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​Emergencies, Police Power, Commandeering, And Compensation: Essential Readings
By Robert Thomas @ 5:00 AM :: 342 Views :: Health Care, Judiciary, Law Enforcement

Emergencies, Police Power, Commandeering, And Compensation: Essential Readings

by Robert Thomas, InverseCondemnation, March 18, 2020

The current headlines -- and a couple of inquiries from colleagues and clients -- got us to thinking about government power in times of crisis and the tension between that power and property and other individual rights. 

On one hand, court decisions going back over the centuries have told us that courts are reluctant to interfere with government power that the government asserts further the public "health, safety, and welfare" (what we in the U.S. call the "police power"). But at what point do such exercises of government power require compensation to a property owner who as a consequence of the limitation on their rights suffers a loss?

So we dusted off our law books and assembled a primer of what we thought were some of the more interesting and important decisions over the centuries on the question. This is not a comprehensive list, of course, and if you think there should be others, please send them our way, and we'll add them. 

We've included, where possible, links to the original opinions so you can read these unfiltered. 

  • The Case of the King's Prerogative in Salt-peter, 12 Coke R. 13 (1606). The King's "saltpetre men" may enter private property to obtain saltpeter to use as an ingredient in gunpowder to be used in the national defence, but they do so with limitations about how and when they do it, and "are bound to leave the Inheritance of the Subject in so good Plight as they found it[.]"
  • Gardner v. Village of Newburgh, 2 Johns. Ch. 162 (N.Y. Chancery 1816). When a municipality diverted a stream and deprived a riparian owner of his rights, the payment of compensation "is a necessary qualification accompanying the exercise of legislature power in taking private property for public uses." 
  • "Contraband" property and the seizure of enemy property during time of war or insurrection. 
  • United States v. Pac. R.R., 120 U.S. 227 (1887). During the "late civil war," the Union Army blew up railroad bridges "to prevent the advance of the enemy." No compensation because the destruction of the bridges was a "military necessity." "The destruction or injury of private property in battle, or in the bombardment of cities and towns, and in many other ways in the war, had to be borne by the sufferes alone as one of its consequences."
  • Mugler v. Kansas, 123 U.S. 623 (1887). A law criminalizing the manufacture of liquor, adopted under the state's police power, did not offend due process. It also wasn't a taking requiring compensation because losses in property's value by virtue of its restrictions for the public health, safety, or welfare is merely an "incidental inconvenience[.]" 
  • Hadacheck v. Sebastian, 239 U.S. 394 (1915). Prohibiting the operation of existing brickyards in some but not all parts of a city is not a due process violation. In "the absence of a clear showing" of improper purpose, the courts "must accord good faith" to the government's claim it barred brickyards as a police power measure.  
  • Attorney-General v. De Keyser's Royal Hotel, Ltd. [1920] AC 508. In series of separate opinions the House of Lords concluded that the Crown may not seize possession of property "in connection with the defence of the realm" (there, a hotel to house RAF officers) without paying compensation for their use and occupation.  
  • Miller v. Schoene, 276 U.S. 272 (1929). The state ordering the destruction without compensation of otherwise un-threatened cedar trees because they served as a "host plant" to a disease harmful to nearby apple trees is a valid exercise of the government's police power. Courts should not question too hard the government's assertion that the action was needed.  
  • The Steel Seizure Case (Youngstown Sheet and Tube Co. v. Sawyer, 343 U.S. 579 (1952)). The President's order to seize steel mills during the Korean War to prevent a strike is limited by the Constitution. The executive's power even during emergencies is limited by the legislature's authority. 
  • Armstrong v. United States, 364 U.S. 40 (1960). The case that gave rise to the famous quote about the cost-distribution purpose of the Just Compensation Clause: "The Fifth Amendment's guarantee that private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." The feds had rendered invalid state law materielmen's liens on boats being built for the federal government. Held: compensation required. 
  • National Bd of YMCA v. United States, 395 U.S. 85 (1969). The government doesn't need to pay compensation when rioters destroyed a building being occupied by soldiers during the riots. The destruction can be blamed on the rioters, and the Army was trying to defend the property, albeit unsuccessfully. Although the government is "ordinarily" liable when it occupies property, in the "unusual circumstances" here, it was the riots and the rioters that deprived the owner of the building's use. 

