By Mary Jo Long, Esq.
As the public sentiment grows for a ban on High Volume Hydrofracking (HVHF),
lawyers and others who speak for corporate profit-making opportunities in
natural gas say that laws banning or limiting gas drilling is a “taking” of
property. Even some who seem to be on our side make the same claim. This claim
is groundless and misguided. It is a scare tactic to prevent public pressure on
our elected officials against HVHF.
What is the Legal Status of These Claims?
1. All property in this country is held under the implied obligation that
the owner’s use of it shall not be injurious to the community. There is no
compensation for limiting that type of use of property, and
2. A “taking” claim does not apply if the property can be used for other
purposes even if those uses are not as profitable.
Consider the Source
The claim that the government (fed, state or local) will be sued to recover the
value of lost property is made by attorneys and others supporting HVHHF as a
method of gas drilling. They say that we, the taxpayers, will have to pay for
the lost profits due to the government’s taking of their property. Always bear
in mind that lawyers are advocates for their clients. When a Landowners’
Coalition lawyer claims that a ban will be a taking, that lawyer is making an
argument in support of his client’s position. Making a claim (I’m going to sue
you) doesn’t mean that a lawsuit will really happen nor that a Court will agree
with the argument if an actual lawsuit is filed.
What Is the Law on Taking Property by the Government
The Fifth Amendment to the U.S. Constitution provides certain protections to
persons. Included in the protections is the phrase “nor shall private property
be taken for public use without just compensation.”[i]This is the “taking”
referred to by the anti-ban people. This obligation to compensate for taking
private property only applied to the federal government until the 14th Amendment
to the Constitution expanded the application to state governments as well.
Eminent domain is the term most frequently used when a government takes a piece
of property: land for a public park, a public road, a public school, etc. The
owner of the land is entitled to be paid for the value of the land taken from
her. Historical evidence suggests that the original intent of the takings
clause did not include mere restrictions on use.
But what if the government, say through a town zoning law or a state law, BANS
gas drilling without taking over title to the property where gas companies and
gas leaseholders expect to drill for gas? Are governmental laws that restrict
the use of the land by restricting a profit making opportunity a “taking” when
actual ownership does not change?
The notion that one can do anything he wants on his property is not the law of
the land. The US Supreme Court has said “all property in this country is held
under the implied obligation that the owner’s use of it shall not be injurious
to the community.” Mugler v. Kansas, 123 U.S. 623, 665 (1887) This principle
still remains the law of the land even as Court rulings on “takings” have
muddied the waters.[ii]
A town government can use its police power[iii] and zoning/land use power to
restrict and prohibit uses that it considers to be detrimental to the
community. The exercise of these powers does not constitute a “taking.” For
example, the Town of Hempstead passed a law prohibiting gravel pit from
excavating below the town’s water table. This law was upheld in Goldblatt v.
Hempstead, 369 U.S. 590 (1962) as a valid use of the town’s police power. The
Supreme Court conceded that the law completely prohibited a prior use by Mr.
Goldblatt who had operated a gravel pit for 30 years. But the Court held that
depriving the property of its most profitable use does not make the law
unconstitutional, nor a taking.
The present case must be governed by principles that do not involve the power of
eminent domain, in the exercise of which property may not be taken for public
use without compensation. A prohibition simply upon the use of property for
purposes that are declared, by valid legislation, to be injurious to the health,
morals, or safety of the community, cannot, in any just sense, be deemed a
taking or an appropriation of property for the public benefit. Such legislation
does not disturb the owner in the control or use of his property for lawful
purposes, nor restrict his right to dispose of it, but is only a declaration by
the State that its use by any one, for certain forbidden purposes, is
prejudicial to the public interests.” Goldblatt at p.593 quoting Mugler v.
Kansas.
In 1992 the Supreme Court carved out an exception to this concept in Lucas v.
S.C. Coastal Council, 505 U.S. 1003. The Supreme Court expanded the right to be
compensated when new laws deprived land of all economically beneficial use.
Although Lucas still owned the land, a lower court at trial had found that the
property was rendered of zero value by the law which prohibited residential
construction beyond a baseline on the beachfront. While the Supreme Court
described these as “relatively rare situations”[iv], it has encouraged
litigation. At the same time as Lucas slightly expanded the takings doctrine it
also reaffirmed the principle that government does not have to pay compensation
when it limits “harmful or noxious uses” of property.
It is correct that many of our prior opinions have suggested that ‘harmful or
noxious uses’ of property may be proscribed by government regulation without the
requirement of compensation. . . .[G]overnment may, consistent with the Takings
Clause, affect property values by regulation without incurring an obligation to
compensate – a reality we nowadays acknowledge explicitly with respect to the
full scope of the State’s police power”[v]
The Court further acknowledged that Lucas would not be entitled to compensation
even though he was deprived of all economically beneficial use if his “bundle of
rights” did not include the prohibited use to begin with.[vi]Some uses of land
are not a part of the land title to begin with. When someone owns property the
owner does not have the property right to have a common law nuisance.
Government actions that abate common law nuisances are per se not takings. The
Court acknowledged there are inherent limits on landowner rights, imposed under
background principles of the State’s law of property and nuisance. Thus
government can still forbid deleterious uses even to the point of total takings.
Justice Scalia, who wrote the majority opinion in Lucas, says that a “total
taking” of personal property would be subject to a lower standard “by reason of
the State’s traditionally high degree of control over commercial
dealings”[vii]This means that there is no claim of a taking based on a gas
lease, which is personal property rather than real property, i.e. land.
Those opposing a ban on hydrofracking base their claims of a “taking” on Lucas
but subsequent cases have confirmed the narrowness of the ruling in Lucas.
· Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning
Agency, 535 U.S. 302 (2002) (Court said moratorium was not a regulatory taking);
· Palazzolo v. Rhode Island, 533 U.S. 606 (2001) (part of parcel was
worth $200,00, so was not a total taking);
· Lingle v. Chevron U.S.A.125 S. Ct. 2655 (2005) (recognized that
Takings cases were inconsistent. Tried to clarify by saying the inquiry is
whether the regulation is “so onerous that its effect is tantamount to a direct
appropriation or ouster” i.e. functionally equivalent to the classic taking in
which government directly appropriates private property or outs the owner from
his property.);
· Gazza v. NYSDEC89 NY 2d 603 (1999), cert. denied. (Mere diminution in
value of property, however serious, is insufficient to demonstrate a taking.)
Conclusion
1. To make a takings argument, the following conditions apply:
a. A taking claim cannot be based on an interest the owner never had,
e.g. the right to create a nuisance.
b. A taking claim does not apply if the property can be used for other
purposes. i.e. the economic value has not been totally extinguished. Just
because the value of the property has been reduced does not mean the owner gets
to claim his “expected” profits if he were allowed to fully exploit the
property.
c. Personal property, such as a gas lease, has even less recognition as a
taking, even if it is a total taking.
2. Property rights, as well as other rights, are limited by the
neighborhood of other public interests. The highest court in NYS said in
Gernatt Asphalt Products v. Town of Sardinia, 87 N.Y.2d 668 (1996):
A municipality is not obliged to permit the exploitation of any and all natural
resources within the town as a permitted use if limiting that use is a
reasonable exercise of its police power to prevent damage to the rights of
others and to promote the interests of the community as a whole. (at page 684)
3. The police power of the state is the power to regulate persons and
property for the purpose of securing the public health, safety, welfare,
comfort, peace and prosperity of the municipality and its inhabitants.