Expanding the Scope of the Takings Clause

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Copyright 2021 Tony Lima.  All rights reserved.

On June 23, the Supreme Court vastly expanded the scope of the Constitution’s “takings clause.” In Cedar Point Nursery v. Hassid, the court ruled that a California law allowing union organizers frequent, lengthy visits to a farmer’s property was a taking. The law in question was adopted in 1975. It allowed union organizers on-site access to farmworkers for three hours a day (one each before and after the workday, plus lunch hour). This access was allowed for 120 days per year. The Court is expanding the scope of the takings clause.

This flies in the face of farming and agricultural processes. Each crop has a growing season. The fields are very busy during planting and harvesting. Those are relatively short time periods, often mere weeks. Timing is critical. And disrupting the workday during busy periods has a serious impact on production. One good example is strawberries. Click here for some generic information, then click here for Driscoll’s Berries superior plants.

The fifth amendment to the Constitution is where you find the takings clause (emphasis added).

Fifth amendment Expanding the Scope of the Takings Clause

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Note that the highlighted clause does not limit the taking to monetary transactions. The plain text of the amendment supports the Court’s decision in this case. Far from expanding the scope of the Constitution, the justices have returned to its original meaning.

By a 6-3 vote, the justices ruled in favor of the plaintiffs and against the state of California. The majority opinion, authored by Chief Justice Roberts, said the regulation was a taking of the growers’ property without compensation. He continued,

The Majority Decision Expanding the Scope of the Takings Clause

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The Wall Street Journal covered this decision. It took 16 paragraphs to get to an important (and overlooked) point. Enter Eduardo Peñalver, a property-law scholar and incoming president of Seattle University.

“This is a much broader reading as it relates to the right to exclude than the prior cases allowed,” Mr. Peñalver said. Normally in takings cases, property’s value, for compensation purposes, is the market price. Here, he said, “there’s no market for the kinds of intrusions” permitted by the access regulations; “this is just the property owner not wanting this kind of person on their property.” He said that suggested the ruling’s impact would be more to frustrate government policies than to obtain compensation for owners.

This is kind of important. The scope of the takings clause has been expanded dramatically. It will take a few more decisions from the Court to define the limits of the non-pecuniary takings. Let me give a personal example.

Meet R1-S Zoning

I live in a suburb in the heart of Silicon Valley. My friend Jeff lives in a nearby town with an interesting zoning feature. There is a process in place for residents of a neighborhood to not allow construction of two (or more) story houses. This is R1-S zoning. This is a classic case of takings without compensation.

The R1-S process begins when a group of residents define the neighborhood on a map. The guidelines state, in effect, that the area should be compact and contiguous.

Once the neighborhood is defined geographically, the proponents circulate a petition. If a majority of homeowners sign the petition, the city mails ballots to each homeowner. lt takes a 2/3 vote of neighborhood property owners to impose this restriction on the entire group of houses.

Jeff happens to live in an area that was successfully converted to R1-S zoning quite a few years ago by a one vote margin. He opposed this measure and voted against it. He also spoke at several city council meetings along with others who shared his feelings. Interestingly, Jeff would have accepted compensation from his neighbors. There’s little doubt that the minimum he might have accepted would be large enough to dissuade the entire effort.

One member of that group was a lawyer. Jeff asked him why R1-S zoning wasn’t a taking. After all, putting restrictions on construction inevitably reduces quantity demanded by altering supply. Put simply, Jeff’s house is worth less because of this zoning change. The lawyer replied that courts had interpreted takings very narrowly, only applying to monetary transactions.

Now, it appears Jeff might have a case. The court has expanded the scope of takings to include non-monetary issues. The Pacific Legal Foundation argued this case. Perhaps they’ll be interested in his situation.

Conclusion

Expanding the scope of the takings clause has huge potential consequences. There will probably be a stream of future cases that will define the new boundaries. The next few years will be exciting. Here’s hoping zoning restrictions are among the many future decisions.

 

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About Tony Lima

Retired after teaching economics at California State Univ., East Bay (Hayward, CA). Ph.D., economics, Stanford. Also taught MBA finance at the California University of Management and Technology. Occasionally take on a consulting project if it's interesting. Other interests include wine and technology.