BEST OF BLONDIE (Songs ) Today: Lecture May Run Over Time; Go Till Done Hold Qs Until After Class No Office Hours Tue-Wed; I’ll Post on Course Page Soon for 11/26-12/14 Assmt Sheet Updated for Final Week Course Evaluations at End Mon/Tue

MORE COMING ATTRACTIONS Ackerman (Mon/Tue): Asking Very Specific Qs Key Terms (“Ordinary Observer” & “Bad Joke”) used in context of these Qs Not asking if people would like the regulation Exam Qs Assigned: IIID(1998) & IIIF(2001) Mon/Tues: What Makes Qs Difficult? Final Class: Arguments re Those Difficulties Thanksgiving Invitation

Penn Central: Takings Analysis KEYS TO COLOR OF TEXT TODAY Greens = Arguments of Claimant PC Blues = Points Made by Majority Reds = Points Made by Dissent Purple = Points Made by Prior Authorities Black = Commentary from Me Yellow/Gold: Open Qs After Penn Central

Penn Central: Takings Analysis Structure of Penn Central Takings Analysis 1.Overview 2.Relatively Clear Instances of Takings 3.Arguments from Purpose 4.Arguments re Harm to Property Owner 5.Means/End Testing

Penn Central Takings Analysis: Relatively Clear Instances of Takings More likely a Taking if there is a physical invasion of property by or because of gov’t – Note: Based on type of interference rather than purpose or extent – Arguably Michelman reasons: Likely high demoralization costs for physical invasions

Penn Central Takings Analysis: Relatively Clear Instances of Takings More likely Taking if physical invasion Gov’t actions that may be characterized as acquisitions of resources to permit or facilitate uniquely public functions. (Sax Enterprisers)

Penn Central Takings Analysis: Relatively Clear Instances of Takings More likely Taking if physical invasion Gov’t actions that may be characterized as acquisitions of resources to permit or facilitate uniquely public functions. (Sax Enterprisers) US v. Causby (DQ131) arguably both: – Very low airline overflights invaded airspace – Use by military completely destroys value of farm

Penn Central Takings Analysis: Relatively Clear Instances of Takings US v. Causby (DQ131): Taking where … – Very low airline overflights invaded airspace – Use by military completely destroys value of farm DQ131: Majority distinguishes Causby from PC: – No physical invasion of airspace by NYC – No appropriation of property by NYC for gov’t use or exploitation for gov’t purposes – Harm to PC not arising from gov’t entrepreneurial operations

Penn Central Takings Analysis: Relatively Clear Instances of Takings DQ131: Majority treatment of Causby suggests endorsement of Sax with narrow view of “Enterpriser” – Majority Characterizes PC: No appropriation of property [by NYC] for gov’t use or exploitation for gov’t purposes. – Arguable if “Enterpriser” read broadly (see application of Sax to PC in earlier slides)

Penn Central: Takings Analysis Structure of Penn Central Takings Analysis 1.Overview 2.Relatively Clear Instances of Takings 3.Arguments from Purpose 4.Arguments re Harm to Property Owner 5.Means/End Testing

Penn Central Takings Analysis: Arguments from Purpose Purpose: Where Were We Before Penn Central? Hadacheck & Mahon: Can regulate to stop public nuisance. Miller: To save one type of property, can limit or destroy another type Sax & Epstein both think purpose is important Indirectly enters into Michelman b/c affects people’s perception of situation and thus may be relevant to both Demoralization Costs & Fairness Principle

Penn Central Takings Analysis: Arguments from Purpose Majority’s Discussion of Zoning (p.130) US SCt had previously “upheld land-use regulations that destroyed or adversely affected recognized real property interests” where – State gov’t “reasonably concluded” – that forbidding particular land use – would promote HSWM Reaffirms Hadacheck & Miller; gives many examples of permissible regulations

Penn Central Takings Analysis: Arguments from Purpose PC Tried to Distinguish Hadacheck/Miller, etc. Argued laws upheld in these cases all designed to stop “noxious uses” (essentially public nuisances) (see fn 30) This is plausible reading of earlier cases : – Stopping public nuisance/noxious use = no Taking – Different rules for other kinds of gov’t actions. – E.g., BDS in Mahon dissent re public harm v. public benefit

Penn Central Takings Analysis: Arguments from Purpose Dissent Agrees with PC: Providing Benefit Different From Stopping Harm “[T]he gov’t can prevent a property owner from using his property to injure others without having to compensate the O for the value of the forbidden use.” (p.138) Describes Hadacheck & Miller as noxious use cases (fn8 p.138) NOTE: Even the most Conservative Justices in 1978 don’t question results in Hadacheck & Miller

