Check Your Rights at the Door: Rethinking Confiscatory Regulation

Abstract

Traditionally, regulatory takings scholarship has focused myopically on real property. Instead, this article explores an underappreciated side of the Takings Clause, offering a systematic analysis of the various strands of takings law that may affect regulation of commercial activity. I give special attention to two fresh U.S. Supreme Court decisions that may invite legal challenges to regimes and regulatory practices that have gone unchallenged in the past.

The Supreme Court’s decision in Horne v. U.S. Department of Agriculture, 135 S.Ct. 2419 (2015), makes clear that commercial regulation violates the Takings Clause if it conditions the right to engage in commerce on a requirement to surrender specifically identified personal assets. Likewise, the Court’s decision in Koontz v. St. Johns River Water Management District, 133 S.Ct. 2586 (2013), opens the door for commercial actors to contest exorbitant or unnecessary fees imposed in various regulatory permitting regimes. Accordingly, Horne and Koontz call into question a few common forms of economic regulation, including agricultural check-off programs, certain required pay-check deductions, regulatory authorizations to use company property for non-business purposes, cap-and-trade regulation and other regimes.

Yet most regulatory impositions will survive constitutional scrutiny. Accordingly, this article seeks to demarcate the line between ‘confiscatory regulation’ that is vulnerable to challenge and the broader realm of economic regulation that must survive. I argue that this demarcation is firmly rooted in settled takings doctrine, which distinguishes between use restrictions and physical appropriations of private property. Accordingly, since Horne makes clear that all forms of property are protected on equal terms, the Takings Clause generally forbids government from conditioning the right to engage in commerce on a requirement to hand-over identified commodities, products, monies or any other asset. Absent an affirmative defense, such regulation must be enjoined — or, otherwise, “just compensation” must be paid.