The course of action which a property owner may pursue against a governmental defendant to recover the just compensation guaranteed by the Fifth and fourteenth amendments when the defendant, without initiating an eminent domain proceeding, "takes" private property is called "inverse condemnation."
The elements of a compensable taking of property can occur under many different circumstances. An action to establish inverse condemnation is clearly proper when a governmental entity has destroyed, confiscated, or substantially abridged some right or privilege in the plaintiff's property or when the normal operation of governmental facilities results in a destructive interference with the use of the plaintiff's property by third persons, as by jet aircraft noise. Excessive regulation, resulting in an effective prohibition of substantially all use and value of the interest regulated, may also constitute a taking.
The most intractable issue in inverse condemnation litigation currently relates to regulatory takings. Although government may carry out many types of programs that adversely affect economic values without its actions constituting a taking, in some contexts police power regulations may be so restrictive in character as to constitute a compensable taking, as in Pennsylvania Coal Co. v. Mahon (1922). However, no "set formula" has been developed for determining when a legislative measure has adversely affected property interests to that degree. The relative magnitude of the loss sustained by the property owner is relevant but not controlling. Factors suggestive of a taking, however, include the extent to which the government's actions have impaired legitimate investment-backed expectations of the owner and the fact that the regulation has resulted in an uncompensated acquisition of resources by the public entity. (See penn central transportation co. v. new york city.) Factors often relied upon to negate a taking include the existence of widely shared compensating benefits resulting from the restrictions and the reflecting in the regulation of a rational legislative choice between mutually incompatible private interests.
Inverse condemnation jurisprudence is also complicated by uncertainty, so far not resolved by the Supreme Court, as to the scope of the relief available for regulatory takings. In many cases, for example, Pennsylvania Coal Co., the taking rationale has been invoked to invalidate excessive regulatory action; in others, an award of monetary compensation has been granted. In San Diego Gas & Electric Co. v. City of San Diego (1981), four Justices, with a supporting dictum from a fifth, intimated that when a taking is enjoined, compensation for interim losses sustained by the property owner should be granted. And when overriding public interest so requires, governmental action that effects a taking may even be declared valid, subject to the payment of just compensation to those persons whose property has thereby been taken. (See dames & moore v. regan.)
Some commentators have argued, and a few courts have held, that the exclusive remedy for a regulatory taking is invalidation of the offending measure. These decisions generally reflect judicial reluctance to impose onerous burdens that could interfere with orderly fiscal planning by governmental agencies engaged in regulatory functions. They appear to be based on the questionable assumption that invalidation will necessarily be less disruptive to the achievement of public objectives than payment of compensation. As Justice william j. brennan suggested in San Diego Gas & Electric Co., a more appropriate remedial posture would permit the governmental entity to choose whether to repeal the offensive regulation with payment of compensation for temporary losses or to retain it in force with payment of full compensation.
Arvo Van a lstyne
Michelman, Frank I. 1967 Property, Utility, and Fairness: Commentaries on the Ethical Foundations of "Just Compensation Law." Harvard Law Review 80:1165–1258.
Sax, Joseph L. 1973 Takings and the Police Power. Yale Law Journal 74:36–76.