The Takings Clause

. . . nor shall private property be taken for public use, without just compensation.

—William Baude & Sarah Leitner

Introduction

Once an uncontroversial part of the Constitution, the Takings Clause is now one of the Constitution’s most important protections for private property rights. On its face, the Takings Clause imposes a simple requirement: If the government takes private property, it must pay for what it takes. Some takings are straightforward, such as when the government condemns a house using its power of eminent domain so that it can widen a road or build a courthouse. But other takings are less obvious, such as when the government changes property rights or passes a property regulation without a physical expropriation. This requires courts to decide what defines “property”; what counts as “taking” property, as well as the purposes for which it may be taken; and what constitutes “just compensation.”

Origins of the Takings Clause

Though the Takings Clause was in some ways an outlier when added to the Bill of Rights, there were a handful of precedents for the clause before ratification. The colonial charters of Massachusetts and the Carolinas, for example, both provided for some degree of compensation to an owner whose property was taken for public use.¹ Following independence, two states each adopted a proto-Takings Clause in their state constitutions. The Vermont constitution of 1777 provided that “whenever any particular man’s property is taken for the use of the public, the owner ought to receive an equivalent in money.”² And the Massachusetts constitution of 1780 expanded upon the guarantee contained in its original colonial charter by providing that “whenever the public exigencies require that the property of any individual should be appropriated to public uses, he shall receive a reasonable compensation therefor.”³

In 1787, shortly before the Constitution was signed, the Articles of Confederation Congress adopted the Northwest Ordinance to govern the territories that were northwest of the Ohio River. There, Congress included a provision requiring “full compensation” when “public exigences” made it necessary “to take any person’s property, or to demand his particular services.”⁴

When it comes to the federal Constitution, however, the origins of the Takings Clause are surprisingly obscure. Most provisions of the Bill of Rights were requested in some form as the states ratified the original Constitution, but the Takings Clause was not.⁵ Representative James Madison of Virginia added it for unexplained reasons as he sifted through the requested amendments to propose a slate of them.⁶ In Congress and during the ratification debates, there was virtually no recorded discussion about the Takings Clause itself.⁷

Early Precedent

The origins of the Takings Clause are made still more enigmatic by the background of limited federal power. There is a good argument that the Constitution did not grant Congress a general power of eminent domain in the first place.⁸ Before the Civil War, Congress generally relied upon the states to exercise eminent domain over land that it needed, and in 1845, the Supreme Court declared that “the United States have no constitutional capacity to exercise . . . eminent domain” in the states.⁹ Congress exercised eminent domain only over property in federal territories. The federal government also took personal property under conditions of military necessity, but it is unclear how much can be gleaned from this historical practice.¹⁰

Meanwhile, in Barron v. City of Baltimore (1833), Chief Justice John Marshall held that the Takings Clause applied only to the federal government and not to the states, meaning that the states were not required by the federal Constitution to provide just compensation for takings of private property.¹¹ Barron, combined with limited federal power, meant that the clause did very little work in the century after its ratification.¹²

Modern Judicial Precedent

Under modern doctrine, the Takings Clause is of much greater importance, and its zone of application is much broader. Beginning with Kohl v. United States (1875), the Supreme Court recognized a general federal power of eminent domain within the states.¹³ The Court has alternately suggested that the power is granted by the Necessary and Proper Clause; that it is granted by implication of the Takings Clause itself; or that it is an inherent power of sovereignty, the specific enumeration of which is unnecessary.¹⁴ Whatever its source, the power is seated in Congress, not the executive, and only Congress has the power to raise the revenues necessary for just compensation.¹⁵

Furthermore, Chicago, Burlington & Quincy Railroad Co. v. Chicago (1897) held that the Fourteenth Amendment’s Due Process Clause requires a state to pay just compensation when it takes private property. The Court stated that “since the adoption of the fourteenth amendment, compensation for private property taken for public uses constitutes an essential element in [the] ‘due process of law.’”¹⁶ Although that decision did not expressly mention the Takings Clause, later cases have treated Burlington & Quincy as having incorporated the clause against the states.¹⁷ In fact, this right was the first element of the Bill of Rights that was held to be part of the Fourteenth Amendment’s Due Process requirement.

What Is “Property”?

