Unclear Outcome in Key Supreme Court Property Rights Case

The Supreme Court has just issued its opinion in Stop the Beach Renourishment v. Florida Department of Environmental Protection, a key property rights case. Unfortunately, the most important constitutional issue at stake – what, if any government actions count as “judicial takings” remains mostly unresolved. I summarized the facts of the case here:

Under Florida’s Beach and Shore Preservation Act (the Act), the state government is required to establish “renourishment” projects to restore waterfront land that has become “critically eroded.” Once the projects are complete, the Act gives the state title to any newly dry land that has been cleared as a result of the project’s pushing back the waterline. This deprives waterfront property owners of their previously existing right to ownership of land up to the “mean high water line” (MHWL). This is exactly what happened to the six waterfront property owners in Florida’s Walton County, whose holdings abutted a renourishment project established in the area. The property owners formed a group called Stop the Beach Renourishment, which is the petitioner in this case.

The project established in their area resulted in the creation of additional dry land between the property owners’ holdings and the ocean – land which was claimed by the state. The property owners argued that the state’s acquisition of land inside the MHWL constitutes a taking that requires compensation under the Takings Clause of the Fifth Amendment. The Florida Supreme Court ruled against the property owners, holding that state law did not give them the right to own all property up to the new MHWL created by the project. The property owners now argue, in the U.S. Supreme Court, that the Florida court decision amounts to a “judicial taking” that deprived them of property rights through a sudden and unexpected revision of state law by the state judiciary.

The Supreme Court held unanimously (8-0, with Justice John Paul Stevens recusing himself) that the Florida Supreme Court’s decision against the property owners did not materially alter previous Florida jurisprudence, and therefore ruled against the property owners. However, the Court did not issue any ruling on the far more important issue of what counts as a “judicial taking” under the Takings Clause of the Fifth Amendment.

I. The Four Justice Plurality Opinion.

Justice Scalia’s plurality opinion, signed by the four most conservative justices, holds that judicial takings do occur and implies that federal courts should not be especially deferential to state courts in determining whether one has happened:

States effect a taking if they recharacterize as public property what was previously private property…. The Takings Clause… is not addressed to the action of a specific branch or branches. It is concerned simply with the act, and not with the governmental actor…. There is no textual justification for saying that the existence or the scope of a State’s power to expropriate private property without just compensation varies according to the branch of government effecting the expropriation. Nor does common sense recommend such a principle. It would be absurd to allow a State to do by judicial decree what the Takings Clause forbids it to do by legislative fiat…

Our precedents provide no support for the proposition that takings effected by the judicial branch are entitled to special treatment, and in fact suggest the contrary. [emphasis added]

The plurality says that a judicial taking occurs any time a state court “declares that what was once an established right of private property no longer exists,” and should be treated the same as any other taking by a state government. The fact that it was done by the judiciary rather than by legislature or executive should not matter.

The plurality’s approach strikes me as sound. However, it did not get the support of a majority of justices.

II. Justice Kennedy’s Concurrence.

In a concurring opinion, Justice Anthony Kennedy (joined by Justice Sonia Sotomayor) argues that these kinds of cases should be analyzed under the Due Process Clause of the Fourteenth Amendment rather than under the Takings Clause of the Fifth Amendment. He contends that a “The Court would be on strong footing in ruling that a judicial decision that eliminates or substantially changes established property rights, which are a legitimate expectation of the owner, is ‘arbitrary or irrational’ under the Due Process Clause.”
Kennedy does not make clear what counts as an “established property right” that is a “legitimate expectation of the owner.” The reference to the “arbitrary or irrational” standard suggests that only the most extreme departures from previous precedent would count as judicial takings.

Since Kennedy is likely to be the key swing voter on this issue (as on many others), his position in future cases will be very important. It is also very unclear.

Kennedy makes a variety of arguments in defense of his claim that the Due Process Clause is a better hook for these kinds of claims than the Takings Clause. None of them strike me as persuasive. This one is probably the most important:

The usual due process constraint is that courts cannot abandon settled principles…..

But if the state court were deemed to be exercising the power to take property, that constraint would be removed. Because the State would be bound to pay owners for takings caused by a judicial decision, it is conceivable that some judges might decide that enacting a sweeping new rule to adjust the rights of property owners in the context of changing social needs is a good idea.

The idea, then, that a judicial takings doctrine would constrain judges might just well have the opposite effect. It would give judges new power and new assurance that changes in property rights that are beneficial, or thought to be so, are fair and proper because just compensation will be paid.

Kennedy’s point is greatly overstated. If judges enact “sweeping new rule[s]” that amount to takings under federal constitutional law, those rulings would probably be invalid under state law as well. In virtually all states, the power to take property is reserved to the legislature. By definition a judicial taking is one that is not authorized by the legislature. Even if a judicial ruling could be a taking under federal law without requiring legislative authorization under state law, legislatures are likely to be vigilant about forestalling and reversing judicial rulings that end up costing them large amounts of money – if only because legislators would probably prefer to spend the funds on their own favorite programs.

Strangely, even as he argues against applying the Takings Clause to these issues, Kennedy leaves open the possibility that it might potentially be applicable in some future judicial takings case.

Finally, Justice Breyer (joined by Justice Ginsburg) argued that the issue of what counts as a judicial taking need not be resolved in this case and refuses to take a position on the issue.

III. The (Very Uncertain) Bottom Line.

In sum, we know that at least six justices believe that at least some judicial actions qualify as unconstitutional takings (even if only under the Due Process Clause). We don’t, however, know much about what the relevant standards for identifying judicial takings are. If Justice Kennedy turns out to be the key swing voter in future cases, it’s possible that state courts will get a lot of deference, since only “arbitrary and irrational” judicial deprivations of previously established property rights would be overturned. However, I’m far from certain that I’m interpreting Kennedy’s vague statements correctly.

Property rights advocates avoided the worst-case scenario: a Supreme Court ruling holding that there is no such thing as a judicial taking that requires compensation under the Constitution. Whether they have won anything more than that remains to be seen. As Ben Barros at Propertyprof Blog puts it, “we will see a lot of litigation on these issues in the near future.”

IV. The Role of Justice Sotomayor.

Commentators such as Josh Blackman and Ben Barros point out that Justice Sotomayor joined Kennedy’s opinon rather than Breyer’s and suggest that this means she may be more supportive of property rights than I previously thought. However, for reasons noted above, it’s far from clear whether Kennedy’s approach really provides much in the way of protection for property owners. It’s also not clear whether that approach will turn out to be more or less protective than whatever rule Breyer and Ginsburg endorse in a future case where they are forced to confront the issue.

We also don’t know whether Sotomayor will continue to agree with Kennedy when and if the latter fleshes out some of the extremely vague points in his opinion. Kennedy and Sotomayor might turn out to have different interpretations of what counts as “a judicial decision that eliminates or substantially changes established property rights, which are a legitimate expectation of the owner.” They might also disagree on the meaning of “arbitrary and irrational,” as applied to judicial takings cases.

UPDATE: In addition to the analyses by Barros and Blackman, Ilya Shapiro and property rights specialist Tim Sandefur have also given their takes on the case. Both are somewhat more optimistic about the implications of the Court’s decision for protection of property rights than I am.