The Fifth Amendment's "Takings" Clause

The Fifth Amendment to the United States Constitution is widely recognized for granting the right to remain silent. Additionally, it forbids the government from taking private property without offering "just compensation" to the property owner.

The "takings clause" does not entirely prevent the government from seizing private property. In fact, it expressly allows the government to seize private property for public use. However, it guarantees that the government can only seize property if it fairly compensates its owner.

The Fifth Amendment's taking clause used to apply only to situations where the federal government took property. However, in 1897, the Supreme Court determined that the Fourteenth Amendment applies the Fifth Amendment to the states. Therefore, the Fifth Amendment also protects citizens against state government takings.

The article thoroughly analyzes the takings clause, beginning with the relevant text from the Fifth Amendment. It investigates the takings clause's significance and delves into related Supreme Court cases, offering a succinct historical overview and its modern interpretation.

What the Takings Clause Says

The Fifth Amendment to the U.S. Constitution mainly covers criminal rights and the due process of law. The takings clause of the Fifth Amendment reads as follows:

"…nor shall private property be taken for public use, without just compensation."

What the Takings Clause Means

The takings clause prohibits the federal and state governments from taking private property from citizens unless the government compensates them for the seizure. In other words, if the government takes your property, it must pay you back.

It's important to note that the Fifth Amendment does not prevent the government from taking private property. On the contrary, the takings clause clearly states that the government can take private property. The only limit on the power is that if the government takes your property, it must fairly compensate you.

The government can only use eminent domain if it can show that the property interest in question will serve a legitimate public use. It also must show that the government will use the property within its legitimate authority to act.

What is a Taking?

The government "takes" property when it deprives the owner of its use or enjoyment. Generally, a taking occurs through the physical taking of property or through government regulations that interfere with a property owner's ability to use their property.

Property owners frequently agree to the government's acquisition of their property. Nonetheless, constitutional concerns emerge when the government employs eminent domain to appropriate private property without the owner's consent.

The terms "taking" and "eminent domain" are often used interchangeably. However, they mean two different things:

• Eminent domain is the power to take private property. It is a tool the government uses to condemn private property for public use. It allows the government to take title to real property or some other property right without the owner's consent.

• A taking is the legal process by which the government actually seizes property. It occurs after the owner provides consent or the government exercises its power of eminent domain and pays the owner for the property.

When the government exercises eminent domain, it initiates a condemnation action against the property owner. Typically, the government is required to compensate the property owner before taking possession of the property. However, there are exceptions to this rule (refer to the Modern Uses of the Takings Clause section for details). Should a dispute occur, a judge or jury will decide the amount of compensation due for the taking.

Types of Takings

Sometimes, the government takes action that falls short of condemnation. If the action "takes" private property for a public purpose (i.e., reduces its economic value), the property owner can file a lawsuit for compensation. Such a suit is called an "inverse condemnation" action. These lawsuits often deal with what constitutes a "taking."

There are generally two types of takings:

• Direct or physical takings

• Regulatory takings

A physical taking occurs when the government permanently converts private property for public use. It may occur even if the government does not condemn the property or acquire its title.

For example, New York City passed a law requiring apartment building owners to allow television companies to install cables on their respective properties. In 1982, the Supreme Court ruled that this was a government taking because it was "a permanent physical occupation authorized by government."

When the government engages in a direct or physical taking, the legal issues generally involve whether the taking is for legitimate public use or the amount of compensation owed.

Regulatory takings generally refer to when the government restricts a property owner's use of their property or imposes legal restrictions that reduce the property's value. A regulatory taking does not typically involve the government actually occupying the property for public use.

A 1922 Supreme Court case demonstrates how the takings clause applies to regulatory takings.

Pennsylvania Coal v. Mahon

Pennsylvania Coal Co. v. Mahon involved a dispute between a coal company and a property owner, H.J. Mahon. Mahon had bought land and the accompanying right to use the surface of an estate. When he bought the property, the coal company reserved the right to mine any coal underneath the property's surface.

