A New Test Or Merely A New Name For Some Regulatory Takings?
Much of the commentary about the Supreme Court’s recent decision in Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 (2021), has focused on its implications for labor law. Yet some of the Chief Justice’s language in the majority opinion suggests a substantial reworking of the Court’s approach to “regulatory takings”—an area that the Court has acknowledged to be “a problem of considerable difficulty.” A close read of the opinion, however, suggests that even though Court may have reshuffled the categories it has used in the past to analyze takings claims, the law remains largely unchanged, if not slightly more obscure.
The Regulatory Background. In Cedar Point, the Court considered a California regulation granting labor organizations access “onto an agricultural employer’s property” for up to four “thirty-day periods” a year. Cal. Code Regs. tit. 8, §20900(e)(1)(A) (2020). Union organizers could access the employer’s premise “for the purpose of meeting and talking with employees and soliciting their support.” § 20900(e).
The regulation set some limits on organizers’ access to private property. It prohibited organizers from engaging in “disruptive conduct.” § 20900(e)(4)(C). Organizers had to identify themselves to the employer and wear an identifying badge. § 20900(e)(4)(B) And organizers had to file written notice with the state agency and serve the employer with a copy. § 20900(e)(1)(B). Otherwise, though, organizers could enter employer’s property for up to three hours a day during each thirty-day period. § 20900(e)(3)(A)–(B).
The Lawsuit. Two agricultural employers—Cedar Point Nursery and Fowler Packing Company—sued board members of the state agency. The employers contended that the regulation amounted to a per se taking under the Fifth and Fourteenth Amendments by granting the organizers an easement into the employers’ property without compensation.
The district court disagreed, ruling that the regulation did not constitute a per se taking. The regulation was instead, according to the district court, subject to the more forgiving “regulatory taking” test set out in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). And under that test, which the employers had not sought to satisfy, the regulation did not effect a taking. The Ninth Circuit affirmed, and the Supreme Court granted certiorari.
The Broad Language of the Majority Opinion. The Court rejected the lower courts’ rulings that the California regulation should be evaluated under the regulatory takings test. It noted that regulations that go “too far” are often referred to as “regulatory takings.” 141 S. Ct. at 2072. But, Chief Justice Roberts wrote, the “regulatory takings . . . label can mislead.” Id. at 2072. Indeed, “[g]overnment action that physically appropriates property is no less a physical taking because it arises from a regulation.” Id. Thus, the “essential question” is “whether the government has physically taken property for itself or someone else—by whatever means—or has instead restricted a property owner’s ability to use his own property.” Id. “Whenever a regulation results in a physical appropriation of property, a per se taking has occurred, and Penn Central has no place.” Id.
Noting that the California regulation “grants union organizers a right to physically enter and occupy the growers’ land for three hours per day, 120 days per year,” the Court ruled that it “appropriates for the enjoyment of third parties the owners’ right to exclude.” Id. And that appropriation, according to the Court, amounts to a per se taking “whether it is permanent or temporary.” Id. at 1274 (emphasis added). In short, “government-authorized invasions of property—whether by plane, boat, cable, or beachcomber—are physical takings requiring just compensation.” Id.
That language, on its face, seems momentous. The divide between per se takings and regulatory takings was previously understood to be wide. On the one hand, once a government action was classified as a per se taking, the only question left was how much the government had to pay. On the other, the regulatory takings test, which was applied to temporary invasions of property that went too far, requires an “ad hoc” factual inquiry. Horne v. Dep’t of Agric., 576 U.S. 350, 360 (2015) (internal citation and quotation marks omitted). Courts consider several factors, including “the economic impact of the regulation on the claimant,” the “extent to which the regulation has interfered with distinct investment-backed expectations,” and the “character of the government action.” Penn Central, 438 U.S. at 123.
The majority opinion seems to suggest that even minor, temporary invasions onto property—by passersby like “beachcombers” or, perhaps, utilities companies’ employees—might require compensation.
The Dissent’s Response. The dissent seized on the majority’s broad language, warning that “large numbers of ordinary regulations in a host of different fields that, for a variety of purposes, permit temporary entry onto (or an ‘invasion of’) a property owner’s land.” 141 S. Ct. at 2088 (Breyer, J., dissenting). And it warned that “activities ranging from examination of food products to inspections for compliance with preschool licensing requirements” might now amount to a per se taking. Id.
The Majority’s Solution. The majority dismissed the dissent’s contention that “treating the access regulation as a per se physical taking will endanger a host of state and federal” activities as “unfounded.” Id. at 2078.
Instead, the majority noted that because “the government conditions the grant of a benefit such as a permit, license, or registration on allowing access for reasonable health and safety inspections, both the nexus and rough proportionality requirements of the constitutional conditions framework should not be difficult to satisfy.” Id. at 2079. That inquiry should sound familiar. It is essentially a different articulation of the “regulatory taking” balancing test set out in Penn Central. But instead of considering “the economic impact of the regulation on the claimant,” the “extent to which the regulation has interfered with distinct investment-backed expectations,” and the “character of the government action,” Penn Central, 438 U.S. at 123, courts must consider “whether the permit condition bears an ‘essential nexus’ and ‘rough proportionality’ to the impact of the proposed use of the property,” Cedar Point, 141 S. Ct. at 2079.
In that way, the Court imported a factual balancing test into the per se framework. And the seemingly momentous shift from regulatory taking to per se taking may ultimately be nothing more than a re-naming.
William P. Sowers, Jr., an associate at Hunton Andrews Kurth, co-authored this piece.
Judge Thomas B. Griffith served on the D.C. Circuit from 2005-2020. In 2021, he joined Hunton Andrews Kurth in Washington D.C. as Special Counsel, where he focuses his practice on appellate litigation, congressional and internal investigations, and strategic counseling.