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New Article: "Daunting Odds: Regulatory Takings Claims in The United States Circuit Courts of Appeals," 94 Miss. L. J. 637 (2025)

You know the claim: even after the federal courts opened back up to regulatory takings claims, winning a case is still pretty difficult. 

Yes, that may be by design: maybe it's not supposed to be easy to get in the way of the regulatory state and prevail on a claim that a government action has "gone too far" by having similar effects on the owner's property rights as an exercise of eminent domain. Or maybe it is. But either way, those of you who have been at this long enough can sense that something isn't quite right. That our property owners are not getting a fair shake from the courts. That there's an imbalance in The Force. 

Whether it is surviving a motion to dismiss where the court applies stricter pleadings standards than in other civil cases, or getting to the merits by escaping summary judgment, or even having a court of appeals wipe out a favorable jury verdict, it is the rare lawyer that doesn't counsel the client that these are tough cases, and not simply because they are difficult to prove. Or, in the words of student-author Ramsey Thrasher, "daunting." 

We'll say. His newly-published article, "Daunting Odds: Regulatory Takings Claims in The United States Circuit Courts of Appeals" (94 Miss. L. J. 637 (2025)), puts forward some empirical proof you aren't just imagining it: "[O]ut of the 366 total cases, only twenty-four decisions have been rendered in favor of the claimant throughout every circuit." The article studied all of the regulatory takings decisions by the federal appeals courts, and lays out the stats.

Here's the summary, from the Introduction:

Since the latter half of the 20th century, the federal Circuit Courts of Appeals have ruled on numerous regulatory takings claims. The cases cover a diverse plethora of issues and industries allegedly affected by regulations, ordinances, and statutes passed by government entities throughout the country. While the factors surrounding the cases are different, the outcomes are shockingly parallel.

This paper aims to compile and compare the many cases under regulatory takings law. Part I establishes a strong foundation by providing a thorough background into Takings Law. This section not only describes regulatory takings but also introduces seminal cases such as Penn Central Transportation Company v. City of New York, which produced the standard test applied to regulatory taking claims today.

Part II consists of a detailed overview of each circuit’s approach to regulatory takings claims. Included in each analysis is a breakdown of how many regulatory takings claims have been decided by each court, how many times the courts have ruled in favor of the government entity compared to the claimant, the industries allegedly affected, reasoning commonly asserted by the courts as to why the regulatory taking claims have failed, and how the courts have applied the Penn Central test.

Part III then analyzes whether the courts have remained consistent, whether the courts seem to protect property rights or promote government intrusion, whether a prediction can be made on how the courts will rule on regulatory taking claims in the future, and whether bringing a successful regulatory takings claim is equally as daunting in each circuit.

The piece goes through each circuit, and there's a section on how the courts' track record may be used to predict how those courts will rule down the road. The bottom line: a claimant 6.6% chance of success:

The number of cases addressing regulatory takings compared to the overall low success for regulatory taking claims allows for one to predict with relative ease how the court will rule on future regulatory taking claims. Over the almost fifty-year span since the courts first began deciding regulatory taking issues, the courts have rendered decisions in 366 cases. In 342 of those cases, the court ruled in favor of the ordinance, regulation, or statute. On the other hand, the court ruled in favor of the claimant in only twenty-four cases. These figures indicate that a claimant has a 6.6 percent chance of bringing a successful regulatory taking claim in front of a federal circuit court of appeals. Considering this low success rate and the courts’ level of consistency, excluding the 2000s, it is relatively convenient to assume the courts will continue to rule against the complaint in future regulatory taking claims.

94 Miss. L. J. at 677.

The culprit? Penn Central. See id. ("Furthermore, as long as the Penn Central test remains unaltered and the standard in evaluating regulatory taking claims, claimants can expect the courts to rule in favor of the government action. While some praise the Penn Central test for its flexibility, others believe the test is “maddeningly unpredictable” and 'favor[s] the government in most situations.'").  

Check it out. This is a must-read, if only to confirm your gut sense that there's a thumb on the scale and the low success rate isn't due to bad cases.

Deer Me! No Property Interest In Deer, Even If You Possess Them

The question in today's case is an old one: can you own wild animals?

In Texas Parks & Wildlife Dep't v. RW Trophy Ranch, Ltd., No. 15-24-00112-CV (Apr. 10, 2025), the Texas Court of Appeals said no. At least not when that wild animal is a white-tailed deer.

Here are the facts. Generally, you can't possess a white tailed deer in Texas. (We bet you can hunt 'em. But you can't, like, domesticate them.) But there are exceptions to that general rule. One of these exceptions allows you to obtain a breeder permit, by which you can keep breeder deer in captivity for propagation purposes. The Ranch is such a deer breeding facility.

But white-tailed deer in Texas -- and elsewhere -- are susceptible to a disease that sounds truly horrible: Chronic Wasting Disease, "a type of transmissible spongiform encephalopathy[.]" Slip op. at 2. One of the ways to control the disease is "depopulation" of (aka killing) the entire herd. 

The Department first detected CWD in one of the Ranch's breeder deer in 2021, leading to a series of moves and countermoves by the Department and the Ranch. The Department apparently offered several ways to control the spread of CWD that did not involve the more drastic depopulation, but each time the Ranch said no. But this approach changed when the Department alleged that the mortality rate was increasing.

Next up was a notification from the Department that the Ranch's deer had to go. "In early 2022, the Department notified Williams that it would 'euthanize and initiate postmortem disease testing of all the deer' in his breeding facility[.]" Slip op. at 3-4. The Ranch at the same time was getting a TRO in state court preventing depopulation. To kill "our" deer would be a taking of private property was one of the reasons advanced in support. 

Barista's note: when the court writes "[t]he next month saw a flurry of filings[,]" slip op. at 4, you know there's got to have been a lot of moves and countermoves. Read pages 4 and 5 for more details. Lots of filings. The sum of which, we gather, were competing views of the facts: the Ranch saying the deer "were in exceptional shape," that the increasing numbers of dead and dying deer were due to a different deer diseases (the equally horrific-sounding "Epizootic Hemorrhagic Disease"), and that deer were dying with, and not of, CWD. The Department, not surprisingly, saw it entirely differently. This was a crisis, they needed to put down the Ranch's deer to stop the spread, and all the things you would expect from your knowledge of the famous cedar rust case.

And we cannot resist this summation of the Department's position, as quoted in the opinion:

“Well, regardless of what you call the disease, it’s a TSE and it’s having impacts on the deer and the deer herd…. You could call it snuffleupagus disease if you want to, but it’s still having an effect on those deer.”

Slip op. at 6.

In the end, the courts came down on the side of the Department, and depopulation of the Ranch's white-tail deer. Deer me!

The court of appeals affirmed. Skip forward to page 11 for the stuff where the court analyzed whether the Ranch possesses a property right (triggering due process and takings protections). Although the court phrased this as a "vested rights" analysis, to us it sounds more like a question of what is and isn't property.

The court started with the proposition that wild animals are incapable of private ownership:

In Texas, all wild animals—including white-tailed deer—belong to the state, as trustee for the people. It is illegal to possess them “for any purpose not authorized by” the Parks and Wildlife Code. That code authorizes a person to hold live deer captive for only two purposes: breeding and management. Our concern here is with breeding.

Slip op. at 12 (footnotes omitted). Yes, the Department can issue licenses to keep and possess deer for breeding purposes, but this isn't some kind of entitlement and thus isn't property. This is a "privilege of possession and breeding deer in captivity only pursuant to a permit issued by the Department[.]" Slip op. at 14. Thus, "[a]ny interest Williams claims in his breeder deer is subordinate to the Legislature's right to amend the laws governing deer breeding, or to abolish the interest altogether. This is precisely the type of interest that is not vested." Slip op. at 15.

The court rejected the Ranch's arguments that it had a common law right property interest in keeping and possessing the deer. No, sorry, the Legislature has completely preempted the field: "William’s theory that deer breeders have a vested property interest in breeder deer under some common-law authority running parallel to, but not inconsistent with, Subchapter L is incompatible with the Legislative scheme completely regulating deer breeding. Slip op. at 16.

The court also rejected the Ranch's Penn Central takings claim, first noting that it had "a difficult time understanding how euthanizing breeder deer represents a restriction on the use of Williams's land." Slip op. at 22 (footnote omitted). It also wasn't a taking of the Ranch's permit rights, because it can still possess and keep deer (just not CWD deer). Added, up, "the Department's depopulation efforts did not go 'too far' so as to rise to a regulatory taking." Slip op. at 23 (footnote omitted).

Agree or disagree with the outcome and the analysis, this one is a fascinating read. Check it out.

Texas Parks & Wildlife Dep't v. RW Trophy Ranch, Ltd., No. 15-24-00112-CV (Tex. Ct. App. Apr. 10, 2025)

Tex App Dismisses Penn Central Claim - But What's It Doing Weighing The Facts?

These days, when we have cases where there's tinkering with the terms of rental agreements, we most often see local governments using their police power to force property owners to rent their properties on a long-term (more than 30 days) basis.

But in Bigelow Arizona TX-344, LP v. Town of Addison, No. 05-23-00642-CV (Apr. 4, 2025), the Texas Court of Appeals was dealing with a town ordinance that went the other way: it redefined the definition of "hotel," which had the effect of prohibiting an extended-stay hotel from continuing to rent 95% of its rooms on a long-term basis under a nearly 30-year old special use permit, and forced what had been long term stays to become short-term stays.

Why? The town's "desire for motels and hotels to operate so that rooms are available for the Town's tourists[.]" Slip op. at 3. Really? Read a bit further and you see what was likely the real reason -- taxes. "[T]he amendment provided for hotel/motel maximum exemptions from the payment of hotel occupancy tax, exempting not more than thirty percent of rooms subject to a room night exemption for pay the payment of hotel occupancy tax." Id. (footnote omitted). After the definition change, the town notified the hotel that it was now a non-conforming use. And you know what that means. 

Next up, the hotel operator sues for a taking under both the Texas and U.S. Constitutions. Next up after that, the Town filed a plea to the court's jurisdiction, and the trial court agreed. As best we can tell, this thing called a plea in jurisdiction is kinda like a motion to dismiss, sort of like a motion to dismiss for lack of jurisdiction, but not quite because a plea can challenge jurisdictional facts. So to us -- not a Texas lawyer by any stretch -- this looks like a dismissal for failure to state a claim, with a little extra oomph because unlike federal court 12(b)(6) motions, the court here looks at the facts "mirror[ing] that of a traditional summary-judgment motion." Slip op. at 4. 

The court of appeals held that the complaint did not plead enough facts to show a regulatory taking. The complaint advanced a Penn Central argument, and the court weighed the factors and concluded that the plaintiff had not asserted sufficient facts to show there's a claim:

• Economic impact: "Here, Bigelow did not plead and provided no evidence that the value of its property has diminished since the Town passed the 2019 Ordinance." Slip op. at 8. The court also rejected the owner's assertion that it would have to turn away at least 65% of its customary long-term residents. The court held that this was another way of claiming lost profits, and the lost-profits claim is "entirely speculative" Who knows, maybe it could fill those vacancies with others? Rent em to short termers. The court concluded "we conclude this factor weights against a finding that the HOT Ordinance constitutes a taking." Slip op. at 10.
• Investment-backed expectations: Looking at the plaintiff's expectations "at the time it purchased the property," the court rejected the argument that the 25 years of long-term use under the special permit, because only the expectations at the time of purchase are relevant. Slip op. at 11. To make it worse, the court reviewed the facts and concluded that the hotel/motel use allowed by the special use permit "did not allow for the housing of permanent residents." Slip op. at 14. Hotel use implies "temporary" and "transient," and does not allow longer term uses; anyone staying longer than 30 days becomes a "permanent resident." Slip op. at 15.
• Character: The court began by noting "[t]he final factor requires us to consider the character of the government's action." Slip op. at 16. The court rejected the owner's argument that the town had it out for the long-term hotel, holding that the town's efforts to enforce its laws "cannot, as a matter of law, take 'unfair advantage' of the violating party." Slip op. at 20. 

We're not really going to take a lot of time quibbling about whether the court's weighing and consideration of the factors is right. Instead, we're going to ask: what was it doing weighing anything at the pleadings stage. Yeah, we get that Texas has this "plea" procedure which seems to allow a court to take a more active hand in actually deciding disputed issues. Isn't that a task for the trier of fact later in the case?

We get that the court doesn't believe the complaint's allegations. It may conclude the town has the better case. But we thought that was irrelevant at the pleadings stage. But wait, you say, your read of what the court did was look at the factual allegations and conclude that even if everything the complaint says is true, the law says "so what?" You can't get profits as a matter of law, that special permit didn't mean what the owner thought it meant as a matter of law. Any efforts to enforce the zoning ordinance as the town interprets it is a "character" safe harbor as a matter of law.

And here we thought that the U.S. Supreme Court has counseled against imposing categorical rules in takings.

Bigelow Arizona TX-344, LP v. Town of Addison, No. 05-23-00642-CV (Tex. Ct. App. Apr. 4, 2025)

Breaking: Texas Takings Law Enters The 20th Century!

Here's the latest in a case we've been following closely (and disclosure: our firm filed an amicus brief in the Texas Supreme Court).

First, the bottom line: in The Commons at Lake Houston, Ltd. v. City of Houston, No. 23-0474 (Mar. 21, 2025), the Texas Supreme Court held that merely because a regulation is a justified exercise of police power does not insulate it from a claim that it goes too far and is also a taking requiring compensation. 

The Texas Court of Appeals held that the city could not be liable for a taking for an ordinance that limited development and use within the city's 100-and-500-year floodplains because the ordinance was a valid exercise of police power and otherwise survived the rational basis test.

As we wrote here, that seems like utter nonsense to say that a valid police power reason categorically insulates a government action from a takings challenge. After all, the entire regulatory takings doctrine is built on the notion that an otherwise-valid exercise of government power (here, the police power, delegated from the State to the city) can so impact an owner's property rights that the law will treat it as a de facto exercise of eminent domain, and require just compensation. The doctrine pretty much presumes that the governmental action is valid, and challenges to what are claimed to be invalid government actions fall under the due process label.

The reason for our snarky headline is that we thought this issue was settled in the "original" regulatory takings case in the early 20th Century, Pennsylvania Coal Co. v. Mahon. Way back in 1922, the Supreme Court held 8-1 that if regulation "goes too far" into an owner's rights, it is a taking. And this was despite the fact that there, it seemed like Pennsylvania's police power justifications for the Kohler Act were very police powery. Preventing surface subsidence seems pretty solidly health, safety, and welfare justified. The Mahon majority rejected the arguments of the City of Scranton and Justice Brandeis' solo dissent that the doubleplusgood police power reasons were enough to say no taking. 

Well, for whatever reason, Texas had not entirely caught the vibe. Or at least there was some lingering uncertainty about the century-plus reasoning that takings doesn't turn on the government's reasons, but focuses on the effects of what might be valid regulations have on the property owner. You know, the Armstrong thing: is it fair to put the entire burden of a public good on a property owner. The same question we ask in straight eminent domain. 

So we are grateful to our friend and colleague Charles McFarland for representing the property owner. Check out the oral arguments here. 

We urge you to check out the opinion. Well worth reading. Here's what we think is the money quote:

But we have long rejected “the notion that the government’s duty to pay for taking property rights is excused by labeling the taking as an exercise of police powers.” Steele, 603 S.W.2d at 789.38 Indeed, whether a regulation constitutes a valid exercise of the police power—or promotes any other important public policy, purpose, or interest—is simply irrelevant to whether the regulation causes a compensable taking. Lingle, 544 U.S. at 543.39 If a regulation does not promote a valid public purpose, the taking is simply impermissible because it is not a taking for a “public use,” and “[n]o amount of compensation can authorize such action.” Id. So whether a regulation constitutes a valid exercise of the police power “is a separate question” than whether it results in a compensable taking. Loretto, 458 U.S. at 425. We do not even attempt to “compartmentalize” a government regulation as being either a taking or an exercise of the police power because of “the manifest illusoriness of the distinctions” between the two. DuPuy, 396 S.W.2d at 107.41 Simply put, any attempt to create a dichotomy between takings and police-power regulations “has not proved helpful in determining when private citizens affected by governmental actions must be compensated.”

Slip op. at 14 (footnote and some citations omitted).

The court also held that the takings claim is ripe under Pakdel's "relatively modest" requirement for a final decision because, despite a number of applications that went nowhere (but haven't been out-and-out denied), the city has said that the owner "has not right to obtain the permit." See slip op. at 25-27.

The opinion's reasoning on this issue is instructive, and well-worth keeping in your hip pocket, because it accurately captures what owners often face when dealing with a regulatory scheme, a topic we've thought about a lot:

Perhaps if the City had ever told The Commons that it was requesting the wrong permit or applying in the wrong manner, the City could have an argument that it was never given the opportunity to grant or deny The Commons relief. See Mayhew, 964 S.W.2d at 929. What the City has instead is a paper trail down which it dragged The Commons for months, if not years, with no suggestion of compromise or a final determination. See Palazzolo, 533 U.S. at 620 (“[A] landowner may not establish a taking before a land-use authority has the opportunity, using its own reasonable procedures, to decide and explain the reach of a challenged regulation.” (emphasis added)). Nevertheless, the City’s assertions that The Commons simply has “no right” to obtain a floodplain-development permit and that its claim “cannot ever ripen” clearly indicates absolute finality. Although the City has not yet formally denied a permit, it “may not burden property by imposition of repetitive or unfair land-use procedures in order to avoid a final decision.” Id. Under these facts, we conclude that The Commons’s inverse-condemnation claim is ripe for adjudication.

Slip op. at 27.

Good work, Charles, thank you.

The Commons of Lake Houston, Ltd. v. City of Houston, No. 23-0474 (Tex. Mar. 21, 2025)

New Article: Ethan Blevins, "Penn Central in the States," 15 Wake Forest J.L. & Policy 105 (2025)

Our Pacific Legal Foundation colleague Ethan Blevins has published the lead article in the latest edition of the Wake Forest Journal of Law and Policy, and it is on a subject that makes it a must-read for you takings mavens.

