1. RECENT SUPREME COURT DECISIONS ON REGULATORY TAKINGS AND THE LEGACY OF KELO ON EMINENT DOMAIN by Gregor I. McGregor, Esq.
© 2017

2. McGregor & Legere, PC 15 Court Square, Suite 500 Boston, MA 02108
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©2017
The author thanks his excellent law clerks for their fine research, graphics, preparation, and updates of this presentation. Giles Krill (1998), Sarah Grilli (2000), Marsha DeGeer (2001), Andrew Meeks (2002), Brian Falk (2005), Sidra Vitale (2006),
Amaan Husain (2008), Peter Vetere (2010), Claudia Colón (2014), and Olympia Bowker, Esq. (2015, 2016).

3. Prior Cases Pennsylvania Coal Co. v. Mahon, 43 S. Ct. 158 (1922)
Penn Central Transportation Co. v. City of New York, 98 S. Ct (1978)
Agins v. City of Tiburon, 100 S. Ct (1980)
Loretto v. Teleprompter Manhattan CATV Corp., 102 S. Ct (1982)
Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank, 105 S. Ct (1985)
First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 107 S. Ct (1987)
Keystone Bituminous Coal Ass’n v. DeBenedictis, 107 S. Ct. 1232(1987)
Lucas v. South Carolina Coastal Council, 112 S. Ct (1992)
Eastern Enterprises v. APFEL, 118 S. Ct (1998)
City of Monterey v. Del Monte Dunes at Monterey, Ltd., 119 S. Ct (1999)
Good v. United States,189 F.3d 1355 (1999)

4. Cases Discussed
Nollan v. California Coastal Commission, 107 S. Ct (1987)
Dolan v. City of Tigard,114 S. Ct (1994)
Palazzolo v. Rhode Island, 121 S. Ct (2001)
Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency, 122 S. Ct (2002)
Kelo v. City of New London, 125 S. Ct (2005)
Stop the Beach Renourishment, Inc. v. Florida D.E.P., 130 S. Ct (2010)
Koontz v. St. Johns River Water Management District, 133 S. Ct (2013)
Arkansas Game and Fish Commission v. U.S., 133 S. Ct. 511 (2013)
Horne v. U.S. Department of Agriculture, 135 S. Ct (2015)
Calif. Bldg. Indus. Ass’n v. City of San Jose, Calif., 136. S. Ct. 928 (2016)
Kirby v. North Carolina Department of Transportation, 786 S.E.2d 919 (2016)

5. Kirby v. North Carolina Department of Transportation 786 S. E
Kirby v. North Carolina Department of Transportation 786 S.E.2d 919 (2016)
Facts: NCDOT’s recording of a Highway Corridor Map land bank prevented plaintiffs from improving, developing, and subdividing their property for an unlimited period of time.
Issue: Was NCDOT’s restriction of property rights a valid exercise of the police power?

6. Kirby v. North Carolina Department of Transportation 786 S. E
Kirby v. North Carolina Department of Transportation 786 S.E.2d 919 (2016)
Holding:
The Supreme Court of North Carolina ruled this effectuated a taking of property rights by eminent domain, not police power, so the case was remanded for an inverse condemnation money damages trial.
Though reduction of highway development costs is a laudable public policy, it triggers a right to seek damages by inverse condemnation.
The NCDOT’s Map Act imposed indefinite restraints on fundamental property rights.

7. California Bldg. Indus. Ass’n v. City of San Jose, Calif. 136. S. Ct
California Bldg. Indus. Ass’n v. City of San Jose, Calif S. Ct. 928 (2016) (cert denied)
Facts: City housing ordinance required a minimum of 15% low-income units in all new residential developments with 20 or more units—restriction to be in place for 45 years. Issue: Case implicated an unsettled issue under the Takings Clause: Does Nollan/Dolan test apply where the alleged taking arises from legislatively imposed conditions, like in an ordinance, rather than administrative conditions, like in a permit?

