who should pay for the benefitsof governmental action. The doctrinereaches back to the case of MonongahelaNav. Co. v. United States, 148 U.S. 312 (1893) where the Supreme Courtdiscussed the principle of NOT forcing one citizen to bear the burden ofgovernment by itself (in that case, taxes).The Takings Clause prevents looking to one individual to bear theburdens or pay more taxes than his share of government cost analogous usuallyto the due process clause but the Professor thinks there is a stronger affinityto equal protection clause. The courtsusually cite to usually cite to Chicago, Burlington, and Quincy Railroadv. City of Chicago, 166U.S. 226 (1897)
What then are the practical consequences of itanalyzing regulatory takings usingallocative fairness principles?
Will use of these principles unilaterally take the SupremeCourt to distributive fairness issues (i.e. taxes)
How should courts apply these Armstrong principles of distributive fairness?
How do you resolve questions Justice O’Connor raised in herconcurrence in Pallazolo (there are adeterminable number of approaches to analyzing these cases despite this beingan ad hoc test) .
There are three ways courts obtain allocative fairness intakings cases:
1) Procedural fairness which can be defined as ifthe procedures fair what the government did was then fair. this helps withallocative consistency in terms of rules after referrals legitimateexpectations as set forth in those rules then the result will be fair
2) Formal equality is the proposition thatsimilarly situated people should be treated similarly by the government. This principle dates back to Aristotle.
3) Substantive fairness that whether the cost youare imposing on someone and benefits to another is fair.
Three cases illustrate these tests.
Koontz vs St. JohnsRiver Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). This case will decide if the governments powerto condition development on some type of exaction is constrained by the TakingsClause. In the Nollan v. CaliforniaCoastal Commission case and the Dolan v. City of Tigard cases, the SupremeCourt held that the Takings Clause did constrain governmental exactions of realproperty. The Koontz case will decide ifit applies to non-real property exactions. Professor Thompson thinks it unlikely that the Supreme Court will extendNollan/Dolan beyond the real property dedication context. He thinks that applying Nollan/Dolan to suchexactions would make it too difficult to achieve substantial fairness.
Professor Thompson considers the application of Nollan/Dolanto be very difficult in the monetary context. School impact fees are relatively easy to calculate (planner expects Xstudents, needing Y schools, developer pays fee). But how do you analyze an impact fee for“open space” or “environmental impacts” or “endangered species habitat”? Studies have shown that Nollan/Dolan hasdeterred governmental actions, but if the Supreme Court approves itsapplication to the fees at issue in Koontz, then the Supreme Court will facetough issues in distinguishing Takings jurisprudence from tax issues. Tax issues are traditionally analyzed with anextraordinary deferential review, stemming from the Supreme Court’s decision inNorwood v. Baker, 172 U.S. 269, 279 (1898) in 1898. The power of taxation is the highest andindispensable power of government and the power to tax is not exempt fromconstitutional challenge, but the Takings Clause doesn’t apply go generaltaxes, circumscribing governmental regtulations only when the governmentregulation impacts on a specfici property interest. see EasternEnterprises v. Apfel, 524 U.S. 498 (1998).
Second case is the case of Guggenheim v. City of Goleta, No. 06-56306 (9th Cir., Dec.22, 2010) (en banc) which is a case challenging a regulationaffecting mobile home owners. For thetrial court, this was a Takings case involving formal equality (treating newand old owners equally). For the NinthCircuit panel, this was an allocative fairness issue (how much does anindividual mobile home owner have to bear for the woes of the rentalmarket). But the en banc decisionrejected the formal equality problem and rejected the Takings argumentwholesale, finding that the owners had no investment backed expectations.
The final case is from the Texas Supreme Court, Day v. Edwards Aquifer Authority. Blog post here. Under Texas law, groundwater was governed bythe “absolute ownership” rule. You pumpit, you own it. But, the aquifer isrunning dry, so and as a result of a lawsuit citing that problem and its impacton endangered species, the Texas legislature passed a law allocatinggroundwater rights to current owners (as a necessary precursor to regulatingthose rights). But, in order to obtain an allocation, theLegislature set up a finite time period where the use had to be proven. A challenge was brought. The Texas Supreme Court which found thatthese taken water rights were compensable but the government can regulate it. This case highlights the fairness ofburdening a regulation on the newcomers(or those who have not used groundwater before). This is a formal equality problem. It is always the case that original actorsget permission to do something (increase density, upzone) and it is thenewcomers who have their developments conditioned on addressing the problemscaused by the earlier projects. Professor Thompson thinks that if legislatures/county councils have atrack record (all developments must pay a development fee of X, then it isfair). If developers KNOW the rules, andthey are consistently applied (procedural fairness), then NO TAKING.
So what are the consequences of using the principlesundergirding the Armstrong decision. There is strong appeal to have fairness guide Takings cases, but theseare very tricky political questions. Howdo the courts obtain fairness? What arethe guidelines for procedural fairness?
Professor Thompson favors looking to the legislature/countycouncils to find rules for how developments should be viewed, taking intoaccount the social context.
There were some audience questions which highlighted somefuture issues that will necessarily involve the Takings Clause. Climate change mitigation efforts and somepredictions about how these principles will play out in the Supreme Court’shandling of the Koontz case this term. He predicted that the court won’t extend Nollan/Dolan to Koontz.
I posed a question, likely rhetorical, seeking to know ifNollan/Dolan didn’t apply, what was the check on a $100 million developmentfee. He said that was the problem withhis prediction. He suggested that such afee would likely have procedural fairness problem(unless a legislature couldpoint to a historical pedigree for such a fee, it would not be procedurallyfair).
All in all, his lecture was a treat. It isn’t often that we get the opportunity tohear thoughts on these constitutional issues and we hope that ProfessorThompson returns to Hawaii soon.