The Takings Clause of the Constitution: Overview of Supreme Court Jurisprudence on Key Topics

The Takings Clause of the Constitution:

Overview of Supreme Court Jurisprudence on

Key Topics

May 22, 2023

Congressional Research Service

https://crsreports.congress.gov

R47562

SUMMARY

The Takings Clause of the Constitution and

Eminent Domain: An Overview of Supreme

Court Jurisprudence on Key Topics

R47562

May 22, 2023

Adam Vann

Legislative Attorney

Government seizure of private property for public use without the consent of the property owner,

often called “eminent domain,” is a traditional power of the state that predates the Constitution.

The Fifth Amendment of the U.S. Constitution provides some protections for property owners,

guaranteeing that private property will not be taken for public use unless the property owner is given “just compensation.”

The Supreme Court first recognized the federal government’s authority to exercise eminent domain in the late 1800s, and

since that time the Court has expanded on notions of what constitutes a “taking,” “public use,” and “just compensation.”

Modern Takings Clause analysis generally divides alleged takings into two categories. In direct condemnation, the federal

government initiates the action to take possession of the property interest in question. In inverse condemnation, a private

property owner initiates an action against the government, claiming that a property interest has been “taken” without just

compensation in violation of the Takings Clause of the Fifth Amendment.

These two types of takings raise distinct legal issues. Direct condemnation will generally involve a physical taking of a

property interest, such as title or an easement, and the government (by filing an action) essentially admits that some

compensation is due under the Takings Clause. These cases raise questions about the scope of the government’s power—for

example, whether the taking is for a “public use”—and what just compensation is owned.

Inverse condemnation can also involve a physical taking, but in some cases a property owner will claim that some other

consequence of the government’s action (such as a diminution in value) constitutes a “regulatory taking.” These cases

therefore raise questions about whether the Takings Clause requires compensation at all.

This report serves as a primer for Members and their staffs on the Supreme Court jurisprudence regarding key principles of

U.S. takings and eminent domain law. The report provides a brief overview of the history of Supreme Court eminent domain

jurisprudence, including the Court’s rulings on direct and inverse condemnation at the federal and state levels, what

constitutes “public use,” and factors considered when determining what constitutes “just compensation” in the event of a

taking.

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The Takings Clause and Eminent Domain: An Overview of Supreme Court Jurisprudence

Contents

Direct Condemnation and the Exercise of Eminent Domain .................................................... 1

The Constitutional Basis for Eminent Domain ................................................................... 2

The “Public Use” Doctrine and Kelo v. City of New London.............................................. 2

Inverse Condemnation: Identifying Takings ............................................................................. 4

Inverse Condemnation Claims Based on Physical Takings ................................................ 5

Inverse Condemnation Claims Based on Economic or Regulatory Takings....................... 6

Exactions............................................................................................................................. 8

What Constitutes “Just Compensation”?................................................................................... 9

Conclusion .............................................................................................................................. 10

Contacts

Author Information......................................................................................................................... 11

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The Takings Clause and Eminent Domain: An Overview of Supreme Court Jurisprudence

T

he Fifth Amendment of the United States Constitution provides in part that private

property shall not “be taken for public use, without just compensation.” This clause, and

the principles behind its inclusion in the Bill of Rights, provide the foundation for two

important legal concepts related to the protection of property rights.

The first is the exercise of eminent domain, or condemnation, in which the government directly

acquires title to real property or some other property right from its owner. The second is the

constitutional protection against “inverse condemnation,” which occurs by government action

that causes a physical property interest that the government has not first acquired through eminent

domain or by regulatory restrictions that impact the value of existing property.

This report reviews the application of the Takings Clause to government condemnation of

property and to inverse condemnation through the lens of Supreme Court case law and identifies

some of the key legal questions raised by the Takings Clause and the government’s processes for

claiming, and providing just compensation for, private property. Those questions include: What is

a “public use” that triggers the requirements of the Fifth Amendment? What kinds of invasions

constitute a “taking” without the exercise of eminent domain? And under what circumstances can

government regulation of property, with no physical invasion, rise to the level of a taking?

Finally, in both direct condemnation and inverse condemnation cases, what principles does a

court apply to assess “just compensation”?

Direct Condemnation and the Exercise of Eminent Domain

Eminent domain is a phrase commonly used to denote “[t]he inherent power of a governmental

entity to take privately owned property ... and convert it to public use.”1 Under the power of

eminent domain, the government may take private property for public use by paying just

compensation.2 Eminent domain can be asserted only alongside a legitimate exercise of

government authority that will be served by the property interest in question.3 Although eminent

domain may apply to both real and personal property, the cases discussed in this report generally

arise in the context of real property.

