Regulatory Taking vs. Physical Taking of Private Property by Government

GOVERNMENTAL TAKINGS: Dispossession/expropriation of Land vs. Regulatory Taking

THE TAKINGS CLAUSE – FEDERAL AND STATE CONSTITUTIONAL PROVISIONS

The Just Compensation Clause of the Fifth Amendment states, “[N]or shall private property be taken for public use, without just compensation.” U.S. Const. amend. V; Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933 (Tex. 1998).

Article I, section 17 of the Texas Constitution similarly provides in pertinent part that no “person’s property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made . . . .” Tex. Const. art. I, § 17; Mayhew, 964 S.W.2d at 933.

“At the heart of the takings clause lies the premise that the government should not ‘forc[e] some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”’ Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 554 (Tex. 2004) (quoting Steele v. City of Houston, 603 S.W.2d 786, 789 (Tex. 1980)).

CLASSIFICATION OF TAKINGS BY GOVERNMENT:

Physical Taking versus Regulatory Taking

Takings can be classified as physical or regulatory. Mayhew, 964 S.W.2d at 933. Because “there are several sharp distinctions between physical takings and regulatory takings,” it is “often inappropriate to treat cases involving one as controlling precedents for the other.” Lowenberg v. City of Dallas, 168 S.W.3d 800, 801-02 (Tex. 2005) (citing Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 323-24 (2002)).

Physical takings occur when the government authorizes an unwarranted physical occupation of an individual’s property. Mayhew, 964 S.W.2d at 933. Physical possession is, categorically, a taking for which compensation is constitutionally mandated. Sheffield, 140 S.W.3d at 669-70.

In contrast to a physical taking, a restriction on the permissible uses of property or a diminution in its value resulting from regulatory action within the government’s police power may or may not be a compensable taking depending on the circumstances. Id. ‘“[A]ll property is held subject to the valid exercise of the police power’ and thus not every regulation is a compensable taking, although some are.” Id. at 670 (quoting City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 804 (Tex. 1984)).

A plaintiff potentially may invoke multiple distinct theories in challenging a government regulation as an unconstitutional taking. The plaintiff may assert (1) a physical taking, which occurs when regulatory action requires an owner to suffer physical invasion of his property;[5] (2) a Lucas-type total regulatory taking, which occurs when regulatory action completely deprives an owner of all economically beneficial use of his property;[6] (3) a Penn Central taking, which occurs when regulatory action unreasonably interferes with a property owner’s right to use and enjoy his property;[7] or (4) a land-use exaction, which occurs when the government requires an owner to give up his right to just compensation for property taken in exchange for a discretionary benefit conferred by the government.[8] Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 548 (2005); see Sheffield, 140 S.W.3d at 671-72.

Footnotes:

[5] A “regulatory action that generally will be deemed a per se taking” and, thus, requires just compensation occurs “where government requires an owner to suffer a permanent physical invasion of property — however minor.” Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 538 (2005); see also Sheffield, 140 S.W.3d at 671.

[6] “[R]egulations that completely deprive an owner of ‘all economically beneficial us[e]’” of his property are deemed per se takings. Lingle, 544 U.S. at 538 (quoting Lucas v. S. Carolina Coastal Council, 505 U.S. 1003, 1019 (1992)) (emphasis in original); see also Sheffield, 140 S.W.3d at 671.

[7] A regulatory taking occurs when the government has unreasonably interfered with a property owner’s right to use and enjoy his property considering the following three factors: (1) “the economic impact of the regulation on the claimant;” (2) “the extent to which the regulation has interfered with distinct investment-backed expectations;” and (3) “the character of the governmental action.” See Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978); Sheffield, 140 S.W.3d at 672.

SOURCE: Houston Court of Appeals 14-09-00701-CV 5/3/11

LEGAL TERMS: Inverse condemnation claim | government exercise of eminent domain powers | regulatory taking | physical invasion of property | expropriation