Regulatory Takings: When Should Compensation Be Paid?

Abstract

WHAT is the limit of the government's right to regulate private property without paying compensation? Despite the long history of takings law, this question has defied a definitive answer. Historically, the only regulations that have virtually assured landowners of compensation have been those involving physical acquisitions. In the absence of physical invasions, however, compensation has rarely been awarded, a result that courts and legal scholars have justified with a variety of rules. The recent case of Lucas v. South Carolina Coastal Council provided the U.S. Supreme Court with yet another opportunity to address this question.' The plaintiff Lucas had purchased two beachfront lots in South Carolina with the intention of building single-family homes, a use for which the lots were then zoned. Before he began construction, however, the South Carolina legislature passed the Beachfront Management Act, which prohibited development of the land. Lucas filed suit claiming that because the regulation rendered his land essentially valueless, it was a taking under the Fifth Amendment of the Constitution. The state countered that the regulation was a legitimate exercise of its police power because it protected a valuable public resource. The court overturned the South Carolina Supreme Court's ruling, which had denied compensation.2