The power of eminent domain derives from the Constitution and implicit historical assumptions

regarding the scope of government authority, but the exercise of that power is generally pursuant

to statute. Some statutes detail a specific process for the exercise of eminent domain authority as

well as the public use to be served by taking the property interest. For example, before exercising

eminent domain to acquire rights-of-way for the interstate highway system, the Secretary of

Transportation must (1) receive a request from the state for acquisition of lands necessary for

construction, reconstruction, or improvement of the interstate highway system; (2) determine that

the state cannot acquire the needed property interests itself in a timely manner; and (3) obtain

agreement from the state that the state will cover a certain percentage of the acquisition costs.4

Federal statutes also dictate broadly applicable procedural requirements for an exercise of

1 Eminent domain, BLACK’S LAW DICTIONARY (10th ed. 2014).

2 The Supreme Court has interpreted the eminent domain authority of the federal government to include the authority to

take property owned by state and local governments as well as privately owned property. See, e.g., PennEast Pipeline

Co. v. New Jersey, 594 U.S. ___, 141 S. Ct. 2244, 2256 (2021) (“State property was not immune from the exercise of

delegated eminent domain power.”); United States v. 50 Acres of Land, 469 U.S. 24, 31 (1984) (“[I]t is most

reasonable to construe the reference to ‘private property’ in the Takings Clause of the Fifth Amendment as

encompassing the property of state and local governments when it is condemned by the United States.”).

3 Courts have evaluated the legitimacy of the exercise of government authority under the “public use” requirement,

discussed infra at “The “Public Use” Doctrine and Kelo v. City of New London.”

4 23 U.S.C. § 107(a).

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eminent domain, including a requirement to file a “declaration of taking” in addition to a court

petition,5 and requirements that the financial commitment be within the agency’s budget limits

and include interest.6 The federal government also has a right to take possession of the necessary

property interest upon filing of the declaration of taking.7

The Constitutional Basis for Eminent Domain

Unlike many of the federal government’s powers, the power of eminent domain is not explicit in

the U.S. Constitution. Instead, the power is implicit in the Fifth Amendment’s prohibition on the

taking of private property without just compensation.8 The Supreme Court has embraced and

validated this implication, recognizing the existence of the eminent domain power since the latter

part of the 19th century. The Court’s first explicit recognition of the federal power to take private

property by the Supreme Court seems to be the 1875 decision in Kohl v. United States.9 In Kohl,

the Court heard a procedural dispute related to a condemnation proceeding. In addressing this

dispute, the Court confirmed the legitimacy of the federal exercise of eminent domain authority.

The Court declared that the authority to exercise eminent domain “is essential to [a nation’s]

independent existence and perpetuity.... The powers vested by the Constitution in the general

government demand for their exercise the acquisition of lands in all the States.”10 The Court also

noted that the Constitution itself contains an implied recognition of the government’s eminent

domain authority, pointing out that “[t]he Fifth Amendment contains a provision that private

property shall not be taken for public use without just compensation. What is that but an implied

assertion, that, on making just compensation, it may be taken?”11 State governments also have the

authority to exercise eminent domain.12 The Supreme Court has confirmed that the federal

constitutional limitations of the Takings Clause apply to the state’s exercise of that power through

the Due Process Clause of the Fourteenth Amendment.13

The “Public Use” Doctrine and Kelo v. City of New London

The Takings Clause requires that any taking be for a “public use.” Eminent domain often

facilitates activities with an obvious connection to “public use,” such as transportation or power

and water supply.14 Its use to establish public parks, to preserve places of historic interest, and to

5 40 U.S.C. § 3114.

6 Id. § 3115–16.

7 Id. § 3114(b).

8 See PennEast Pipeline v. New Jersey, 594 U.S. ___, 141 S. Ct. 2244, 2255 (2021) (“W]hen the Constitution and Bill

of Rights were ratified, they did not include the words ‘eminent domain.’ The Takings Clause of the Fifth Amendment

... nevertheless recognized the existence of such a power.”) Courts have evaluated the legitimacy of the exercise of

government authority under the “public use” requirement, discussed in the “Public Use Doctrine” section of this

Report.

9 91 U.S. (1 Otto) 367 (1875).

10 Id. at 371.

11 Id. at 372–73.

12 The Supreme Court has held that eminent domain “appertains to every independent government. It requires no

constitutional recognition; it is an attribute of sovereignty.” Boom Co. v. Patterson, 98 U.S. (8 Otto) 403, 406 (1878).

More recent case law has acknowledged eminent domain authority as inherent in state sovereignty. See, e.g., Texas

Midstream Gas Servs., LLC v. City of Grand Prairie, 608 F.3d 200, 207 (5th Cir. 2010); Township of W. Orange v. 769

Assoc., LLC, 172 N.J. 564, 571 (N.J. 2002).

