In what may be the Supreme Court’s most momentous takings decision in decades, which was handed down last week, the six-member conservative majority held in Cedar Point v. Hassid that a regulation of the California Labor Relations Board ran afoul of the Takings Clause. The regulation, first announced in 1975, sought to balance the right of a labor union to organize agricultural workers under the California Labor Relations Act against a property owner’s exclusive right to possession of his land, long regarded as the key feature of private property. The California board decreed that labor union representatives were entitled to enter an employer’s property for three hours per day for 120 days per year to solicit union support. Cedar Point, an agricultural grower, originally acquiesced, but then demanded that the union representatives leave the premises for “distracting” and “intimidating” its employees. The court struck down the CLRB regulation, holding that it amounted to an unconstitutional taking of the grower’s private property rights.
A narrow decision would have left the CLRB rule in place by holding that the union had forfeited its access rights by exceeding the scope of its limited privilege to enter. The court put that modest solution to one side to address the broader question of whether the firm’s constitutional right to exclude union representatives could be limited for reasons having nothing to do with traditional police power justifications, which would allow, for example, government inspectors to enter the premises to check for health and safety violations. The Trump administration wrote a powerful amicus brief explaining why the California legislation should be struck down. Sensing the size of the stakes, in March 2021, President Joe Biden’s acting solicitor general, Elizabeth B. Prelogar, wrote a short letter to the Supreme Court withdrawing the earlier Trump brief, claiming that it was inconsistent with prior precedent.
After a fashion, both sides had a point. The case does indeed reinterpret two well-established precedents: Penn Central Transportation Co. v. City of New York (1978) and Loretto v. Teleprompter Manhattan CATV Corp. (1982). These cases introduced two wildly inconsistent regimes for deciding cases under the Takings Clause. The ostensible distinction between the two is that Loretto applies to physical entrances onto property that amount to “permanent physical occupations,” whereas Penn Central applies only to restrictions on the way in which a landowner can use his property. The former is subject to a per se rule, which in practice means that the government’s duty to pay just compensation is excused only in very narrow circumstances. However, Penn Central cases are subject to a “balancing test” under which courts routinely find that the government interest is stronger than the private one, even for losses in value over 50 percent.
So, on which side of the line does the California regulation fall? Unfortunately, the combination of permanent physical occupations and use restrictions does not exhaust the universe of all possible government actions. Thus, in Loretto, Justice Marshall held that New York City’s authorization of a private company to place a small cable box on the roof of a local apartment house was a permanent taking, even though its expected useful life was at most a decade. And so the term “permanent” becomes an art form—it would be extremely odd to say that no compensation was owing because of the shorter useful life of the cable box, or, alternatively, that only takings that last forever are compensable.
In his majority opinion, the chief justice effectively exploited this gap in Cedar Point by pointing out the odd discontinuities that would result if Loretto were taken literally:
There is no reason the law should analyze an abrogation of the right to exclude in one manner if it extends for 365 days, but in an entirely different manner if it lasts for 364. The court has held that a physical appropriation is a taking whether it is permanent or temporary; the duration of the appropriation bears only on the amount of compensation due.
The upshot of this line of precedent is that government-authorized invasions of property—whether by plane, boat, cable, or beachcomber—are physical takings requiring just compensation.
In his perceptive dissent, Justice Stephen Breyer thought little of the chief justice’s bold move to excise the permanent requirement of Loretto. He, rightly, therefore, noted how Justice Marshall carefully qualified his opinion so that it did not upset basic New Deal institutions. In particular, Breyer took the view that Loretto’s per se rule could only applied to “permanent and continuous” occupations, not intermittent ones of an indefinite duration. But his argument quickly ran into trouble because even short and intermittent entries do not count as mere restrictions on use—especially when they can continue indefinitely. To assert that equivalence, Breyer resorted to intellectual doubletalk by insisting “this regulation does not ‘appropriate’ anything; it regulates the employers’ right to exclude others.” Indeed, a partial but not total removal of the right to exclude could itself be regarded as a kind of “easement in gross” (i.e., the right is not connected to any neighboring parcel of land) or a kind of property interest. After all, public easements across private lands were treated as possessory takings in Nollan v. California Coastal Commission (1987), even though they permitted only intermittent actions of an indefinite duration.
Breyer was, however, on stronger precedential ground when he noted that the parallel federal rules dealing with limited access also characterized these labor regulations as “mere regulations.” After all, Marshall, a liberal justice, wrote that this court “has consistently affirmed that States have broad power to regulate housing conditions in general and the landlord-tenant relationship in particular without paying compensation for all economic injuries that such regulation entails,” citing cases that upheld rent control legislation.
That last proposition, however, now has to be regarded as up for grabs after Cedar Point. It is pure sophistry to claim that the state does not engage in a taking when it authorizes a tenant to stay continuously in possession of the leased premises after the expiration of the lease at a rent that is consciously set below market value. Nor should it matter that this constant occupation is of an uncertain duration. As the chief justice wrote, that point pertains only to the amount of compensation that should be paid, which can vary continuously. In this instance, the best way to handle that uncertainty is to require the state to offer the landlord a check equal to the difference between the rental value of the property in an unregulated market and its regulated price, for the duration of the regulation, as was suggested by the late Justice Scalia in Pennell v. City of San Jose (1988). Putting this expense on the government budget, Scalia noted, is wholly consistent with democratic values. It forces the government to make explicit budget decisions instead of allowing it to sweep the entire issue under the rug by forcing landlords to bear that loss.
In Armstrong v. United States (1960), Justice Black famously articulated the principle underlying Scalia’s rationale: “The Fifth Amendment’s guarantee that private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”
Penn Central undermined that principle when it treated the total and permanent loss of air rights over Grand Central Terminal, fully protected under state law, as a mere regulation that required no compensation—thereby spurring excessive government activity. At this point, the chief justice’s opinion in Cedar Point does not do enough because it provides no justification for keeping the occupation/restriction line, given that land-use zoning ordinances, such as density restrictions, can wipe out huge portions of value. Yet these land-use regulations have largely gotten a free pass since the 1926 decision in Village of Euclid v. Ambler Realty. Put otherwise, if an easement in gross is a property interest, then so too is a restrictive covenant that prevents construction on real property that is not justified by one of the “longstanding background restrictions” of property, such as is found in the law of nuisance. At this point, the correct conclusion is that land-use restrictions should be treated under the same analytical framework as occupations and entrances on private property.
I make these remarks with quiet satisfaction, because the chief justice’s logic echoes (without ever referring to) the exact line that I first took in my book Takings (1985), which condemned the entire New Deal project as a vast, unprincipled scheme of wealth distribution flatly inconsistent with the Takings Clause. Unlike me, the chief justice is a principled incrementalist who seeks to avoid such generalizations. In two recent cases—Horne v. Department of Agriculture (2015) and Murr v. Wisconsin (2017)—he mightily sought to preserve the occupation/restriction distinction that he appears to sweep away in Cedar Point. In truth, no jerry-built rationales can save the Penn Central/Loretto line. Knowing that, a principled Supreme Court has its work cut out for it if the reconceptualization in Cedar Point is to continue apace.