The title says it all: "Penn Central in the States." How do states treat the U.S. Supreme Court's Penn Central test? Find out here, as Ethan surveys over 200 state court applications of that notorious test. Do they do better than federal courts? What court should you file in?

And if that doesn't grab you enough, here's his conclusion:

I conclude that most of these problems do not stem from unfaithful applications of the Supreme Court's regulatory takings doctrine, but rather are a direct consequence of the Supreme Court's failure to establish a clear, reliable test rooted in sound principles. I hope this article's findings can assist in the quest to improve the doctrine.

Download the article here.

Join Us: "Property Rights and The Roberts Court: 2005-2025" (Feb. 27, 2025, UC Berkeley Law School)

Register now and plan on joining us on Thursday, February 27, 2025 at the U.C. Berkeley Law School for a one-day conference: "Property Rights and the Roberts Court: 2005-2025."

Here's the agenda. Here's a description of the program:

For much of the past century, property rights were relegated to second-class status compared to the rest of the Bill of Rights. However, under the Supreme Court leadership of Chief Justice John Roberts, this trend has begun to shift.

In recognition of the 20th anniversary of the Chief Justice’s elevation to the Supreme Court, Pacific Legal Foundation is partnering with Berkeley Law’s Public Law and Policy Program to host a day-long conference exploring the major property rights developments and future of property rights law in the Roberts Court.

We’ll hear from two different panels of renowned legal scholars and accomplished litigators, as well as a keynote lunch discussion between Richard Epstein, director of the Classical Liberal Institute and law professor at NYU School of Law, and John Groen, executive vice president at PLF.

A catered lunch will be provided.

Register here.

Agenda, Property Rights and the Roberts Court 2005-2025 (Cal Berkeley Law School, Thurs. Feb. 27, 2025)

Two New Cert Petitions (Ours) - 50 Years Of Fruitless Trying Is Enough: Overrule Or Clarify Penn Central!

Two -- count 'em two! -- cert petitions from our shop, filed today. Both call for "clarifying or overruling" Penn Central.

Oh, have I got your attention now?

• Petition for a Writ of Certiorari, The Gym 24/7 Fitness, LLC v. Michigan, No. 24-____ (U.S. Jan. 15, 2025)
• Petition for a Writ of Certiorari, Mount Clemens Recreational Bowl, Inc. v. Hertel, No. 24-____ (U.S. Jan. 15, 2025)

Both arise out of the Michigan governor's orders shuttering some, but not all, businesses during Co-19. These had devastating consequences, and owners sued for, inter alia, a taking, asserting a Penn Central theory. As we noted here, the Gym 24/7 case went up through the Michigan court system, with the Supreme Court eventually denying discretionary review over an extensive dissent. The Mount Clemens Recreational Bowl case took pretty much the same path. 

We're not going to say much more because these petitions are ours, with Jon Houghton and Deb La Fetra walking point.

Here are the Questions Presented:

In the Gym 24/7 case:

In this Fifth Amendment regulatory takings case, Michigan’s Executive Order took dominion and control of the use of Petitioner’s commercial property. It barred all customers from the premises for six months, which erased the property’s economic use and destroyed Petitioner’s reasonable investment-backed expectations to benefit the general public. However, Michigan courts dismissed Petitioner’s case at the pleadings stage, generating three disparate opinions, with two different outcomes, and three conflicting interpretations of Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978). The result demonstrates Penn Central’s inability to protect fundamental property rights and to provide a clear, consistent, and uniform determination of “how far is too far.” There is also tension in this Court’s decisions, and those below, as to whether the element of time should be a determinant of takings liability. The questions presented are:

1. Whether Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104 (1978), should be clarified or overruled?

2. Whether a taking occurs upon the government asserting control over a property right, as the Court held in Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021), or instead, upon the government asserting control over a property right for some undefined period of time, as the Court held in Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Plan. Agency, 535 U.S. 302 (2002)?

In the Mount Clemens Recreational Bowl case:

Whether Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978), should be clarified or overruled?

Stay tuned.

Petition for a Writ of Certiorari, The Gym 24/7 Fitness, LLC v. Michigan, No. 24-____ (U.S. Jan. 15, 2025)

Petition for a Writ of Certiorari, Mount Clemens Recreational Bowl, Inc. v. Hertel, No. 24-____ (U.S. Jan....

CA8 Misses An Opportunity For Penn Central Clarity: No Taking When City Bans New Private Wells, Requires City Water

At first glance, it might seem like there's a lot there in the U.S. Court of Appeals' opinion in Becker v. City of Hillsboro, No. 23-3367 (Jan. 7, 2025).

After all, the city's prohibition on new private wells and another requirement that newly built homes connect to the city's water system seems a bit arbitrary (at least the opinion doesn't give a lot of detail why, other than "the city said so"). And the opinion evaluates a Lucas wipeout, a physical invasion, a Penn Central ad hoc taking, and a Nollan/Dolan claim. Even a Murr denominator issue. This case could have been a good vehicle to examine those questions in more detail that many courts do.

But after taking a dive in, our initial impression that this case would provide a lot of insight -- or even food for deeper thought -- didn't pan out. Take a look and see if you agree.

The case involved two separate but related city restrictions on how landowners use their property. The first was a prohibition on new private wells within the city's jurisdiction, put in place five decades ago. The second is more recent (2008), and requires all residences to get water service from the city.

The plaintiff here owed an undeveloped 156-acre parcel zoned for residential uses. A prior owner voluntarily annexed the land to the city in 2000. Flash forward, and the current owner tried to sell the property in 2020. It was only then, it asserted, that it discovered the annexation and the resultant well ban and city-water requirement. Complying with the city water requirement would cost way more than it is worth, and killed potential sales. 

Takings lawsuit next, cross motions for summary judgment followed. City's motion granted, appeal followed.

Physical invasion? No. The owners "are not being compelled to tolerate a permanent physical occupation because they are not being compelled to do anything at all." Slip op. at 9. No, this is a require that if they build homes, then those homes must be on city water. "If." No one is compelling the owners to build homes: the owner "still may choose whether to build a structure and comply with the ordinance or forego building a structure." Id. Simple: don't want to be on city water? Don't build nothin!

Well, what about the owners' argument that yes, we could choose to not build but that would force us into a Lucas wipeout. That, too, failed to convince the court. You might not be able to build homes, but hey, you "may still use the Property as it is for recreational purposes, or they could sell it." Id. And, worse yet, the owners' "own expert did not suggest that the property was rendered valueless by the City’s ordinances." Slip op. at 10. The requirements "only" reduced the property's value by 70%.

What about forcing the owner to choose (develop and use city water, or not develop and get whacked for 70% value) violates Nollan/Dolan? The court held that it couldn't address this argument because it had not been raised and argued in the district court. Hold on, the owners argued, whadda mean we didn't raise this -- our district court summary judgment papers used the terms "exaction" and "Nollan/Dolan." Not good enough the court of appeals concluded: "those references and citations were made in the context of arguing that the regulations are not impermissible exactions because the Trust is not seeking permits from the City. Furthermore, the trustees made no reference to exactions, Nollan, or Dolan in their Amended Complaint." Slip op. at 12.

Finally, the owners' Penn Central argument floundered on similar shoals. The court started off by rejecting the owners' claim that the denominator should be be each of the potentially subdivided lots ("as that's how they hope to sell the tract"), or was the court going to treat the property as the entire 156 acres? One big lot, the court concluded, applying the multi-factor Murr test. That settled, the court held that each of the Penn Central factors weighed against the owners.

• Economic impact: nothing "significant" here, because owners "presented no evidence" to show impact, because the expert only declared that "the cost to the Trust of extending the City water system to the Property made the development for that highest and best use economically unfeasible," and didn't conclude anything about the economic impact of other uses."Slip op. at 16.
• Investment-backed expectations: yes, the owners might have subjectively believed that they could developed without connecting to city water, and the prior owner voluntarily annexed the property, thus subjecting it to the city's regulations. Yeah, there's Palazzolo, which doesn't categorically bar you from forming reasonable expectations, but the regulatory regime can "shape" your expectations (what's the difference?) and other nearby owners paid to hook up city water, so there's that. Slip op. at 17.
• Character: the court acknowledged that the government's reasons for the regulations are not what the Supreme Court meant by "character of the government action," but in the same breath concluded that the the "likely" reason for the city's regulations was to prevent water contamination and depletion of the aquifer. Slip op. at 18.

The court's approach to Penn Central is perplexing. On one hand, it acknowledges--as it must--that the Supreme Court directs the factors to mean a certain thing (or not mean a certain thing), and are applied a certain way. Yet despite that acknowledgement, the Eighth Circuit just goes ahead an applies the test the same old way. You have to disprove all possible uses and values (and not let the trier of fact decide how much is too much), your post-regulation acquisition of the property doesn't kill your RIBE, but merely "shapes" them negatively, and "character" doesn't mean the government's reasons (yet it does).

So despite the initial promise that the Eighth Circuit would grapple with the issues presented in the case -- in particular an application of the Penn Central factors -- in the end it was a tale full of sound and fury, signifying nothing.

Becker v. City of Hillsboro, No. 23-3367 (8th Cir. Jan. 7, 2025)

Breaking News: Come Join Us For The 42d ALI-CLE Eminent Domain & Land Valuation Litigation Conference, San Diego, Jan 30-Feb 1

With our tongues firmly planted in cheeks, the Planning Chairs for the upcoming 42d edition of this popular and venerable Conference bring you this "breaking news" report from San Diego!

As you know, in addition to being the best nationally-focused conference on the subjects that we love and a venue that is nearly certain to have some of the warmest winter weather in the continental United States, and we went on-location from some of the local highlights: the beaches, Torrey Pines, the Zoo, Balboa Park, the Gaslamp Quarter, and Coronado to name but a few.

More about the Conference here, including registration information.

Here are some of the highlights:

• Property Rights at the Supreme Court: DeVillier and Sheetz and What's Next
• Slow Take: Possession, Rent, Relocation, and Offset
• The Jury's View: How Jurors See Your Case
• From Penn Coal to Penn Central: How to Prove "Too Far"
• Leveraging Expertise in Eminent Domain Litigation: Working with Land Planners, Engineers, and Other Predicate Experts
• Kelo at Twenty: What Changed, What Didn't, and What's on the Horizon
• Viva Las Vegas: How the Nevada Judiciary Upheld Property Rights in 180 Land's Inverse Condemnation Taking
• Ethics: Guiding the Trolley: Perspectives on Professional Ethics in Eminent Domain for Lawyers, Appraisers, and Right of Way Agents
• "I Think I Shall Never See" Just Compensation For a Tree: Strategies to Securing Recovery for Trees, Crops, and Fixtures

And more. Check out the complete agenda here. Registration information here. 

We especially welcome first-time participants, or those returning after an absence. Connect (or reconnect) with your colleagues from across the nation.

The 41st Conference was in New Orleans. Here's a report of that event, and here are our reports from prior conferences in Austin and Scottsdale.

Don't miss out on San Diego: we have had record attendance in recent years, so hold your space now. #EminentDomain2025

New Article (Donald Kochan): "Involuntary Regulatory Servitudes: Correcting for 'Regulatory Takings' Terminological Problems"

Check this out, a new SSRN posting by lawprof Donald Kochan (George Mason/Scalia Law).

If this one is not a direct sequel to his earlier work on re-branding the "takings clause" (a piece we think is excellent and is part of the materials we teach in our Eminent Domain course at William and Mary Law), it does at least seem like a spiritual successor.

Here, Professor Kochan suggests that we're being unclear when we use the term "regulatory takings" to describe those instances where an exercise of some governmental power other than eminent domain results in what feels like an eminent domain taking from the property owner's viewpoint.

Instead, he argues, we should focus on the burdens the regulations place on an owner's use (what the common law described as a servitude). To us, that seems very consistent with the Supreme Court's approach, and proposals from other commentators. And it does focus the inquiry on the right question, namely what effect has a regulation put on an owner's property rights. As that suggests, this should be a property-centric inquiry, and not on such unknowables such as the "character of the government action," or whether an owner has "distinct investment-backed expectations."

Here's the Abstract:

This essay challenges the use of the term “regulatory takings” in our takings jurisprudence and scholarly discussion. The words we choose when developing doctrine matter. They can, even subconsciously, affect—by reducing, enlarging, distorting, limiting, or accurately shaping—the perceived and functional quality and character of the things they describe.

The better way to frame the inquiry underlying what is often called regulatory takings law should be to determine not whether there is a “regulatory taking” – some special kind of taking – but instead whether there is a regulation that amounts to a taking. Segmenting the judicial treatment of regulatory effects into a specialized analysis that takes it farther and farther away from an enterprise focused on equivalency between the private law of voluntary servitudes and the public law of what we should be calling involuntary regulatory servitudes. Regulations that restrict some but not all sticks in the property rights bundle should be characterized as the involuntary equivalent of the voluntary instrument, mechanism, or transfer that would have been necessary to achieve a parallel result. The essay proposes an alternative test for determining whether a regulation should be deemed a taking based on a comparison between the effect on the bundle from the regulation and determining whether the same effect in the private marketplace would have required a consensual, mutually beneficial exchange with appropriate compensation. This would better serve the meaning and purposes of the so-called Takings Clause.

The essay also documents the usage history of the regulatory takings label. To be sure, “regulatory takings” was not a dominate part of the takings lexicon before 1981. The first law review publication available in Westlaw to use the term “regulatory takings” is from 1965. The first court opinion to use the term came in a footnote in 1977. Briefing in advance of the 1980 U.S. Supreme Court decision in Agins v. Tiburon involved significant invocations of “regulatory takings” language across nearly a dozen briefs. But, the U.S. Supreme Court in its Agins opinion never uses the phrase “regulatory takings.” The first major court opinion to use “regulatory takings” language is the dissenting opinion by Justice William Brennan—joined by Justices Stewart, Marshall, and Powell—in the 1981 case of San Diego Gas & Elec. Co. v. City of San Diego. And, the Brennan dissent may have entrenched the term in the takings lexicon and is likely the impetus for widespread adoption of the term after 1981.

A must-read for all you takings...uh, dirt law...mavens.

Registration For The 42d ALI-CLE Eminent Domain & Land Valuation Litigation Conference Is Underway (Don't Miss Out!)

Get ready to join your colleagues and friends in San Diego for the 42d ALI-CLE Eminent Domain & Land Valuation Litigation Conference.

The 41st Conference was in New Orleans. Here's a report of that event, and here are our reports from prior conferences in Austin and Scottsdale.

Here are some of the highlights of the upcoming Conference:

• Property Rights at the Supreme Court: DeVillier and Sheetz and What's Next
• Slow Take: Possession, Rent, Relocation, and Offset
• The Jury's View: How Jurors See Your Case
• From Penn Coal to Penn Central: How to Prove "Too Far"
• Leveraging Expertise in Eminent Domain Litigation: Working with Land Planners, Engineers, and Other Predicate Experts
• Kelo at Twenty: What Changed, What Didn't, and What's on the Horizon
• Viva Las Vegas: How the Nevada Judiciary Upheld Property Rights in 180 Land's Inverse Condemnation Taking
• Ethics: Guiding the Trolley: Perspectives on Professional Ethics in Eminent Domain for Lawyers, Appraisers, and Right of Way Agents
• "I Think I Shall Never See" Just Compensation For a Tree: Strategies to Securing Recovery for Trees, Crops, and Fixtures

And more. Check out the complete agenda here. Registration information here. 

We especially welcome first-time participants, or those returning after an absence. Connect (or reconnect) with your colleagues from across the nation.

Don't miss out: we have had record attendance in recent years, so hold your space now.

Come, join us!

Links From Today's ABA Land Use Session

Here are the cases and other materials we discussed in today's Section of State & Local Government Law Land Use group meeting on takings:

• By The Thinnest Of Margins, SCOTUS Declines Public Use Pretext "Spite Taking" Case
• SCOTUS Declines To Review NYC Rent Control Challenge
• Sheetz pt. I - "Radical Agreement" At SCOTUS: "Your Money Or Your Rights" Isn't OK Just Because A Legislature Does It
• In DeVillier v. Texas, The Winner Takes It All
• Unanimous SCOTUS: "state law cannot be the only source" Of Property Rights, And "traditional property law principles" As Enforced By The Takings Clause Play A Role
• "Final decision" ripeness incentivizes government to be opaque, and avoid saying no.
• Texas takes a more practical (and realistic) approach to takings ripeness: City of Buda v. N.M. Edificios and City of Kemah v. Crow
• New Cert Petition: Does The Obligation To Provide Just Compensation Waive Sovereign Immunity?
• Inverse liability for wildfires?
• New Law Review Article: John Groen, "Takings, Original Meaning, and Applying Property Law Principles to Fix Penn Central," 39 Touro L. Rev. 973 (2024)
• Yee v. Escondido and physical occupation takings lower court split: CA8: Yee v. Escondido Doesn't Save Eviction Moratorium From Takings Review and CA9: No Physical Commandeering In Eviction Moratorium Because Yee Says "You Let The Tenants In, So You Can't Complain About Keeping Them (For Free)"
• Florida Appeals Court: TDRs, Beekeeping, And Camping Are Not Economically-Beneficial Uses, So Downzoning Is A Lucas Taking

PS: If you are not a member of the Land Use group, you really should be. We summed up the reasons why here.

SCOTUS Declines To Review NYC Rent Control Challenge

Here's the latest in a case we've been following. This morning, in this Order, the Supreme Court denied cert in two cases which seemed to have a good chance at a grant, on two pressing issues which have divided lower courts, the physical occupation in tenancies (aka Yee), and the nature of the Penn Central takings test. Only Justice Gorsuch would have granted.