13 Green v. Frazier, 253 U.S. 233, 238 (1920) (noting that “[p]rior to the adoption of the Fourteenth Amendment,” the

power of eminent domain of state governments “was unrestrained by any federal authority”).

14 See, e.g., Kohl v. United States, 91 U.S. (1 Otto) 367 (1875) (public buildings); New Orleans Gas Co. v. Drainage

(continued...)

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promote beautification also has substantial precedent.15 However, these are not considered the

only appropriate “public uses’ for which eminent domain may be exercised.

The Supreme Court affords a high degree of deference to legislative determinations regarding the

scope of eminent domain authority,16 stating that “[t]he role of the judiciary in determining

whether that power is being exercised for a public use is an extremely narrow one.”17 When state

action is challenged under the Fourteenth Amendment, the Court also defers to the highest court

of the state in resolving such an issue.18 In a 1908 decision, the Court observed that “[n]o case is

recalled where this court has condemned as a violation of the Fourteenth Amendment a taking

upheld by the state court as a taking for public uses.”19

The Supreme Court has also generally approved federal and state governments using the power of

eminent domain alongside private companies for facilitation of urban renewal, erection of lowcost housing in place of deteriorated housing, and promotion of aesthetic values as well as

economic ones. In its 1954 decision in Berman v. Parker, a unanimous Court observed: “The

concept of the public welfare is broad and inclusive. The values it represents are spiritual as well

as physical, aesthetic as well as monetary. It is within the power of the legislature to determine

that the community should be beautiful as well as healthy, spacious as well as clean, wellbalanced as well as carefully patrolled.”20

This broad and deferential approach to defining public use continued in the decades that

followed, as interpretations of what constitutes a compensable taking expanded significantly. In

1946, the Supreme Court cast doubt upon the power of courts even to review the issue of public

use, stating “[w]e think that it is the function of Congress to decide what type of taking is for a

public use and that the agency authorized to do the taking may do so to the full extent of its

statutory authority.”21 No definition of the reach or limits of this power is possible, the Court has

said, because such “definition is essentially the product of legislative determinations addressed to

the purposes of government, purposes neither abstractly nor historically capable of complete

definition.”22 In 2003, the Court added as an indicium of “public use” whether the government

purpose could be validly achieved by tax or user fee.23

Comm’n, 197 U.S. 453 (1905) (city drainage system); Chi. Milwaukee, & St. Paul Ry. v. City of Minneapolis, 232 U.S.

430 (1914) (canal); Long Island Water Supply Co. v. Brooklyn, 166 U.S. 685 (1897) (condemnation of privately owned

water supply system formerly furnishing water to municipality under contract); Mt. Vernon-Woodberry Cotton Duck

Co. v. Alabama Interstate Power Co., 240 U.S. 30 (1916) (land, water, and water rights condemned for production of

electric power by public utility); Dohany v. Rogers, 281 U.S. 362 (1930) (land taken for purpose of exchange with a

railroad company for a portion of its right-of-way required for widening a highway).

15 See, e.g., Shoemaker v. United States, 147 U.S. 282 (1893) (establishment of public park in District of Columbia);

Rindge Co. v. Los Angeles Cnty., 262 U.S. 700 (1923) (creation of a scenic highway); Roe v. Kansas ex rel. Smith, 278

U.S.191 (1929) (protection of a historic site).

16

Kelo v. City of New London, 545 U.S. 469, 482 (2005). The taking need only be “rationally related to a conceivable

public purpose.” Id. at 490 (Kennedy, J., concurring).

17 Berman v. Parker, 348 U.S. 26, 32 (1954) (federal eminent domain power in District of Columbia).

18 Green v. Frazier, 253 U.S. 233, 240 (1920); City of Cincinnati v. Vester, 281 U.S. 439, 446 (1930).

19 Hairston v. Danville & W. Ry., 208 U.S. 598, 607 (1908).

20 Berman, 348 U.S. at 32–33. See also PennEast Pipeline v. New Jersey, 594 U.S. ___, 141 S. Ct. 2244, 2255-66

(2021).