In 1921, Pennsylvania passed the Kohler Act, which generally prevented miners from extracting minerals located underneath existing structures. Subsequently, the Pennsylvania Coal Company informed Mahon that it intended to mine coal underneath his property. Mahon filed a lawsuit arguing that the Kohler Act prevented the coal company from mining under his house.

The Supreme Court of Pennsylvania ruled that the Kohler Act prohibited the coal company from mining under Mahon's house. The coal company appealed to the United States Supreme Court, arguing that the takings clause protected its right to mine the coal, given the contract entered between it and Mahon when he bought the property.

The Court held that the Kohler Act violated the takings clause because it significantly diminished the property's value, and the state did not show a compelling enough public purpose to do so. Therefore, the state exceeded its police powers by passing the Act.

In his dissent, Justice Louis Brandeis created what is now known as the nuisance exception to the taking clause. He wrote that states may use their police powers to regulate nuisances (i.e., actions that interfere with other people's rights), even if the regulations diminish the property's value.

Test for Regulatory Takings

When the government physically occupies your land or seizes personal property, a claim based upon the takings clause is relatively straightforward. Regulatory takings, on the other hand, are more difficult to prove.

In Mahon, the Court created a balancing test to determine if the state or federal government violated the takings clause. In a subsequent case, the Supreme Court wrote that the "Fifth Amendment's guarantee . . . [is] designed to bar government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the people as a whole." (Armstrong v. United States (1960)).

In Penn Central Transportation Co. v. City of New York (1978), the Court identified factors state and federal courts may consider when analyzing a takings case. These factors, used when the government allegedly deprives an owner of some, but not all, of the economic value of their property, include the following:

• The regulation's economic impact on the property owner

• Whether and to what extent the regulation interfered with "distinct investment-backed expectations"

• The character of the government action (i.e., a physical taking versus a public program that adjusts the "benefits and burdens" of economic life)

In other words, courts use these factors to determine "when 'justice and fairness' require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons." (Penn Central).

If a regulation deprives an owner of most or all of the economic benefit of their property, it is a per se regulatory taking. The Penn Central test only applies when a regulation deprives some (but not all) economic benefit.

Private Property Explained

The Constitution does not define "private property." Therefore, state laws and the common law define private property for cases involving the takings clause.

Generally speaking, property refers to something a person owns that they can exclude from the enjoyment of others. Someone who holds a property interest in either personal or real property falls under the protection of the takings clause. It also applies to intangible property, such as easements and trade secrets.

Public Use Explained

Governments may only take property for public use. Common examples include the following:

• Roads and highways

• Power lines

• Water towers

• Oil pipelines

• Public parks

• Preserving historical points of interest

When determining whether a taking is legal, the courts analyze two factors:

• Did the government take the property for public use?

• Did the government fairly compensate the private property owners whose property it seized? (see the section below for more information on just compensation)

Whether a taking is for "public use" is for the courts to determine. Congress generally decides what type of takings the government may make. However, if the property owners disagree, the courts decide whether Congress' actions violated the Constitution's enumerated powers.

As the Supreme Court noted, the government must show the taking advances a "legitimate state interest" before taking property. The Court has also ruled that federal and state governments may only use the power of eminent domain pursuant to the Constitution's grant of power. In other words, the government cannot take property for any reason. Instead, it must show that the taking is necessary to effectuate a governmental power that the Constitution grants.

In Kelo v. City of New London (2005), the Supreme Court allowed a state government to transfer private properties to a private developer. The homeowners argued that taking their homes to give to the developer did not constitute a "public use."

The city argued that the development would boost the community's economy. It projected that the development would create over 1,000 jobs, increase tax revenue, and "revitalize an economically distressed city." It argued that this satisfied the "public purpose" necessary to condemn the properties.