8. California Bldg. Indus. Ass’n v. City of San Jose, Calif. 136. S. Ct
California Bldg. Indus. Ass’n v. City of San Jose, Calif S. Ct. 928 (2016) (cert denied)
Thomas concurrence in denial of certiorari:
“I continue to doubt that ‘the existence of a taking should turn on the type of governmental entity responsible for the taking.’ Until we decide this issue, property owners and local governments are left uncertain about what legal standard governs legislative ordinances and whether cities can legislatively impose exactions that would not pass muster if done administratively.”
Ultimately, still an unsettled issue whether and how the Nollan/Dolan permit conditions test would apply to ordinance or statutes.

9. California Bldg. Indus. Ass’n v. City of San Jose, Calif. 136. S. Ct
California Bldg. Indus. Ass’n v. City of San Jose, Calif S. Ct. 928 (2016) (cert denied)
Since certiorari was denied, the holding of the Supreme Court of California stands:
The city housing ordinance was not an unconstitutional exaction in violation of the takings clause; and
The validity of an inclusionary housing ordinance does not depend upon a showing that the restrictions are reasonably related to the impact of that particular development has on affordable housing.

10. Nollan v. California Coastal Commission 107 S. Ct. 3141 (1987)
Landmark
Case
Facts: Landowners sought building permit to expand their home. California Coastal Commission conditioned permit on granting of a public easement across their beach for the public, in exchange for the new construction impairing public’s view of the beach.
Nollan Property

11. Nollan v. California Coastal Commission 107 S. Ct. 3141 (1987)
Holding:
Exacting an easement across the front of the property parallel to the ocean, under a law protecting visual access to the ocean from the street, constituted an unlawful taking. Court invalidated permit condition.
Reasoning:
Permit condition was a taking not because it deprived the landowners of all practical land use (the impact test), but because it lacked an “essential nexus” with the California Coastal Commission’s legitimate interest in preserving the public’s right to view the beach.

12. Nollan v. California Coastal Commission 107 S. Ct. 3141 (1987)
Government must establish a clear relationship between a land use restriction and the legitimate police power purposes to protect the public health, safety, welfare, or morals. “Essential nexus” is a Court-created test for land use permits.
CCC had the power to forbid construction of the house to protect the public’s view of the beach, and therefore could have provided the owner an alternative to that prohibition: a condition on a permit to accomplish the same purpose.
This is very significant language because the restriction is based on broader public welfare.

13. Dolan v. City of Tigard 114 S. Ct. 2309 (1994)
Landmark
Case
Facts:
Store owner sought a permit to expand and pave a parking lot. The city had a land use plan and a Community Development Code to manage flooding. The City Planning Commission granted the permit subject to conditions of dedicating land within a floodplain to have a “greenway,” and a bicycle path.
Dolan Property, before.

14. Dolan v. City of Tigard 114 S. Ct. 2309 (1994)
Holding:
An essential nexus between the legitimate state interest and the permit condition imposed is required, per Nollan. If a nexus exists, then exactions imposed must be “roughly proportionate” to the projected impact of the proposed development. This is to be determined in the board’s individualized findings.
Creek and store, after.

15. Dolan v. City of Tigard 114 S. Ct. 2309 (1994)
Reasoning:
The Court applied the essential nexus and rough proportionality tests, and found that, while there was a nexus, the conditions imposed were not proportional to the expected impact.
This case is the origin of the “rough proportionality” test, applicable to restrictions that are permit conditions.
The practical impact of the Dolan decision is to require planners and regulators, when doing land use planning and permitting, to make individualized findings before they require dedications in exchange for granting approvals.

16. Palazzolo v. Rhode Island
121 S. Ct (2001)
Facts: Regulations designated salt marshes as coastal wetlands. Landowner acquired property that included salt marsh. Landowner claimed regulation was a taking since he wasn’t allowed to fill wetlands.
Issue decided: Is there standing to claim a taking is a party acquired the property after the fact?
Holding: Several concurrences and dissents.
A claimant does not waive his right to challenge a regulation as an uncompensated taking by purchasing affected property after the enactment of the regulation.