21 United States ex rel. TVA v. Welch, 327 U.S. 546, 551–52 (1946).

22 Berman, 348 U.S. at 32.

23 Brown v. Legal Found., 538 U.S. 216, 232 (2003).

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The Court’s expansive interpretation of public use in eminent domain cases may have reached its

outer limit in 2005 in Kelo v. City of New London.24 There, a five-justice majority upheld as a

public use the government acquisition of privately owned land to be transferred to another private

party for purposes of economic development under a redevelopment plan adopted by a

municipality to invigorate a depressed economy. The Court saw no principled way to distinguish

economic development from the economic purposes endorsed as “public uses” of property in

previous Supreme Court cases and stressed the importance of judicial deference to legislative

judgment as to public needs.25 At the same time, the Court cautioned that condemnations of

individual properties that are transferred to other private parties not as part of an “integrated

development plan ... raise a suspicion that a private purpose [is] afoot.”26 Following Kelo, many

states enacted new legislative protections intended to curb the exercise of eminent domain in

service of private interests.27

Inverse Condemnation: Identifying Takings

Inverse condemnation generally refers to instances in which a property owner institutes an action

claiming that his or her property has been “taken,” in contrast with instances in which the

government initiates the process of condemnation through an exercise of eminent domain.28 The

Supreme Court has long held that when government permanently occupies property (or authorizes

someone else to do so) without an express exercise of eminent domain, the action still constitutes

a taking of private property for Fifth Amendment purposes, regardless of the public interests

served or the extent of damage to the parcel as a whole.29

Early Supreme Court cases considering inverse condemnation claims focused on claims that a

government action had caused a physical taking of property without explicitly seeking to exercise

its eminent domain authority. At first, the Court limited such claims. In an 1871 decision, the

Supreme Court concluded that the Fifth Amendment required just compensation only for “direct

appropriation” of property “and not to consequential injuries resulting from the exercise of lawful

power.”30 Based on this perspective, the Court found that a number of government actions that

diminished the value of the property did not constitute compensable takings during the late 19th

and early 20th centuries.31 However, the scope of compensable property interests expanded

during the 20th century to include regulatory takings and other forms of “inverse

condemnation.”32

24 545 U.S. 469 (2005).

25 Id. at 482–83.

26 Id. at 487.

27 HENRY M. JACOBS & ELLEN M. BASSITT, AFTER “KELO”: POLITICAL RHETORIC AND POLICY RESPONSES, LAND LINES

(Apr. 2010), https://www.lincolninst.edu/sites/default/files/pubfiles/1773_992_1773_992_4%20Kelo.pdf.

28 San Diego Gas & Elec. Co. v. City of San Diego, 450 U.S. 621, 638 n.2 (1981) (Brennan, J., dissenting). See also

United States v. Clarke, 445 U.S. 253, 257 (1980); Agins v. City of Tiburon, 447 U.S. 255, 258 n.2 (1980).

29 See, e.g., Pumpelly v. Green Bay Co., 80 U.S. (13 Wall.) 166 (1872); City of St. Louis v. W. Union Tel. Co., 148 U.S.

92 (1893); W. Union Tel. Co. v. Pa. R.R., 195 U.S. 540 (1904).

30 Legal Tender Cases, 79 U.S. (12 Wall.) 457, 551 (1871).

31 See, e.g., Meyer v. Richmond, 172 U.S. 82 (1898) (authorization of train siting and operation that damaged abutting

property was not a taking); Bothwell v. United States, 254 U.S. 231 (1920) (cattle sale compelled by loss of grazing

land due to government flooding was not a taking).

32 See infra at Regulatory Takings. The Court has also heard a case during the current October 2022 term that asks

whether seizing cash to satisfy a debt to the government could be considered a taking. Tyler v. Hennepin Cnty., 26

F.4th 789 (8th Cir. 2021), cert. granted, 143 S. Ct. 644 (U.S. Jan. 13, 2023) (No. 22-166).

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The Constitution does not prohibit takings without formal eminent domain proceedings, but it

requires that just compensation be paid. Claims for compensation against the federal government

are typically raised under the Tucker Act, which waives sovereign immunity for the federal

government for certain monetary claims, including those founded upon constitutional violations.33

The Tucker Act also confers jurisdiction over such matters upon the United States Court of

Federal Claims (or, in matters related to procurement or with smaller amounts in dispute, to the

Court of Federal Claims or a U.S. district court).34 The Court of Federal Claims is authorized only

to grant compensation for takings and generally does not grant declaratory or injunctive relief.35

The United States Court of Appeals for the Federal Circuit has exclusive jurisdiction over appeals

from the Court of Federal Claims.36

Until recently, a plaintiff who sought to pursue a takings claim against a state entity could not do

so in federal court until that plaintiff had (1) received a final decision from the state government

regarding the application of the alleged regulation to his or her property and (2) sought

compensation through the relevant state-level procedures.37 However, in 2019 the Supreme Court

eliminated this requirement in Knick v. Township of Scott.38

Inverse Condemnation Claims Based on Physical Takings

Some government actions result in physical occupation of, or require or authorize a third party to

occupy, private property without the owner’s consent. When the government has not itself

instituted eminent domain proceedings to effect such a taking, the property owner may make an

inverse condemnation claim. For example, in 1982 the Court heard a challenge to a law requiring

landlords to permit a cable television company to install cable facilities on top of rental

properties. Although the equipment occupied only about 1½ cubic feet of space on the exterior of

each building and had only a de minimis economic impact, a divided Court held that the

regulation authorized a permanent physical occupation of the property and thus constituted a

taking.39

A physical taking may also be temporary. For example, a temporary physical taking may occur

when government action causes flood waters to physically intrude upon property.40 In 2021, the

