Statutory Approaches to Regulatory Takings: State Property Rights Legislation Issues and Implications for Public Administration

Article excerpt

Should state administrators be required to perform assessments of potential violations of the Fifth Amendment before issuing a new regulation or applying an existing one? Should state regulations be confined to protection of public health and safety only and exclude other public interest goals for the "general welfare?" Should local governments be required to perform impact assessments of takings according to the state attorney general's mandated guidelines prior to taking a regulatory action? If as a result of the lawful application of a state regulation, a business person's property experiences a 25 percent decline in value, should the state agency that issued the regulation be required to pay for the amount of the decrease out of its budget? These and other questions are being answered in the affirmative by provisions in new laws governing state and local regulation being considered and passed by state legislatures across the country. The rise of the regulatory state, conflicts over land use and environmental regulation, political organizing by property rights groups, and federal judicial pronouncements have all sparked an explosion of state legislative initiatives concerning regulatory takings.

Recent federal judicial decisions have set out an emerging, albeit somewhat muddled doctrine of regulatory takings that directly impacts a wide range of federal, state, and local regulatory activities. The doctrine states that under certain circumstances, many normal regulatory activities can be judged to have violated the Fifth Amendment's prescription that private property may not be "taken for public use without just compensation."

Compensation can be required by the courts, even though the regulation leaves legal ownership in the hands of the private individual. These pronouncements coupled with concerted lobbying activities by property rights advocates across the country have led to a spate of new state statutes that in some cases embrace, and in others, extend requirements placed on regulators. These measures could portend complicating, if not extremely costly consequences for the exercise of government regulation, depending on the approach a state takes.

In this article we provide a preliminary overview and analysis of the state property rights legislation enacted to date. We describe the extent and nature of these new statutes, explain and critique the major types of measures being adopted, and conclude with a discussion of the key issues raised by these acts and their implications for public administration.

Federal Jurisprudence on Regulatory Takings

One of the intentions of most of the new state statutes concerning property rights is to codify elements of the newly developing takings doctrine. A brief review, then, of the key Supreme Court rulings on regulatory takings is in order before moving on to the legislative approaches themselves.

Since 1922, the U.S. Supreme Court has recognized the possibility that a regulation, as opposed to outright confiscation, could be judged a taking without just compensation (Pennsylvania Coal v. Mahon, 260 U.S., 1992). However, federal courts seldom invoked the "regulatory takings" doctrine or sided with private property owners against state interests until the 1980s. In the last 15 years, the takings doctrine has been elaborated, and property owners have begun to win more regulatory takings suits against state and local regulators in federal and state courts.

The Supreme Court's preferred approach to assessing regulatory takings claims is for trial judges to conduct an ad hoc balancing of the "legitimate state interest" at stake with the burden placed on the property owner affected by the governmental action. The Court has preferred (but not always insisted) that courts assess each regulation as it is actually applied to a particular piece of property to determine if a taking has occurred rather than to assess the regulation when issued. …