A fundamental principle of our legal system is that law ought to embody known, promulgated rules, impartially applied to all individuals at all times. But one area of the law that seems blithely to defy such a notion of the "rule of law and not of men" revolves around individuals' use and disposition of their property, The Fifth Amendment to the Constitution includes the "taking clause." This provision protects property owners from an otherwise almost limitless eminent-domain power by declaring, "Nor shall private property be taken for public use, without just compensation." Under the aegis of the taking clause, governments may exercise their power of eminent domain only when the property seized will be devoted to a "public use," and all takings must be accompanied by the payment of "just compensation." In many cases, however, governments do not openly take property through eminent domain. Rather, they simply regulate property under the guise of another putatively inherent power of government-the "police power," a legacy of English common law that allows governments to constrain individual conduct in the name of the public good.
Using the police power as a rationale, courts frequently sanction regulations imposing enormous financial losses on property owners and abridging their control over their own property. So long as these regulations are clothed in the proper police-power language-if a legislature proclaims that they were enacted to further the "public health, safety, morals, or general welfare"-courts will normally see them as "reasonable" and not examine either the motives of the legislators, the necessity for such measures, or the efficacy of the schemes. Zoning boards, planning commissions, city councils, and state legislatures are permitted to run roughshod over landowners' property rights, provided only that fraud, deception, or transparent favoritism are not conspicuously apparent. The rights to use, develop, enjoy, and transfer property-rights considered of intrinsic and preeminent importance by our Founding Fathers-suffer accordingly.
For example, zoning and land-use legislation frequently cause some landowners to absorb substantial financial losses, while other, more fortunate owners reap huge windfalls. This injustice mocks our basic intuitions about even-handedness in government's treatment of individuals. It also violates one of the egalitarian precepts that undoubtedly inspired James Madison's urging that the taking clause be included in the Bill of Rights: that no individual should be forced to contribute more than his fair share to public improvements.
How did such regulatory measures as zoning become judicially acceptable as legitimate exercises of local governments' police power? The reasoning can be traced in some legal precedents established when the victims of police-power acts challenged them as takings that, under the eminent-domain clause, should be beyond the pale of constitutional legitimacy.
Very early in our history, the courts confined compensable takings to instances in which a government had physically invaded the plaintiff's property. Late in the 19th century, however, the Supreme Court invoked a so-called "noxious use" test to distinguish legitimate police-power acts from unconstitutional takings. The noxious-use test arose out of a decision written by Justice John Marshall Harlan in an 1887 case, Mugler v. Kansas. Kansas passed a law prohibiting the manufacture of liquor within the state. Mugler, the owner of a distillery there, claimed that this law reduced the value of his property by 75 percent. He argued that it unconstitutionally deprived him of his property without due process of law and operated so as to take his property without compensation.
Justice Harlan rejected Mugler's argument. Conceding that not all statutes adopted under the guise of the police power are beyond review, Harlan explained that the due-process clause of the Constitution does not contravene the equally essential principle that all property is held "under the implied limitation that the owner's use of it shall not be injurious to the community." Therefore, he suggested that government can prohibit property uses validly declared injurious to the health, safety, and morals of the community. Such legislation is not a "taking"; the state need not compensate property owners for losses sustained when they are simply denied the privilege of inflicting harm on the community by the noxious use of their property. After all, no one has a right to inflict harm on others.
Justice Harlan's noxious-use test, while it remained the regnant theory embraced by the Supreme Court, produced some rather curious decisions. If the ordinary, peaceful, nonviolent, non-fraudulent operation of a brewery-a business that had never been considered a common-law nuisance-could be completely prohibited, what next? Under Harlan's test, the Supreme Court upheld a Pennsylvania statute prohibiting the manufacture or sale of oleomargarine as a valid police-power measure to protect the public health. The Court similarly endorsed a Los Angeles ordinance barring the operation of brickyards within a portion of the city even though only one brickyard fell victim to that edict, and its owner incurred a loss in excess of $700,000. Ban liquor, margarine, and brickyards today, and why not gasoline stations, cigarettes, beauty parlors, or even lemonade stands tomorrow?
Two cases in the 1920s further clarified-if it can be called clarifying-the context for distinguishing uncompensable police-power regulations from compensable takings. Pennsylvania Coal Company v. Mahon, decided in 1922, was the first.
In this case, the Pennsylvania Coal Company had sold land to the Mahons, reserving the right to mine beneath the surface of the land without liability for any attendant damages. Nevertheless, the Mahons went to court to prevent the company from mining in such a way as to cause their home, which was on the land, to subside.
The Mahons' argument relied on a Pennsylvania law called the Kohler Act, which required surface support in anthracite districts. The company argued that for this requirement to be constitutional, the state would first have to acquire the privately owned anthracite districts through condemnation and the payment of just compensation. But the state contended that it had no such obligation, because the Kohler Act fell within the bounds of its police power.
When the case went to the Supreme Court, Justice Oliver Wendell Holmes argued that the police power and the power of eminent domain were as two poles of a continuum. As a state exercised its police power, at some point it would move beyond the limits of that power and sneak over into the terrain inhabited by eminent domain. In other words, some activities that states might try to accomplish under the police power could be constitutionally performed only under the power of condemnation. Thus, as bogus police-power measures, they would have to be invalidated.
But how can one tell whether an activity is a police-power action or in the eminent-domain terrain? Holmes proposed tests that boil down to a diminution-in-value criterion. "The general rule," he wrote, "is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking," else "the contract and due process clauses are gone." He added that "one fact for consideration in determining such limits is the extent of the diminution."
Holmes found that Pennsylvania had exceeded its constitutional authority-taking, in effect, the entire value of the coal by banning mining likely to cause subsidence. But he didn't say how large a diminution is required to cross the limit (100 percent? 25 percent?), nor did he say what other facts might be taken into consideration.
Not surprisingly, the adoption of the Holmesian test has fostered a chaotic legal climate. Decisions are written in highly conclusionary language, and they often supplement the diminution-in-value test with noxious-use or physical-invasion rules.
Another related theory, usually considered to have emanated from the Pennsylvania Coal decision, attempts to balance the benefit to the public against the loss to the property owner in order to determine the legitimacy of a police-power measure. If a court determines that the supposed public benefits exceed the private losses, the measure is deemed constitutional. Some environmentalists have been zealously encouraging the wholesale adoption of this harm/benefit standard. They believe that judges will become increasingly susceptible to their briefs arguing that land-use legislation always produces an enormous public benefit, a benefit always outweighing any private losses.