February 16, 1995
The Honorable Beverly M. Perdue Room 629 Legislative Office Building Raleigh, North Carolina 27602
RE: Advisory Opinion: Takings Implications of Proposed Wetlands Rules
Dear Senator Perdue:
You have asked for advice on whether the Environmental Management Commission’s proposed wetlands rules will subject the State to liability as a "taking". The Fifth Amendment to the United States Constitution states as follows:
No person shall be held to answer for a capital or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be denied life, liberty or property, without due process of law; nor shall private property be taken for public use without compensation.
The United States Supreme Court has long held that regulations that "go too far" may constitute a taking under the Fifth Amendment. The Takings Clause does not, however, require government to compensate property owners for every reduction in property value caused by regulatory action. Both state and federal government have wide latitude to regulate for the public health, safety and welfare without paying for the privilege. The Court’s decisions recognize that to require compensation for every impact on property values would make environmental and land use regulation impossible. As the Court noted in Keystone Bituminous Coal Assn. v. Benedictus, 480
U.S. 470, 491-492 (1987):
Long ago it was recognized that all property in this country is held under the implied obligation that the owner’s use of it shall not be injurious to the community and the Takings Clause did not transform that principle to one that requires compensation whenever the State asserts its power to enforce it.
For the most part, the Court has indicated that it will determine whether there has been an unconstitutional taking of private property based on a case-by-case analysis of the public interest advanced by the regulation and the resulting burden on the private property owner. In practice, this balancing of interests has favored the regulator, with the Court upholding even regulations that substantially reduce the value of the affected property. See e.g., Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926) [75% loss]; Hadachek v. Sebastian, 239 U.S. 394 (1915) [statute prohibiting continued operation of a brickyard resulting in a 90% diminution in the property value]; Goldblatt v. Hempstead, 369 U.S. 590 (1962) [statute prohibiting continued excavation in a rock quarry].
The Court has identified only two categories of cases where compensation will in every instance be required:
- Where the regulation requires the property owner to suffer a physical "invasion" of his property – no matter how minor. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982). [New York law requiring landlords to allow television cable companies to place facilities in their buildings constituted a taking even though the utilities occupied no more than 1 1/2 cubic feet of the property]; and
- Where the regulation denies all economically beneficial or productive use of the land (unless the regulation simply codifies established common law principles of nuisance or property law). Lucas v. South Carolina Coastal Council, 112 S.Ct. 436 (1992).
The North Carolina Supreme Court has followed a similar approach in analyzing takings claims under the state constitution. In Finch v. City of Durham, 325 N.C. 352, 364, 384 S.E.2d 8 (1989), the Court held that the test for determining whether a taking has occurred as the result of a zoning change "is whether the property as rezoned has a practical use and a reasonable value".
As a result, decisions under both the state and federal constitutions require a case-by-case analysis of the impact of a particular law as applied to a specific property. The wetland rules under consideration by the Environmental Management Commission must be presumed to be constitutional and any challenge to the rules under the Takings Clause will require a property owner to show that the rules as applied to his property effectively deprive him of all practical use and reasonable value.
Daniel C. Oakley Senior Deputy Attorney General
Robin W. Smith
Assistant Attorney General