The Takings Clause is triggered only when the thing that was allegedly taken is in fact “property.” This of course can include land, that is, real property. But it can also include personal property, such as bank accounts and raisins, or even intangible property, such as trade secrets.¹⁸

The Takings Clause does not itself define property, so courts draw on “existing rules or understandings” about property rights, including state law, traditional property law principles, historical practice, and precedent to discern the contours of a property interest.¹⁹

When Is Property Physically “Taken”?

There are a range of government actions that affect the value or use of property—some of which are clearly takings, and some of which are not. It is easiest to see that there has been a taking when the government formally “condemns” property and takes legal title to it. Such an exercise of eminent domain is the paradigmatic example of a taking.

But condemnation is not necessary to effectuate a physical taking. Cedar Point Nursery v. Hassid (2021) held that, even without formal condemnation, there is still a taking whenever the government physically appropriates private property.²⁰ The Supreme Court made an analogous ruling as early as 1871, concluding that a government-authorized flooding was a taking of property under Wisconsin state constitutional law.²¹ This rule applies even if the government authorizes a permanent physical occupation of only a tiny part of the property, and even if the physical appropriation is only temporary.²² Finally, the technical source of this kind of taking is of no consequence: “Government action that physically appropriates property is no less a physical taking because it arises from a regulation.”²³

Regulatory Takings

Although regulations that physically appropriate property are per se takings, other regulations of land pose harder questions. In the early twentieth century, the Supreme Court created the so-called “regulatory takings” doctrine. In Pennsylvania Coal Co. v. Mahon (1922), Justice Oliver Wendell Holmes wrote that “while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”²⁴ This doctrine has been widely criticized for lacking a historical basis.²⁵

Nevertheless, under modern doctrine, regulations of property are sometimes held to be takings. When a property regulation is challenged as a taking, the Court must usually engage in the “essentially ad hoc” determination of whether a taking has occurred. Under the framework set out in the landmark decision of Penn Central Transportation Co. v. City of New York (1978), courts must place particular emphasis on “the economic impact of the regulation on the claimant,” the interference with “distinct investment-backed expectations,” and “the character of the government action.”²⁶ In practice, courts rarely find that a regulation qualifies as a taking under this test. And even before Penn Central, the Court held that zoning regulations would almost never be held to be takings of property.²⁷

However, there are a few specific types of regulation that are categorically considered takings. One such category includes regulations of property that deprive an owner of all economically viable use of his or her land.²⁸ Another category includes regulations that unfairly condition the grant of a governmental permit upon the forfeiture of a physical property interest or the exaction of inappropriate fees.²⁹ And, as already mentioned above, a regulation that appropriates a right to invade private property is per se a taking.³⁰

The Public Use Requirement

So to implicate the Fifth Amendment’s Takings Clause, the property at issue must actually be “property,” and it must be “taken” within the meaning of the clause. But the Takings Clause imposes a third limitation: that “private property be taken for public use.”

As with the rest of the clause, the original meaning of this “public use” requirement is difficult to discern. Professor Richard Epstein has argued that as an original matter, the property taken must be usable by the public—either by a government entity or a private entity obligated to grant access on broad and neutral terms like a common carrier.³¹ Many nineteenth-century state courts interpreted the requirement in this fashion. For example, courts allowed eminent domain for railroads to claim a right-of-way, or for mills that served the community to build dams that would flood neighboring property.³²

Throughout the twentieth century, however, the Supreme Court has adopted a much broader reading of the “public use” requirement. The modern view requires only a public purpose, rather than that the property be usable by the public, and the Court has given deference to legislatures in defining that public purpose. For example, Berman v. Parker (1954) upheld the use of eminent domain to condemn blighted property for urban renewal. Justice William O. Douglas’s majority opinion found that “the legislature, not the judiciary, is the main guardian of the public needs to be served by social legislation.”³³ Hawaii Housing Authority v. Midkiff (1984) unanimously approved Hawaii’s breakup of large, landed estates “to reduce the perceived social and economic evils of a land oligopoly traceable to their monarchs.”³⁴

More recently, Kelo v. City of New London (2005) allowed the government to take a private home to transfer it to a private corporation for purposes of economic development.³⁵ The majority infamously invoked the “diverse and always evolving needs of society” to conclude that governments have “broad latitude in determining what public needs justify the use of the takings power.”³⁶ Kelo was a closely divided and extremely controversial decision, prompting Justice Sandra Day O’Connor to write in dissent: “The specter of condemnation hangs over all property.”³⁷ The negative reaction to Kelo resulted in state laws designed to increase protection for property holders throughout much of the country.³⁸