Here are the Questions Presented:

New York’s Housing Stability and Tenant Protection Act of 2019 transforms a temporary rent- regulation system into a permanent expropriation of vast swaths of private real estate, without just compensation, in the name of “affordable housing.” Among other things, the Act prohibits owners—even of small and midsized apartment buildings like Petitioners—from reclaiming rental units for their own personal use, and grants tenants a collective veto right over condo/co-op conversions. As Justice Thomas has observed, the constitutionality of regimes like New York’s is “an important and pressing question” that has divided the courts of appeals and should be addressed in “an appropriate future case.” 74 Pinehurst LLC v. New York, 2024 WL 674658, at *1 (U.S. Feb. 20, 2024) (statement respecting denials of certiorari). Although case-specific vehicle concerns may have dissuaded the Court from granting other recent petitions that sought to challenge the constitutionality of rent-control regimes in general, this case is based on a substantially different record, targeting only a specific set of amendments to New York’s regulatory regime, and thus provides an ideal vehicle for this Court’s review.The questions presented are:

1. Whether New York’s rent-regulation laws, and in particular its new restrictions on owner reclamation and condo/co-op conversions, effect physical takings.

2. Whether this Court should overrule Penn Central or at least clarify the standards for determining when a regulatory taking occurs.

Too bad, we thought this one had a chance.

New Law Review Article: John Groen, "Takings, Original Meaning, and Applying Property Law Principles to Fix Penn Central," 39 Touro L. Rev. 973 (2024)

Today's must-read, a (very) recent article by our Pacific Legal Foundation colleague John Groen, published in the Touro Law Review, "Takings, Original Meaning, and Applying Property Law Principles to Fix Penn Central."

Get the pdf here.

With a title like that, who could resist? Here's the Abstract:

Justice Clarence Thomas, dissenting in Murr v. Wisconsin, suggested the Supreme Court take a “fresh look” at its regulatory takings jurisprudence and see “whether it can be grounded in the original public meaning of the Takings Clause.” He repeated this request in Bridge Aina Le’A, LLC v. Hawaii Land Use Commission, but also sharply criticized the existing takings analysis developed in Penn Central Transportation Co. v. City of New York, stating: “If there is no such thing as a regulatory taking, we should say so. And if there is, we should make clear when one occurs.”

This article responds to Justice Thomas and contends that the original and current public meaning of the term “property” as used in the Takings Clause is a group of rights, the most essential being the right to possess, the right to exclude others, the right to alienate, and, most saliently, the right to beneficial use. Contrary to assertions by the Court and commentators that the Takings Clause was originally limited to direct appropriations or physical takings of property, many early 19th century cases found takings based on destruction of the right of beneficial use, cases that today we call regulatory takings. The development of takings jurisprudence leading to the 1922 decision by Justice Holmes in Pennsylvania Coal Company v. Mahon is based on protection of these rights. This Article focuses on the essential rights that define property and thereby exposes the flaw of Penn Central which bases a taking on diminution in value, rather than substantial interference with a property right. Drawing on the original public meaning and early takings jurisprudence, as well as recent precedent in Lingle v. Chevron USA and Cedar Point Nursery v. Hassid, this article proposes a takings framework based on formal or functional transfer of rights, rather than diminution in value.

Most definitely check it out.

NJ Supreme Court Grants Review: Is Forcing Hospitals To Operate At A Loss A Taking?

Here's the latest in a case we've been following. The New Jersey Supreme Court has agreed to review the Appellate Division's decision in Englewood Hospital & Medical Center v. New Jersey. 

That's the case where several hospitals challenged a New Jersey statute which requires hospitals to take all patients regardless of their ability to pay, but does not fully reimburse under Medicaid the hospitals for the costs of treating these patients even where it results in the hospitals losing money.

The Appellate Division held this was not a categorical (Cedar Point/Loretto) or an ad hoc (Penn Central) taking.

The hospitals asserted that the statute required them to suffer a physical invasion, because the statute prohibited hospitals from excluding nonpaying patients. The court rejected the argument, in what reminded us of the Yee rent control and PruneYard commercial benefit approach, where the essential reasoning is that "you let people onto your land and business, so you've waived your right to exclude." 

In contrast to the plaintiffs in Loretto and Nollan, plaintiffs here operate hospitals within the complex and highly regulated health care industry. Unlike the cable installation law in Loretto, N.J.S.A. 26:2H-18.64 does not limit the right to exclude individuals from their premises. Rather, it prohibits hospitals from turning away patients "on the basis of [their] ability to pay" without being subject to civil penalty, and further prohibits billing only those patients who qualify under charity care.

Slip op. at 19.

The court concluded that "the charity care statute's operation does not lead to physical invasion of the hospitals' property by the public because, unlike Cedar Point, the public's presence in a hospital is a natural element of its business, making it more analogous to Pruneyard." Slip op. at 20 ("Charity care restricts how hospitals use their property to provide medical services, not whether they do so. The property will be used as it was intended—to treat patients.").

The Penn Central argument fared no better. The economic impact must be viewed in the context of the hospital as a whole: the court viewed the property at issue as the operation of the entire hospital, not the right to treat each patient in a way that doesn't lose money on that patient: 

Although plaintiffs contend that charity care as a whole has a negative economic impact on their investment interests, there is no evidence that the prohibition on turning away patients because of inability to pay unreasonably impairs the value of the premises.

Slip op. at 20. Yes, the requirement to treat all patients and then provide only a limited reimbursement for those who could not pay has an adverse impact on the hospitals' "profitability," the premises could still be used as a hospital.

But, the hospitals argued, the statute forces us to operate as pretty lousy hospitals! The Appellate Division's response is faintly laughable, along the lines of "yeah, the lack of reimbursement forces hospitals to operate kinda crap hospitals, but they can still operate them as hospitals: "A takings claim cannot be sustained on the sole ground that plaintiffs fail to financially perform on par with industry-wide norms." Slip op. at 23. 

The court really torpedoed the notion that the hospitals have any expectation of operating free of onerous regulations. Ah yes, the old "heavily-regulated industry" trope:

Hospital investors in the highly regulated health care industry should expect that use of their property, in all its forms, is likely to be regulated by the state, and that such government regulation may diminish investment-backed expectations without resulting in an unconstitutional taking.

Slip op. at 24.

Not only did the court require hospital investors to understand the existing regulatory environment ... they also are charged with predicting the future: 

When a hospital seeks a license to operate in our state, it must consider the laws in effect at that time as well as those which may be adopted by our Legislature. Given plaintiffs' choice to do business here, it is reasonable that they should expect such license conditions to affect business profits. In turn, we conclude it is not reasonable for the hospitals to expect an at-cost reimbursement for the medical services the Legislature has required them to provide as a condition of doing business in our state

Slip op. at 25.

Finally, the Appellate Division made the common error when analyzing the "character of the government action" factor, concluding that "courts have repeatedly stated that the character of public health and healthcare regulations typically weighs against the conclusion that a law acts as a taking." Slip op. at 25.

We've said it before but we shall say it again, just as a reminder: the reasons the government does something is not part of the takings analysis, and has not what the "character" factor asks about. Read this article we wrote a while back for the inquiry this Penn Central factor should focus on is whether the government action looks like it is having the same effect as would a straight-up exercise of eminent domain. If it looks like the property owners is being forced to bear more than its proportionate share of a public benefit, then the "character" factor should weigh in favor of a taking.

What does the New Jersey Supreme Court's agreeing to review this case mean, prediction-wise. We're not going to venture a guess there, but it does seem like something is in the cards.

Here's the issue the court will be reviewing:

Does New Jersey’s charity care program -- which requires a hospital to provide services to all patients regardless of their ability to pay, prohibits the hospital from billing those patients, and does not provide at-cost reimbursement to the hospital -- amount to an unconstitutional taking of the hospital’s property?

More on the case here from our NJ colleague Joe Grather, who predicted, "I bet the hospitals are preparing their petition for certification to the New Jersey Supreme Court now."

Stay tuned.

New Cert Petition: Use vs Value, And Applying Penn Central

Here's the latest takings cert petition, in a case involving a California county's refusal to rezone property back to its former zoning to allow residential development. The only uses permitted on the property presently are "scientific research facilities uses" and hiking trails. Or, at the petition puts it, "only public, park-like uses." Pet. at 5. 

The District Court and the Ninth Circuit both held no taking.

Here are the Questions Presented:

Does a taking analyzed under Lucas v. S.C. Coastal Council require that the affected property be left with no value even if the regulation in question deprives the property of all economically beneficial uses?

Does Palazzolo v. Rhode Island leave any room for consideration of the landowners’ expectations in a Penn Central takings analysis?

Do the decisions in Loper Bright Enters. v. Raimondo, Cedar Point Nursery v. Hassid, Sheetz v. Cnty. of El Dorado and Lingle v. Chevron USA, Inc., change the way courts should evaluate the “character of governmental action” factor in a Penn Central analysis?

Follow along here, or on the Court's docket.

Petition for a Writ of Certiorari, Collins v. Monterey County, No. 24-487 (U.S. Oct. 31, 2024)

Ky App: No Taking To Force Sex Offender To Move When Daycare Opens Near His Home

You understand that there are just some cases where a certain analysis and outcome  appeal to your intellect, but your gut goes "ick," and you'd bet that a judge's (or judges') reaction would be similar. Thus, intellectual analysis takes a backseat to the gut. (What one of our mentors referred to as "the widow plaintiff" scenario.)

The Kentucky Court of Appeals' opinion in Doe v. Dean, No. 2023-CA-0844-MR (Sep. 20, 2024) is just one of those.

Kentucky law prohibits registered sex offenders from residing, working, loitering, or otherwise being within 1,000 feet of certain child-related operations such as daycare facilities, schools, or playgrounds. The plaintiff Doe is a registered sex offender, having "pled guilty to one felony count of possession of matter portraying a sexual performance by a minor[.]" Slip op. at 2.

Apparently, he's been toeing the line since then, and "Doe has not been subject to active supervision since 2010 and has had no reported violations of his probation or registry conditions." Id. In 2022, he and his wife bought a house which at that time was outside the no-live zone.

But that changed in 2022, when a daycare operation opened within 1,000 feet of his property. Slip op. a 3. The statue has no exception if the registrant was there first, and if a new operation opens within 1,000 feet, the registrant has 90 days to move. Thus, "Doe was told he had to move." Id.

He sued, asserting that what is labeled the "anti-grandfather clause" in the Kentucky statute violates the Due Process and Takings clauses of the U.S. and Kentucky constitutions. The trial court dismissed and the Court of Appeals affirmed. And here's where our intellect clashes with our gut.

Skip down to page 13 of the slip opinion for the (substantive) due process analysis, which turns on what level of scrutiny the court is going to give this thing. And once the court settles on rational basis review, you know where this is headed: the court rejecting the argument that prohibiting someone from living in his or her home based on "unsubstantiated fears about a class of people" isn't rational:

The criticisms of Dr. Socia [Doe's expert] may be thought provoking. Legislators may benefit from taking a serious look at what does and does not work in the context of residency restrictions, since we now have had decades of experience to consider results and future best practices.

But, as a court and not a legislature, our task is to review for any rational basis, not demand the best possible practice or even a good “fit.” “[A] statute does not have to be perfect to pass constitutional muster.” Cornelison v. Commonwealth, 52 S.W.3d 570, 573 (Ky. 2001). We agree with the Commonwealth that the residency restrictions are at least rationally related to the legitimate state interest of protecting children. It does not offend due process and is not an arbitrary exercise of state authority.

Slip op. at 15.

Next, the takings analysis.

First, the court rejected the approach of the Georgia Supreme Court in Mann v. Georgia Dep't of Corrections, 653 S.E.2d 740 (Ga. 2007), a case we covered here. Yes, the facts in Mann and this case are similar, but the Kentucky court concluded that Mann misapplied the Penn Central factors, which "do not support Doe's claim of a taking." Slip op. at 19.

Overall, the court rejected the Penn Central takings claim because the statute does not deprive Doe of "all" beneficial uses of his property. Yes, "Doe's forced relocation may cause a negative economic impact on him, [but] it does not rise to the level of a taking." Slip op. at 21. He can sell or rent his home. To us, however, whether a regulation deprives an owner of all economic use should not be determinative, unless the owner is making a categorical Lucas claim. Thus, instead of concluding that the Kentucky statute doesn't work a taking because Doe could sell or rent, the court should have acknowledge the severe economic impact and then weighed it along with the other Penn Central factors.

Next, the court held that Doe's expectations of continuing to live in his home were weak because he purchased the home after the statute was adopted. Slip op. at 21-22 ("While his expectation was to live in the home, Doe was always aware of the possibility that he may have to move if a childcare facility opened within 1,000 feet of the home.").

The court also concluded that the public interest in keeping registered sex offenders away from children is "clearly a 'common good.'" Slip op. at 22. Thus, the "character" factor weighed heavily in the state's favor. But we'd argue that this is a mischaracterization of the "character" prong, which should not ask whether the government action is a valid exercise of power (of course it is, if the claim is a taking). Instead, the character factor asks about the nature of the impact on the property owner. Is this like a physical invasion? And here, this statute works an ouster, something that to us looks an awful lot like a plain-old taking by eminent domain. Indeed, it even operates like a quick-take: get out, and get out now.

Getting back to our intellect vs our gut. Yes, it looks like the court misapplied the Penn Central factors, and never addressed the what appears to us to be the most obvious issue: the statute seems to work a physical ouster, which to us looks like a very good analogue to physical invasion analysis. But the court appears to have gone with the "ick" factor, which doesn't pay a lot of attention to the rights of registered sex offenders.

Doe v. Dean, No. 2023-CA-000844-MR (Ky. Ct. App. Sep. 20, 2024)

Imagining The Future Of Regulatory Takings: "Making Property Rights Cool Again"

Lawprof Ilya Somin (GMU Law), Mercatus Center's Charles Gardner,
and lawyer Emily Cruikshank Bayonne (Tubman Realty, LLC)
speaking on "How Policy Changes Can Address Incursions on
Property Rights Where Courts Have Failed to do So."
Jim Burling (PLF) moderating.

Recently, we attended a wonderful symposium co-sponsored by George Mason Law School's Journal of Law, Economics & Policy (congratulations to the student editors who ran the show that day), and our outfit Pacific Legal Foundation. Of course, with the subject being "Imagining the Future of Regulatory Takings," how could we resist attending?

If you missed it, it was not recorded unfortunately. But stay tuned for the full published symposium issue which shall include all of the articles and other pieces the speakers presented that day.

PLF's Ethan Blevins kicked off the day by
urging the speakers and the audience to
"make property rights cool again."

Brian Hodges (PLF) and Amy Boulris (Gunster)
on land use conditions, exactions, and unconstitutional conditions.

Circuit Judge (ret.) (and California Supreme Court Justice),
Hon. Janice Rogers Brown presented the keynote address
and responded to participants' questions.

Lawprof Donald Kochan (GMU), Lawprof Adam MacLeod (St. Mary's),
and Sam Spiegelman (Citizen Action Def. Fund)
started the day off with "Fixing the Text -
How We Can Better Approach Regulatory Takings."
Moderator: Judge Andrew Brasher (CA11).

The day's final program was "Takings on the Ground - Applying the
Takings Tests in Challenging Scenarios" with
lawyer William Shadbolt (Washington Bus. Properties Ass'n),
Lawprof Eric Claeys (GMU), and Michael Berger (Manatt) (aka Big Brother).
Moderator: Judge Ryan Holte (Court of Federal Claims).

CA10: A Municipality Is Forcing Owners To Violate State Law ... No Problem!

This one from the Tenth Circuit didn't even merit a published opinion, but is still worth reading, just because the situation seems so absurd.

In this Order and Judgment, the court affirmed the dismissal of property owners' claim that the County wouldn't issue a septic permit until after the owners actually constructed the septic system. Colorado law, they argued, requires them to get a permit before building a septic system. That's nice, replied the County: here, we do it different; first you build, and only then do we decide whether you get a permit.

The owners alleged that without a septic permit, they could not obtain a construction permit. Which means that they couldn't build their home as planned. Next stop, federal lawsuit alleging due process violations (both kinds) and a taking. 

The district court dismissed and the Tenth Circuit summarily affirmed:

• Procedural due process: yes, the conflict between the procedures required by the State of Colorado and the County of Costilla might be a problem, but it's only a problem of state law, and not a problem under the U.S. Constitution. And remember: you don't have a property interest "in a specific permitting procedure." Order at 5.
• Substantive due process (you know where this is headed): the County's procedure may not be "beyond criticism" because it might force the owners to violate state law by installing a septic system without a permit, but whatever. "The county could reasonably conclude that withholding permits until after inspection would allow it to better ensure that septic systems meet health and safety standards." Order at 5. Rational basis strikes again.
• Takings: the owners didn't properly plead a Penn Central claim. They didn't allege that the denial of a construction permit for their home would have a significant economic impact on them (that seems like a reasonable inference that could be drawn, but what do we know). The court also decided the "investment-backed expectations" factor on the merits by concluding that "[t]hey expected to be able to build a home on the property, and the county’s procedure allows them to realize that expectation." Order at 8. Yeah, but only if they violate state law. 

The owners were made to decide between violating state law or violating local law. According to the court, it's no problem to the constitution that they have to make this choice. Very odd.

Order and Judgment, Smith v. Medina, No. 23-1303 (10th Cir. Oct. 11, 2024)

Michigan, Over Dissent, Declines To Hear Co-19 Shutdown Takings Case

In this Order, the Michigan Supreme Court declined to consider a case which challenges the Michigan governor's Co-19 shutdown executive orders, which, in the words of the dissenting Justices, reached "nearly every aspect of life in our state."

There have been a lot of cases asserting that Co-19 shutdowns are takings, with most (but not all) of them crashing and burning, including this one. Here, the plaintiffs -- a class of owners whose businesses suffered devastating losses as a result of the shutdown orders -- sought just compensation for the regulatory taking. They alleged both types of takings, categorical and ad hoc (Penn Central). They also asserted claims under the Michigan Constitution (a trend we approve!).