17. Palazzolo v. Rhode Island
121 S. Ct (2001)
Reasoning:
“A blanket rule that purchasers with notice have no compensation right when a claim becomes ripe is too blunt an instrument to accord with the duty to compensate for what is taken.”
Aftermath: In 2005, on remand the Rhode Island Superior Court found there was no taking.
NOTE:
SCOTUS mentioned Palazzolo five times since the decision, but three of those times the court cited J. O'Connor's concurrence.

18. Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency
122 S. Ct (2002)
Facts: Landowners claimed a temporary moratorium on development around Lake Tahoe effected an unconstitutional taking.
Issue: Does such a moratorium constitute a per se taking requiring compensation?
Holding: Moratoria was not a per se taking.
Whether the Takings Clause requires compensation when the government enacts temporary regulation denying a property owner of all viable economic use of the property is to be decided by the Penn Central Test—not by applying any categorical rule.

19. Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency
122 S. Ct (2002)
Reasoning:
In rejecting the taking as being per se, the Court recognizes that the temporary nature of a land use restriction should not be given exclusive significance.
The interest in “fairness and justice” will be best served by relying on the familiar Penn Central approach when deciding cases like this, rather than by attempting to craft a new categorical rule.
The ruling is a remarkable exposition on what the Court regards as a valid moratorium planning and scientific basis.

20. Stop the Beach Renourishment, Inc. v. Florida D. E. P. 130 S. Ct
Facts: Beach eroded. Town wanted to add sand to the beach to counter erosion. Beachfront owners claimed state was taking their property by nourishing beach that belonged to private owners.
Holding: No taking occurred, Florida DEP’s approval to restore eroded beach did not deprive landowners of littoral rights. However, Justices differed on whether a judicial taking could take place.

21. Stop the Beach Renourishment, Inc. v. Florida D. E. P. 130 S. Ct
Observations:
We must wait for a future case to see how (or if) the Court applies the judicial taking doctrine.
Governmental beach, recreation, transportation, and navigation projects continue to enjoy a green light where they do not implicate private real estate rights.
State supreme courts, which issue hundreds of decisions upholding enabling acts for public projects, validating statutes on state agency programs, and announcing broader interpretations of traditional real estate doctrines, dodged the judicial taking bullet.

22. Stop the Beach Renourishment, Inc. v. Florida D. E. P. 130 S. Ct
The decision potentially has long-term consequences on governments adapting to climate change in future years, such as to cope with sea level rise, larger flood-prone areas, altered river and stream channels, and higher ground water levels.
Examples are: erosion control, coastal structures, beach nourishment, utility and road relocation, development retreat, and wetland restoration.

23. Koontz v. St. Johns River Water Management District 133 S. Ct
Landmark
Case
Facts: Landowner sought to develop his property, and offered to deed a conservation easement to mitigate environmental effects. District demanded a bigger easement or payment as permit conditions.
The Florida wetlands property at issue in Koontz v. St. Johns River Water Management District

24. Koontz v. St. Johns River Water Management District 133 S. Ct
Holding: Nollan-Dolan applies when agencies impose conditions upon issuing land-use permits, even if the permit is ultimately denied for failure to comply with such conditions.
Reasoning: Limiting the standard to exclude the denial of permits or the exaction fees would create a path towards circumvention.

25. Koontz v. St. Johns River Water Management District 133 S. Ct
Extended the Nollan-Dolan “essential nexus” and “rough proportionality” tests to monetary exactions and fees related to issuance of land-use permits.
The case left the burden of proof and heightened scrutiny requirements still unclear, as it expressly reserved judgment on whether Koontz’s claim would be successful.
On remand, the Florida Court of Appeals adopted it’s previous opinion, and found that a taking did occur.

