Lucas v. South Carolina Coastal Council

Brief Fact Summary.

A coastal zoning law rendered Lucas’s beachfront property virtually valueless. Lucas sued claiming that his property had been taken within the meaning of the Fifth Amendment, which required just compensation.

Synopsis of Rule of Law.

The Fifth Amendment prohibits governmental taking of private property for public use without just compensation. This prohibition applies to the states as well through the Fourteenth Amendment. In order to not constitute a taking, the land use regulation must first substantially advance a legitimate state interest, and second not deny the owner of all reasonably economically viable use of his land.

Facts.

Lucas paid $975,000 for two residential lots in Isle de Palms in Charleston, South Carolina. He intended to build single-family homes on the property. The state passed the Beachfront Management Act, which had the direct effect of making Lucas’ property valueless because he could not build on the property. The State did not act until after the property had been zoned for individual lot development and most other parcels had been improved. This put the whole burden of the regulation on the remaining lots. Lucas sued claiming that his property had been taken within the meaning of the Fifth Amendment, which required just compensation. The trial court found that the property had been “taken” by operation of the Act and that the South Carolina Coastal Commission was ordered to pay “just compensation” in the amount of $1,232,387.50. The Supreme Court of South Carolina reversed the trial court and found that, because Petitioner did not challenge the facial validity of the Act as a rea
sonable use of the police power, no compensation could be owed. Petitioner Lucas petitioned the United States Supreme Court for review.

Issue.

Did the dramatic effect on the economic value of Lucas’s lots amount to a taking of private property under the Fifth and Fourteenth Amendments requiring the payment of “just compensation”?

Held.

Yes. Judgment reversed.
If the protection against physical appropriations of private property was to be meaningfully enforced, the government’s power to redefine the range of interests included in the ownership of property was necessarily constrained by constitutional limits.
There are two categories of regulatory action, which the government must compensate without case specific inquiry into the public interest advanced in support of the restraint. The first is when the property owner has to suffer a physical invasion of his property. The second is where the regulation denies all economically beneficial or productive use of the land without a legitimate state interest.
The government does not need to compensate when acting under the government’s police powers where the government could reasonably conclude that the health, safety, morals or general welfare would be promoted by prohibiting particular contemplated uses of land. In the past the cases held that if the use prohibited was “harmful or noxious” then such standard was the touchstone to distinguish regulatory takings from regulatory deprivations.
However, the standard of “harmful and noxious”cannot be the basis of departing from the categorical rule that total regulatory takings must be compensated. There are limits to the non-compensable exercise of police power. The cases should be understood to mean that when a state uses their police power, then the test of whether or not there has been a taking depends on if the restrictions were reasonably related to the implementation of the policy expected to produce a widespread public benefit and applicable to all similarly situated property. Other landowners, similarly situated, built single-family homes. Those landowners were permitted to continue the use denied to Lucas.
Whether or not this is a harm-preventing legislation is not enough to justify the taking. Here the legitimate state interest is to stop construction too close to the beach-dune area. The regulation may advance this interest because construction had contributed to the erosion and destruction of this public resource.
The lower courts found that Lucas’s land lost all economic value as a result of the new law. This would be a categorical formulation because here the law deprives the land of all economically beneficial use. There are problems with determining whether the land has decreased in value so much that there is no economically feasible use.
First is there is more to property than just the development and economics. Even if those are deprived, the landowner could still enjoy the land. However, the Court here does not ignore the possibility of non-economic uses. The Court stated that if those non-economic uses were impaired, that possible taking would invite exceedingly close scrutiny under the Takings Clause as they did in Loretto. Therefore if there are still non-economic uses that the owner would enjoy and would increase the value to him in a non-investment or development way, the Court would closely scrutinize the legislation to determine whether there was harm to the non-economic value of the land.
The second problem is that one does not know if the owner was deprived of all economically beneficial use of the burdened portion of the tract or as one in which the owner has suffered a mere diminution in value of the tract as a whole. Therefore the Court would advocate looking to see whether the owner’s investment-backed expectations are harmed by the legislation.
The third problem is that in a categorical formulation where “deprivation of all economically beneficial use” is taken away, an owner whose land has diminished in value by 90% could not recover. However, the owner might still recover because the economic impact of the regulation on the claimant and the extent to which the regulation has interfered with distinct investment-backed expectations are keenly relevant to the takings analysis generally. So, in cases where the land has only diminished in value, the test of whether a taking has occurred is if the owner’s investment-backed expectations were diminished substantially. Then the state must show that its actions are in furtherance of stopping a noxious harm (traditional nuisance analysis- the taking of a nuisance does not require just compensation).
The State is attempting to justify their regulation because the uses Lucas desires are inconsistent with the public interest or that they violate a common-law maxim. If the State wishes to restrain Lucas in a common-law action for public nuisance, then they must identify background principles of nuisance and property law that prohibit the uses he now intends in the circumstances in which the property is presently found.

Dissent.