We recommend you take a dive into the Statement of the two Justices who dissented. They would have taken up the case because "the majority leaves unresolved novel and important questions regarding federal and state takings jurisprudence." What are those novel and important questions? Glad you asked:

Can the temporary impairment of business operations be a categorical taking if there are no reasonable alternative uses of the business property during the period in which its intended and normal use is prohibited? And, if not, can the prohibition of the normal business operations nonetheless constitute a taking under the multifactor test established by the United States Supreme Court and employed by our courts? Because neither that Court nor this one has given significant guidance on the actual application of the test, and because this case is an appropriate case in which to provide clarity in this area of the law, I would take the opportunity to do so. Plaintiff, on behalf of a putative class, has raised plausible claims that the government took its property without just compensation, and genuine issues of material fact exist regarding its claims. Further factual development would aid in the proper resolution of these questions that should eventually be answered, such that summary disposition prior to the close of discovery was inappropriate. I would reverse the Court of Appeals and remand to the trial court to allow discovery to continue in this case.

Dissent at 1-2.

The Justices undertake what we view as very valid criticisms of the way the Michigan Court of Appeals analyzed the the claims. On that, some humblebragging (and what else is the internet good for but a good humblebrag?): the Justices apparently appreciated the article we published on "emergency takings," Evaluating Emergency Takings: Flattening the Economic Curve, 29 Wm & Mary Bill of Rights J. 1145 (2021)), which contains our own criticisms of the way that many courts approach these type of claims generally, and specifically how they apply the ad hoc Penn Central test. 

More on the story here:

• Michigan Supreme Court won’t hear appeals on COVID-19-related compensation lawsuits
• Mich. Supreme Court sides with state in COVID-19 shutdown cases
• Mich. Supreme Court Shuts Down COVID Closure Suits

Stay tuned.

Order, The Gym 24/7 Fitness, LLC v. Michigan, No. 164557 (Mich. Aug. 30, 2024)

Relying On Complaint's Allegation That City Issued A Permit As Confirmed By Chief Building Officer Email, Texas App Holds Takings Claim Ripe Even Though City Said Council Must Issue Permits

Check out City of Kemah v. Crow, No. 01-23-00417-CV (July 25, 2024), from the Texas Court of Appeal (First District).

This is yet another takings ripeness case -- here, the so-called "final decision" requirement -- the second recent opinion on this issue from the Texas court. See "Final Decision Takings Ripeness Is Based On All Circumstances, Not Hard-And-Fast Requirements (Read That Again: A Factual Question)" for our write-up of the other case.

In this one, the owner asserted that the city issued her a building permit for her "barndominium" and and two other structures to be used as short-term rentals, but later issued a stop work order. This resulted in a Penn Central taking, she asserted.   

The city sought ripeness dismissal, asserting the owner didn't actually have a permit issued by the city council as its ordinances require. The owner didn't have the actual permit, but her complaint alleged that she did have emails from the City's Planning officer and City Manager saying she had a permit, and her complaint also included allegations that these and other city officials repeatedly confirmed that she had the permit. See pages 2-9 of the slip opinion for the details as recited by the court.

The city argued that emails and other communications with city officials don't count, and only the city council can issue permits. Yes, she applied for a permit, but the city council has never approved one.

The City argued that Crow never obtained a final decision from the City on her permit application. Specifically, it asserted that although Crow claimed to have received an email from Shoaf advising her of the City’s approval of her permit application, she failed to allege facts showing the actual issuance of such a permit or the City’s denial of her application. It further argued that Crow did not allege that she obtained a variance, or that her alleged variance request was denied, and she failed to allege facts showing that re-application for a building permit would be futile. Thus, it argued, Crow failed to present a ripe claim over which the trial court could assert subject matter jurisdiction.

Slip op. at 9-10.

No official final decision from the council = takings claim not ripe.

The court limited itself to the allegations in the complaint: we take those allegations and the attachments to the complaint (including, inter alia, the emails from the planning and city officials saying 'you have a permit') as true, and if proven, this would be enough to show that the city made enough of a final decision to consider the takings claim on the merits, even though the city now claims it didn't make a formal, official permit grant. The city made enough of a final decision to show the case was ripe:

In support of her allegation that the City issued her a building permit, Crow attached copies of the emails and texts above as exhibits to her amended petition. Crow also attached a transcript of the minutes from the February 16, 2022 City Council meeting. At the meeting, Mayor Joiner stated, “[Item] 24. Discussion, consideration, and possible action on a request to lift the stop work order on 1306 Fay Road, Kemah, Texas 77565, Owner Veronica Crow, request for the city to provide a hard copy of the permit for 1306 Fay Road, Kemah, Texas 77565, issued under No. 210603007 . . . .” Also attached to Crow’s amended petition is a December 10, 2021 email from Shoaf to the Mayor and City Council providing an update on 1306 Fay Road. In the email, Shoaf stated, “It has also been brought to the attention of Walter [Gant] and myself that a member of Council has reached out to the permit holder.” (emphasis added)

Crow alleged that she was issued a permit to build on 1306 Fay Road in July 2021, constituting the final determination of her permit application, the City then denied Crow her right to proceed with construction under that permit, and later denied that the permit ever existed. Crow alleged that she sustained the loss of investment-backed expectations as a result of the City’s improper, intentional, and wrongful conduct, which amounts to a taking under the Texas Constitution. Taking her factual allegations as true, as we must, we conclude that Crow’s claim is ripe.

Slip op. at 17-18.

Here's a practical lesson that we take from this case and others: we know that in most jurisdictions, a complaint only need meet the fairly low bar of "notice pleading" tempered (in federal courts) by Twiqbal "plausibility." And that ripeness is generally a defense and not an essential element of a claim. But when pleading regulatory takings, property owners are seemingly held to a higher standard.

That being so, if you have the facts and the documents to anticipatorily plead the case is ripe, you should do what Crow's lawyers did her: plead with specificity like this was a fraud claim, and attach the documents to the complaint. Yes, it might not be required, but there's little harm in it, and doing so might avoid all kinds of mischief wrought by defendants and courts looking to get rid of your claim. 

PS - can we move all of our clients' properties to Texas, please? 

City of Kemah v. Crow, No. 01-23-00417-CV (Tex. App. July 25, 2024)

Final Decision Takings Ripeness Is Based On All Circumstances, Not Hard-And-Fast Requirements (Read That Again: A Factual Question)

We suggest those of you interested in takings ripeness -- here, the so-called "final decision" requirement -- take a quick gander at the Texas Court of Appeals' opinion in City of Buda v. N.M. Edificios, LLC, No. 07-23-00427-CV (July 2, 2024).

We won't go into the details, except to say that a property owner developing its land entered into an agreement with the city, under which the owner would grant a drainage easement to the city to alleviate citywide flooding, while the city was obligated to construct drainage improvements. When the owner submitted a plan, the city instructed it to "provide additional drainage improvements on the property." Slip op. at 2. Not so fast, said the owner: the city, not me, is on the hook for these additional improvements. If you condition approval of my development plans on me providing more drainage stuff, that's a taking (what the court calls "an investment-backed or regulatory taking," which we assume means Texas's versions of Penn Central or Nollan).

The city asserted these claims were not ripe because the owner had not submitted an application, and the city consequently had not denied said application. No application, no decision. "Buda argues that a final decision typically requires both a rejected development plan and the denial of a variance from the controlling regulations." Slip op. at 4. The owner countered by pointing out the fact that at the city's lawyer's "direction," the city stopped the application process.

While it is true that in many cases, an application, denial, and variance are what ripen a claim, That's true, the court concluded, but the application rule is merely the "usual" rule, and not a requirement in every case:

"'[U]sually' does not imply a hard and fast rule but, rather, a determination dependent on relevant circumstances. Indeed, futility may be one of those circumstances, that is, requiring a complaint to engage in futile ventures. Thus, a 'final decision' may take different forms. And, we cannot see why exclusion from the castle should be less definitive because it came from the captain as opposed to the king. It is not farfetched to conclude that directives from the City's legal counsel to those at the gate could be found sufficient to render futile additional attempts by Edificios to gain entry into the realm of the city council. And, to the extent we have an affiant attesting that such directives were made, there exists a question of fact pretermitting our adoption of the City's position on ripeness.

Slip op. at 5-6 (citations omitted).

The court emphasized that these are factual disputes, not legal questions to be resolved at the pleadings/jurisdiction stage: "the issue as presented by Buda sounds more like an attack on the merits of Edificio's cause of action rather than a jurisdictional inquiry. As said previously, consideration of the underlying merits of the claim generally lies outside the scope of review when address pleas to the trial court's jurisdiction." Slip op. at 6-7.

The court concluded: "[s]uch review will happen, if it happens at all, after the trial court has been presented with a fully developed record and comes to a final substantive judgment on the matter." Slip op. at 7.

It's good to see at least one court that "gets it." In many cases where a takings plaintiff's complaint alleges that it received some kind of final decision from the government about development plans -- even where that decision is not via the government's claimed official or usual process for eliciting such decisions -- it should be a factual question, not one for the court's pleading-stage gatekeeping.

If a factual allegation is Twiqbal-plausible that the government has made a decision such that the court on the merits can measure the owner's property losses – a determination that should not be based on any judgment call on the merits of the claim at this stage, but only on whether the facts as alleged are within the realm of possibility, that should be enough to get to the next stage.

It may be, in the court's view, a weak claim. But don’t weak - but plausible - claims have the right to move past pleadings? The purpose of 12(b) screening is to get rid of cases where there’s no actual controversy ((b)(1) jurisdictional ripeness), or those where the alleged facts are fantastic and don’t add up to a claim ((b)(6) (i.e., the complaint pleads only a diminution of value and doesn’t allege anything about character or expectations). It is the function of Rule 56 summary judgment to weed out those claims that are factually weak and should not waste judicial resources with a trial. Not, as many courts conclude, Rule 12 dismissal.

As the Texas court noted, "[s]uch review will happen, if it happens at all, after the trial court has been presented with a fully developed record and comes to a final substantive judgment on the matter."

Study this one.  

City of Buda v. N.M. Edificios, LLC, No. 07-23-00427-CV (Tex. Ct. App. July 2, 2024)

New Jersey: Forcing Hospital To Provide Care At A Loss Isn't A Taking

We were all set to write up a scintillating and detailed analysis of the New Jersey Appellate Division's opinion in Englewood Hospital & Med. Center v. New Jersey, No. A-2767-21 (June 27, 2024), when we thought, ah, why not just ask you to read our New Jersey colleague Joe Grather's scintillating and detailed analysis.

Short story is right there in the title of this post. As Joe puts it:

In short, the hospitals argued that requiring them to provide charity care and Medicaid care at a loss was an unconstitutional taking of private property without just compensation.  The trial court analyzed the claims as an “as-applied” challenge.  Therefore, it dismissed some of the claims because of a failure to exhaust administrative remedies.  The “slightly different reason” was that the Appellate Court found the claims were a facial challenge to the constitutionality of the statute, and therefore it analyzed the takings claims under the familiar rubric of whether there was a “direct government appropriation or physical invasion of private property,” or an “uncompensated regulatory interference with a property owner’s interest in their property.” Slip op. at 14.

No physical taking, no Penn Central taking. We recommend you read his entire post "As We Approach Our Nation's Birthday, a New Jersey Appellate Court Rejects Hospitals' Takings Claims."

Joe ends it this way: "I bet the hospitals are preparing their petition for certification to the New Jersey Supreme Court now.  Happy 4th of July!"

That means to stay tuned for more.

Englewood Hospital & Med. Center v. New Jersey, No. A-2767-21 (N.J. App. Div. June 27, 2024)

New Article: "Original Understanding of 'Background Principles' in Cedar Point Nursery v. Hassid"

Worth reading: a student-authored piece in the latest issue of the Harvard Journal of Law & Public Policy, "Original Understanding of 'Background Principles' in Cedar Point Nursery v. Hassid."

From the Introduction:

But in Cedar Point, when considering a regulation that authorized union organizers to enter certain businesses, the Court held that even a temporary physical occupation was a per se taking requiring compensation.

The Court’s shift to a per se rule is significant because it means a landowner can receive “just compensation” without satisfying Penn Central’s high bar required for regulatory takings. For governments, the Cedar Point holding could pose a heavy financial burden if they must compensate landowners for temporary intrusions authorized under existing regulations. Due to this imposing financial burden, some have suggested that Cedar Point threatens existing civil rights regimes, which at first blush resemble the labor rights regulation at issue in Cedar Point.

But Cedar Point also recognized three exceptions to its per se rule, one of which is particularly expansive: “longstanding background restrictions on property rights.” Writing for the majority, Chief Justice Roberts defined this exception as “background limitations [that] encompass traditional common law privileges to access private property.” The opinion listed several examples, including entering private land for public or private necessity or to enforce criminal law. For governments, these background principles could alleviate otherwise staggering financial liability due to the Cedar Point rule.

...

This Note argues that these principles are part of the original meaning of the Fifth Amendment, and then offers an originalist framework for deriving them. The Framers viewed provisions like the Takings Clause as “declaring” existing law that the American people already recognized as enforceable. When viewing the Takings Clause this way—as declarative of “general law”—it becomes apparent that the methodology of Cedar Point reflects the original understanding of the Fifth Amendment. In addition to confirming Cedar Point’s originalist pedigree, general law also informs the framework for how originalists can divine these background principles.

Check it out.

New Cert Petition: Gov't Asks Whether A Penn Central Taking Is Really A Lucas Taking

Check this out, a local government has filed a cert petition seeking reversal of one of those relatively rare circumstances where the property owner won below on a temporary regulatory takings claim for the County's denial of a development permit.

We won't go into details on this, but urge you to read the petition, especially the Questions Presented:

In First English Evangelical Lutheran Church of Glendale v. Los Angeles County, Cal., the Court held that the Fifth Amendment requires “just compensation” for temporary regulatory takings, i.e., “those regulatory takings which are ultimately invalidated by the courts.” 482 U.S. 304, 310 (1987). The appropriate compensation for a temporary regulatory taking is described as “fair value for the use of the property during this period of time.” Id. at 322. All claims for temporary regulatory takings must be analyzed using the ad-hoc, fact-based analysis set out in Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978). Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 328 (2002). The takings analysis must “focus on ‘the parcel as a whole,” including a temporal element, in determining the impact of the challenged regulation. Id., 535 U.S. at 331 (quoting Mahon, 438 U.S. at 130-131.

Judgment was entered in this case finding that the denial of a permit for a specific project – a three-story beachfront duplex – during administrative appeal proceedings was a temporary regulatory taking, even though other economically beneficial uses remained available, and there was no evidence of any effect that this denial may have had on the fair market value of the land. Compensation was awarded for the total value of claimed lost profits, plus additional estimated costs, as if the denial of the permit had completely stripped the property of all value during the litigation.

The questions presented are:

1) Does the temporary prohibition of a specific project or use constitute a compensable regulatory taking, regardless of the availability of other economically beneficial uses of the property?

2) Alternatively, whether it is “just” pursuant to the Fifth Amendment to award compensation for a temporary regulatory taking based solely on the lost profits and other costs of the prohibited project or use, without regard for any remaining value.

Stay tuned. Follow along here, or on the Court's docket.

Petition for a Writ of Certiorari, Baldwin Cnty. v. Bordelon, No. 23-1337 (U.S. June 25, 2024)

Unhappy 45th Birthday, Penn Central

If you know, you know.

Sad birthday wishes to our most un-favorite decision ever, Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978), which turns 45 today.

Time has not treated the opinion well. Practitioners, judges, and legal scholars across the spectrum have called the three-factor Penn Central test for an ad hoc regulatory taking "demanding," "fuzzy," a four-part test, "neither defensible as a matter of theory nor mandated as a matter of precedent," and "problematic" and "mysterious." Courts mess up the basic meaning of the factors, treat what is supposed to be a fact-centric "ad hoc" test as a legal question decided on the pleadings, and gatekeep most of these cases from juries.

The definitive deconstruction of the case was Professor Gideon Kanner's "Making Laws and Sausages: A Quarter-Century Retrospective of Penn Central Transportation Co. v. City of New York," 13 Wm. & Mary Bill Rts. J. 679 (2005). A must-read for anyone who plays in the Penn Central sandbox. 

If you want to be a part of rethinking Penn Central, listen to this episode of Clint Schumacher's Eminent Domain Podcast with our colleague Jon Houghton ("Jon Houghton and His Penn Central Quest"), or early-bird register for the 2025 ALI-CLE Eminent Domain and Land Valuation Litigation Conference in San Diego (Jan. 30-Feb 1, 2025), where we will be putting on a presentation about alternative regulatory takings tests. Penn Central is not written in amber.

But until something better comes along, let's wish Penn Central an Un-Happy Birthday.

Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978)

We Heard You, Justice Thomas: NY Property Owners File New Takings Cert Petition Challenging Rent Control

As we noted here ("SCOTUS Denies Review To Remaining Rent Control Takings Petitions: "Important and pressing question" (Just Not In This Case)"), a small silver lining in the Court declining review was the statement of Justice Thomas accompanying the denial, where he noted the issue is an "important question," and set out a rough roadmap to future challenges.

Here's a cert petition which asserts this is the case to take up the issue. Here's the Question Presented:

New York’s Housing Stability and Tenant Protection Act of 2019 transforms a temporary rent- regulation system into a permanent expropriation of vast swaths of private real estate, without just compensation, in the name of “affordable housing.” Among other things, the Act prohibits owners—even of small and midsized apartment buildings like Petitioners—from reclaiming rental units for their own personal use, and grants tenants a collective veto right over condo/co-op conversions. As Justice Thomas has observed, the constitutionality of regimes like New York’s is “an important and pressing question” that has divided the courts of appeals and should be addressed in “an appropriate future case.” 74 Pinehurst LLC v. New York, 2024 WL 674658, at *1 (U.S. Feb. 20, 2024) (statement respecting denials of certiorari). Although case-specific vehicle concerns may have dissuaded the Court from granting other recent petitions that sought to challenge the constitutionality of rent-control regimes in general, this case is based on a substantially different record, targeting only a specific set of amendments to New York’s regulatory regime, and thus provides an ideal vehicle for this Court’s review.

