Regulatory Takings Under Federal Law: SCOTUS Cedar Point Nursery Decision

The United States Supreme Court recently issued its decision in Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 (US Supreme Court June 23, 2021) involving important questions with respect to regulatory takings of private land for public uses. The case involved a State of California regulation that granted labor unions and organizations a "right to take access" to an agricultural employer's property in order to solicit support for unionization. Under the regulations, an agricultural business was required to allow union organizers onto their land for up to three hours per day for up to 120 days per year.

The question for the US Supreme Court was whether this California regulation was a regulatory taking under the Fifth Amendment of the US Constitution. The Supreme Court answered "yes" to the question. In brief, the court said "yes" because the regulation allowed a “physical invasion” or “appropriation” of a landowner's private property without just compensation. Here is a brief explanation of the case and of regulatory takings under federal law.

The Fifth Amendment to the US Constitution contains what is called the Takings Clause. The Takings Clause provides: "[N]or shall private property be taken for public use, without just compensation." The Supreme Court has interpreted this to mean that the federal government can take private land for public use but must pay just compensation. In general, just compensation is defined as the fair market value for the land. As the court has said, when the government physically takes private property, the rule is clear: "the government must pay for what it takes."

It is recognized that governments can be engaged in the taking of private land even though there may be no physical appropriation of private property. This can occur when the government imposes statutory or regulatory requirements that restrict an owner's ability to use their private property.

When this happens, a different set of legal rules are used to evaluate whether a taking has occurred and, if so, what is the amount of "just compensation" that must be paid. On the first question -- whether such a statutory/regulatory land use restriction amounts to a taking -- courts typically use a "flexible approach" that considers factors such as the economic impact of the regulation, its interference with reasonable investment-backed expectations of the owners and the character of the government action.

Generally, if the statute or regulation results in a near total loss of all value and productive use of the private land in question, then a regulatory taking has likely taken place. But, not always since the court will also consider whether the statute or regulation is justifiable on other grounds, like preventing clear public nuisances and/or hazards.

Finally, there is a third set of rules that are applied when a statute or regulation allows or requires a physical "invasion" or "appropriation" of private land for public purposes. If a statute or regulation does this, then courts will nearly automatically determine that a taking has occurred.

This is how the Supreme Court resolved the Cedar Point Nursery case. As described above, the California regulations at issue required that union organizers be allowed access to the private property of the agricultural businesses. In this manner, the regulations clearly allowed a physical "invasion" of private land. The court held that this was a governmental taking of private property as a matter of law.

As the court explained, the right to exclude persons from one's land -- the right to deny access -- is "a fundamental element of the property right." Further, the court held that the right to exclude is "... not an empty formality that can be modified at the government's pleasure." Thus, if the government issues a regulation that infringes upon the right to exclude, the government has engaged in a takings under the Fifth Amendment as a matter of law. Further, the court held that the California regulation was a taking even though the regulations did not allow for permanent and continuous access to the private property. The Court held that ANY physical invasion/appropriation is a taking whether the invasion/appropriation is permanent or temporary. The court held that the duration of the appropriation bears only on the amount of just compensation that must be paid for the taking.

For more information, and to schedule a confidential consultation with experienced and dedicated eminent domain and condemnation attorneys in Charlotte, contact Arnold & Smith, PLLC. Use our “Contact” page or give us a call at 704-370-2828. We handle land use, zoning and condemnation legal matters in federal court, in Mecklenburg County and elsewhere in North Carolina. We have offices in Charlotte, Lake Norman, and Union County.