26. Arkansas Game and Fish Commission v. U.S. 133 S. Ct. 511 (2013)
Facts:
State agency alleged that federal flood control activities, which induced temporary flooding in State-owned wildlife area, had damaged timber products to such an extent as to constitute an unlawful taking.
Images from Google Images.
Black River Wildlife Management Area

27. Arkansas Game and Fish Commission v. U.S. 133 S. Ct. 511 (2013)
Holding: Recurrent flooding caused by such government actions is not automatically exempt from compensation liability under the Takings Clause, even if it is temporary in duration.
Aftermath: On remand, the court found there was a taking by the United States.
NOTES: This decision highlights that all takings claims are case-specific and that compensation may be sought for temporary takings.

28. Horne v. U.S. Department of Agriculture 135 S. Ct. 2419 (2015)
Facts: The second of two cases. First case went to SCOTUS on jurisdictional grounds, second concerning takings. Petitioners were raisin farmers from California alleging that the government had committed a taking by fining them for not turning over part of their crop in order to regulate market prices, under the Agricultural Marketing Agreement Act of 1937.

29. Horne v. U.S. Department of Agriculture 135 S. Ct. 2419 (2015)
Holding: Parties subject to a fine for violating the marketing order could bring takings claims in Federal District Court, in the nature of a defense, prior to paying the fines.
The fine caused a present injury and the statutory scheme was the proper avenue to pursue a takings claim.
This case suggests that takings claims can be used as a defense against an administrative enforcement order, not just for compensation after the fact.

30. THE LEGACY OF KELO ON EMINENT DOMAIN FOR PRIVATE DEVELOPMENT IN URBAN RENEWAL

31. Kelo v. City of New London 125 S. Ct. 2655 (2005)
Landmark
Case
Facts: Developer wanted to construct project and create jobs. City authorized agent to either purchase property or acquire it by eminent domain. Area to be taken included many homes.
Issue: It this a “public use” within the meanings of the takings clause?
Holding:
Yes. The proposed disposition of property “to increase tax and other revenues, and to revitalize economically distressed city” qualified as “public use” within meaning of takings clause of Federal Constitution's Fifth Amendment.

32. Kelo v. City of New London 125 S. Ct. 2655 (2005)
Reasoning:
“Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us…to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan.”
“There is, moreover, no principled way of distinguishing economic development from the other public purposes that we have recognized.”
“Quite simply, the government's pursuit of a public purpose will often benefit individual private parties.”

33. Kelo v. City of New London
125 S. Ct (2005)
THE AFTERMATH
The US Supreme Court denied a rehearing of the case.
While the taking was upheld, no building was ever constructed in any of the project area taken by eminent domain.
“The project site is now a field of weeds, a home for feral cats, and, occasionally, a dumping ground for storm debris.”
The original developer disappeared, and no subsequent developers have been able to finance the project.

34. Kelo v. City of New London The Kelo Property: before and after.
125 S. Ct (2005)
The Kelo Property: before and after.

35. Kelo v. City of New London 125 S. Ct. 2655 (2005)
RIPPLE EFFECT
44 states changed their laws
11 changed their constitutions; 40 enacted new statutes;
30 states tightened these the terms “public use” or “public purpose.”; 25 changed their definitions of “blight”; 11 gave prior owners repurchase rights for property not used for the taken purpose and later sold; 9 changed the burden of proof in eminent domain cases; 2 states prohibited or limited transferring taken property to private parties for any reason; 7 states with new statutory protections saw their high courts add additional protections via case law.
By 2013, 47 states increased protections against takings for private use. Only 3 states (Arkansas, Massachusetts, and New York), the District of Columbia, and the U.S. territories declined to change their laws, so Kelo applies.

