A Line Beyond Penn Central?

Anthony Sanders · March 25, 2021

Aside from a Justice Stephen Breyer question about the constitutionality of inspecting personal spaceships in the not-too-distant future, the questions during Monday’s oral argument in Cedar Point Nursery v. Hassid, an important property rights case, were not too surprising. Most surprising is what was not said: No one – no litigant nor jurist – provided a full-throated defense of the challenged regulation. Though the Justices seemed to express skepticism toward the competing standards advocated by each side, that absence gives those of us concerned with property rights reason to be optimistic.

The dispute at the heart of the case is whether a California regulation that requires farmers to allow labor organizers onto their property up to three times a day for up to 120 days per year is a taking under the Fifth Amendment. The Fifth Amendment’s Takings Clause requires the government to provide just compensation when it takes private property. The Supreme Court has recognized that certain types of government action, including permanent physical occupations of property, constitute per se takings, regardless of the value diminution or the public benefit. If the government takes one square foot of your property for a telephone pole, it has to pay you. If the per se rule doesn’t apply then the courts apply the ad hoc balancing test established in Penn Central Transportation Co. v. City of New York. This threshold question – which test applies? – is hugely important because, as Justice Amy Coney Barrett pointed out at oral argument, courts hardly ever, if ever, find a taking under Penn Central unless the government action destroys at least 50% of the property’s value. Indeed, some courts have declined to find a taking when the government action destroys as much as 90%.

In Cedar Point Nursery, the petitioners – farmer owners represented by the Pacific Legal Foundation – argued the regulation is a per se taking because it provides labor organizers a right to physically invade their property. The respondent – the state of California – argued that, because the regulation is not the “functional equivalent of the government directly appropriating private property,” the Penn Central standard applies and, thus, no compensation is due.

Throughout the argument, the Justices’ questions pushed on the boundaries of the parties’ proposed standards. Perhaps Justice Barrett best exemplified the tenor of the bench when she commented “that both sides . . . have line-drawing problems.”

For petitioners, much of the questioning concerned how many regulations’ constitutionality would be called into question if their position were adopted. If this regulation were held to be a per se taking, would regulations requiring periodic nuclear power plant inspections also constitute per se takings? How about inspections of mines? Though counsel for petitioners, Joshua Thompson, ably responded that such regulations would not be called into question because of the government’s reasonable inspection powers at common law, the hypos kept coming. Cue Justice Breyer’s spaceships. He probed whether, since such technology didn’t exist at common law, in 15 years or so when personal spaceships and (more plausibly) autonomous cars become commonplace, the government will be able to inspect them if the Court adopts the farmers’ position. Yes, according to Thompson, because while the technology did not exist at common law, the government’s inspection power did. These and other questions attempted to understand both the impact adopting petitioners’ standard would have and what the nature and legal source of the property interest at issue is.

For respondents, the questioning centered on just how much access third parties would need to be given to private property for the regulation to constitute a taking requiring compensation. After respondents clarified that the 120 days were allotted per union (and thus, if enough unions wanted access, there could be year-round access), Chief Justice John Roberts asked whether respondents would concede that year-round access would constitute a taking. California Solicitor General Michael Mongan responded that the concern was theoretical. When further pushed on the issue, he did not concede that year-round daylight hours access would necessarily be a compensable taking because it would need to be considered under Penn Central’s ad hoc inquiry. Justice Clarence Thomas wanted to know just how related the access to the property would need to be to the business operation for it to be a taking and why that would matter under Penn Central. For different reasons, both Justice Samuel Alito and Justice Sonia Sotomayor seemed unconvinced that Penn Central was the appropriate standard.

Though the Justices challenged both advocates, it was striking that no one presumed the regulation is clearly constitutional. While it is true that property owners rarely win under the Penn Central test advocated by the respondent, even the Justice least sympathetic to property rights claims seemed unconvinced by California’s argument. Justice Sotomayor, whose skepticism toward property rights claims dates to her time on the Second Circuit, stated during a colloquy with Mongan that the test “can’t be Penn Central” and that “[a]d hoc won’t satisfy many people.”

Based on the argument, it seems likely that the property owners will prevail. What is less clear is on what theory that might be.

The great benefit of petitioners’ theory of the case – that government granting a third-party access to enter, occupy, and use another’s private property is a per se taking – is that it is highly property-protective. If adopted by the Court, it would be a boon for property owners. But, considering the Justices’ explicit line-drawing concerns, it is reassuring to know that other avenues are available for the Court to rule for petitioners. Both amici and the oral argument surfaced alternative standards that could be applied to protect property rights in cases of non-permanent, non-continuous physical intrusions.

The Institute for Justice made one such argument. Writing as amici on behalf of the petitioners, we argued that even if the regulation is not a per se taking because it is not a permanent physical intrusion, the Penn Central test for regulatory takings is inapplicable. Our argument turned on SCOTUS precedents establishing that temporary physical invasions are presumptive takings – meaning more protection is afforded to property owners than in cases of regulatory takings, where the government merely restricts what owners can do with their own property.

Justice Brett Kavanaugh suggested another possible avenue for petitioners to win. He looked to NLRB v. Babcock & Wilcox, where SCOTUS held that when employees were otherwise unreachable (not the case here) employers must allow union organizers on their property. Though Babcock was a statutory ruling, Justice Kavanaugh pointed to the constitutional principles underlying its reasoning and suggested that was enough for petitioners to win.

Neither our argument nor Justice Kavanaugh’s suggestion would be as property-protective as petitioners’ proposed per se rule, but both show that various paths are available. It seems likely that this case will be a step in ensuring greater property rights protections. Though the Justices struggled with the administrability of standards advocated by both sides, the Penn Central test seems especially unattractive for this and similar cases.

Katrin Marquez is a Constitutional Law Fellow at the Institute for Justice.