Penn Central Takings Analysis: Arguments from Purpose Dissent Apparently Would Adopt Position Later Articulated By Epstein (Taking unless Public Nuisance or Reciprocity) Dissent Sees Neither Here DQ133: As I argued earlier, could see some reciprocity in tourist $$$ flowing to PC; neither opinion recognizes Important: Majority Implicitly Rejects Epstein Position by Disagreeing w Dissent

Penn Central Takings Analysis: Arguments from Purpose [DQ132] (n.30): Majority seems to reject distinction between preventing harm & providing benefit. In Hadacheck & Miller, uses lawful at time of regulation [relevance: Os not bad actors meriting punishment?] Cases don’t turn on “noxious use” but that restrictions were “reasonably related” to implementing a policy “expected to produce a widespread public benefit” Plus destruction of historic landmark is public harm.

Penn Central Takings Analysis: Arguments from Purpose DQ132: Does Footnote 30 alter earlier cases? If “noxious use” category gone, would seem to mean that readings of Hadacheck & Miller that rest on public nuisance idea are incorrect. I’m skeptical that category is completely gone. You’d think preventing greater harms ought to give state more leeway to regulate land use.

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central A.Noxious Use B.Meaning of Distinct Invest-Backed Expectations (DIBE) C.DIBE & Hadacheck D.Denominator Q E.Heightened Scrutiny for Takings?

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central Noxious Use Should we read Footnote 30 literally to mean that harm/ benefit distinction is irrelevant to Takings analysis and there’s no special treatment for “noxious uses”? —OR— Can we still argue that gov’t gets more leeway to limit property rights when stopping harm to others or when purpose is otherwise very important?

Penn Central: Takings Analysis Structure of Penn Central Takings Analysis 1.Overview 2.Relatively Clear Instances of Takings 3.Arguments from Purpose 4.Arguments re Harm to Property O a.Distinct Investment-Backed Expectations b.Denominator Q 5.Means/End Testing

Penn Central Takings Analysis: Arguments re Harm to Property Owner Majority rejected claimant’s argument that any significant loss in value is a Taking. (Last Class) However, says (p.130) that a significant factor in Takings analysis is the “extent to which the regulation has interfered with distinct investment-backed expectations” (DIBE) Opinion is not explicit about what DIBE means or its relationship to the facts or to prior cases

Penn Central Takings Analysis: Arguments re Harm to Property Owner [DQ127] Not significant interference with DIBE in Penn Central (pp ) No interference w primary expectations re parcel. – Can still use in way intended (RR Stn) – Can still make reasonable rate of return (RRR) on investment Claimant exaggerates impact on “air rights” – No indication that can't build anything above. – Can transfer air rights in any event (suggests can consider TDRs in doing valuation)

Penn Central Takings Analysis: Arguments re Harm to Property Owner [DQ127]: DIBE: My Read from Majority Expectations = – Refers to owner’s expectations at time of purchase (or relevant subsequent investment) – Expectations presumably must be plausible/lawful at time = implicit requirement of reasonableness

Penn Central Takings Analysis: Arguments re Harm to Property Owner [DQ127]: DIBE: My Read from Majority Distinct: expectations re property right affected must be – Specific: Not vague like “someday I might develop more” or “I want as much profit as I can get” – Separate from Whole (where relevant): Look for evidence showing O considered right in Q separately at time purchased

Penn Central Takings Analysis: Arguments re Harm to Property Owner [DQ127]: DIBE: My Read from Majority Investment-Backed? – Evidence that distinct property right specifically paid for (e.g., separate price or negotiation) – Rewards good lawyering in drafting transaction documents (e.g., separately pricing “air rights” “mineral rights” “support rights” etc.)

Penn Central Takings Analysis: Arguments re Harm to Property Owner [DQ127]: My Read of DIBE Expectations = O’s at time of investment (reasonable) Distinct: Specific v. Vague; Separate from Whole Investment-Backed? Specifically paid for Penn Central – Air Rights not focus of deal: not distinct or investment-backed – DIBE in RR Station: No significant interference b/c RRR

Penn Central Takings Analysis: Arguments re Harm to Property Owner [DQ127]: My Read of DIBE Expectations = O’s at time of investment (reasonable) Distinct: Specific v. Vague; Separate from Whole Investment-Backed? Specifically paid for Exam Note: – Owner generally had some DIBE at purchase (intended uses) – Check if right affected is specific part of DIBE – Check if interference w DIBE is significant (e.g., no RRR)

Penn Central Takings Analysis: Arguments re Harm to Property Owner If My Read of DIBE Correct Significance: Protects ag. specific out-of-pocket losses – If O explicitly paid for specific use and state denied that use, may be Taking – If RRR on intended investment, not Taking Suggests different result in Penn Central IF: – O bought parcel last year at higher price b/c of intent re tower OR – O purchased air rights alone

Penn Central Takings Analysis: Arguments re Harm to Property Owner If My Read of DIBE Correct, Tension betw. 1.Why should result differ depending on DIBE if claims by otherwise identical Os of identical lots? (Clancy) 2.Why should O get compensated when govt cuts off other possible uses if O – is still using parcel as intended at purchase; and – is making a RRR

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central A.Noxious Use B.Meaning of Distinct Invest-Backed Expectations (DIBE) C.DIBE & Hadacheck D.Denominator Q E.Heightened Scrutiny for Takings?