The questions presented are:

1. Whether New York’s rent-regulation laws, and in particular its new restrictions on owner reclamation and condo/co-op conversions, effect physical takings.

2. Whether this Court should overrule Penn Central or at least clarify the standards for determining when a regulatory taking occurs.

Here's the unpublished Second Circuit decision.

Follow along this case here or on the Court's docket here.

Petition for Writ of Certiorari, G-Max Mgmt, Inc. v. State of New York, No. 23-1148 (U.S. Apr. 18, 2024)

Sheetz pt. I - "Radical Agreement" At SCOTUS: "Your Money Or Your Rights" Isn't OK Just Because A Legislature Does It

Guess where we stopped for coffee this morning?
(A reminder: this case has nothing to do
with the convenience store.)

Note: this is the first of two posts on the recent Supreme Court opinions in Sheetz v. County of El Dorado, the case in which the unanimous Court held that exactions imposed by legislation are not exempt from the essential nexus (Nollan) and rough proportionality (Dolan) standards. Here's the second post, which covers the concurring opinions.

[Disclosure: this case is one of ours.]

In this post, we cover the background, and the Court's unanimous opinion.

* * * *

Does the government have the unfettered ability to demand "the goodies" (as one municipality's chief land use planner famously called them in the 1980s), simply because a property owner needs the government's approval to make use if his or her land?

That's the issue the Supreme Court agreed to resolve (or more accurately, clarify) in in Sheetz v. County of El Dorado, No. 22-1074 (Apr. 12, 2024).

Confessing Judgment: Game over man, game over!

After oral arguments a bit over three months ago, the Court's unanimous opinion by Justice Barrett issued last week wasn't too hard to predict. Especially because during the arguments the advocate for the County expressly acknowledged that there was "radical agreement" on the Question Presented in the case:

The question presented is whether a permit exaction is exempt from unconstitutional-conditions doctrine as applied in Nollan and Dolan simply because it is authorized by legislation.

The unanimity of the resulting decision reflects that with the County's acknowledgement on the record, it was all over but the shouting: the Court, as predicted, held that a blanket exaction (in this case a traffic impact fee) isn't exempt from the "essential nexus" and "rough proportionality" standards that have long governed exactions imposed ad hoc. See slip op. at 1 ("The Takings Clause does not distinguish between legislative and administrative permit conditions.").

Which leads to an obvious question: if the County was going to confess judgment by agreeing that legislative exactions are not categorically exempt -- a conclusion it contested in the lower courts -- why did it let the case get to decision stage at the Supreme Court? We're not at all sure. [Disclosure: this case is one of ours.]

Anyway, with that question asked (but not answered), let's see what the entire Court thought about this, and why.

Laying the Foundation: Nollan, Dolan, (and Koontz)

In 1987, the Court held that before the government can force a property owner into the choice between giving up something in return for government land use approvals, there must be an "essential nexus" between the demand and the owner's proposed use of land. Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987). And in 1994, the Court refined the requirement by recognizing the need for a "rough proportionality" between the burdens the owner's proposed use is predicted to put on the public, and the magnitude of the government's demand. Dolan v. City of Tigard, 512 U.S. 374 (1994). In Koontz v. St Johns River Water Management Dist., 570 U.S. 595 (2013), the Court further refined the doctrine by holding that demands for money are subject to the nexus and proportionality requirements as much as demands for land.

The close nexus and rough proportionality requirements were designed to check the government's temptation to use the land use approval process as an opportunity to leverage its power to regulate in furtherance of the public health, safety, welfare, or morals to exact land, money, or other property out of the applicant.

These requirements were motivated primarily by two concerns. First, if the government wants land or other property from an owner, it has the means to do so -- eminent domain, which comes with the requirement to provide the property owner just compensation; it should not use the land use regulatory process to get by regulation for free what it is required to pay for by a compensated taking. Second, there is something unseemly about the government demanding that an owner give up one of her constitutional rights (the right to compensation for a taking of property) as a condition of exercising another constitutional right (the right to make reasonable use of land). The government has no business forcing people into these kind of "money or your rights" choices.

But many lower courts refused to understand how broadly the close nexus and rough proportionality requirements applied, and for the longest time, they were split. Some held that Nollan and Dolan's requirements applied any time the government conditioned land use permits on either a surrender of land or money. Others, like California, held that unless the government was demanding the donation of land, and did so on a case-by-case basis as an exercise of discretion and not as a product of a legislative-imposed ministerial requirement, that nexus and proportionality were not required.

With a longstanding lower court split, the stage was set for Supreme Court review.

California Courts: We Don't Ask Whether The County's $23k Traffic Impact Fee Is Related, or Proportional, to Sheetz's Proposed Home

The facts of the Sheetz case are straightforward. George and Mrs. Sheetz, property owners in unincorporated rural El Dorado County, California, sought a building permit to "build a modest prefabricated house on the parcel, with plans to raise their grandson there" on their residental-zoned land. Slip op. at 3. The County was okay with issuing the permit, but only if Sheetz first paid the County's $23,420 traffic impact fee.

The impact fee was determined by the preset fee schedule in the County's General Plan, and not on a determination that the Sheetz home would increase the County's traffic burdens. California law treats the County's General Plan as legislation. In recent years, the area has seen dramatic growth, with related demands on infrastructure, the County uses the traffic fees to fund improvements to county roads. The rates for the traffic impact fees are fixed, and set by the schedule:

The fee amount is determined by a rate schedule, which takes into account the type of development (commercial, residential, and so on) and its location within the County. The amount is not based on "the cost specifically attributable to the particular project on which the fee is imposed."

Slip op. at 2 (citation omitted).

The General Plan prohibited the County from issuing building permits without collecting the fee, so "Sheetz paid the fee under protest and obtained the permit." Slip op. at 3. He filed suit in state court for a refund, arguing inter alia, that the County's conditioning the issuance of a building permit was an unlawful exaction of money, because the County had not demonstrated either a close nexus between the requested building permit for a "modest prefabricated house" and any additional traffic burdens this use of the property created in the County, or a rough proportionality between the scheduled amount of $23k and those same supposed traffic burdens.

The trial court prohibited Sheetz from asserting the claim. Under California law, the Nollan/Dolan requirements apply only "to permit conditions imposed 'on an individual and discretionary basis[,]'" and do not allow for any kind of judicial inquiry into nexus or proportionality when the condition is imposed on every applicant by broadly-applicable legislation. Slip op. at 3 (citation omitted).

The rule in California (and some other other jurisdictions) is that broadly-applicable rules like this, imposed ministerially on everyone and not individually, are just plain-old land use legislation, to be examined by courts (like zoning regulations) only under the rational basis test. And you know what that means: nearly everything passes muster.

As noted above, other courts went a different way. North Carolina, for example. See slip op. at 4 & n.3, where the opinion lays out a part of the lower court split of authority.

A Regulatory Takings Primer: the Right to Just Compensation and the Police Power "seem more like in-laws than soulmates"

The next portion of the opinion is a worthy read if you want to get an overall flavor of what all nine Justices of the Court think about regulatory takings today. Yes, the theory has been recognized as a federal constitutional doctrine for more than a century, but any insights we get into how the current Justices view the doctrine are going to be helpful. And there are a lot of clues embedded in Justice Barrett's opinion:

• Public Use. The opinion starts off with the idea that "[w]hen the government want to take private property to build roads, courthouses, or other public projects, it must compensate the owner at fair market value." Slip op. at 4. Focus on the examples the opinion lays out. All are "classic" public uses, and the opinion conspicuously avoids citing Kelo, its most recent eminent domain decision, where the project involved taking Kelo's property and turning it over to another private owner. So maybe that omission is a hint that Court would be open to revisiting Kelo's very reviled opinion.
• Takings law spreads the cost. The opinion next lays out the Armstrong rationale: the point of the Takings Clause and the requirement that government "pay for what it takes," is to avoid focusing the cost of public burdens on individual property owners. Id. Good to know that all nine Justices understand the big vibe of both eminent domain and de facto takings.
• De facto takings by over-regulation. Next, the opinion highlights the essential tension behind the regulatory takings doctrine and straight up eminent domain (what the Chief Justice calls an "upfront taking;" see PennEast Pipeline Co. v. New Jersey, 594 U.S. ___ (2021)). The essential question is when does an exercise of regulatory power "go too far" such that it has the same effects on the property owner's rights as an exercise of eminent domain?
• Per se regulatory takings. The Sheetz opinion noted the government's "substantial authority to regulate land use" on one hand, and on the other the various rules the Court has established for when that authority goes too far and triggers the obligation to pay compensation. Slip op. at 4-5. Things like when a regulation physically appropriates property, or "otherwise interfere[s]" with the owner's right to exclude others = easy analysis, compensation always required. 
• Euclid and land-use regulations. But "different rules apply" when government "merely restrict[s] how land is used." Slip op. at 5.
• Substantially advance? You takings mavens can be forgiven for a bit of an inside baseball chuckle for how the opinion lays out those different rules. The Court described the regulatory takings test thusly: "'[T]he Fifth Amendment is violated when land-use regulation does not substantially advance legitimate state interests or denies an owner economically viable use of his land[.]"” Id. (quoting Lucas v. South Carolina Coastal Council, 505 U. S. 1003, 1016 (1992)  (internal quotation marks omitted).
• Whoa!  Has Agins been resurrected? (Recall that in Lingle, the unanimous Court rejected Agins's "substantially advance" standard as a regulatory takings test.) No, we doubt that this was intended to bring back Agins. But this also doesn't seem to be merely a (mis)citation to the takings test as set out in Lucas (1994) before the Court clarified it in Lingle (2005).
• Character of the government action. Instead, we're viewing the Court's recitation of the regulatory takings test that "[a] use restriction that is 'reasonably necessary to the effectuation of a substantial government purpose' is not a taking unless it saps too much of the property's value or frustrates the owner's investment-backed expectations[,]" as meaning that Penn Central's "character of the government action" factor requires that regulation be reasonably necessary for the effectuation of a substantial government purpose." That isn't the rational basis test that many courts currently apply when asking about the character of the government action, is it? If so, this is a major clarification that deserves more attention.  
• Double whoa! Justice Barrett also treats Penn Central as a disjunctive test ("or frustrates the owner's investment-backed expectations"). That's a correct view of the Penn Central test we think, but many (many) lower courts have not received the message and treat it as a "one strike and you're out" (conjunctive) rule and not a series of factors to be weighed by a jury -- where a single factor could be dispositive, but also where failing to convince on a single factor is not an automatic loss. See Hodel v. Irving, 481 U.S. 704 (717) (1987) (proof of a single Penn Central factor alone could be sufficient to show a taking; in the case, "the character of the Government regulation ... is extraordinary"). 
• Very cheeky. The money quote in this part of the opinion might just be Justice Barrett's assertion that the relationship between the police power to regulate the use of property, and private property owners' right to just compensation is "more like in-laws than soulmates." Slip op. at 4. Probably not BFFs, but more like frenemies, Your Honor? We recommend lawprof Josh Blackman's take on this turn of the phrase ("Justice Barrett on the Takings Clause and the Police Power").

On To Exactions...Err "Permit Conditions"

The special application of the takings rules to permit conditions is "more complicated."

The opinion starts off with the premise that if the government can deny a building permit for some "'legitimate police-power purpose,' then it can also place conditions on [a grant of] the permit that serve the same ends." Slip op. at 5 (citation omitted).

[Sidebar: no one has adequately explained to us how the County could condition a building permit -- the classic example of a "must issue" ministerial permit -- on anything but the application's failure to comply with the Building Code. An application for a building permit does not involve any exercise of the government's discretion, at least in our experience.]

Here, if Sheetz's home would "substantially increase traffic congestion," then the County could legitimately condition its approval of the building permit on Sheetz's willingness to pony up land or money for road improvements. This, according to the Court is "the hallmark of responsible land-use policy." Id. (citation omitted). When this situation exists, then the government is within its authority if it tells the owner that it must accept the condition or else no government approvals will be forthcoming.

But (and this is a significant "but"), "[t]he bargain takes on a different character when the government withholds or conditions a building permit for reasons unrelated to its [legitimate] land-use interests." Slip op. at 5-6. (Remember, the County's police power interests here are limited in the Court's view to traffic mitigation.) In such a case, the condition isn't being employed to further the health, safety, or welfare of the public (traffic mitigation), but takes on the character of "an out-and-out plan of extortion[,]" an "abuse of the permitting process." Slip op. at 6 (citation omitted). Show us the money!

After reciting the Nollan "essential nexus" and Dolan's "rough proportionality" requirements, the opinion next noted that the "nexus requirement ensures that the government is acting to further its stated purpose, not leveraging its permitting monopoly to exact private property without paying for it." Id. The rough proportionality requirement serves the same function, but from a slightly different angle: "[a] permit condition that requires a landowner to give up more than is necessary to mitigate harms resulting from new development has the same potential for abuse as a condition that is unrelated to that purpose." Id.

Wait, since when can legislation be subject to more exacting judicial review than the oft-applied rational basis test? After all, California law considers the County's General Plan to be legislation, adopted by a legislative body. Why isn't this treated like other legislation? The opinion stated it succinctly:

Nothing in constitutional text, history, or precedent supports exempting legislatures from ordinary takings rules.

Slip op. at 7.

We're going to emphasize the "takings rules" part of that sentence because it highlights what we've always thought was the problem with the analysis applied by those lower courts which focused on the form or source of the condition (legislative/legislature) rather than the effect the condition had. Perhaps applying the tiers-of-scrutiny method is what is called for when the challenge asks whether a regulation arbitrarily and capriciously interferes with a constitutional right. But the entire Court, it seems, views takings as a independent limitation on the power of government, subject to different rules. 

The opinion next laid out seriatim the "text, history, [and] precedent" to support its conclusion that conditions-from-legislation are to be treated on "equal footing" with every other condition, regardless of source.

• Text. After chiding the framers for the syntax of the Takings Clause ("[t]he Clause ... speaks in the passive voice"), the opinion noted that it "does not single out legislative acts for special treatment. Nor does the Fourteenth Amendment, which incorporates the Takings Clause against the States." Id. On one hand, this seems very noncontroversial. Of course legislation and legislatures are subject to the limitations the Fifth and Fourteenth Amendment place on them. Yet we've had several decades of some lower courts concluding otherwise, mainly because (in our view) they can't get past the form (legislation) to the substance (your money or your rights). 
• History. Legislation was how governments exercised their eminent domain power (today and historically), so "[s]pecial deference for legislative takings would have made little sense historically[.]" Slip op. at 7. This analysis tells us that once regulation is deemed a taking requiring compensation, the entire Court views the regulation as having taken on a different character. Instead of merely regulating property's uses, these regulations require compensation as if the legislature had exercised its eminent domain power, and not its police power.
• Precedent. The opinion noted that "[w]e have applied the per se [physical takings] rule requiring just compensation to both legislation and administrative action." Slip op. at 9. And to regulatory takings. Indeed, in the "big one" (Pennsylvania Coal Co. v. Mahon), the Court held that a Pennsylvania statute went "too far" was was a taking.

The Court also put the Nollan/Dolan test into a larger context, the "unconstitutional conditions" doctrine that covers other areas like free speech, the right to travel freely, and other constitutional rights, noting that in these areas, legislative conditions are regularly challenged. See slip op. at 10.

In sum, there is no basis for affording property rights less protection in the hands of legislators than administrators.The Takings Clause applies equally to both—which means that it prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits.

Id.

The majority opinion summed up by noting the "radical agreement" and the County's oral argument acknowledgement that it agreed with Mr. Sheetz (at least on the Question Presented):

The County no longer contends otherwise. In fact, at oral argument, the parties expressed “radical agreement” that conditions on building permits are not exempt from scrutiny under Nollan and Dolan just because a legislature imposed them. Tr. of Oral Arg. 4, 73–74. The County was wise to distance itself from the rule applied by the California Court of Appeal, because, as we have explained, a legislative exception to the ordinary takings rules finds no support in constitutional text, history, or precedent.

Slip op. at 10.

The Court took no position on whether the County's traffic impact fee has an essential nexus to the Sheetz development, or whether $23 grand is roughly proportional to any traffic his proposal might be responsible for. For this and more, the Court remanded the case. Notably, the Court did not decide whether "a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development." Slip op. at 9-10.

In our next post, we'll cover the three concurring opinions, to thoughts about what Sheetz might mean, and what's on the horizon.

Sheetz v. County of El Dorado, No. 22-2074 (U.S. Apr. 12, 2024)

Commit To Submit: Call For Papers "Imagining the Future of Regulatory Takings"

Have thoughts about where regulatory takings are (or should be) headed? Here's your chance to get in on the conversation, and to shape the future of the law.

Our outfit, the Pacific Legal Foundation, in cooperation with the Antonin Scalia Law School's Journal of Law, Economics, and Policy, are calling for papers on "Imagining the Future of Regulatory Takings." There will be an in-person discussion of these papers at the Law School in October 2024.

Here's the full description:

A century ago, Oliver Wendell Holmes, speaking for the Supreme Court, assured us that “[t]he 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.” In the ensuing one hundred years, courts have struggled to draw the line defining “too far.” Some still wonder whether such a line should even exist. As Justice Clarence Thomas recently said, “If there is no such thing as a regulatory taking, we should say so. And if there is, we should make clear when one occurs.”

To date, many jurists and scholars have argued that the “too far” line is anything but clear. The regulatory takings doctrine is a hodgepodge of balancing and categorical tests alongside a scattered throng of exceptions, with little guidance on which tests or exceptions apply when, much less how to apply them in a principled and consistent manner. There are the categorical tests of Lucas (“total” takings) and Loretto (“physical” takings) and the amorphous balancing tests like the Penn Central ad hoc regime and the threshold “relevant parcel” test. Then there are vexing and unanswered questions about whether some restrictions on property are simply exempted from a takings analysis: When is a property restriction a “background principle” baked into the meaning of property itself as opposed to a restraint on a recognized property right? When, if ever, does a valid exercise of the police power operate outside of takings constraints? And, to top it all off, we still aren’t settled on how to define “property.” Pacific Legal Foundation seeks papers that offer fresh ideas on how to make “too far” more just, more concrete, and more principled. We welcome proposals that look at this problem from legal, economic, political, historical, and related angles, including empirical and nonempirical approaches.