Supreme Court held in Cedar Point Nursery v. Hassid that a state law requiring agricultural

employers to allow union organizers on their business properties for up to three hours per day,

120 days per year, constituted a per se physical taking requiring just compensation.41 In Cedar

Point, the government itself did not physically take a property interest, but it enacted a regulation

that allowed a third party to temporarily, physically enter the landowner’s property. The Court

nonetheless characterized that regulation as causing a “per se” taking due to the element of

33 28 U.S.C. § 1346.

34 Id. § 1491.

35 United States v. King, 395 U.S. 1 (1969).

36 Id. § 1295(a)(3).

37 Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 195 (1985).

38 139 S. Ct. 2162, 2177 (2019).

39 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 441 (1982). See also Yee v. City of Escondido, 503

U.S. 519, 539 (1992) (no physical occupation caused by regulations in effect preventing mobile home park owners

from setting rents or determining whom their tenants would be; owners could still determine whether their land would

be used for a trailer park and could evict tenants in order to change the use of their land).

40 Ark. Game & Fish Comm’n v. United States, 568 U.S. 23, 34 (2012).

41 141 S. Ct. 2063 (2021).

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physical occupation.42 These cases indicate that a physical occupation or restriction can constitute

a taking even if the amount of property taken is relatively small, the occupation is not permanent,

or the cause of the occupation is a government regulation.

Inverse Condemnation Claims Based on Economic or Regulatory Takings

For several decades after explicitly recognizing the federal government’s eminent domain

authority, the Court held firm to the notion that regulation designed to secure the common

welfare, especially in the area of health and safety, was not considered a “taking.”43 The Court

began to change direction in its 1922 decision Pennsylvania Coal Co. v. Mahon.44 In Mahon, the

Court heard a challenge brought by holders of subsurface mining rights to a state statute

prohibiting subsurface mining for coal in areas where it might trigger subsidence (caving or

sinking) of any structure used for human habitation. The Court observed that the statute, by

making it “commercially impracticable to mine certain coal,” had essentially “the same effect for

constitutional purposes as appropriating or destroying” the subsurface estate.45 The Court

concluded that “while property may be regulated to a certain extent, if regulation goes too far, it

will be recognized as a taking” and that such a taking had occurred here, where the government

action rendered the subsurface property interest largely valueless.46 In later cases, however, the

Court has emphasized a distinction between these regulatory takings and permanent physical

occupations, and it has declared it “inappropriate” to view case law from either realm as

necessarily controlling precedent in the other.47

Land use controls often generate regulatory takings claims, as restrictions on land use can impact

property value in many ways. The Court has held that such controls constitute a “per se”

regulatory taking if they deny a property owner any “economically viable use of his land.”48 Like

a per se physical taking, a per se regulatory taking mandates compensation under the Fifth

Amendment regardless of the value of the property taken or the government interest promoted by

taking it. This rule, which the Court first articulated in Agins v. City of Tiburon49 and later

confirmed in Lucas v. South Carolina Coastal Council,50 dictates that when the landowner “has

been called upon to sacrifice all economically beneficial uses in the name of the common good,

that is, to leave his property economically idle, he has suffered a taking.”51 Such land use controls

42 As the next section will discuss, a regulation that causes a “per se” physical taking is treated differently under takings

jurisprudence than a regulation that has only an economic effect. Although either type of taking can be caused by a

regulation, only the latter is referred to as a “regulatory taking” (to distinguish it from a physical taking).

43 Mugler v. Kansas, 123 U.S. 623, 668–69 (1887). See also Chi. B. & Q. R.R. v. City of Chi., 166 U.S. 226, 255

(1897); Omnia Com. Co. v. United States, 261 U.S. 502 (1923).

44 260 U.S. 393 (1922).

45 Id. at 414–15.

46 Id. at 415–16.

47 Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 323 (2002).

48 Agins v. City of Tiburon, 447 U.S. 255, 260 (1980).

49 Id.

50 505 U.S. 1003 (1992). The Court did not refer to “per se” takings in Lucas, but it identified a class of regulatory

takings that are appropriate for “categorical treatment”–i.e., without any consideration of balancing.