Justice Blackmun and Stevens dissenting:
Justice Blackmun: Nothing in the record undermines the South Carolina General Assembly’s assessment that prohibitions on building in front of the setback line are necessary to protect people and property from storms, high tides, and beach erosion. That legislative determination cannot be disregarded in the absence of such evidence. The determination of harm to life and property from building is sufficient to prohibit that use.
The government may in certain circumstances regulate property without compensation no matter how adverse the financial effect on the owner. The Court has upheld the right of States to prohibit uses of property injurious to public health, safety or welfare without paying compensation. This is because the State has full power to prohibit an owners’ use of property if it is harmful to the public. Since no individual has a right to use his property so as to create a nuisance or otherwise harm others, the state has not “taken” anything when it asserts its power to enjoin the nuisance-like activity. There is nothing, however, to show that the Fifth Amendment’s takings clause was limited by the common law nuisance doctrine. The legislatures regularly determine which uses are prohibited, independent of the common law and independent of whether the uses were lawful when the owner purchased the property.
Justice Stevens: The categorical rule is unsound, unwise, and the Court’s formulation of the exception to the rule is too rigid and narrow. A law that renders property valueless may not constitute a taking. In response to the rule, courts may define “property” broadly and only rarely find regulations to affect total takings.
For example, Lucas may have put his land to “other uses” fishing, camping or may sell his land to his neighbors as a buffer. His land is far from “valueless.” The Court’s analysis fails to explain why only the impairment of “economically beneficial and productive use” of property is relevant in takings analysis.
Under Mugler the state does not have to compensate if they prohibit or regulate certain uses of property that were previously lawful. One must wonder if Government will be able to “go on” effectively if it must risk compensation “for every such change in the general law”. This ruling freezes the State’s common law, denying the legislature much of its traditional power to revise the law governing the rights and uses of property.
The just compensation clause was designed to bar government from forcing some people alone to bear public burdens, which in all fairness and justice should be borne by the public as a whole. Therefore when a law is part of general and comprehensive land use plan, it is far less likely to constitute a taking. Conversely, “spot zoning” is far more likely to constitute a taking. The generality of the Beachfront Act is significant. The Act does not target particular landowners, but rather regulates the use of the coastline of the entire State. The Act did not single out owners of undeveloped land. It also prohibited owners of developed land from rebuilding if their structures were destroyed.
Concurrence. Justice Kennedy concurring.
A beachfront lot does not lose all value because of a development restriction. The finding of no value must be considered under the takings clause by reference to the owner’s reasonable investment-backed expectations. The expectations protected are those based on objective rules and customs that can be understood as reasonable by all parties involved.
States should not be prevented from enacting new regulatory initiatives in response to changing conditions. The takings clause protects private expectations to ensure private investment. Common law of nuisance is not the test because there may be an interest that the state would need to protect by going further than the law of nuisance might otherwise protect.

Discussion.

The determination whether a state law unlawfully infringes a landowner’s property in violation of the takings clause requires an examination of whether the restriction on private property forces some people alone to bear the public burdens which should be borne by the public as a whole.
There is an explicit taking/eminent domain where there is an actual appropriation or destruction of a person’s property or a permanent physical invasion by the government or by the authorization of law.
The right to exclude others from one’s property is one of the most essential sticks in the bundle of rights that are commonly characterized as property See: Loretto v. Manhattan CATV (1982), a case where cable installation was found to be an intrusion as a minor but permanent encroachment. The Court said this was enough to warrant damages. See also, Kaiser Atena v. US, a case where people made a waterway connected to a lagoon. Although the government may regulate the waterway, it does not follow that the pond is also subject to a public right of access. See also, Nolan v. CA Coastal Commission, where the government wanted an easement across the property to allow the public access to the beach.
Even though the right against physical invasion is paramount, the State may show they have a compelling interest that outweighs the private interest. See: PruneYard Shopping Center v. Robins, a case where the Court said that the owners of a shopping center could not exclude the general public from exercising their free speech and petition rights, but they could restrict the expression by imposing reasonable time, place and manner restrictions. See also, State v. Shack, where the Court concluded that the title to real property cannot include dominion over the destiny of the migrant workers the owner permits to come upon the premises. Necessity justifies the government officials in entering to give them information because an owner cannot use property to injure others rights
Implicit Taking/Regulatory Taking arises when the government has restricted the use of privately owned land for the public benefit to such an extent that compensation is required. A taking will occur when the owner is effectively denied all economic viable use of his land without the state advancing a legitimate state interest. The question in this case was how to know when the value of the land has been simply diminished or eliminated.
If the idea of “property” is defined broadly as it was in Penn Central v. NYC, then it is harder to prove the regulation has eliminated all economic uses of the land. The bundle of sticks analysis comes in and the Court can find other economic uses of the land that could produce income, which are not uses the owner might have thought to use it for such as selling air rights of a building if not allowed to develop up. It is harder under such analysis for the owner to win. The dissent in this case said that this was a narrow law, which made one owner, or a few owners bear the burden of a public interest.
If the idea of “property” is defined narrowly as only encompassing the owner’s specific investment backed expectations then it is easier to show a taking as it was in Lucas. Lucas wanted to build a single-family house and could not. The majority did not tell him to sell his property to his neighbors as a buffer or that the non-economic benefits still made the property valuable. The dissent said this was a general law applicable to everyone.
The State will defend the regulation against a taking attack three ways. First if the facts allow, they would say they are trying to abate activities that are common law nuisances (Lucas). The regulations would do no more than duplicate the result obtainable by private parties under the state law of private nuisance. Second, the State validly exercised their police power to regulate for the health, safety or welfare purposes. This will require a fairly tight fit between the means chosen and the objective the State is pursing. Third, the use intended was already prohibited by the owner’s title (Lucas).
If the state loses then the state must pay the property owner just compensation for the taking. That includes the fair market value, including any reasonable expectations that a buyer may have had about possible future uses. An owner is not entitled to additional value that is subjective and peculiar to the owner (Lucas). The owner could also obtain an injunction to invalidate the ordinance. The State could terminate the regulation and pay the owner for damages that occurred while the regulation was in effect.