36. STATUTORY COMPENSATION FOR REGULATORY TAKINGS
2004: Oregon, Measure 37; Or. Rev. Stat. § (2013)
Voters approved a statutory provision requiring compensation for landowners whose property is devalued by government restrictions on land use.
However…2007: Oregon, Measure 49
Significantly reduced the impact of Measure 37 by removing a provision of monetary compensation, limiting development on high value agricultural land and keeping current zoning laws enforceable.
2006: States follow Suit
In response to Kelo and, presumably, the fallout from Oregon’s Measure 37, 13 states placed similar bills limiting eminent domain and regulatory takings powers on their ballots.
Arizona: Measure 49: Modifies Measure 37; Clarifies Right To Build Homes; Limits Large Developments; Protects Farms, Forests, Groundwater. [ ]
Florida: The amendment modified Article X, Section 6 of the Florida Constitution to require that if the state government, or a local government within Florida, takes property through the process of eminent domain, the government must retain that property for at least 10 years before it can transfer the property to a private owner. Amendment 8 includes a provision that allows the Florida State Legislature to legislate exceptions; for this to happen, the exception must be approved by both houses of the legislature by a 60% supermajority vote.[[
Georgia: Georgia Proposed Constitutional Amendment 1 was on the November 7, 2006 statewide ballot in Georgia as a legislatively-referred constitutional amendment, where it approved. It reformed the state's eminent domain laws. Louisiana: To prohibit the expropriation of property by the state or a political subdivision of the state for predominant use by or transfer to a private person or entity under certain circumstances; to define "public purposes" relative to the expropriation of property; to provide exceptions for the operation of public ports and airports and for the expropriation of property for industrial development purposes; and to provide for items included in just compensation to be paid to the owner of the expropriated property. (Amends Article I, Section 4(B) and Article VI, Section 21(A); Adds Article VI, Section 21(D) Michigan: Michigan Eminent Domain Restriction Amendment, Proposal 4 was on the November 7, 2006 election ballot in Michigan as a legislatively-referred constitutional amendment, where it was approved. Proposal 4 prohibited government from taking private property by eminent domain for certain private purposes.
The effects of Proposal 4 were to:
Prohibit government from taking private property for transfer to another private individual or business for purposes of economic development or increasing tax revenue.
Provide that if an individual’s principal residence is taken for public use, the individual must be compensated for at least 125% of property’s fair market value.
Require government that takes a private property to demonstrate that the taking is for a public use; if taken to eliminate blight, require a higher standard of proof to demonstrate that the taking of that property is for a public use.
Preserve existing rights of property owners. New Hampshire: Public Question 1 was on the November 7, 2006 statewide ballot in New Hampshire as a legislatively-referred constitutional amendment, where it was overwhelmingly approved.[1] The proposal was one of 12 eminent domain-related ballot measures throughout the country on the 2006 ballot. North Dakota: The North Dakota Taking of Private Property for Public Use Initiative, also known as Initiated Constitutional Measure 2, was on the November 7, 2006 ballot in North Dakota as an initiated constitutional amendment, where it was approved.[1] This measure provided that the taking of private property for public use or purpose, also known as eminent domain, does not include public economic development benefits and that private property could not be taken for private benefit unless necessary for conducting a common carrier or utility business. The measure amended Section 16 of Article I of the North Dakota Constitution.[2]
South Carolina: South Carolina Amendment 7, also known as the Eminent Domain Act, was on the November 7, 2006 election ballot in South Carolina as a legislatively-referred constitutional amendment, where it was approved.[1] Amendment 7 prohibits "the State [of South Carolina] or a local government" from "condemning, or taking, private property for any purpose except for a public use."
The proposal was one of 12 eminent domain-related ballot measures throughout the country on the 2006 ballot.

37. STATUTORY COMPENSATION FOR REGULATORY TAKINGS
Nine bills passed:
Arizona (Prop. 207, codified Ariz. Rev. Stat. § )
Florida (Amendment 8, modifying Article X, Section 6)
Georgia (Amendment 1)
Louisiana (Amendment 5(c), known as the Eminent Domain Act)
Michigan (Proposal 06-4)
New Hampshire (Question 1, inserted Article 1(a) to their constitution)
North Dakota (Measure 2, amended Article 16, Section 2 of their constitution)
South Carolina (Amendment 7)
Oregon (Measure 49, amending O.R.S ).
Others failed:
California (Prop 90)
Idaho (Prop 2)
Washington (Initiative 933)
Montana (Initiative 154): found to be illegally on the ballot due to “‘pervasive fraud’ by out-of-state, paid, signature-gatherer(s).” 334 Mont. 265 (2006).