Just Compensation

When property has been taken for public use, the Takings Clause mandates the payment of “just compensation.” At bottom, the exercise of eminent domain is a forced sale. The amount of this compensation is necessarily a case-specific inquiry, but as a guiding principle, the Court has said that the owner “is entitled to be put in as good a position pecuniarily as if his property had not been taken.”³⁹ However, the Court has also said that “serious practical difficulties” preclude giving “this principle of indemnity . . . its full and literal force.”⁴⁰ Instead, the owner is typically awarded the “fair market value” of his property even if that is less than his true loss.⁴¹

A few kinds of takings, as a matter of law, do not entitle the property owner to any kind of compensation. For example, a person cannot seek compensation if his property is confiscated or destroyed during military hostilities.⁴² But when compensation is due, the amount awarded may well depend on whether a judge or jury awards it. The Supreme Court has said that “there is no constitutional right to a jury in eminent domain proceedings.”⁴³ However, in the different context of a “regulatory taking,” landowners do have the right to a jury trial.⁴⁴

Open Questions

• What should be made of state court decisions that change the scope of property rights? Should such a “judicial taking” give rise to a claim under the Takings Clause? If so, what is the proper remedy?⁴⁵
• Cedar Point Nursery adopted a very broad definition of what constitutes a physical appropriation. What kinds of government regulations will be held to physically appropriate property after Cedar Point Nursery, and what kinds will not? Is there a physical appropriation when the government requires access to “a business generally open to the public”?⁴⁶ What if a regulation reflects “traditional common law privileges to access private property”? ⁴⁷ Are legitimate permitting conditions takings?⁴⁸
• How should “just compensation” be calculated in situations where the fair market value does not accurately reflect the value of the taking? For instance, what if a market failure, such as a financial crisis, causes the “fair market value” to understate an owner’s true loss?⁴⁹ On the other hand, what if the taking also produced collateral benefits to the owner, causing “fair market value” to overstate an owner’s true loss?⁵⁰
• Is the regulatory takings doctrine supported by the text and history of the Constitution? Many scholars, including John Hart and William Treanor, have argued that regulations of land at the Founding did not give rise to claims for compensation.⁵¹ Professor Eric Claeys, by contrast, has argued that at least some kind of regulatory takings doctrine is supported by historical evidence, whereby regulations that infringed upon an owner’s natural rights allegedly required compensation.⁵² Professor Michael Rappaport has argued that the regulatory takings doctrine might be justified under the Fourteenth Amendment even if none was originally established by the Fifth Amendment.⁵³
• In Devillier v. Texas (2024), the Supreme Court granted certiorari to decide the question of whether a person whose property is taken may seek compensation under the Takings Clause, even if the legislature has not affirmatively provided them with a cause of action.⁵⁴ But the Court ended up remanding the case to be decided under a Texas law cause of action. So the question remains: Does the Takings Clause provide a cause of action for compensation? If so, does it abrogate sovereign immunity?

The views and opinions expressed in this article are solely those of the authors. They do not purport to reflect the views or opinions of any entities or individuals with which Sarah Leitner is affiliated or that she represents.

