Property Rights

Just Compensation?

Testing the Takings Clause

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In 1995 Daniel and Andrea McClung applied for a permit to open a Subway sandwich shop on their property in Sumner, Washington. The city then charged the couple nearly $50,000 for improvements to the town's entire storm drainage system, not just the portion of the system that would have served their fledgling business. The McClungs then sued the city under the Fifth Amendment to the U.S. Constitution.

The Takings Clause in the Fifth Amendment forbids the state from seizing private property for public use without just compensation. Applying the clause is fairly routine in cases involving, say, land taken for a school or highway. Less common is invoking the Fifth when governments force property owners to spend money on complying with new regulations. Different governments have different standards when it comes to what regulations merit compensation and under what conditions.

Last year, the U.S. Court of Appeals for the 9th Circuit ruled in favor of the city of Sumner. The court determined that money is not property and that therefore there was no unconstitutional taking. The McClungs have appealed to the U.S. Supreme Court, which has yet to decide whether it will hear the case and clarify the scope of the Fifth Amendment.