Regulatory Takings: Ripeness: Exhaustion and Finality – Update from McGregor, Legere & Stevens, P.C.

Written by Gregor I. McGregor, Esq.

Regulatory Takings: Ripeness: Exhaustion and Finality
Takings jurisprudence requires that courts know the extent of a regulation’s interference with property rights prior to making any adjudication on its validity. Williamson County Regional Planning Commission v. Hamilton Bank, 473 U.S. 172 (1985)

A property owner has an actionable 5th Amendment takings claim when the government takes their property without paying for it and so may bring suit in federal court under section 1983 at that time, without “exhausting” state court suits. Knick v. Township of Scott, Pennsylvania, 862 F. 3d 310 (2019)

The Supreme Court in California Pakdel v. City and County of San Francisco, 141 S.Ct. 2226 (2021), set the Finality Rule for challenging a regulatory taking. “Once the government is committed to a position…the potential ambiguities evaporate and the dispute is ripe for judicial resolution.”

At issue was the time for the property owners to sue the government over the application of state law and local restrictions on conversion of tenancy-in-common interests into condominium-type.

The bottom line is that once it is clear that the government is committed to a position, the dispute is ripe for judicial resolution.

More recently the 10th Circuit applied these finality principles in North Mill Street, LLC v. City of Aspen, 6 F.4th 1216 (10th Cir. 2021).  “The finality requirement does not require landowners to exhaust administrative procedures, or to ‘submit applications for their own sake.’ . . . Instead, a “final decision” has been reached and a regulatory takings claim becomes prudentially ripe for judicial resolution ‘[o]nce the government is committed to a position.’

The lessons are that landowners can bring their regulatory takings cases in federal court without going through state court first, and once the city, town, county, state or other governmental body is committed to a position on the action being challenged as unconstitutional. The US Supreme Court has fine-tuned the formerly rigid prerequisites of exhaustion and finality.