The takings clause in the Fifth Amendment strikes a balance between the rights of private property owners and the right of the government to take that property for a purpose that benefits the public at large. When the government takes private property, it is required to pay just compensation to the property owner for his or her loss.
The Bill of Rights, including the Fifth Amendment, is ratified. The amendment contains several clauses that provide protection against governmental abuse of criminal law. Another clause says that no one “shall be deprived of life, liberty, or property without due process of law.” The amendment protects individuals by limiting government’s power of eminent domain under which it can confiscate private property.
In Kohl v. United States, the U.S. Supreme Court upholds the federal government’s takeover of land in Cincinnati, Ohio, for a U.S. Post Office and the eviction of the tenants. The Court rules that the ability of the government to exercise its eminent domain power in the Fifth Amendment is essential to its ability to fulfill all of its duties to the public, and this important goal outweighs any inconvenience to individuals living on the land. The Court also finds that the amount of the tenants’ compensation (to reimburse them for the government’s “taking”) should be determined by the federal court.
In Fallbrook Irrigation District v. Bradley, the U.S. Supreme Court upholds a California law that imposed a tax on all landowners to pay for irrigation of drier land in the state. In deciding that the law does not violate property owners’ due process rights, the Court notes that the irrigation project qualifies as a “public use” – even if only certain landowners will benefit – because it helps the state’s economy as a whole. Notably, this case is decided before the takings clause is extended to the states and thus relies on the 14th Amendment’s due process clause rather than the Fifth Amendment. Nevertheless, the Court’s decision on what is a public purpose has been applied in other Fifth Amendment cases.
In Chicago B. & Q. R.R. v. Chicago, the U.S. Supreme Court rules that a city’s decision to build a public road across some railroad tracks – which requires the railroad to incur the cost of “erecting gates, planking the crossing and maintaining flagmen, in order that [the] road may be safely operated” – is not a “taking” that requires the city to pay “just compensation” to the railroad company. The Court rules that the railroad gains much from the privilege of running through the city, and that the cost of public roads being built on or near its tracks is a necessary cost of doing business.
In Backus v. Fort Street Union Depot Co., the U.S. Supreme Court upholds a lower court’s decision that reduced a manufacturing plant owner’s compensation when the street in front of the plant was condemned for use by a railroad. The Court rules that the measure of damages was fairly set by a jury that was instructed to award “full and adequate compensation, not excessive or exorbitant, but just compensation.” The Court refuses to set an absolute formula for calculating “just compensation” under the Fifth Amendment: “All that is essential is that in some appropriate way, before some properly constituted tribunal, inquiry shall be made as to the amount of compensation, and when this has been provided there is that due process of law which is required by the Federal Constitution.”
Coal mining companies that were primarily interested in the coal beneath the land’s surface often sold the land above the mines – but only the surface rights. Sometimes, the surface buyers would specify in their contracts with the mining companies that special supports had to be installed in the mines when the coal was removed to prevent cave-ins – but not always, because it cost less to buy the surface rights without requiring the companies to guarantee support. Over the years, towns were built above coal mines. In 1921, in response to a growing problem of cave-ins above unsupported mines, the state of Pennsylvania passed the Kohler Act to protect the public from these accidents. In this case, surface owners sued under the Kohler Act, asking that all mining beneath their property be stopped. In Pennsylvania Coal Co. v. Mahon, the U.S. Supreme Court rules that the Kohler Act violates the takings clause of the Fifth Amendment. The Court finds that the surface owners knew that they had only limited rights to the property when they bought the land and that they must absorb the risk and the cost of any repairs, unless the contract specifies that the coal company is liable for damages.
In United States ex rel. TVA v. Welch, the U.S. Supreme Court rules that Congress has the authority to define how much private land needs to be “taken” to achieve a particular public use. In Welch, a dam built by the Tennessee Valley Authority (TVA) created a reservoir that flooded the only public highway serving the area’s residents. After consulting with state and local officials, the TVA decided that instead of paying to build a new road, it would take over the whole surrounding area for a park and relocate the few local residents. The Court rules that Congress has authorized the TVA to take whatever steps are necessary to carry out its projects, such as the dam, and taking private property here serves that “public use” in a constitutional manner.
In Armstrong v. United States, the U.S. Supreme Court holds that the Fifth Amendment’s takings clause applies not only to land and real estate but also to more intangible property, such as financial interests. In Armstrong, a company building ships for the government did not complete its contract. The company turned over to the government the partially completed ships and the remaining building materials so the government could finish the job. A second company, the supplier of the materials, complained that the shipbuilding company never had paid it and that the government would be “taking” the supplier’s property unless it paid the amount that was owed. The Court agrees.
In Penn Central v. New York City, the U.S. Supreme Court rules that New York City’s denial of a developer’s request to build above Grand Central Station – which the city had named a historic landmark – is not a “taking” requiring “just compensation.” The Court rules that the limits placed on the developers are not so severe that they had lost all benefit of the station as an investment property. “The restrictions imposed are substantially related to the promotion of the general welfare and not only permit reasonable beneficial use of the landmark site.”
In Nollan v. California Coastal Commission, the U.S. Supreme Court invalidates a California Coastal Commission regulation requiring that when coastal property owners develop their property, they allow a path or other passageway to be added so the public has access to the beach. The Court finds the requirement to be a “taking” of private property by the government without compensation in violation of the Fifth Amendment.
In Lucas v. South Carolina Coastal Council, the U.S. Supreme Court rules that a South Carolina environmental preservation law barring a property owner from building any houses on his beachfront land is a “taking” by the government requiring that “just compensation” be paid. The Court rules that it is not necessary for a property owner to be “ousted” altogether from the property to be entitled to “just compensation” from the government; a taking also results if the property owner is required to “sacrifice all economically beneficial uses” of it.
In Dolan v. City of Tigard, the U.S. Supreme Court rules that an Oregon town’s requirement that private property owners dedicate part of any new development on their land to a public bike and pedestrian path and a public “greenway” to help minimize flooding to be a “taking” of private property by the government without compensation. The Court rules that the regulation unconstitutionally takes away property owners’ right to exclude the public from their land, an essential part of property ownership.
In Palazzolo v. Rhode Island, the U.S. Supreme Court reduces the administrative challenges that private landowners face in obtaining a “takings” claim in state and federal courts. The Court says Anthony Palazzolo had the right to challenge development restrictions on his property in court even though they were effective when he bought the land. Palazzolo contended the restrictions were an unconstitutional taking of his land. The Court’s decision boosts private citizens’ property rights.
In Kelo et al. v. City of New London, the U.S. Supreme Court authorizes local governments to force private citizens to sell their property and shift ownership to private economic developers, if public benefit is likely. The Court says public use can be defined more broadly as public purpose. The ruling is a victory for local governments needing venues for urban revitalization. However, property-rights activists argue that the ruling violates the Fifth Amendment because the forced transfer of ownership is between private individuals and not for public use.