Regulatory Taking - Regulatory Taking Themes - Permit Exhaustion

Permit Exhaustion

One precondition of a regulatory takings claim is that the claimant must obtain a final decision by the regulating entity as to what uses will be permitted. The Supreme Court's decisions make it clear that the mere assertion of regulatory jurisdiction by a governmental body does not constitute a regulatory taking. See Hodel v. Virginia Surface Mining & Reclamation Assn., 452 U.S. 264, 293-297(1981).

The reasons are obvious. A requirement that a person obtain a permit before engaging in a certain use of his or her property does not itself "take" the property in any sense: after all, the very existence of a permit system implies that permission may be granted, leaving the landowner free to use the property as desired. Moreover, even if the permit is denied, there may be other viable uses available to the owner. Only when a permit is denied and the effect of the denial is to prevent "economically viable" use of the land in question can it be said that a taking has occurred. United States v Riverside Bayview Homes, 474 US 121 (1985)

The United States Supreme Court has established a number of tests under which a state regulation constitutes a taking per se. These are physical invasion, denial of all economically viable private property uses, or requiring the owners to dedicate some of their property to the government without a justifying reason for so doing. For example, when the owners' proposed land use will result in a significant increase in traffic they may be required to dedicate a strip of their land to improve an adjacent road. But when an action does not fall into a category addressed by one of these tests, the Court relies primarily on an ad hoc inquiry into the specifics of such individual case. This approach has been the subject of much criticism because of its unpredictability.