1. Massachusetts Body of Liberties § 8 (1641); Fundamental Constitutions of Carolina art. 44 (1669). ↩︎
2. Vt. Const. of 1777, ch. 1, § II. ↩︎
3. Mass. Const. of 1780, pt. 1, art. X. ↩︎
4. Northwest Ordinance of 1787, art. II. ↩︎
5. Edward Dumbauld, The Bill of Rights and What It Means Today 10–33, 53, 162 (item 14) (1957). ↩︎
6. Id. at 53 n.9. ↩︎
7. William Michael Treanor, The Original Understanding of the Takings Clause and the Political Process, 95 Colum. L. Rev. 782, 791, 835–36 (1995). ↩︎
8. William Baude, Rethinking the Federal Eminent Domain Power, 122 Yale L.J. 1738 (2013). ↩︎
9. Pollard’s Lessee v. Hagan, 44 U.S. 212, 223 (1845). ↩︎
10. Baude, supra at 1780–85, 1799–1800. ↩︎
11. 32 U.S. 243 (1833). ↩︎
12. Baude, supra at 1762–66. ↩︎
13. 91 U.S. 367 (1875). ↩︎
14. United States v. Gettysburg Electric Railway Co., 160 U.S. 668, 679 (1896); Kohl, 91 U.S. at 372–73; U.S. v. Jones, 109 U.S. 513, 518 (1883). ↩︎
15. Art. I, § 8, cl. 1; Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 631–32 (1952) (Douglas, J., concurring). ↩︎
16. 166 U.S. 226, 239 (1897). ↩︎
17. Palazzolo v. Rhode Island, 533 U.S. 606, 617 (2001). ↩︎
18. Webb’s Fabulous Pharmacies v. Beckwith, 449 U.S. 155 (1980); Horne v. Dept. of Agric., 576 U.S. 350 (2015); Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984). ↩︎
19. Tyler v. Hennepin Cnty., 598 U.S. 631, 638 (2023). ↩︎
20. 594 U.S. 139, 147 (2021). ↩︎
21. Pumpelly v. Green Bay & Miss. Canal Co., 80 U.S. 166 (1871). ↩︎
22. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982); Cedar Point Nursery, 594 U.S. at 151–52. ↩︎
23. Cedar Point Nursery, 594 U.S. at 149. ↩︎
24. Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922). ↩︎
25. John Hart, Land Use Law in the Early Republic and the Original Meaning of the Takings Clause, 94 Nw. U. L. Rev. 1099 (2000); Murr v. Wisconsin, 582 U.S. 383, 419 (Thomas, J., dissenting). ↩︎
26. 438 U.S. 104, 124 (1978). ↩︎
27. Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926). ↩︎
28. Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992). ↩︎
29. Nollan v. Cal. Coastal Comm’n, 483 U.S. 825 (1987); Dolan v. City of Tigard, 512 U.S. 374 (1994); Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595 (2013); Sheetz v. Cnty. of El Dorado, Cal., 601 U.S. 267 (2024). ↩︎
30. Cedar Point Nursery, 594 U.S. at 162. ↩︎
31. Richard Epstein, Takings: Private Property and the Power of Eminent Domain 168 (1985). ↩︎
32. Ilya Somin, The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain 40 (2015). ↩︎
33. 348 U.S. 26, 32 (1954). ↩︎
34. 467 U.S. 229, 241–42 (1984). ↩︎
35. 545 U.S. 469 (2005). ↩︎
36. Id. at 479, 483. ↩︎
37. Id. at 503 (O’Connor, J., dissenting). ↩︎
38. Somin, supra at 135–64. ↩︎
39. Olson v. United States, 292 U.S. 246, 255 (1934). ↩︎
40. United States v. 564.54 Acres of Land, More or Less, 441 U.S. 506, 510–11 (1979). ↩︎
41. Id. ↩︎
42. United States v. Caltex, 344 U.S. 149 (1952). ↩︎
43. United States v. Reynolds, 397 U.S. 14, 18 (1970). ↩︎
44. City of Monterey v. Del Monte Dunes at Monterey, 526 U.S. 687 (1999). ↩︎
45. Barton Thompson, Jr., Judicial Takings, 76 Va. L. Rev. 1449 (1990); Stop the Beach Renourishment, Inc. v. Fla. Dept. of Env’t Prot., 560 U.S. 702 (2010). ↩︎
46. Cedar Point, 594 U.S. at 156–57. ↩︎
47. Id. at 160. ↩︎
48. Id. at 160–62. ↩︎
49. Eric A. Posner, Last Resort: The Financial Crisis and the Future of Bailouts 161–64 (2018). ↩︎
50. Horne v. Dept. of Agric., 576 U.S. 350, 371–77 (2015) (Breyer, J., dissenting). ↩︎
51. Hart, supra; Treanor, supra. ↩︎
52. Eric Claeys, Takings, Regulations, and Natural Property Rights, 88 Cornell L. Rev. 1549 (2003). ↩︎
53. Michael Rappaport, Originalism and Regulatory Takings: Why the Fifth Amendment May Not Protect Against Regulatory Takings, but the Fourteenth Amendment May, 45 San Diego L. Rev. 729 (2008). ↩︎
54. 601 U.S. 285 (2024). ↩︎