Also known as: economic impacts
Written by attorneys · grounded in primary & secondary sources — see below
A factor in regulatory takings analysis consisting of the degree to which a government regulation diminishes the value or utility of the claimant's property. Courts weigh this factor along with interference with investment-backed expectations and the character of the government action to decide whether compensation is required.
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Everest Holdings owned Grand Central Terminal and sought to build a large office tower above it. The city enacted a landmarks law that barred the tower and left the terminal in its historic form. Everest Holdings claimed the restriction destroyed the most profitable use of its air rights and substantially reduced the property's overall market value.
Eastern Enterprises had exited the coal business decades earlier. A federal statute then assigned it responsibility for lifetime health benefits of retirees it had never employed after 1965. The company faced hundreds of millions of dollars in new premiums that had no connection to its post-1965 operations.
Lucas purchased two beachfront lots intending to build single-family homes. A new state coastal council regulation prohibited all construction on the lots. The ban left the parcels with no economically beneficial use whatsoever.
Nollan owned a beachfront lot and applied for a permit to replace a small bungalow with a larger house. The coastal commission granted the permit only on the condition that Nollan dedicate a public access easement across the dry sand portion of the lot.
Chevron operated service stations in Hawaii. A state rent-control statute capped the rent Chevron could charge independent dealers. Chevron argued the cap substantially reduced its net returns on the leased properties without advancing any legitimate state interest.
The City of Detroit condemned an entire residential neighborhood to assemble land for a General Motors assembly plant. Poletown residents and businesses lost their properties even though the city planned to transfer the assembled parcels to a private corporation.
Courts compare the value of the property before and after the regulation and assess whether the owner retains any economically viable use. A mere reduction in value or loss of the most profitable use is usually insufficient to establish a taking.
Supporting sources
No. Even when the economic impact is substantial, courts still balance it against the extent of interference with investment-backed expectations and the character of the government action.
Supporting sources
…they effect a taking. In deciding this question, we have identified several factors that are particularly significant. The economic impact of the regulation on the claimant, the extent to which the regulation has interfered with distinct investment-backed expectations, and the character of the governmental action are all…