51 Id. at 1019. The Agins/Lucas total deprivation rule does not create an all-or-nothing situation, because “the

landowner whose deprivation is one step short of complete” may still be able to recover through application of the

Penn Central economic impact and “distinct [or reasonable] investment-backed expectations” criteria. Id. at 1019 n.8.

See also Palazzolo v. Rhode Island, 533 U.S. 606, 632 (2001).

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may still not constitute takings if those controls come with the property as title encumbrances or

other legally enforceable limitations in place prior to acquisition of the property.52

A more common situation is for a regulation to have some economic effect on property value

without depriving the property own of all economically viable uses. In that situation, the courts

employ a balancing test to determine whether a taking has occurred for purposes of the Takings

Clause. A landmark precedent in this area is Penn Central Transportation Co. v. City of New

York,53 in which the Supreme Court articulated guidance for determining whether a regulatory

taking had resulted from a particular government action. The dispute in Penn Central concerned

New York City’s landmarks preservation law, under which the city denied approval to construct a

53-story office building atop Grand Central Terminal. The Court denied Penn Central’s takings

claim based, in part, on these considerations:

•

•

•

“The economic impact of the regulation on the claimant and, particularly, the

extent to which the regulation has interfered with distinct investment-backed

expectations;”54

“[T]he character of the governmental action ... a ‘taking’ may more readily be

found when the interference with property can be characterized as a physical

invasion by government ... than when interference arises from some public

program adjusting the benefits and burdens of economic life to promote the

common good;”55 and

Whether the challenged government action “[i]nterfere[d] with interests that were

sufficiently bound up with the reasonable expectations of the claimant to

constitute ‘property’ for Fifth Amendment purposes.”56

Considering the economic impact on Penn Central, the Court noted that the company could still

make a “reasonable return” on its investment by continuing to use the facility as a rail terminal

with office rentals and concessions, and the city specifically permitted owners of landmark sites

to transfer to other sites the right to develop those sites beyond the otherwise permissible zoning

restrictions.57 As for the character of the governmental regulation, the Court found the

preservation of historic sites to be valid economic legislation and a policy that served the public

interest.58

While the Supreme Court also cautioned that regulatory takings cases require “essentially ad hoc,

factual inquiries,”59 the Penn Central balancing test continues to guide courts in determining

whether a regulatory taking has occurred. In particular, the Court has repeatedly relied on the

concept of distinct or reasonable “investment-backed expectations” to analyze whether a taking

had occurred. For example, in Ruckelshaus v. Monsanto Co.,60 the Court used this concept to

determine whether the government’s disclosure of trade secret information submitted with

applications for pesticide registrations resulted in a taking. The Court reasoned that the disclosing

data was submitted from 1972 to 1978, a period when the statute guaranteed confidentiality and

52 Lucas, 505 U.S. at 1026-27.

53 438 U.S. 104 (1978).

54 Id. at 124 (citing Goldblatt v. Town of Hempstead, 369 U.S. 590, 594 (1962)).

55 Id.

56 Id. at 124–25.

57 Id. at 129.

58 Id. at 124–28, 135–38.

59 Id. at 124.

60 467 U.S. 986 (1984).

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thus “formed the basis of a distinct investment-backed expectation,” would have destroyed the

property value of the trade secret and thus constituted a taking.61

Later Supreme Court decisions clarify that, in applying the economic impact and investmentbacked expectations factors of Penn Central, courts should compare what the property owner has

lost through the challenged government action with what the owner retains. Discharging this

mandate requires a court to define the extent of plaintiff’s property—the “parcel as a whole”—

that sets the scope of analysis.62 In Murr v. Wisconsin, the Court stated, “Like the ultimate

question whether a regulation has gone too far, the question of the proper parcel in regulatory

takings cases cannot be solved by any simple test. Courts must instead define the parcel in a

manner that reflects reasonable expectations about the property,” but it noted that those courts

must also “take into account a number of factors, including (1) the treatment of the land under

relevant state and local law; (2) the physical characteristics of the land; and (3) the prospective

value of the land.”63

Murr provides a useful touchpoint for seeing the Court’s progression with respect to regulatory

takings over the past century or so. After rejecting the concept entirely in case law in the late 19th

and earliest 20th centuries, the Court changed course in 1922.64 It eventually arrived at a

balancing test of sorts for regulatory takings in Penn Central65 and subsequently clarified that this

rule should not be considered a rigid test and that courts could consider a number of factors as

they deem appropriate.66 Finally, in Lucas, the Court found that no balancing test was necessary

to find that a taking has occurred in cases “where regulation denies all economically beneficial or

productive use of land.”67

Exactions

Another example of inverse condemnation is the exaction taking. An “exaction” is a governmentimposed requirement that a project developer provide certain public benefits to offset the impacts

of the project on the public. Two late-20th-century Supreme Court decisions, Nollan v. California