38. STEALTH LANGUAGE AS ADDED ON POST-KELO
Arizona
“If the existing rights to use, divide, sell or possess private real property are reduced by the enactment or applicability of any land use law enacted after the date the property is transferred to the owner and such action reduces the fair market value of the property the owner is entitled to just compensation from this state or the political subdivision of this state that enacted the land use law.” Ariz. Rev. Stat. Ann. § (A).
Oregon
“(1) If a public entity enacts one or more land use regulations that restrict the residential use of private real property or a farming or forest practice and that reduce the fair market value of the property, then the owner of the property shall be entitled to just compensation from the public entity that enacted the land use regulation or regulations.” Or. Rev. Stat. Ann. §
North Dakota
“Private property shall not be taken or damaged for public use without just compensation having been first made to, or paid into court for the owner, unless the owner chooses to accept annual payments as may be provided for by law.” NDCC Const. Art. 1, § 16.
See also:
Washington Wash. Rev. Code Ann. § (West) Damages--Eminent domain
 If an ordinance is passed as in this chapter provided, and it appears that in making of the improvements so authorized, private property will be taken or damaged thereby within or without the city, the city shall file a petition in the superior court of the county in which such city is situated, in the name of the city, praying that just compensation be made for the property to be taken or damaged for the improvement specified in the ordinance and conduct proceedings in eminent domain in accordance with the statutes relating to cities for the ascertainment of the compensation to be made for the taking and damaging of property, except insofar as the same may be inconsistent with this chapter.
Nevada Nev. Const. art. I, § 22. Eminent domain proceedings: Restrictions and requirements
3. If a public use is determined, the taken or damaged property shall be valued at its highest and best use without considering any future dedication requirements imposed by the government. If private property is taken for any proprietary governmental purpose, then the property shall be valued at the use to which the government intends to put the property, if such use results in a higher value for the land taken.
Minnesota Minn. Stat. Ann. § (West) Upon successfully bringing an action compelling an acquiring authority to initiate eminent domain proceedings relating to a person's real property which was omitted from any current or completed eminent domain proceeding, such person shall be entitled to petition the court for reimbursement for reasonable costs and expenses, including reasonable attorney, appraisal and engineering fees, actually incurred in bringing such action. Such costs and expenses shall be allowed only in accordance with the applicable provisions of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970,1 Statutes at Large, volume 84, page 1894 (1971), any acts amendatory thereof, any regulations duly adopted pursuant thereto, or rules duly adopted by the state of Minnesota, its agencies or political subdivisions pursuant to law.
(c. Remedies for regulatory takings. The Minnesota Supreme Court has recognized that the remedies available to an owner who has sustained a regulatory taking include an injunction against enforcement of the regulation29 as well as a writ of mandamus compelling the unit of government that enacted the regulation to commence condemnation proceedings.30 Thus, a property owner who brings a regulatory takings claim should request injunctive relief against the continued enforcement of the regulation as well as damages for inverse condemnation of the owner's property.31 In light of the Minnesota Supreme Court's indication that the Minnesota takings clause is friendlier to property owners than the federal clause,32 owners should plead their regulatory takings claims under both the Minnesota Constitution and the U.S. Constitution. 25 Minn. Prac., Real Estate Law § 10:38 (2014 ed.))

39. Kelo was a predictable result based on case law since the 1960’s.
LESSONS OF KELO
Kelo was a predictable result based on case law since the 1960’s.
The backlash from Kelo was out of proportion to the true impact of the holding.
States and municipalities should use professional planning by land use and economic planners, with valid public participation.
“If there’s valid public participation, then the plan is valid.”