In a 5-4 decision, the Supreme Court ruled in favor of the city. It allowed the city to condemn and take the properties so the developer could proceed with their project. The majority cited the development's "expected public benefits" as satisfying the "public use" requirement.

Americans overwhelmingly disagreed with the Kelo decision. In the years following it, at least 43 states adopted measures protecting citizens against government takings. Nevada, for example, prohibited the government from using eminent domain to transfer land from one private party to another.

"Just Compensation" Explained

The other factor that courts analyze when taking cases is whether the government satisfies the Fifth Amendment's just compensation clause. When disputes arise regarding just compensation, courts determine the amount owed. Factors courts consider when determining compensation include the following:

• Suitable uses for the property

• The local community's existing businesses and wants

Generally, the courts' default standard is the property's fair market value.

Historical Background of the Takings Clause

The Framers of the Constitution included many safeguards prohibiting or limiting the confiscation or taking of private property. The states ratified the Constitution in 1787, and four years later, they ratified the Bill of Rights. After they ratified the Bill of Rights, the Constitution provided the following protections of property rights, directly or indirectly:

• Article I, Section 10 (protecting against governmental interference with contracts

• The general concept of representative government

• Separation of powers

• Federalism

• The Fourth Amendment (protection against unreasonable searches and seizures)

• The Fifth Amendment's taking clause and just compensation clause

• The Fifth Amendment's due process clause

Initially, the takings clause only guaranteed a right to just compensation when the federal government took properties for public use. However, the Fourteenth Amendment's ratification in 1868 soon changed the clause's application.

The Fourteenth Amendment includes the due process clause, which the Supreme Court determined applies the Fifth Amendment to the states. (Chicago, B. & Q. R.R. v. City of Chicago (1897)). Before that, state and local governments could use the power of eminent domain "unrestrained by any federal authority." (Green v. Frazier (1920)).

Until 1875, the federal government's power of eminent domain did not extend to property outside Washington, D.C. However, the Supreme Court extended the power to private property outside the District of Columbia (Kohl v. United States (1875)).

In Kohl, the Court wrote that the federal government's power of eminent domain "was as necessary to the National Government as it was to the states." Three years later, another decision affirmed that "every independent government" had the power of eminent domain.

These decisions led to expanded use of the power of eminent domain. Governments used it to construct post offices, railroads, highways, and more. For example, see California v. Central Pacific Railroad (1888).

Modern Uses of the Takings Clause

As noted above, the Supreme Court continued to develop the takings clause throughout the 1900s. Today, local governments often use it for infrastructure, such as building power lines, pipelines, and other utilities. Other uses include building schools, roads, parks, and other public buildings.

As noted above, the government usually has to pay the property owner before taking possession of the property. However, an exception to the rule is called the "quick take." A quick take allows the government to deposit an appraised offer of compensation in the court registry. This allows the government to take the property and begin working on the project. At the same time, if the owner disputes the compensation, the court proceedings to determine fair compensation are deferred.

The quick take allows the government to take the property and begin its work quickly. It also allows governments to take property during an emergency. It also preserves the property owner's right to dispute the amount of compensation. If the owner agrees with the deposited compensation, they can file a motion to distribute the funds.

A federal statute, 25 U.S.C. § 357, also allows states to exercise eminent domain over tribal lands. Generally, states may condemn allotments that private people own within a tribal reservation. Such allotments generally do not receive tribal immunity.

The Supreme Court has often deferred to legislative determinations regarding eminent domain. In 1954, the Court wrote that its role in determining whether a government properly used the power of eminent domain for a public purpose "is an extremely narrow one" (Berman v. Parker). The Court also often defers to the highest state court's decision when it receives a takings case.

Moreover, the Court has tended to allow governments to use eminent domain to give property to private developers. Like the Kelo case, governments can generally condemn properties to further public developments, urban renewals, and the construction of low-cost housing. These goals appear to satisfy the taking clause's "public use" prong. If the government shows that the taking will promote public welfare, courts will generally allow it to exercise eminent domain.