Coast Commission and Dolan v. City of Tigard, articulated a two-part test to evaluate alleged

exaction takings. The first part dictates that in order not to be a taking, an exaction condition must

have an “essential nexus” to a legitimate state interest.68 The second part of the test requires the

government to establish that “the required dedication is related both in nature and extent to the

impact of the proposed development,” a test the Court calls the “rough proportionality” test.69

More recent cases about exaction takings continue to apply the principles of Nollan and Dolan. In

Koontz v. St. Johns River Water Management District, the Supreme Court heard a challenge to an

exaction based on a rejected wetlands mitigation proposal.70 The petitioner sought permission for

61 Id. at 1011.

62 The “parcel as a whole” analysis refers to the precept that takings law “does not divide a single parcel into discrete

segments and attempt to determine whether rights in a particular segment have been entirely abrogated.” Penn Cent.,

438 U.S. at 130.

63 Murr v. Wisconsin, 137 S. Ct. 1933, 1945–46 (2017).

64 See Mugler, 123 U.S. at 668–69.

65 438 U.S. 104.

66 See Murr, 137 S. Ct. at 1945–46.

67 Lucas, 505 U.S. at 1015.

68 Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 837 (1987).

69 Dolan v. City of Tigard, 512 U.S. 374, 391 (1994).

70 570 U.S. 595 (2013).

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a construction project on property situated on wetlands in Florida.71 Florida law requires

applicants seeking to build on wetlands to offset the resulting environmental damage, so the

petitioner exchanged proposals with the water management district. Ultimately, the petitioner

rejected the district’s proposals and sued the district under a Florida statute that allows for

monetary recovery for a victim of “an unreasonable exercise of the state’s police power

constituting a taking without just compensation.”72 The matter made its way to the Supreme

Court, which held that the “essential nexus” and “rough proportionality” requirements of Nollan

and Dolan also apply in cases where the government denies an application due to failure to satisfy

the government’s proposed conditions under the “doctrine of unconstitutional conditions.”73 The

Court noted that this rule allows the government to “enable permitting authorities to insist that

applicants bear the full costs of their proposals” while still forbidding the government from

engaging in “out-and-out ... extortion that would thwart the Fifth Amendment right to just

compensation.”74

What Constitutes “Just Compensation”?

The Takings Clause also dictates that the compensation for a taking be “just.” Both eminent

domain and inverse condemnation cases therefore require courts to determine the value of just

compensation for a particular taking.

The Supreme Court has declared that just compensation should be determined “by reference to

the uses for which the property is suitable, having regard to the existing business and wants of the

community, or such as may be reasonably expected in the immediate future” but noted that “mere

possible or imaginary uses or the speculative schemes of its proprietor, are to be excluded.”75

The default standard in case law regarding just compensation is generally “fair market value,”

i.e., what a willing buyer would pay a willing seller.76 The Supreme Court has been resistant to

alternative standards. For example, it has repudiated reliance on the cost of substitute facilities.77

In earlier cases, the Court seemed to require that the equivalent be in money, not in kind.78

However, in its 1974 decision in Regional Rail Reorganization Act Cases, the Court indicated that

courts should allow for greater flexibility in the form of compensation.79

Two Supreme Court cases illustrate some of the particular difficulties in applying the “fair market

value” standard of just compensation. In one, the Court held that a company was entitled to

compensation for the value of improvements on leased property for the life of the improvements

and not simply for the rest of the term of a lease that had no renewal option, because the company

occupied the land for nearly 50 years and had every expectancy of continued occupancy under a

new lease.80 The Court noted that just compensation required considering the possibility that the

71 Id.

72 Id. at 602.

73

Id. at 606. For further discussion of the doctrine of unconstitutional conditions, see CRS Report R46827, Funding

Conditions: Constitutional Limits on Congress’s Spending Power, by Victoria L. Killion.

74 Id.

75 Chicago, B. & Q. R.R. v. City of Chi., 166 U.S. 226, 250 (1897).

76 United States v. Miller, 317 U.S. 369, 375 (1943).

77 United States v. 564.54 Acres of Land, 441 U.S. 506 (1979); United States v. 50 Acres of Land, 469 U.S. 24 (1984).

78 Miller, 317 U.S. at 373 (1943).

79 Reg’l Rail Reorganization Act Cases, 419 U.S. 102, 150–51 (1974) (“No decision of this Court holds that

compensation other than money is an inadequate form of compensation under eminent domain statutes.”).