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central Meaning of DIBE: Difficulties Should gifts/inheritances count as zero investment? Should foregone opportunities count as DIBE: – PC pays $15 Million for Air Rights = DIBE – If PC turns down offer of $15 Million for Air Rights = Same? How prove distinct & investment-backed? – RR Station in PC built with capability to support tower. – Majority doesn’t see as evidence of DIBE in tower (but could)

Penn Central Takings Analysis: Arguments re Harm to Property Owner DQ134 (fn.13): Dissent: Sees Difficulties w RRR Must determine what rate of return is “reasonable” for different types of property Must determine which piece of property to look at (Denominator Q; we’ll return to in a moment) ME: Also turns Constitutional Q into Battle of Accountants (re Proving Rate of Return)

Penn Central Takings Analysis: Arguments re Harm to Property Owner DIBE & PRIOR CASES: Mahon [DQ128] Majority’s description of Mahon (pp.132): Taking where Act made mining commercially impracticable Nearly same effect as destroying all of rights reserved Note: Doesn’t look at whole parcel (see Denominator Q below) As described, easy case for signif. interference w DIBE: Mineral & Support Rights both distinct & investment-backed Almost all gone = significant interference Critical that majority accepts Holmes reading of facts

Penn Central Takings Analysis: Arguments re Harm to Property Owner DIBE & PRIOR CASES: Miller Probably no significant interference w DIBE Highly unlikely that purchaser would have distinct expectations related to cedar trees Under Penn Central analysis, might require payment in rare case where big interference w related DIBE (10,000 Cedars)

Penn Central Takings Analysis: Arguments re Harm to Property Owner DIBE & PRIOR CASES: Hadacheck Invested money specifically to build brickworks – Expectations both distinct & investment-backed – Significant interference; investment in building now destroyed Why is Hadacheck OK but Mahon not OK? Why is Hadacheck OK but Mahon not OK? Prior explanations re public nuisance/noxious use seem to be eliminated by majority’s fn30

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central A.Noxious Use B.Meaning of Distinct Invest-Backed Expectations (DIBE) C.DIBE & Hadacheck D.Denominator Q E.Heightened Scrutiny for Takings?

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central DIBE & Hadacheck: After Penn Central, Why is Case Different from Mahon? I test this a lot; useful to think about possible answers. Some examples on next slide.

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central DIBE & Hadacheck: After Penn Central, Why is Case Different from Mahon? Because many uses of parcel remain (v. Mahon: complete loss of mineral rights)? Because Hadacheck is a Miller case (unavoidable choice between brickworks & residential use)? Because unreasonable to expect to continue harming neighbors ? – Though looks like noxious use claim again – Also, could say same about Mahon: unreasonable to cave in

Penn Central: Takings Analysis Structure of Penn Central Takings Analysis 1.Overview 2.Relatively Clear Instances of Takings 3.Arguments from Purpose 4.Arguments re Harm to Property O a.Distinct Investment-Backed Expectations b.Denominator Q 5.Means/End Testing

Penn Central Takings Analysis: Arguments re Harm to Property Owner [DQ129] PC: Ordinance = Taking b/c completely deprived PC of “air rights.” Majority addresses this claim even though it says it isn’t clear that “air rights” totally deprived (see discussions of DQ127 & 130)

Penn Central Takings Analysis: Arguments re Harm to Property Owner [DQ129] Majority Response (top p.133) to PC claim: Taking b/c completely deprived PC of “air rights.” Can’t establish a Taking simply by saying can’t exploit a property interest that they had believed they could use Elimination of one use of parcel not inherently interference w DIBE (see fn. 27) [MAF: would flow from my explanation of DIBE] Goes on to address Denominator Q

Penn Central Takings Analysis: Arguments re Harm to Property Owner Majority on Denominator Q (p.133) “‘Taking’ jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated. … [T]his Court focuses rather both on the character of the action and on the nature and extent of the interference with rights in the parcel as a whole, [here, the city tax block designated as the ‘landmark site.’]” (bold passage in original)