For accepted works there is a $2500 honorarium and an opportunity to publish your work in the Journal. Certain travel expenses to the Law School also will be covered.

Download the full brochure for all the details, including timeline, and a list of possible topics.

Please consider submitting, and joining us in this fascinating enterprise. Find out more here.

Call for Papers: "Too Far: Imagining the Future of Regulatory Takings"

Pass A Good Time: Our Report From The 41st ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Feb 1-3, 2024, New Orleans

When it comes to the longstanding ALI-CLE American Law Institute-CLE Eminent Domain and Land Valuation Litigation Conferences, we're always ready to go. You know that. But this year's version -- the 41st -- was buzzing like no other in recent memory.

Maybe it was the New Orleans venue with its atmo, food, and music for our after-class activities, or even the timing (the second-to-last week on the Mardi Gras parade season, and our conference hotel was right on the routes). It might have been the nice weather (oh, it rained buckets one evening, but there wasn't an ice storm like we experienced in Austin in 2023). Or maybe it was the capacity crowd, and new topics and speakers on the agenda. Or maybe it was just the prospect of seeing our friends and colleagues again after a year.

Here's a photo essay of some of the Conference highlights.

And if you missed out, the webcast was recorded and is available for viewing. Or, better yet, hold on your calendar January 30 through February 1, 2025 for the 42d Conference, to be held at the Westin Bayside San Diego.

Excitement this way...

The view from the podium.
Say "hello" to our opening plenary session in wide-angle.

Prepping the space.
The finished stage that Conference attendees
see isn't how the room starts off.
It takes a lot of work by the ALI-CLE staff
to get the place camera-ready.

The live webcasting of the sessions also takes a lot of
set-up and a ton of equipment. This is just some of it. 

Here's more. 

The badges were arranged on the table with care...

...in trust that our faculty and registrants would soon be there.

No conference would be complete without swag.
Here is but a sampling.

As always, a huge thank you to our generous sponsors.
Without your support, this Conference would not be as
good as it is, year after year.


The Conference site was right on the routes of several parades.
It was difficult to keep focusing on severance damages and larger parcel
when the music and excitement was just outside.
But we tried.


The opening plenary session -- on the U.S. Supreme Court's
big takings case -- got us off to a solid start.


Thanks to Christina Martin and Steve Silva for speaking
on Tyler v Hennepin County.

The view from the podium as Amy Boulris speaks about the most
significant eminent domain decisions of 2023.

The speakers are a mix of practicing lawyers, judges, other eminent domain
professionals, and legal academics. Here, two property scholars --
Timothy Harris and Jessica Asbridge --
discuss how state property law and state courts
can drive the constitutional issues.

Kinnon Williams, Esq. and Christina Thoreson, SR-WA, MAI, CRE 
present on "Valuation of Wasting Assets."

Lawprof Emilio Longoria and attorney Tony Francois
on "What Condemnation Lawyers Need to Understand
About the Clean Water Act After Sackett"
(hint: it goes to highest and best use).

Matthew Ackerman, Marianna Baggett, and Kenneth Haywood
on "The Pitfalls of Objectively Measured Just Compensation:
When Market Value Isn't Enough."

It was not all work and no play.
Again, a big thanks to our generous sponsors.

Our speakers take questions, of course.
We solicit them the old-fashioned way (thanks, James Masterman).

William and Mary Law School Professor
Emerita Lynda Butler (and her former student, North Carolina's
Jeremy Hopkins" discuss property rights in an age of coastal retreat.

Luis Gallardo-Rivera, Dana Berliner, and (off-camera)
Sophia Holley on "Proving and Defending Pretext,
Public Use, and Necessity."

James Masterman and Martye Kendrick on "Preparing Your Witness
to Overcome Obstacles to Highest and Best Use."

Jeff McCoy, Robert McNamara, and Kristen Renfro on
"Getting to Federal Court and Staying There:
Navigating Procedural Mazes in Federal Takings Claims."

Sean Metherell and Nathan Farris zero in on
"How to Win a Future Highest and Best Use Claim: Proving Reasonable
Probability of Rezoning and Other Issues."

Michael Berger is Watching You:
SCOTUS Property Rights Maven Michael Berger zooms in with his
annual "Regulatory Takings Update."

We always hold a spot for Jim Burling on Saturday.
Why? Because his tours-de-force always are interesting
and put people in seats, even on a Saturday morning.

More Big Michael.
Here, sharing his memories of Professor Gideon Kanner.

See you in San Diego!
January 30 - February 1, 2025
Westin San Diego Bayside

DC App: $350k Loss In Value Due To Home's Historic Designation Not A Penn Central Taking

The DC Court of Appeals' (note: not the U.S. Court of Appeals for the D.C. Circuit) opinion in Gordon v. District of Columbia, No. 20-CV-0568 (Feb. 15, 2024), presents a good cross-section of property rights issues. Not a good outcome on property rights issues, mind you.

If nothing else, be sure to check out the outrageous facts in the case. They will make your toes curl. 

The Gordon brothers own a home in the District, in the Forest Hills area. They didn't want to be owners of this home, and instead wanted to sell it. Consequently, they took some of the usual steps one takes when one wants to sell a home - they retained a real estate agent, authorized certain entries for looky-looks (but did not ok free access or open house showings), and the like.

This aroused the ire of some of the area's residents, who were "[c]oncerned that the property was being sold as a development opportunity" and did what people like this do: they nominated the home for historic landmark designation.

One of these buttinskys even went so far as to retain her own real estate agent (who is also the president of the Forest Hills Neighborhood Alliance) so she could pose as an interested buyer and obtain access to the inside of the house for an intel-gathering view. Believing that Ms. Buttinsky was a genuine potential buyer, the Gordons allowed unaccompanied access to her and her real estate agent. A second pretextual access also occurred during which an official with the District's Historic Preservation Office, the agency tasked with designating properties as historic landmarks, and several "friends and colleagues" -- accompanied the interloper for what the official termed a "site visit." Slip op. at 3.

Next thing you know, Ms. Buttinsky informed the Gordons' real estate agent that she was preparing an application to designate the property as a historical landmark. Then, "[o]n May 11, 2015, the Forest Hills Neighborhood Alliance submitted a petition, drafted partly by Ms. Berk, nominating the Gordon house to be designated a historic landmark. Around this same time, Ms. Berk was awarded a lifetime achievement award by the [Historic Preservation Review Board]." Slip op. at 6.

After even more questionable shenanigans (read pages 6-8 of the opinion for some astounding details), the Board approved designation of the Gordons' house as a historical landmark. Did the approval have an effect? You bet, an immediate one:

Before the designation, the Gordons had received an offer to purchase their home for $1.55 million dollars, but that offer was withdrawn the day after the Historic Preservation designation. The same buyers later made the Gordons another offer for $1.2 million dollars; they cited the landmark designation as the reason for their reduced offer.

Slip op. at 8.

Lawsuit followed. Claims included takings (natch), due process, and search-and-seizure violations. The trial court dismissed some of the claims for failure to state a claim, and granted the District summary judgment on the remainder of the claims. Next, the Gordons appealed to the DC Court of Appeals.

The Gordons asserted that the historic preservation official's entry into their home violated the Fourth Amendment and was a trespass. The trial court rejected the claim because it was Ms. Buttinsky who let the official on the premises, and the official asserted she believed Ms. Buttinsky had apparent authority to do so. And this wasn't an investigation into a crime. Concluding that there was no violation of "clearly established" law, the trial court dismissed. Qualified immunity strikes again.

The appeals court held that it didn't matter why the official entered the property, only that she did. Next, the court seemed to be heading toward rejecting the District's argument that it couldn't be liable unless the official violated some clearly established prohibition. In other words, some court must have already said that this kind of behavior was illegal. The court noted that no other court had done so in this precise situation, but that "this court spoke to the issue of apparent authority over property with sufficient specificity" in a 2023 case, such that the officials are now on notice that this kind of conduct is illegal. Slip op. at 18.

This principle applies with obvious clarity to the facts presented here and compels the conclusion that the nature of Ms. Warner’s access to the Gordon home was clearly limited to her role as a real estate agent, not a preservationist. It was therefore unreasonable for Ms. Williams to believe that Ms. Warner had the apparent authority to consent to her entry into the Gordon home for an HPO site visit. Ms. Williams was aware that Ms. Warner was “not the listing agent,” but instead a “sympathetic” agent “who want[ed] to save” the Gordon home, and she was aware that Ms. Berk had arranged the tour not because she was considering buying the home, but because she was “strategizing its rescue” and wanted to take photos for the historic nomination application.

Slip op. at 19.

Things seemed to be looking the Gordons' way. But then the court held that this 2023 case was decided after the official had entered the Gordon property, and thus it was not clearly established at the time she did so that it was wrong. Thus, the court concluded, she is entitled to immunity. We'll get you next time!

But what about the District's liability for its employee's illegal entry? Nope there as well. The complaint didn't allege that there was some official District policy to do this and that omission was fatal. The only claim the court allowed to go forward was the common law trespass claim against the official. The court rejected the trial court's conclusion that the official was entitled to qualified immunity, holding instead that QI "does not shield government officials from liability for common law torts, like a claim of trespass." Slip op. at 26.

Now on to the takings claim. As noted above, the complaint alleged that the designation of the Gordon home as a landmark resulted in a loss of the value of the property of $350,000, as evidenced by that lost sale and new lower offer. The trial court dismissed because the complaint did not plead anything about alternative economic uses of the property. (In other words, the complaint didn't allege that every other possible use of the property was not economically beneficial.)

But wait, the owners argued, we're arguing "that the court erred by . . . applying what they construe to be a categorical rule for assessing the occurrence of a total taking, rather than the multi-factor inquiry for partial takings[.]" Slip op. at 33. No deal, held the appeals court. To press a Penn Central claim, you must allege that there are no other alternative uses that are economically beneficial. Slip op. a 34.

Indeed, the court expressly considered both the fact that the Gordons had alleged the historic designation of their home reduced its value by $350,000, and the fact that they still had an offer to purchase the home, albeit at a reduced price—$1.2 million as opposed to $1.5. million. Lastly, we note that the Gordons have failed to explain what factor under the fact-specific Penn Central test the Superior Court should have considered but did not that would have made a difference in the court’s analysis. For all of these reasons, we affirm the court’s determination that the Gordons failed to allege facts sufficient to support a takings claim.

Slip op. at 35.

So there is is. What looks to us like outrageous government conduct mostly gets a pass.

And the Penn Central pleadings trap continues it yeoman's work keeping takings claims from being determined on the merits. 

Gordon v. District of Columbia, No. 20-CV-0568 (D.C. App. Feb. 15, 2024)

Ohio: We Really Meant It When We Remanded For Weighing Of Evidence - Appeals Court Had No Business Dismissing

A quick per curiam from the Ohio Supreme Court.

In State ex rel. AWMS Water Solutions, LLC v. Mertz, No. 2023-0125 (Ohio Jan. 24, 2024), the court issued a gentle (or maybe not-so-gentle) "benchslap" to the court of appeals. Here's the scenario.

First of all, recall that Ohio does not recognize a claim for "inverse condemnation" or "regulatory taking." Instead, if a property owner believes that the government has de facto taken property but has not provided just compensation, the owner seeks a writ of mandamus asking the court to compel the government to institute an eminent domain action (what CJ Roberts calls "an upfront taking").

AWMS thought this was the case and sought a writ to compel Mertz, an official with the state Department of Natural Resources, to take and pay. The court of appeals entered summary judgment for Mertz, but the Ohio Supreme Court held that the case should be tried. "In an earlier appeal, we reversed the court of appeals’ grant of summary judgment in favor of the state and remanded the case to the court of appeals with directions to weigh the parties’ evidence relating to AWMS’s total-takings and partial-takings claims." Slip op. at 1.

On remand, the court of appeals held a nine-day trial. [Sidebar: it is interesting that in Ohio, a three-judge panel of the court of appeals conducts trials.] So far, so good. But at the close of the evidence, "the court of appeals again ruled in favor of the state and denied the writ. This time, the court of appeals held that AWMS did not have a cognizable property interest for purposes of a takings analysis." Id. It denied the writ. Foiled again!

AWMS sought Ohio Supreme Court review, and requested oral argument.

The court said no (to the request for oral argument, that is). We don't need to hear more to conclude that the court of appeals wasn't listening to us when we said to WEIGH THE PARTIES' EVIDENCE. "[T]he court of appeals failed to follow our remand order and violated the law-of-the-case doctrine by sua sponte revisiting the issue whether AWMS possessed a cognizable property interest for Takings Clause purposes." Slip op. at 6.

The Supreme Court didn't seem that happy with the appeals court:

It is axiomatic that an inferior court lacks jurisdiction to depart from a superior court’s mandate. State ex rel. Heck v. Kessler, 72 Ohio St.3d 98, 104, 647 N.E.2d 792 (1995). In AWMS, we reversed the court of appeals’ grant of summary judgment to the state and remanded the case specifically for the purpose of conducting the proper takings analysis. In this regard, we did not leave the court of appeals’ task open-ended. Rather, we specified that the court of appeals “must weigh the parties’ evidence relating to AWMS’s total-takings claim” and “must weigh the parties’ evidence in accordance with this opinion and balance all three Penn Cent.[, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631] factors to determine whether AWMS suffered a partial taking.” (Emphasis added.) AWMS at ¶ 88-89.

{¶ 20} The court of appeals did not follow our instructions. Instead, after a trial and posttrial briefing, the court of appeals sua sponte ordered the parties to file supplemental briefs on the threshold issue of whether AWMS has a cognizable property interest that is compensable under the Takings Clause.

Slip op. at 7.

The court didn't really deal with the court of appeals' legal conclusion (AWMS has no property interest) other than to say "we already decided that." Slip op. at 11 ("it is the law of the case that AWMS possesses a cognizable property interest in the leasehold right").

Although this opinion is really more about law of the case than about takings, there's a good lesson here. The Ohio Supreme Court saw this case as one about facts (as most Penn Central takings claims inherently are). Having so concluded -- and apparently treating this takings claim like any other civil claim, and not one subject to judges imposing their own views of the law -- the court rebuked the court of appeals for not understanding that these are factbound claims, not generally resolved by law.

"Ad hoc factual inquiry" rules the day!

State ex rel. AWMS Water Solutions, LLC v. Mertz, No. 2023-0125 (Ohio Jan. 24, 2024)

New Article: Missed Opportunities in State Takings Challenges to Pandemic-Era Restrictions (Brennan Center's State Court Report)

Thank you to the Brennan Center for Justice at NYU Law School's State Court Report (#statecourtreport) for publishing our piece "Missed Opportunities in State Takings Challenges to Pandemic-Era Restrictions." The title gives a hint about what this is about: how state and local government's reaction to Co-19 spurred challenges not only under the U.S. Constitution, but under state constitutions. We give examples of -- and comment on -- missed opportunities and out-and-out errors in several approaches.

Here are the opening paragraphs:

Responding to the Covid-19 pandemic, the federal government and many state and local governments imposed a variety of restrictions on individuals and businesses. The Centers for Disease Control and Prevention, for example, purported to suspend the ability of property owners to evict nonpaying tenants — a move the U.S. Supreme Court rejected as beyond the agency’s power. State and local governments adopted similar eviction moratoria, and many directed businesses to close or curtail operations. Litigation followed.

Much of that litigation focused on the federal Fifth Amendment’s requirement that the government provide just compensation when it takes private property for public use. Property and business owners have generally been unsuccessful in pressing federal takings claims for Covid-19 restrictions. But it is established that the rights acknowledged by the U.S. Constitution are merely a floor, not a ceiling. This notion recognizes that states may freely offer a higher level of protection of rights under their own laws or more severely restrict the state’s powers (or both). And many state constitutions go further, guaranteeing compensation when property is damaged. 

We also take a quick look at a still-pending case in Michigan, with the hope that the Michigan Supreme Court does not fall into these same traps.

We'd appreciate it if you were to read the entire piece -- it's short, we promise!

Dig Property Rights? Join Our Firm As A Courtroom Property Rights Lawyer

If you dream such dreams as this photo, read on.

My law firm, Pacific Legal Foundation, is on the hunt for lawyer to join our Property Rights group (yours truly is the Director of Property Rights Litigation, so you will be working with me and the other takings and con law mavens in our practice). Here's the full description of the spot:

You: An entrepreneurial freedom fighter with a passion for property rights litigation. You work with more senior-level attorneys to find and win cutting-edge property rights cases in trial and appellate across the country. You work as a part of a collaborative team, but are also self-motivated and able to work independently with minimal supervision. You are eager to learn, relentless, and a focused lawyer.

Them: Bureaucrats, city councils, mayors, governors, and federal agencies stripping Americans of their rights every day. There’s a lot of government overreach out there, and it’s backed by seemingly endless resources. But fortunately, like all lumbering giants, abusive government is most vulnerable when countered by individuals who act strategically and nimbly, take calculated risks, have each other’s backs, and are confident in, and passionate for, the cause—the very sort of property rights swashbucklers we employ in spades here at PLF.

Us: We fight back. Pacific Legal Foundation is the nation’s first and most successful public interest law firm dedicated to vindicating individual liberty and protecting the fundamental right to property as the “guardian of every other right.” PLF has an unmatched record in the United States Supreme Court, with 17 victories in the Court. We also are actively litigating more than a hundred cases in trial and appellate courtrooms across the nation.

We are a next-generation public interest law firm. What does “next-generation” mean for a legal nonprofit? It means we aren’t interested in doing the same thing as everyone else. We aspire to be the best player in a constantly changing game.

