Property Rights

Talking Takings

How much has to be taken to be a taking?

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One small refusal to act by the federal government could be one giant leap for property owners bedeviled by federal regulations.

The U.S. House of Representatives in March passed a bill giving citizens standing to sue if federal action takes away more than 20 percent of their property's value. Perhaps it was recognition of a congressional groundswell against regulatory takings that made the feds decide, after 15 years of fighting, not to appeal the U.S. Circuit Court of Appeals for the Federal Circuit decision against them in Loveladies Harbor v. United States.

That decision gives the investors in the Loveladies Harbor development $2.6 million in damages because wetlands regulations forbade them to develop 12.5 acres out of their original 250-acre plot. Thus, the decision says that a taking can occur even if the property taken is part of a larger chunk. The decision sets a precedent for the U.S. Court of Federal Claims, and thus should have profound effects on the future of takings law.

Why would the feds bow out of a case whose precedent will doubtless work against them in future takings cases? Roger Pilon, director of the Cato Institute's Center for Constitutional Studies, speculates that they were afraid that the Supreme Court might end up agreeing with the lower court, and thus establish a binding precedent on all other circuits, not just the federal one.

In 1993's Lucas takings case, the Supreme Court seemed to hold that only a total taking needed to be reimbursed; in Loveladies, Pilon says, the federal appeals court held that "a taking is a total taking of whatever part is taken. If the courts had gotten it right from the start, with a zero-percent rule instead of a 100-percent rule, this issue would never have come up."

Nancie Marzulla, chief legal counsel for the Defenders of Property Rights, suggests that Lucas doesn't necessarily mean that anything less than a total taking is exempt from reimbursement. Since the facts of that case happened to involve a total taking, she says, the Supreme Court was restricted to judging only on that issue. That doesn't mean that anything less might not also be a taking.

Thus, she is optimistic about the possibility of future Supreme Court victories for reimbursing people who have any of their property's value taken by government action.