80 Almota Farmers Elevator & Warehouse Co. v. United States, 409 U.S. 470, 478 (1973).

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lease would be renewed, because a willing buyer and a willing seller would have placed a value

on that possibility.81 However, when the federal government condemned privately owned grazing

land of a rancher who had leased adjacent federally owned grazing land, the Court held that the

compensation owed need not include the value of the condemned property attributable to its

proximity to the federal land.82 The result would have been different if the adjacent grazing land

had been privately owned, but the general rule is that government need not pay for value that it

itself creates.83

The Supreme Court has held that the constitutional protection afforded by the Takings Clause

does not extend to expenses incurred that are incidental to or a consequence of the government

taking:

Whatever of property the citizen has, the Government may take. When it takes the

property—that is, the fee, the lease, whatever he may own—terminating altogether his

interest, under the established law, it must pay him for what is taken, not more, and he must

stand whatever indirect or remote injuries are properly comprehended within the meaning

of “consequential damage” as that conception has been defined in such cases. Even so, the

consequences often are harsh. For these, whatever remedy may exist lies with Congress. 84

Despite this language, the Court has at times carved out some exceptions to this strict rule. For

example, in Kimball Laundry Co. v. United States,85 the federal government seized a tenant’s

laundry plant for the duration of World War II, which turned out to be less than the full duration

of the lease, forcing the plant to suspend business during the military occupancy. The Court held

that the government must compensate for the loss in value of the business attributable to the

destruction of its “trade routes,” that is, for the loss of customers, whose patronage the laundry

had developed over the years.86 The Court articulated another exception in United States v. Miller,

in which it held that if the government takes less than the entire parcel of land and leaves the

owner with a portion of what he had before, compensation should include any diminished value

of the remaining portion (“severance damages”) as well as the value of the taken portion.87 The

Court noted, however, that “if the taking has in fact benefitted the remainder, the benefit may set

off against the value of the land taken.”88

Conclusion

It has been almost 150 years since the Supreme Court first explicitly acknowledged the sovereign

right of eminent domain and the Fifth Amendment’s guarantee of just compensation for persons

whose property is taken for public use.89 Over that time, federal and state authorities have adopted

broader interpretations of property to include things other than real property and of takings to

include government actions other than the physical seizure of property. Courts have generally

81 Id. at 473–74.

82 United States v. Fuller, 409 U.S. 488, 493–94 (1973).

83 Id.

84 United States v. Gen. Motors Corp., 323 U.S. 373, 382 (1945).

85 338 U.S. 1 (1949).

86 Id. at 16.

87 United States v. Miller, 317 U.S. 369, 375–76 (1943). See also United States v 40 Acres of Land, 175 F.3d 1133,

1139 (9th Cir. 1999) (“If the value of the remaining land, on a unit basis, diminishes when the condemned parcel is

removed from the larger whole, the landowner is entitled to compensation ‘both for that which is physically

appropriated and for the diminution in value to the non-condemned property.’”).

88 Id.

89 Kohl v. United States, 91 U.S. (1 Otto) 367 (1875).

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deferred to legislatures to interpret the “public use” requirement for takings, but a number of

stakeholders expressed concern about this following the Court’s Kelo v. City of New London

decision, and some states have taken action to narrow the circumstances in which eminent

domain can be exercised by the state.

Concerns related to the Takings Clause arise frequently during the preparation of legislation, as

legislators must consider whether proposed legislation will result in a taking of property and, if

so, whether and how to compensate the property owners. For example, border security measures

calling for the deployment of fencing and other infrastructure along the southwest border may

prompt legislators to consider how best to acquire the necessary property interests and

compensate owners.90 Similarly, discussions about infrastructure permitting in the current

Congress must likely consider whether and how to accommodate property owners whose interests

may be directly or indirectly affected by the facilities and whose cooperation may be necessary to

accelerate construction projects.91 Understanding the evolving jurisprudence regarding the

Takings Clause can help legislators avoid pitfalls and ensure compliance with the Constitution.

Author Information

Adam Vann

Legislative Attorney

Disclaimer

This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan

shared staff to congressional committees and Members of Congress. It operates solely at the behest of and

under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other

than public understanding of information that has been provided by CRS to Members of Congress in

connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not

subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in

its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or

material from a third party, you may need to obtain the permission of the copyright holder if you wish to

copy or otherwise use copyrighted material.

90 See e.g. Examining the Effect of the Border Wall of Private and Tribal Landowners: Hearing Before the Subcomm.

on Border Security, Facilitation and Operations of the Committee on Homeland Security, 116th Cong (2020).

91 See e.g. Committee Business Meeting & Opportunities to Improve Project Reviews for a Cleaner and Stronger

Economy: Hearing before S. Comm. on Env't & Pub. Works, 118th Cong. (2023).

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