A “regulatory taking” occurs when the value or usefulness of private property is diminished because of some regulatory action taken by a governmental entity. A regulatory taking claim usually arises as a result of the implementation of land use planning and zoning ordinances, building codes, or environmental regulations. If a regulatory taking has occurred, the landowner is entitled to initiate an inverse condemnation action to recover just compensation for the taking. There are two categories of regulatory action that generally will be deemed per se takings:
1). The first category is when a government regulation requires an owner of property to suffer a permanent physical invasion of his or her property. If so, the landowner is entitled to just compensation. As an example, in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), the United States Supreme Court ruled that a state law requiring landlords to permit cable companies to install cable facilities inside apartment buildings constituted a permanent taking for which just compensation had to be paid.
In McCarran Int’l Airport v. Sisolak, 122 Nev.Adv.Rep. 58 (2006), height restriction ordinances imposed by Clark County on property near McCarran Airport limited the landowner’s ability to build multiple story buildings and enabled airplanes to fly over the property at lower levels. This constituted a permanent, physical invasion of the landowner’s airspace for which the landowner was entitled to just compensation.
2). The second category of per se takings is when a government regulation completely deprives an owner of “all economically beneficial use of her or his property”. In Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), a landowner purchased two residential lots on which he intended to build homes. Thereafter, the state enacted a regulation which barred the landowner from erecting any permanent homes on the two parcels. The United States Supreme Court held that when a regulatory action denies a landowner of all economically viable use of his or her property, the landowner is entitled to just compensation.
Outside of these relatively narrow per se taking categories, other regulatory taking claims are governed by the standards set forth in Penn Central Transportation Company v. New York City, 438 U.S. 104 (1978), which require courts to engage in a three-pronged factual analysis to determine whether a governmental action constitutes a taking of private property. The three-prongs are:
1). The character or nature of the governmental action;
2). The severity of the regulations economic effect on the landowner; and
3). The extent to which the regulation interferes with reasonable investment-backed expectations.