The overall "vibe" we take away from all of this:

1.  Under "rational basis" review, modern courts are reluctant -- even in the absence of crisis -- to second-guess the government's assertion that even a total restriction on someone's property rights can be halted. 
2.  When faced with an assertion that there are "unusual circumstances" afoot, the courts become even more reluctant. 
3.  Whether compensation (and not an injunction) should be provided for an exercise of the police power is a separate question, and in the absence of an emergency or a claim that someone's use of their property is harmful to others, the courts may enforce the requirement to pay (see Lucas, Penn Central, and Mahon).  
4.  But when there's a claim of an emergency, crisis, or what we might call an extreme need for the police power, courts will not require compensation. 

The bottom line as we view it is that the search for principles often go out the window in times of calamity. Not just in takings law, but generally. Denial of compensation and the rejection of the Armstrong principle might not be theoretically sound if someone is being forced to suffer for the good of the public. But much of the time it simply is. 

And here's what our fellow property lawyers are thinking about this topic:

  *   *   *   *   *

Latest Readings: On Emergency Takings, Compensation For Commandeered Property

by Robert Thomas, InverseCondemnation, March 26, 2020

It's tough with all that's swirling around all of us to keep focused on non-virus related things. But because we think that's one way to keep calm and carry on, we shall continue to endeavor to do so. But come on, being takings and dirt lawyers we also can't help viewing current events through that lens, no? Consequently, we shall also continue from time-to-time to post about issues that have cropped up in practice that are related to the thing that is on everyone's mind these days.

In that vein, here's the latest on-topic things we've been reading: 

  • History: Fire and Blood(worth) - Steve Silva, Taking Nevada blog ("Many argue, with great merit, that when a person’s property is sacrificed to preserve the public health, that the person is entitled to compensation. But the law has not yet reached that conclusion, ... [and] there is no legal mandate that the sovereign must so compensate.").
  • Does the Takings Clause Require Compensation for Coronavirus Shutdowns? - Ilya Somin, The Volokh Conspiracy ("Under current Supreme Court precedent, the answer is almost always going to be "no." But some compensation may be morally imperative, even if not legally required.").
  • Eugene Kontorovich, Liability Rules for Constitutional Rights: The Case of Mass Detentions, 55 Stanford L. Rev. 755 (2004) ("Another objection to liability rules for constitutional rights is that forced takings of constitutional entitlements may have particularly high "resentment costs." This term refers to the psychological or dignitary cost of having an entitlement forcibly taken.").
  • Brad Kuhn (California Eminent Domain Law Report) is holding a web program on April 1, 2020 about "Navigating COVID-19 for the Right of Way Industry" ("We have received a number of questions and concerns from clients on how the current pandemic affects the way we do business, and what to expect going forward. We will be hosting a webinar on April 1, 2020 from 1:00 to 2:00 p.m. PT to bring our industry together (virtually) and help answer as many questions as we can."). 

Here are our own prior posts on the topic:

Steve Silva's post above also got us to thinking about compensation issues also. So we dusted off what we think is one of the more important decisions in the oeuvre, Kimball Laundry Co. v. United States, 338 U.S. 1 (1949). That case, as you recall, involved the wartime long-term but temporary taking by the feds of a going-concern commercial laundry, for use as a military laundry.

The case has often been used to support arguments that business losses that result from an affirmative taking (or commandeering) of property for public use should be compensable. Most jurisdictions, as you know, do not include such losses in "just compensation." In Kimball Laundry, however, the Supreme Court held: 

But when the Government has taken the temporary use of such property, it would be unfair to deny compensation for a demonstrable loss of going-concern value upon the assumption that an even more remote possibility -- the temporary transfer of going-concern value -- might have been realized.

Id. at 15. There's an ongoing debate about whether business losses should be part of just compensation when the government takes property, but does not necessarily take over the business. Is the loss of business just a "consequential" damage, and therefore not compensable? Or should, as others have argued, these losses be part of compensation because the measure of compensation is supposed to be what the owner lost, and not what the taker gained? 

We're certainly not going to resolve that debate in this modest blog post. We only put the case here to add to your reading list because we think that if the government acknowledges that compensation is required for emergency takings or commandeering, the question of just what is compensable is going to take center stage. And on that question, you better know Kimball Laundry. 

PDF: Kimball Laundry Co. v. United States, 338 U.S. 1 (1949)

 
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