REGULATORY TAKINGS IN EMINENT DOMAIN: Looking at New Jersey's Highlands through Lingle v. Chevron U.S.A.

Whether the Just Compensation Clause authorizes a court to invalidate and enjoin state economic legislation on the basis that the law effects a "taking" because it does not "substantially advance a legitimate state interest," without regard to whether the challenged legislation diminishes the economic value or usefulness of any property. --Question No. 1 of the Petitioners: Linda Lingle, Governor of the State of Hawaii and Mark J. Bennett, Attorney General of the State of Hawaii

We have had numerous inquiries lately regarding the recently enacted (Aug 10, 2004) Highlands Water Protection and Planning Act in New Jersey. The Act preserves and protects approximately 400,000 acres in New Jersey's Highlands region and sources of drinking water for New Jersey residents. However, the Act has resulted in development being stopped, subdivisions thwarted, and long planned projects by farmers and ordinary citizens halted as the state seeks to preserve the Highlands area of New Jersey for water protection and planning purposes. Some property owners claim that this Act violates their rights and is effectively a taking without compensation. Do these regulations and their effect on property rights constitute a taking for a "public purpose" under eminent domain statutes in New Jersey, and either the New Jersey or United States Constitutions?

The quick answer is probably not. Simply stated, property owners will have a very difficult time proving they fall within the regulatory takings categories enumerated in a recent U.S. Supreme Court Case, Lingle v. Chevron U.S.A., which was argued on February 22 and decided on May 23, 2005. This case is the first in a triology of eminent domain cases to be decided before July.

The United States Supreme Court in Lingle v. Chevron U.S.A reiterates long standing law on this subject. Justice Sandra Day O'Connor writing for the unanimous court set forth the standards for so called "regulatory takings". Download the Opinion These are regulations that result in
a) permanent physical invasion of the property,
b) regulations that deprive the owner of all beneficial use and enjoyment of the property, or
c) do not meet the Penn Central test.

Penn Central turns in large part on an analysis of the regulation's impact and the degree to which it interferes with legitimate property interests. In Penn Central, the question was whether a city may, as part of a comprehensive program to preserve historic landmarks and historic districts, place restrictions on the development of individual historic landmarksóin addition to those imposed by applicable zoning ordinancesówithout effecting a "taking" requiring the payment of "just compensation." Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978).

New Jersey Highlands cases will most likely not meet these criteria. They will be very similar in nature to the cases litigated after the New Jersey legislature passed the Pinelands Preservation Act of 1979. In Lingle, the unanimous Supreme Court abandoned the long standing test that the regulation in question must "substantially advance legitimate state interest" in order to be valid. Lingle overrules Agins v. City of Tiburon, 447 US 255 decided 25 years ago. Justice Sandra Day O'Connor and the Court held that the "substantially advance" test is not an appropriate test for determining whether a regulation effects a Fifth Amendment taking:

Twenty-five years ago, the Court posited that a regulation of private property "effects a taking if [it] does not substantially advance [a] legitimate state interes[t]." Agins, supra, at 260. The lower courts in this case took that statement to its logical conclusion, and in so doing, revealed its imprecision. Today we correct course. We hold that the "substantially advances" formula is not a valid takings test, and indeed conclude that it has no proper place in our takings jurisprudence.

Highlands property owners will likely file suits contesting the regulations and the impacts on their constitutional rights. It is unlikely in our opinion that these suits will be successful and force eminent domain on the properties. These types of laws have been upheld consistently by New Jersey Courts going as far back as the creation of the Hackensack Meadowlands Development Commission in 1970 and the Pineland Commission in 1979. Perhaps the regulations applicable to the Highlands will offer property owners some relief.

It remains to be seen.

Written By:Pineland On August 26, 2005 9:34 AM

Agree for 100%.