Here’s what you get to do in this role:

You will be a courtroom lawyer in PLF’s Property Rights Practice Group. From Nollan to Koontz to Knick to Cedar Point Nursery to Tyler, PLF’s property rights litigation is unparalleled. You will help find and win the next important Supreme Court property rights case, becoming recognized as a nationwide leader on property rights litigation. Occasionally, You will have opportunities to speak at conferences or with the media about your cases or important property rights issues.

You will be a key contributor to PLF’s property rights practice group. You will work in teams with junior and senior attorneys, growing in your expertise and knowledge and elevating the team’s efforts to defend property rights. You will have the latitude to think big and the resources to execute. At PLF, you will be at the forefront of shaping property rights for all Americans.

In a nutshell, we’re seeking someone passionate about liberty and property rights, someone who is magnanimous, and someone who is a bold and relentless freedom fighter.

Getting down to brass tacks, your specific job duties likely will include:

• Winning property rights cases! Finding, developing, and litigating important property rights cases.
• Working with other attorneys to develop and litigate PLF’s property rights cases to protect the constitutional rights of Americans.

Qualifications

• 1-3 years of litigation or judicial clerkship experience
• Passion to litigate property rights cases
• A deep understanding of the moral and constitutional basis for property rights is a huge plus
• A track record of successful legal work
• Outstanding interpersonal communication skills
• A knowledge of, and passion for, the ideas of freedom and individual liberty
• The ability and willingness to travel approximately 10% to 15%

General Information

Pacific Legal Foundation identifies and litigates important legal issues to set landmark precedents that benefit Americans nationwide. Using strategic and principled litigation, communications, and research, we battle for freedom in the nation’s courts and the court of public opinion.

As a national nonprofit organization, PLF has brick-and-mortar offices in Sacramento, California; Arlington, Virginia; and Palm Beach Gardens, Florida, although approximately half of the staff work from home offices across the country. You can work physically in any of our offices or request to work virtually. This position is particularly suited for a lawyer who would like to be in one of our offices, or who is a focused and relentless self-starter eager to take advantage of our cross-country virtual office environment by proactively collaborating and communicating with colleagues, clients, and other professionals.

This is a full-time, permanent position. PLF is committed to recruiting and retaining the highest-quality talent available nationwide, and we offer a total compensation package that includes a competitive salary, medical and dental insurance, and employer-paid retirement savings. We take work-life balance seriously through our generous paid leave and flextime policies. We have a flexible, collaborative, positive, and collegial work environment. We take pride in investing in your future and encourage internal advancement. PLF is the place for someone principled, tenacious, and determined to succeed in positively shaping the future of our country and restoring real limits on government power. Join us.

To Apply

Qualified candidates should submit the following application material:

• Your resume or C.V., including your experience in the liberty movement and relevant professional experience.
• A cover letter explaining why PLF is the place for you, why you want to fight for liberty, and what distinguishes you from typical applicants; your letter should detail your courtroom experience, including any experience in trial preparation and civil discovery.
• A recent writing sample, no longer than 10 pages, that demonstrates your analytical and advocacy skills.

More here, including a link to submit your application packet.

If you fit the bill, here's your chance to join us.

No FOMO: There's Still Room For You To Join Us In New Orleans Feb 1-3, 2024 For The 41st ALI-CLE Eminent Domain & Land Valuation Litigation Conference

Don't miss out!

We promise: this is the last time we're going to try to entice you to the upcoming ALI-CLE Eminent Domain & Land Valuation Litigation Conference in New Orleans. We are getting close to capacity, but there is still room. In recent years, we have standing room only in the Conference halls, and have sold out the hotel block. After all, this is a pretty niche area of law. So what gives?

When we were in Austin last year, we thought it might be nice to try and answer that question. We asked Conference participants why they come, year-after-year (and in Austin, despite massive travel disruptions). Yes, it is the various venues (Nashville, Austin, Scottsdale, Palm Springs, to name a few recent locations), and yes, it is the excellent and useful programming.

But as we suspected it is more than that. As the above video notes, the consistent response from our participants about why the attend is the participants. The faculty and other attendees, the vendors. The collegiality, the chance to renew long-standing friendships, and especially the chance to make new friends and colleagues who share our passion for this area of law. The welcoming environment, and our desire to have lawyers and other professionals new to this area of law or new to the Bar feel at home and welcomed.

We have also made a big effort in the last few years to include a range of professionals from various perspectives, including lawyers, legal academics, jurists, appraisers and MAIs, planners, right of way and relocation experts, and jury and trial consultants. Family members also welcome (there are a lot of "adjacent" social and networking events, and families are welcome as long as they don't mind a lot of "shop talk"). Our program is a mix of practical and substantive sessions.

We also have a special track on the first day of the Conference designed as a crash course in Eminent Domain law ("Condemnation 101"), which is a good place for an overview and introduction to the practice, or as a refresher course for those with more time under your belt.

In short, we try and make the Conference not just a place to learn the latest in eminent domain and related topics, but somewhere you can return to each year, and feel welcome.

So if you have not attended before, give us a try! We'd love to see you in New Orleans in just a few months. Registration is still open. Sign up now, and don't miss out.

2023 Year-End Clean Up

As 2023 comes to a close, here are a few of the decisions that we wanted to blog about, but didn't have the time.

• Bruce v. Ogden City Corp., No. 22-4114 (10th Cir. Dec. 1, 2023): city demolishing a building that was damaged by fire was not a Lucas taking because the owner still has use of the land (even though the building is gone). And no Penn Central taking because... Penn Central.
  
• Moriarity v. Indiana, No. 22A-PL-2899 (Ind. Ct. App. Nov. 15, 2023): State ordering removal of illegal dam was not a taking under U.S. or Indiana Constitution. The owners don't have a property right to build an illegal dam. Thus, the "background principles" exception to Lucas rules the day. And no Penn Central taking because the owners never had any investment-backed expectations they could build this dam.
• Lafayette Bollinger Dev., LLC v. Town of Moraga, No. A163636 (Cal. Ct. App. July 19, 2023): No Penn Central taking because city might have allowed a smaller project.
  
• Estancias de Cerro Mar, Inc. v. Puerto Rico Aqueduct and Sewer Auth., No. 20-1644 (D.P.R. Nov. 17, 2023): the complaint plausibly alleged a categorical regulatory taking, and did not need to be pleaded under Penn Central. The complaint alleged that the plaintiff possessed a private property interest, and that the Authority's actions took that interest.
• Moskovic v. City of New Buffalo, No. 23-1165 (6th Cir. Dec. 14, 2023): city's moratorium on short-term vacation rental permits, and eventual permanent ban was not a taking or a deprivation of substantive due process because property owners have no protected interest under Michigan law in renting their properties. 
• First Floor Living LLC v. City of Cleveland, No. 22-3216 (6th Cir. Sep. 28, 2023): even though the plaintiff purchased the property to rehabilitate and redevelop it, the city declared them public nuisances and ordered their destruction. The district court correctly entered summary judgment in the city's favor on the plaintiff's due process claim because the owner received sufficient notice.
• 835 Hinesburg Road, LLC v. City of South Burlington, No. 23-218 (2d Cir. Nov. 8, 2023): takings claim not ripe when city applied restrictions that it intended to adopt and denied owner's preliminary development application [disclosure: this case is one of ours].
• In re City of New York (Coney Island Plan - Stage I), No. 517650/2016 (Kings County, N.Y. Nov. 1, 2023): compensation for city's taking of mostly-vacant land to be measured by the "three unities" test. The zoning in place at the time of the taking was part of "the project," so the pre project zoning is used to measure the value of the taking.

On to 2024!

Cases And Links From Today's ABA State & Local Govt Law Land Use Presentation

Here are the cases that Michael Berger and I discussed in today's presentation to the ABA State and Local Government Law Section's Land Use group. It was good seeing everyone, even virtually:

• Sheetz v. County of El Dorado - are legislatively-imposed exactions subject to the nexus and proportionality requirements of Nollan/Dolan? (SCOTUS)
• Devillier v. Texas - must the government consent to be sued for just compensation? (SCOTUS)
• Watson Memorial Spiritual Temple of Christ v. Korban - the payment of a final just compensation judgment is ministerial, and may be compelled by a writ of mandamus (Louisiana Court of Appeal)
• The New York Rent Control cases - two still pending (SCOTUS)
• Gearing v. City of Half Moon Bay - abstaining from adjudicating a regulatory takings case under Pullman abstention (Ninth Circuit; cert. denied)
• Ateres Bais Yaakov Academy of Rockland v. Town of Clarkstown - RLUIPA claim is ripe; court rejected the "land use is local" trope (2d Cir.)
• Catholic Healthcare Int'l, Inc. v. Genoa Township - RLUIPA claim ripe because Township had taken a "definitive position" on what uses were allowed and not allowed on plaintiff's property, even though there remained a possibility that the Township might allow the use (6th Cir.)
• Yes in My Backyard v. City of Los Angeles - the general plan is law, and controls over zoning (Cal. Super. Ct.)
• Idaho Power Co. v. Bean - some precondemnation entries are takings (Or. Cir. Ct.)
• Town of Apex v. Rubin - after a taking is invalidated for lack of public use, what if the condemning agency just takes it anyway? (N.C. S. Ct. review granted)

Check em out.

And if you are not a member of the ABA State and Local Government Law Section, you should be. Come, join us!

Hawaii Five-80: More Land Use (Law 580) At The University Of Hawaii

Starting in January, we'll be helping our friend and former law partner Mark M. Murakami with the venerated and oh-so-important Land Use course (Law 580) at the University of Hawaii's Law School.

We're temporarily stepping into some mighty big slippers (this is Hawaii, so we don't always wear shoes), as this is the course that our mentor Professor David Callies taught for decades. And is there a better venue in which to teach and study land use law and regulation, and its limits? After all, Hawaii may be the most heavily-regulated land on the planet, and is a focal point for every issue you can think of, from zoning to environmental restrictions to takings to public trust to subdivision to admin law to ... well, you get the drift.

We'll cover those topics, as well as the fundamentals. And we have a few surprises up our sleeves -- some impressive guest lecturers, explorations of dirt law careers, and maybe a field trip or two.

We'll bring you the highlights here, as they happen. Is there a bit of pressure on us to get it right? You bet. But are we looking forward to it (not just an opportunity to head back to the 808, but because this is a great subject)? You bet.

"Groping in a Fog" - Bound by Oath Podcast, S3 E2: Regulatory Takings - Penn Coal And Penn Central ... Unplugged!

We've been eagerly waiting for the new season of the Institute for Justice's podcast series, "Bound by Oath" to drop. Not only because it's a great series - produced by John Ross, it is more like an audio documentary than a typical podcast - but also because John was kind enough to ask us to participate again (our last appearance was in Season 1, where we guested on the episode about the origins of the "incorporation" doctrine).

This season is all about property rights, and episode 2 is all about regulatory takings. Pennsylvania Coal Co. v. Mahon, and Penn Central Transp. Co. v. New York City, to be exact.

So just over a year ago, John and I headed up to anthracite coal country in Pennsylvania. We wanted to be on site on the exact 100th anniversary of the Supreme Court issuing the Mahon decision. Why? It just seemed appropriate. And as true takings nerds, we couldn't resist the chance to be in the room where it happened. Kind of a "John and Robert's Excellent (Takings) Adventure."

And as you dirt lawyers know, nothing substitutes for a site visit. 

In addition to John, me, and two Pittston lawyers who now own and used to own the former Mahon property, also weighing in is Professor William Fischel, who shares the insights about the Mahon case he learned while researching his book "Regulatory Takings" (1995)

And not content to cover the case that is seen as the first modern regulatory takings decision (the case is often wrongly assumed to be where the regulatory takings doctrine got its start), this episode also gives an in-depth treatment to the other well-known takings case with "Penn" in its name: Penn Central.

For that one, John goes to the source, Professor Gideon Kanner in what might be his final interview. Professor Kanner, of course, authored the seminal law journal article about the case, so he was a natural for this part of the episode. See Kanner, Making Laws and Sausages: A Quarter-Century Retrospective of Penn Central Transportation Co. v. City of New York, 13 Wm. & Mary Bill of Rts. J. 679 (2005). Don't miss out on this part of the episode, or you will miss some of the classic "Kannerisms" the good Professor issues.

Professor Kanner is also responsible for the episode's title, from his reaction to the three factors the Court seemingly created from whole cloth in Penn Central:

John: The Court said, there would be quote “no settled formula” for determining when a taking requiring just compensation had occurred. But there are three factors to consider. It didn’t say how much weight courts are supposed to give each factor or what evidence litigants could use to satisfy them.

Gideon Kanner: So it was another one of these impossible-to-meet criteria. There were three factors. There's no rule, but three factors, such as the impact on the owner, the nature of the government activity. So we all looked at each other: What the hell does that mean? All it did was confuse the law. The Court was groping in a fog.

This is a not-to-be-missed episode.

Here's the description from IJ:

In 1922, Scranton, Pennsylvania was said to be on the verge of collapsing into the vast coal mines beneath the city; residents, buildings, and streets alike were being swallowed up by “suddenly yawning chasms.” State legislators responded by unanimously passing a law meant to save the region, where about a million people lived, from total desolation. But when the law reached the Supreme Court, the justices struck it down, ruling that it would be an unconstitutional “regulatory taking” to force coal companies to leave their coal in the ground. On this episode, we go to nearby Pittston, Pennsylvania to find out what happened to the house at the center of the case. Did it—or Scranton—fall into the pits? After that, we trace the major developments in regulatory takings doctrine, which protect against regulations that go “too far.” But we wind up in a bit of a fog. Plus! This episode will have an unsolved murder—and some Supreme Court trivia: did you know a future Supreme Court justice argued the case on behalf of Scranton (at least in state court)?

Click here for transcript.

In case you are aching for some visuals to go with your listening, here you go.

The (former) Mahon home on a snowy Pittston day.
No signs of subsidence at all.

 

The view from lawyer Mahon's office.

We paid our respects to Mr. and Mrs. Mahon.
The episode also has a murder mystery,
something you don't see everyday in takings cases.

Grand Central Terminal,
preserved in aspic (for free).


That airspace.

Check the episode out here, and be sure to subscribe so you don't miss future eps.

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (Dec. 11, 1922)

New Podcast: The Cedar Point Takings Case (From The Guy Who Argued Cedar Point)

Check this out, our law firm colleague Joshua Thompson talks about regulatory takings, and his big Supreme Court victory in Cedar Point Nursery.

If you are reading this blog, you already know what that means. Regulatory takings. Bundle of sticks. Penn Central (bleh), and right to exclude. Here's the description of the program:

In this thought-provoking episode, Bob Stetson and Joshua Thompson, Director of Equality and Opportunity Litigation at the Pacific Legal Foundation, discuss the landmark case of Cedar Point Nursery vs. Hassid and explore the intricate balance between private property rights and public interests. What constitutes a 'taking' and how far government regulations can go in the name of the public good?

Stream it above, or listen on Spotify here.

(Our own thoughts on the Cedar Point case here.)

Here's The Program For The 41st ALI-CLE Eminent Domain And Land Valuation Litigation Conference, Feb 1-3, 2024, New Orleans

Here's the brochure and the full agenda and registration information for the upcoming ALI-CLE Eminent Domain and Land Valuation Litigation Conference at the JW Marriott in New Orleans, February 1-3, 2024.

This is the long-running nationally-focused conference on all things eminent domain, takings, valuation, and related. We have three tracks, from which you can choose a la carte - Practice, Substantive, and Condemnation 101:

For over 40 years, we’ve been bringing eminent domain practitioners together to examine the latest issues, engage in healthy debate, and get the information they need to stay current in their practice. This year – our 41st – is THE perfect time to reunite with your eminent domain colleagues. There will be plentiful opportunities to meet and mingle with the faculty and other registrants – throughout the conference and at evening social events. Attendees come back year after year to make new friendships and renew longstanding ones – in a welcoming environment and amongst others who share the same passion for this area of the law.

Please check it out. Over the next couple of weeks we shall bring you details of the various programs.

If you have joined us in the past, you know what a worthwhile conference this is. If this will be your first time, welcome; we hope that you will become a long-term colleague.

Register now, and reserve your spot. In the past few years, we've sold out the hotel block and the Conference seats. So don't miss out!

2024 ALI-CLE Eminent Domain and Land Valuation Litigation Conference Brochure, Feb. 1-3, 2024, New Orleans,...

ALI-CLE's Eminent Domain & Land Valuation Litigation Conference (Feb 1-3, 2024, New Orleans): Why Attend? Here's Why.

Why is it, you ask, that the ALI-CLE Eminent Domain & Land Valuation Litigation Conference (scheduled next February 1-3, 2024, in New Orleans) is an event that seems to be growing in popularity and attendance. In recent years, we have standing room only in the Conference halls, and have sold out the hotel block. After all, this is a pretty niche area of law. So what gives?

When we were in Austin earlier this year, we thought it might be nice to try and answer that question. We asked Conference participants why they come, year-after-year (and in Austin, despite massive travel disruptions). Yes, it is the various venues (Nashville, Austin, Scottsdale, Palm Springs, to name a few recent locations), and yes, it is the excellent and useful programming.

But as we suspected it is more than that. As the above video notes, the consistent response from our participants about why the attend is the participants. The faculty and other attendees, the vendors. The collegiality, the chance to renew long-standing friendships, and especially the chance to make new friends and colleagues who share our passion for this area of law. The welcoming environment, and our desire to have lawyers and other professionals new to this area of law or new to the Bar feel at home and welcomed.

I can personally attest to that one, having been welcomed to a Conference long ago by Toby Brigham, who although he was one of the Chairs of the event, made it a point to notice that I was a new attendee, and to introduce me around to the "old hands."

