Stephen Hawking and the Law of Regulatory Takings

In homage to Stephen Hawking, let us discuss a recent regulatory takings case.  While physical takings law is logical, and thus the legal equivalent to Newtonian physics, regulatory takings can make quantum physics look like a rational piece of cake.

Recently, we blogged on a Business and Consumer Court ruling regarding the need to give the Attorney General notice of declaratory judgment actions seeking a ruling that an ordinance is unconstitutional. (Your serve )  Now I have reviewed the ruling in that case on the merits, and it seems to me that the cause of action wasn’t a dj action at all, and so the notice requirement shouldn’t’ve applied in the first place. (MacQuinn, Inc. vs. Town of Lamoine, No. BCD-CV-2017-05, Decision (Feb. 13, 2018)).

As you can see, the plaintiff in MacQuinn claimed an as-applied regulatory taking without just compensation.  The plaintiff is not claiming that there couldn’t be a taking at all – e.g., that the ordinance wasn’t enacted for a legitimate public purpose.  Rather, it claims that the municipality can’t apply the ordinance to its property without paying for it.

If so, then this is a state law inverse condemnation claim. See Frustacci v. City of South Portland, 2005 ME 101, ¶ 12, 879 A.2d 1001; Drake v. Town of Sanford, 643 A.2d 367 (Me. 1994).  The remedy for inverse condemnation is money – just compensation – not declaratory or injunctive relief.  See Ruckelhaus v. Monsanto, 467 U.S. 986, 1016 (1984), (“[e]quitable relief is not available to enjoin an alleged taking of a private property for public use, duly authorized by law, when a suit for compensation can be brought against the sovereign subsequent to the taking”).

There’s some old Maine case law suggesting that a statute that provides for condemnation without specifying compensation can get struck down, i.e. you might get declaratory relief. See Jordan v. Town of Canton, 265 A.2d 96, 100 (Me. 1970) (striking down a statute that provides for condemnation without specifying compensation as failing to meet constitutional standards); Cushman v. Smith, 34 Me. 247 (1854).  Maine can always go its own way in defining the state law claim, both for inverse condemnation and a taking under the Maine v, U.S. Constitution (although in Maine, just to complicate things, you can put both the inverse condemnation and a federal section 1983 causes of action in your complaintMC Associates v. Town of Cape Elizabeth, 2001 ME 89, 773 A.2d 439).  But on the takings front, like most constitutional claims with federal counterparts, the Maine SJC has generally moved in lockstep with the feds.

Also, at least in modern times, the ability to seek declaratory/injunctive relief versus compensation seems to apply still, but only when you are claiming a facial taking, i.e. you are claiming that the statute or ordinance cannot be applied to anyone without effecting a taking.  See, e.g., Hodel v. Irving, 481 U.S. 704 (1987) (finding facial taking under Indian Land Consolidation Act).  Why is this so?  The short answer is this is regulatory takings law, so nothing really makes sense unless or until you look at how the regulatory takings doctrine developed, to see why all its quirks developed.  A longer answer is that when it’s a facial attack, there’s less need as a practical matter for all the procedural hurdles for most regulatory taking claims, e.g. identifying the diminution in value caused by the taking.  If it’s a facial taking, the diminution analysis could vary property by property, but the fact of the taking won’t.  It makes more sense to allow a dj action in that context versus a gazillion individual claims for just compensation.  See Suitum v. Tahoe Reg’l Planning Agency, 520 U.S. 725, 736 n. 10 (1997) (finding that a facial takings claim need not meet the first procedural ripeness prong for a regulatory taking: “Such ‘facial’ challenges to regulation are generally ripe the moment the challenged regulation or ordinance is passed”).

In our last blog entry, we noted that you can raise constitutional claims as a part of an 80B or 80C, where the relief is the grant of your permit.  Is inverse condemnation such a constitutional defense?  Conceptually, not really, at least in terms of a federal claim.  Again, under Monsanto, things don’t get unconstitutional, at least on the as-applied front, until the government has been asked for compensation and the government has said no.  So if you don’t want money, you just want your permit, what do you do?  It would appear that the safest course of action is to attach, as an independent claim to your 80B, a separate cause of action for inverse condemnation, and seek both types of relief – permit or money, and let the government choose.  (Theoretically, if the government chose to issue the permit, the government might still be liable for a temporary taking, but the time and nature of that inability to use the property during the litigation process probably wouldn’t arise to the level deemed to require compensation.)

Gotten a headache yet?

In the end, in MacQuinn, it looks like these legal niceties really don’t matter.  Under the three-part test for a non-per se, as-applied regulatory taking as alleged here (1. diminution in value; 2. Reasonable investment backed expectations; 3. character of the action), as noted by the court, the claim here doesn’t seem to cut the mustard.  There’s not enough diminution in value, for one thing.  The BCD Court’s reference to a 40% diminution to one of the plaintiff’s pieces of property approaching what was needed is intriguing, and raises the question of what parcel is should be deemed relevant for identifying the denominator when calculating reduction in value.  That’s a whole other head scratcher line of regulatory takings law

In sum, just as Einstein and Hawking kept searching for the Unified Theory of Everything for physics and never quite got there, we still await a holistic, logical theory of regulatory takings law.