Curious Development in the Takings Clause

I recently co-authored a piece in Engage that asks: “Does the Takings Clause Have an Expiration Date?” The Supreme Court has already answered in the negative with a clear declaration that “[t]his ought not to be the rule” when it reversed the Rhode Island State Supreme Court in its 2000 decision Palazzolo v. Rhode Island, making clear that a transfer of title does not deprive a property owner of standing to challenge a regulation burdening his property. However, two recent cases have now made this clear answer into a murky one.

In the last term, the high court could have granted the petitions for certiorari for Guggenheim v. City of Goleta (Ninth Circuit) and for CRV Enterprises v. United States (Federal Circuit). In both cases the courts of appeals sidestepped the Supreme Court’s holding in Palazzolo. Because the high court had already clearly decided this question, many court observers thought both of these Fifth Amendment cases would be granted certiorari or even be summarily reversed by the high court. Inexplicably, neither happened, leaving property rights in those respective circuits less protected than in the rest of the country, which in theory would still follow Palazzolo.

My article argues that the Supreme Court had it right in Palazzolo: An unconstitutional regulation cannot be laundered into a constitutional regulation by the transfer of title of the property. Imagine that the federal government issued a regulation that required the Wall Street Journal to publish flattering stories about a particular issue, and subsequently the WSJ changed ownership. Under the Ninth and Federal Circuit’s legal reasoning, the new owners of the WSJ would not even have standing to challenge such an obviously unconstitutional regulation because said unconstitutional regulation existed prior to the transfer of title. To borrow a phrase used last week by Paul Clement in arguing a different matter before the high court, that theory largely refutes itself.

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