We have also made a big effort in the last few years to include a range of professionals from various perspectives, including lawyers, legal academics, jurists, appraisers and MAIs, planners, right of way and relocation experts, and jury and trial consultants. Family members also welcome (there are a lot of "adjacent" social and networking events, and families are welcome as long as they don't mind a lot of "shop talk"). Our program is a mix of practical and substantive sessions.

We also have a special track on the first day of the Conference designed as a crash course in Eminent Domain law ("Condemnation 101"), which is a good place for an overview and introduction to the practice, or as a refresher course for those with more time under your belt.

In short, we try and make the Conference not just a place to learn the latest in eminent domain and related topics, but somewhere you can return to each year, and feel welcome.

So if you have not attended before, give us a try! We'd love to see you in New Orleans in just a few months. Registration and hotel reservation now open. Sign up now, and don't miss out.

Register Now For The 20th Brigham-Kanner Property Rights Conference, Oct. 26-27, 2023

Heads-up: the registration page for the 20th Brigham-Kanner Property Rights Conference, October 26-27, 2023, at the William and Mary Law School in Williamsburg, Virginia, is now up.

Early registration is a good thing because space is limited, especially at the Wren Building banquet on the 26th, at which the 2023 B-K Property Rights Prize will be presented to Prof. Gregory Alexander.

So please don't miss out.

The Property Rights Hall of Fame (second plaque)

If you are not already familiar with the Conference, it is (in our opinion) the best one-day event on property and property rights theory and practice. Expressly designed to bring together the legal academy and the practicing dirt law bar, the conference is where we discuss the burning property and property rights issues of the day. Here's the 2023 Program:

• Property and Propriety (or a Well-Ordered Society): A Tribute to Gregory S. Alexander
• Equity’s Role in Defining Property Rights
• Roundtable: Emerging Issues
• The Restatement’s Impact on Property Rights
• The Scalability of Property Rights (or the extent to which interests in property are or should be constitutionally protected)

Details here.

For more on the Conference, see our report from the 2022 Conference (more here as well).

Come, join us!

New Cert Petition: Overrule Penn Central!

Here's the latest in a case we've been following.

In this cert petition, the property owner is asking the U.S. Supreme Court to review an unpublished decision of the Ninth Circuit which rejected both Lucas and Penn Central takings claims.

Here are the Questions Presented:

1. Should this Court overrule in its entirety, or reconsider parts of, Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978)?

2. Does the “economic impact” of a regulation on the subject property have to approach total loss of use and value to weigh in favor of a taking under Penn Central, as the District Court and Ninth Circuit held below?

3. Can a property owner ever have “distinct investment-backed expectations” for the beneficial use of property, for purposes of alleging a Penn Central taking, if restrictive downzoning is adopted before development of the property is undertaken?

4. Should the “character of the government action” prong of Penn Central be expunged from takings analysis as conflicting with Loretto v. Teleprompter Manhattan CATV Corp., 458 US 419 (1982) and Lingle v. Chevron USA Inc., 544 US 528 (2005)?

5. Does a zoning regulation that places property in a zone for which no beneficial uses are authorized violate the categorical taking rule of Lucas v. South Carolina?

Follow along here as we'll be watching the case as it progresses, or on the Court's e-docket.

Petition for a Writ of Certiorari, Craneveyor Corp. v. City of Rancho Cucamonga, No. 23-169 (U.S. Aug. 18,...

New Article: Application of the Penn Central Test

Here's a recently-published article (ALI-CLE's The Practical Real Estate Lawyer) on a subject that we know you will want to read about: Jon Houghton, Hertha Lund, and Ben Stormes, Application of the Penn Central Test, 7 Prac. Real Estate Lawyer 7 (May 2023).

Check it out. It's short, practical (naturally), and worth your time.

Jon Houghton, Hertha Lund, and Ben Stormes, Application of the Penn Central Test, Prac. Real Estate Lawyer...

Don't Release The Hounds! No Taking When Florida Voters Outlawed Dog Race Gambling

 A short one from the Florida District Court of Appeals (First District).

In D'Arcy v. Florida Gaming Control Comm'n, No. 1D21-3606 (May 24, 2023), the court held that the voters of Florida adopted Amendment 13 to the Florida Constitution that outlawed betting on greyhound racing (indeed betting all dog racing), it did not effect a Penn Central taking of the property of the owner of a greyhound racing business.

The trial court granted the state summary judgment, and the appeal court affirmed. The court also pointed out that the Amendment didn't ban dog racing outright, merely betting on dog racing. Slip op. at 3. The court focused on a single Penn Central factor, the "expectations" question and held that "given then heavily regulated field of gambling, D'Arcy did not have a reasonable expectation that the investment in dog racing could not be severely impacted by regulation." Id.

It is not surprising that reasonable investment-backed expectations “are greatly reduced in a highly regulated field.” Branch v. U.S., 69 F.3d 1571, 1581 (Fed. Cir. 1995). Given the extensive history of state regulation of gambling, it is not reasonable that D’Arcy had no expectation of future governmental interference with their property investments, as they as claimed. Because one of the factors of Penn Central may be dispositive of a takings claim as a whole, we affirm the grant of summary judgment on this ground. See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984) (indicating that a single Penn Central factor may be dispositive of a takings case).

The court also held that the Amendment was a valid exercise of the police power, thus no taking:

The operation of Amendment 13 does not deprive racing dog owners of their property; it merely regulates its use. Thus, we also affirm summary judgment on the alternative ground that Amendment 13 was a valid exercise of police power, not eminent domain. Regulation of gambling does not constitute a taking as it is a well-established, valid exercise of police power.

Slip op. at 4.  

You already know what we think of that argument.

D'Arcy v. Florida Gaming Control Comm'n, No. 1D21-3606 (Fla. Dist. Ct. App. May 24, 2023) (per curiam)

SC: No Penn Central Taking For City Ordinance Merging Contiguous-But-Separate Parcels

As you can tell from the date of the opinion, we've been meaning to post the South Carolina Supreme Court's ruling in Braden's Folly, LLC v. City of Folly Beach, No. 2022-000020 (Apr. 5, 2023) for a while. Something else always intervened, but it remains a decision worth reviewing.

The city adopted an ordinance that erased lot lines for certain contiguous properties under common ownership, merging two distinct parcels into one and prohibiting their separate sale. The ordinance recognized nonconforming uses. Braden's properties are covered by the ordinance.

When Braden's Folly acquired the Lots in 1999, there was a small house on Lot A, and Lot B was undeveloped because it was either underwater or part of the active beach. Following a beach renourishment in 2005, Lot B became developable because it had been transformed into mostly sandy beach. Therefore, between 2006 and 2007, Braden's Folly received building permits from Folly Beach and constructed two single-family residences—a larger, more modern one on Lot A and a smaller one on Lot B—for a total cost of $1.1 million.

According to Braden's Folly, it had always intended to keep one of the Lots and sell the other—whichever of Lot A or B received the highest offer—in order to pay for the construction costs of the two houses. However, construction on the Lots finished in 2007 during the housing market collapse and Great Recession, which made selling either of the Lots financially unfeasible at that time. Nonetheless, even after the housing market recovered, Braden's Folly did not place the Lots on the market, continuing to use them for family vacations and as rental properties that grossed an average of $117,000 per year combined. It was not until February 2018 that Braden's Folly finally put the houses on the market, listing Lot A for $1.3 million and Lot B for $1.2 million.

One year later, upon the amendment of Folly Beach's merger ordinance in April 2019, Lots A and B were legally combined or "merged" into a single lot.

Slip op. at 9-10 (footnote omitted).

Braden alleged the merger was a taking of its property rights. The trial court agreed, holding the ordinance effected an as-applied Penn Central taking. Slip op. at 12 ("The circuit court held a property owner's reasonable investment-backed expectations are defined at the time the investment is made, and Braden's Folly intended to sell one of the Lots when it constructed the houses in 2006 and 2007.").

The S.C. Supreme Court held no Penn Central taking. The court's application of the three factors begins on page 16, with what we'll call the "Murr" question: what is the property alleged to be taken? Is it the unsaleable parcel, or the post-ordinance two-combined parcels? Applying the Penn-Central-within-Murr factors, The court held it is the latter. Slip op. at 19 ("we hold the appropriate denominator in the takings fraction, and the appropriate parcel to compare any economic impact resulting from the merger ordinance, is the entirety of Lots A and B combined").

• Economic impact: Assuming the owner's calculations are true, the before-and-after delta caused by the regulations represents a 23% loss of economic value. Slip op. at 22 ("While not insignificant, a 23% reduction in value is far less than other reductions in value found constitutional by the Supreme Court."). Remember, the court already determined that the "property" is both parcels, so you kind of knew where this was going, didn't you? As we wrote here, the big battle in these cases isn't so much whether there's been a taking, but what kind of taking it is (Lucas v. Penn Central), and once that battle has been fought and lost, the handwriting is nearly always on the wall.
• Investment-backed expectations: Because the merger ordinance didn't exist at the time of Braden's purchase, "[o]bjectively, it would have been reasonable for Braden's Folly to have expected to be able to" develop and sell its separate lot. Slip op. at 28. But (and there's always a "but"), Braden has been able to use the property for a number of decades, and it "made little to no effort to actually sell either property." Slip op. at 28, 29 ("Third, even assuming Braden's Folly's investment-backed expectation remained the same, the government cannot be held hostage by a property owner's expectations indefinitely when an owner refuses to implement those expectations. Rather, at some point, the government must have a right to regulate local properties in a measured fashion without running afoul of the takings doctrine, even if its regulation runs contrary to an owner's unspoken and unimplemented investment-backed expectations.").
• Character of the government action: "Folly Beach's merger ordinance does not unfairly single out Braden's Folly's Lots. Rather, as discussed by the Murr Court, merger ordinances have long been employed as a tool to regulate lot sizes." Slip op. at 34. The merger ordinance is designed to help save the beach, and this benefits beachfront owners like Braden. Id. ("Rather, in light of the potential public costs of continuing unchecked super-beachfront development, we reject the argument that Folly Beach's merger ordinance constitutes anything but responsible land use policy— one that is generally applicable and widely accepted nationwide.").

Here's what bothers us about this case:

After applying the Penn Central test, we find two factors weigh strongly in favor of Folly Beach: the economic impact and the character of the government action. As to the third factor, we find there is competing evidence regarding whether the merger ordinance interfered with Braden's Folly's reasonable, investment-backed expectation. We therefore conclude the third factor is a neutral factor that does not weigh in favor of either party. As a result, we hold the Penn Central balancing test overall weighs in favor of Folly Beach, and the merger ordinance did not effect an unconstitutional taking of Braden's Folly's Lots.

Slip op. at 35.

If there is "competing evidence" about Braden's investment-backed expectations, what is a court doing entering summary judgment on the Penn Central case by balancing and weighing the factors (even if the other two factors are property resolved as a matter of law - which they should not be)? The Penn Central test is ad hoc, with no one factor dispositive. As the Supreme Court has noted, one factor alone can serve to support a Penn Central verdict in favor of a property owner. For more see here and here.

Braden's Folly, LLC v. City of Folly Beach, No. 2022-000020 (S.C. Apr. 5, 2023)

Indiana SCT: We're Not Going To Decide Whether Indiana's Takings Tests Should Be The Same As Federal Tests (But We'd Like To In A Future Case)

In this Order the Indiana Supreme Court declines to take up the question of when property is taken by regulation. We post it here to note the statement of Justice Slaughter, who agreed that this case isn't the right vehicle to examine whether Indiana law should adopt a takings test different than the federal test but that he "remains open" to considering it in the right case.

So, Indiana friends, heads-up. Be sure in your next regulatory takings matter, you plead and argue both federal and Indiana takings.

Order at 2.

Order, Duke Energy Indiana,...

Sad Birthday Wishes To Penn Central - Some Things Don't Get Better With Age

Thanks to lawprof Josh Blackman for the reminder that our un-favorite case, Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978), turned 44 today.

If you know, you know.

Time has not treated the opinion well. Practitioners, judges, and legal scholars across the spectrum have called the three-factor Penn Central test for an ad hoc regulatory taking "demanding," "fuzzy," a four-part test, "neither defensible as a matter of theory nor mandated as a matter of precedent," and "problematic" and "mysterious." Courts mess up the basic meaning of the factors, treat what is supposed to be a fact-centric "ad hoc" test as a legal question decided on the pleadings, and gatekeep most of these cases from juries.

The definitive deconstruction of the case was Gideon Kanner's "Making Laws and Sausages: A Quarter-Century Retrospective of Penn Central Transportation Co. v. City of New York," 13 Wm. & Mary Bill Rts. J. 679 (2005). A must-read for anyone who plays in the Penn Central sandbox. 

If you want to be a part of rethinking Penn Central, listen to this episode of Clint Schumacher's Eminent Domain Podcast with our colleague Jon Houghton ("Jon Houghton and His Penn Central Quest"), or submit a proposal for our "Rethinking Penn Central" symposium.

But until something better comes along, let's wish Penn Central an Un-Happy Birthday.

Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978)

CAFED: Temporary But Recurring Flooding Is A Categorical Taking, Not Penn-Central-Plus

Here's the latest in a case we've been following.

In Ideker Farms, Inc. v. United States, No. 21-1949 (June 16, 2023), the U.S. Court of Appeals for the Federal Circuit held that temporary, but recurring government-caused flooding was correctly treated by the Court of Federal Claims as a categorical per se taking, and not under Arkansas Game & Fish's Penn-Central-plus multifactor test. The court also held that the property owners are entitled to just compensation for their lost crops.

The opinion is pretty dense (39 single-spaced pages) so we're not going to provide a blow-by-blow account of the arguments and the court's reasoning. But we will hit some of the highlights:

• The Missouri River floods annually. In the 1990s, the Corps of Engineer and Fish and Wildlife Service "began discussions concerning proposed changes to the River designed to mitigate the environmental impact" of the federal flood control measures built and installed long ago. Eventually (you know where this is going, don't you?), the federal agencies decided to "restor[e] the Missouri River to a more natural state," and abandoned its former policy of prioritizing flood control (2004 Changes).
• Well guess what? "While the period from 2000-2006 was largely a drought, periodic flooding returned in 2007, 2008, 2010, 2011, 2013, and 2014." Slip op. at 7. Property owners on the short end "alleged the 2004 Change caused frequent and severe flooding on Plaintiffs' farms between 2007 and 2014 that amounted to permanent, physical takings under the Fifth Amendment." Id. 
• Eventually, the CFC concluded the government caused the flooding and after a trial held the government liable for taking a permanent flowage easement. Just compensation awarded to the three representative plaintiffs: $7 million. That compensation did not include anything for the loss of the crops destroyed; the CFC held that loss was a consequential damage and not recoverable. Slip op. at 8. Both sides appealed: the government from the liability judgment, the owners from the denial of crop compensation.
• The Federal Circuit first rejected the government's statute of limitations argument (there always seems to be one of those, doesn't there?). The "stabilization" doctrine, which instructs courts to look when the impact of the government's acts or omissions stabilized when the impacts are spread out over time, applies here. See slip op. at 15 ("When a reasonable plaintiff knew or should have known that his claim stabilized does not need to correspond identically with the physical event giving rise to liability."). Thus, a takings claim need not invariably be triggered by the physical event giving rise to liability occurs. When the harm stabilizes is a fact question, and the CFC was not clearly erroneous when it concluded the damage settled in 2014, not earlier. Slip op. at 16.
• On to the merits of the takings claim. The court rejected the government's argument that the flooding must be analyzed under the Penn-Central-plus factors for temporary flooding outlined by the Supreme Court in Arkansas Game & Fish. True, the flooding here did not cover the plaintiffs' properties permanently with water. "The [CFC] accepted based on the parties' stipulation that the flooding in this case is permanent, not temporary, in nature. In short, the Government has not ceased and does not plan to cease flooding Plaintiffs' lands." Slip op. at 19. If it wasn't clear enough from Arkansas Game & Fish that permanent-yet-intermittent flooding is treated as a categorical taking, then the Supreme Court's more-recent Cedar Point opinion makes that "abundantly clear."

Where the government takes a permanent right of access, akin to an easement in gross, even if used only intermittently, it is unquestionably an appropriation of the owner’s right to exclude. It is undisputed that the Corps has permanently burdened Plaintiffs’ land with a right to access their land with flood waters.

Slip op. at 20.

• Here's the holding: "Accordingly, Arkansas Game & Fish II’s multi-factor test does not apply to permanently recurring flooding. Instead, such flooding that foreseeably or intentionally results from government action is a categorical physical taking." Slip op. at 21-22.
• Some clarification: "To be clear, we do not alter or amend our trespass-versus-takings jurisprudence or question the applicability of Arkansas Game & Fish II to temporary floodings. Cedar Point, 141 S. Ct. at 2078 (“[O]ur holding does nothing to efface the distinction between trespass and takings. Isolated physical invasions, not undertaken pursuant to a granted right of access, are properly assessed as individual torts rather than appropriations of a property right.”). Nor do we establish a hardline rule for establishing what is a permanent or recurring flooding. We simply reinforce the principle that the permanent appropriation of a flowage easement is 'clear enough' to be on the side of a per se taking and not a trespass." Slip op. at 22 (some citations omitted).
• The Federal Circuit also upheld the CFC's causation analysis. Check out pages 22-29. We think the critical part of this analysis is the court's rejection of the government's assertion that this case is like the MR-GO case in which the Federal Circuit held that Katrina-related flooding is a tort not a taking. 
• The crop-damage analysis begins at page 31. The court agreed with the property owners that their crops are "property" for which they are entitled to receive just compensation and the loss of the crops aren't (uncompensated) consequential damages. Those damages are damages that flow from the taking and are collateral. After all, the flooding wiped out the crops, and it wasn't just some side effect. Slip op. at 33.
• "Plaintiffs do not claim compensation consequential to the taking of an easement—rather, they seek compensation for the government’s appropriation
  of two distinct property interests." Slip op. at 34.  

Will the federal government try and take this one further up the chain? We'll see.

Ideker Farms, Inc. v. United States, No. 21-1849 (Fed. Cir. June 16, 2023)