Penn Central Takings Analysis: Arguments re Harm to Property Owner Majority on Denominator Q: Language looks like BDS dissent in Mahon (parcel top to bottom) Don’t divide a single parcel into segments to determine if whole segment gone Look at all of parcel affected by regulation – Here whole block that was designated a landmark – NOTE majority doesn’t look at other nearby parcels owned by PC, so don’t look at all claimant owns

Penn Central Takings Analysis: Arguments re Harm to Property Owner Majority on Denominator Q BUT Comparing Treatment of Mahon suggests Majority is not just adopting BDS Dissent May turn on what claimant owns – Maybe looking at parcel in PC b/c PC owned whole parcel – Where claimant in Mahon did not own whole parcel, discussion did not look at whole parcel, but only at rights reserved. Generally would seem possible to have DIBE in particular segment if pay for separately

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central A.Noxious Use B.Meaning of Distinct Invest-Backed Expectations (DIBE) C.DIBE & Hadacheck D.Denominator Q E.Heightened Scrutiny for Takings?

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central Denominator Q Majority on Mahon v. PC  Denominator Q Uncertain Aspect of Denominator Q I’ve Tested a Lot: – Person separately buys two adjacent parcels and uses together – Challenged regulation affects one of the two – To Measure Reasonable Return/DIBE/Loss in Value, when should you look just at affected parcel and when at new combined parcel ?

Penn Central: Takings Analysis Structure of Penn Central Takings Analysis 1.Overview 2.Relatively Clear Instances of Takings 3.Arguments from Purpose 4.Arguments re Harm to Property Owner 5.Means/End Testing

Penn Central Takings Analysis: Means/End Testing Common Type of Constitutional Analysis Asks if – Means Chosen (Particular State Law) is Sufficiently Well-Designed to Achieve … – An End (State Interest) that is Sufficiently Important

Penn Central Takings Analysis: Means/End Testing Common Type of Constitutional Analysis Asks if – Means Chosen (Particular State Law) is Sufficiently Well-Designed to Achieve … – An End (State Interest) that is Sufficiently Important Rational Basis Scrutiny – Means Chosen Must Be Rationally Related to – Legitimate State Interest

Penn Central Takings Analysis: Means/End Testing Common Type of Constitutional Analysis Rational Basis Scrutiny – Means Chosen Must Be Rationally Related to – Legitimate State Interest Compare Two Forms of “Heightened Scrutiny”: Strict & Intermediate

Penn Central Takings Analysis: Means/End Testing Rational Basis Scrutiny Must be Rationally Related to Legitimate State Interest Used for Ordinary Legislation (where deferring to legislature) Govt Almost Always Wins Strict Scrutiny Must be Narrowly Tailored to Compelling State Interest Used for, e.g., Lines Drawn on Basis of Race, Religion, Speakers’ Point of View Govt Almost Never Wins

Penn Central Takings Analysis: Means/End Testing: Heightened Scrutiny Intermediate Scrutiny Must be Reasonably Necessary to Substantial State Interest Used for, e.g., Lines Drawn on Basis of Sex; Restrictions on Commercial Speech Govt Sometimes Wins Strict Scrutiny Must be Narrowly Tailored to Compelling State Interest Used for, e.g., Lines Drawn on Basis of Race, Religion, Speakers’ Point of View Govt Almost Never Wins

Penn Central Takings Analysis: Means/End Testing Majority Discussion of Zoning (p.130) US SCt had previously “upheld land-use regulations that destroyed or adversely affected recognized real property interests” where State gov’t “reasonably concluded” that forbidding particular land use would promote HSWM. – Looks like applying Rational Basis Scrutiny BUT

Penn Central Takings Analysis: Means/End Testing Majority (p.131): “It is, of course, implicit in Goldblatt that a use restriction on real property may constitute a ‘taking’ if not reasonably necessary to the effectuation of a substantial public purpose….” Looks like Intermediate Scrutiny test BUT majority never explicitly applies test to PC facts. BUT If majority thinks test applies, it must believe Miller, Hadacheck & Penn Central all pass test.

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central A.Noxious Use B.Meaning of Distinct Invest-Backed Expectations (DIBE) C.DIBE & Hadacheck D.Denominator Q E.Heightened Scrutiny for Takings?

Big Qs Left Open by Penn Central Penn Central: Takings Analysis Big Qs Left Open by Penn Central Heightened Scrutiny for Takings? Some Language in Majority Supporting Both Rational Basis and Intermediate Scrutiny I’ll Talk About Why It Matters in Final Lecture Can Use Intermediate Scrutiny Test on Exam – Can Cite to Passage in PC re Goldblatt – Should Try to Defend That Use is a Good Idea for Some or All Takings Cases

Penn Central: Takings Analysis I’ll Hang Around to Take Qs or You Can Me

Have a good & productive break