February 10, 2016 Article

Regulatory Takings Do Exist: The Federal Circuit Applies the Lucas Rule

There have been few significant substantive developments since this landmark Supreme Court decision

by Jerry Stouck

The Federal Circuit’s two decisions in the Lost Tree case add clarity on how to apply the Supreme Court’s 1992 decision recognizing governmental action that eliminates “all economically viable use” of property as a per se taking.

For real property owners pursuing regulatory taking claims arising from federal, state, or local administrative action, there have been few significant substantive developments since the landmark Supreme Court decisions in Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978), and Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). In addition, since those seminal decisions, courts have generally been reluctant to find regulatory takings. And in 2002, the Court indicated that Lucas “was limited to ‘the extraordinary circumstance’ when no productive or economically beneficial use of land is permitted.” Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 330 (2002) (quoting Lucas, 505 U.S. at 1017). However, in two successive decisions rendered in the same case, the Federal Circuit recently provided important guidance on how to apply the rule laid down in Lucas—affirming that government regulatory action can, in fact, eliminate all “economically viable use” of property and thus constitute a “per se” regulatory taking. The case is Lost Tree Village Corp. v. United States, and the Federal Circuit’s decisions are reported at 707 F.3d 1286 (Fed. Cir. 2013) (Lost Tree I) and 787 F.3d 1111 (Fed. Cir. 2015) (Lost Tree II).

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