Suppose Grutz is the owner of a 3000 acre tract of land somewhere in Florida. The land is currently undeveloped, but Grutz intends to develop it as a shopping center. The land is zoned for commercial use.
Shortly before the scheduled ground breaking for the shopping center, a federal environmental S.W.A.T. team sweeps into town and discovers that there are some endangered wildflowers growing on the property. Under the Federal Ecosystem Protection Act of 2024, landowners are forbidden to make any use of their land which would threaten an endangered species.
Under the law, Grutz is required to leave approximately 2/3 of his land in its natural state. He will be permitted to develop about 1000 of his acres for low-density use. (Such as residential use to develop 5 10-acre homes) The effect of this regulatory scheme is to reduce the value of his property from about $10 million dollars (which is what he paid for it) to $500,000.
Is this regulatory scheme a taking?
What are the issues?
Here is the key passage from note 16 on page 838:
Regrettably, the rhetorical force of our “deprivation of all economically feasible use”
rule is greater than its precision, since the rule does not make clear the “property interest”
against which the loss of value is to be measured. When, for example, a regulation requires a developer to leave 90% of a rural tract in its natural state, it is unclear whether we would analyze the situation as one in which the owner has been deprived of all economically beneficial use of the burdened portion of the tract, or as one in which the owner has suffered a mere diminution in value of the tract as a whole. (For an extreme—and, we think, unsupportable—view of the relevant calculus, see Penn Central Transportation Co. v. New York City, 366 N.E.2d 1271, 1276–1277 (N.Y.1977), aff’d, 438 U.S. 104 (1978), where the state court examined the diminution in a particular parcel’s value produced by a municipal ordinance in light of total value of the taking claimant’s other holdings in the vicinity.) Unsurprisingly, this uncertainty regarding the composition of the denominator in our “deprivation” fraction has produced inconsistent pronouncements by the Court. Compare Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 414 (1922) (law restricting subsurface extraction of coal held to effect a taking), with Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470, 497–502 (1987) (nearly identical law held not to effect a taking); see also id., at 515–520 (Rehnquist, C.J., dissenting); Rose, Mahon Reconstructed: Why the Takings Issue is Still a Muddle, 57 S.Cal.L.Rev. 561, 566–569 (1984). The answer to this difficult question may lie in how the owner’s reasonable expectations have been shaped by the State’s law of property—i.e., whether and to what degree the State’s law has accorded legal recognition and
protection to the particular interest in land with respect to which the takings claimant alleges a diminution in (or elimination of) value. In any event, we avoid this difficulty in the present case, since the “interest in land” that Lucas has pleaded (a fee simple interest) is an estate with a rich tradition of protection at common law, and since the South Carolina Court of Common Pleas found that the Beachfront Management Act left each of Lucas’s beachfront lots without economic value.
