In a June 21, 2019 opinion, the U.S. Supreme Court finally reversed a 1985 ruling that has prevented property owners from challenging land use regulations in federal court under federal constitutional standards. In Knick v. Township of Scott, the court restored the right of property owners to bring claims directly in federal court when they claim that the government has "taken" their property without paying "just compensation." The new decision promises a substantial change in how and when property owners challenge the impacts of land use regulation.

The Takings Clause of the Fifth Amendment to the U.S. Constitution prohibits government from taking real property except for public use, and only if it pays "just compensation"—generally, the fair market value of the property that government appropriates to itself. When government uses eminent domain to take private property for a public use, the issue is whether the government has fairly compensated the property owner for the land taken.

But sometimes the government does not use eminent domain—"direct condemnation"—but issues regulations that substantially reduce or even eliminate the value of property, claiming that the regulation is necessary public policy but declining to compensate the impacted property owner. In such cases, the property owner has a "regulatory taking" claim.

A property owner's use of the Takings Clause's protections rests on three pillars: The first is that the federal Takings Clause, part of the Bill of Rights, is the "floor" of protection—state laws can be more protective of property rights than federal law or regulation, but not less. Second, generally speaking, the federal courts have been more protective of property rights than the state courts. Third, federal constitutional claims are generally brought under 42 U.S.C. § 1983, which allows a successful plaintiff to recover attorneys' fees. Thus, a property owner's ability to gain the full protection of the federal Takings Clause depends on being able to sue in federal court, to have the court apply federal constitutional standards and to obtain attorneys' fees.

In 1985, in Williamson County Regional Planning Commission, et al. v. Hamilton Bank, 473 U.S. 172, the U.S. Supreme Court held that before a property owner could litigate a federal takings claim in federal court, it must first go to state court, seeking remedies available under state law—and lose. Only then was the federal claim "ripe" for adjudication.

Timothy Hollister of Shipman & Goodwin.

But this so-called "state court first" requirement had an unintended consequence: Property owners began bringing their takings claims in state court, and losing, but when they tried to proceed to federal court, the federal court dismissed the federal claim under rules that prohibit the same case or issue from being litigated twice; and the "full faith and credit" provision of the federal Constitution, which requires federal courts to honor state court judgments. So, it became the rule in takings cases that when a state court denied a claim, the property owner became barred from ever litigating its federal claim.

Enter Rose Mary Knick. She owns a farm in Pennsylvania that contains a very old cemetery. The Township, by ordinance, declared her cemetery to be a public park, without any payment. The Pacific Legal Foundation, a property rights law firm in Sacramento, took her case. She lost in state court and in the federal Third Circuit. When it became clear in 2017 that President Trump would nominate a fifth conservative justice, four justices voted to grant Mrs. Knick's petition for review.

The case was scheduled for oral argument on October 3, 2018, when Justice Kavanaugh's nomination was still in dispute, so the case was argued to eight justices. Those eight apparently were equally split, 4-4. So, after Justice Kavanaugh took his seat a week later, the case was scheduled for an almost-unheard-of second oral argument, in January 2019. On June 21, in a 5-4 decision, in which Justice Kavanaugh was the long-missing fifth vote, the court overruled the Williamson County state-court-first requirement.

The decision explains that Williamson County was wrong in forcing property owners to go to state court under state law first, and that takings claims should be allowed to be brought in federal court in the same manner as freedom of speech, protection against unreasonable search and seizure and other constitutional protections. The opinion states that in overruling Williamson County, the court "[restored] restoring takings claims to the full-fledged constitutional status the Framers envisioned when they included the [Takings] Clause among the other protections of the Bill of Rights." The dissenting opinion focuses mainly on the fact that the majority was overruling a decision issued 34 years ago, citing the principle of stare decisis.

The Knick decision will make a big difference in property rights cases in several ways. Overall, when state agencies and regulators regulate the use of land as to substantially reduce the value of private property, state and local governments will now have to defend against claims for compensation in federal court. The standards of the federal Takings Clause, if more stringent than state law, are more likely to be applied. Property owners will bring more claims, because it will be faster and less expensive to proceed directly in federal court. And the property owner will now have the ability to recover attorneys' fees if it prevails.

Federal and state government jurisdiction over wetlands and watercourses under the Clean Water Act, floodplain regulation, mining rights, climate change, sea-level rise regulation, coastal regulation and resiliency planning, among other programs, will all be tested, in the sense that government regulation in these areas, if it severely impacts private property use, will be challenged as an uncompensated taking. Governments will need to decide whether to back down, revise, pay compensation, or reach some other accommodation between public and private interests.

Whether one regards the Knick decision as a victory for property rights or a setback for land use and environmental regulation, the new conservative majority of the U.S. Supreme Court has now hit the reset button with regard to federal Fifth Amendment takings claims.

Timothy S. Hollister is a partner in the Hartford office of Shipman & Goodwin where his practice focuses on land use, environmental and municipal law. Tim handles a wide range of real estate and administrative law problems that arise in the context of land use and environmental matters. Tim wrote an amicus brief in Knick v. Township of Scott in support of petitioner Rose Mary Knick. The brief was cited by Justice Kagan in her opinion.