Fair Disclosure and Airport Impact Statements in Real Estate Transfers (2012)

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8 Analysis for Single Family One- to Four-Unit Dwellings includes guidelines for appraisals of Federal Housing Administration (FHA)-insured mortgages.53 Because property near an airport may be subjected to the noise and hazards of low-flying aircraft, “[a]ppraisers must identify affected properties, review airport contour maps and condition the appraisal accordingly.”54 How- ever, appraisers are cautioned not to reject “existing properties only because of airport influences if there is evidence of acceptance within the market and if use of the dwelling is expected to continue.”55 Although an appraisal may reveal the presence of an airport, unless an appraisal’s valuation results in the property not qualifying for a buyer’s required financing, thereby causing a cancellation of the contract, a buyer still will have agreed to purchase property subject to airport noise. In Section VI of this digest, which contains the typi- cal airport disclosure act provisions, Part VI.B.7. is more specific in that it provides that “[o]n receipt of an Airport Disclosure Statement in compliance with this Act, a buyer shall have a duty to investigate the current or future impact of an airport on the property that is the subject of the Airport Disclosure Statement” [emphasis supplied]. As stated in the Comment to Part VI.B.7., however, the nature of a buyer’s investigation is in the buyer’s discretion but could include a review of the land records in the county where a property is located, the use of an appraiser or other expert, and/or the buyer’s own reconnaissance of the area. III. AN AIRPORT DISCLOSURE ACT: AN EXERCISE OF THE STATE’S POLICE POWER OR A REGULATORY TAKING? A. Introduction Among the issues to be considered is whether airport disclosure legislation would be merely an exercise of a government’s police power or would constitute a regu- latory taking of real property requiring the payment of just compensation. Parts B and C in this section dis- cuss whether an airport disclosure act is a noncom- pensable exercise of the government’s police powers with respect to real property or would be sufficiently burdensome to constitute a taking. An airport disclo- sure act likely would be a reasonable exercise of the police power, not a regulatory taking. Part D discusses the difference between a facial and an “as applied” chal- lenge to an airport disclosure act but concludes that under either approach an airport disclosure act proba- bly would be constitutional. 53 Department of Housing and Urban Development, Valua- tion Analysis for Single Family One- to Four-Unit Dwellings, HUD Directive 4150.2 § 2-2(G), available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/ administration/hudclips/handbooks/hsgh/4150.2, last accessed on July 7, 2011. 54 Id. 55 Id. B. Whether an Airport Disclosure Law Is an Exercise of the Police Power A governmental authority’s exercise of its police power in the form of a statute, regulation, or ordinance may give rise to a claim that a landowner has suffered a diminution in value and therefore that the statute, regulation, or ordinance is a de facto taking of his or her property. Nevertheless, it appears that a statute requiring the delivery of an airport disclosure state- ment, as well as requiring that a deed contain an air- port disclosure provision or that a disclosure statement be recorded as part of a deed, would not be a taking of an owner’s real property. Under the police power the government has an in- herent regulatory power to protect the health, safety, morals, and general welfare of the community. The burdens of such regulation do not amount to takings of property unless the burdens manifest themselves “in certain, enumerated ways.”56 The legislature may au- thorize or delegate the authority to a particular admin- istrative agency, such as a transportation department, to make reasonable rules and regulations to carry out the police power.57 The police power is broad and pro- vides the government with an effective tool for gov- erning, but the government may not use its police power “to infringe upon or invade rights safeguarded by constitutional provisions.”58 As long as a regulation is merely an exercise of the police power and is not a taking, the government is not required to pay just compensation to a property owner affected by the regulation. As Justice Holmes stated in Pennsylvania Coal Co. v. Mahon,59 although “property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”60 Fre- 56 Eggleston v. Pierce County, 148 Wash. 2d 760, 767, 64 P.3d 618, 622–23 (2003) (citations omitted). See also Lincoln Fed. Labor Union v. Nw. I. & M. Co., 149 Neb. 507, 31 N.W.2d 477, 487 (1948) (stating that the term “police power” is used “‘to denote those inherent governmental powers which, under the federal system established by the constitution of the United States, are reserved to the several states’”) (citation omitted). 57 Dep’t of Highways v. Sw. Elec. Power Co., 243 La. 564, 145 So. 2d 312 (1962); State Roads Comm’n v. Jones, 241 Md. 246, 249, 216 A.2d 563, 565 (1966). 58 Colman v. Utah State Land Bd. 795 P.2d 622, 627 (Utah 1990) (citation omitted). On the difference between eminent domain and the police power, see 1 NICHOLS ON EMINENT DOMAIN § 1.42. 59 260 U.S. 393, 43 S. Ct. 158, 67 L. Ed. 322 (1922). 60 Id. at 415, 43 S. Ct. at 160, 67 L. Ed. at 326. More re- cently, according to the Supreme Court of Texas, “[w]hen the benefits to be gained by the public are not commensurate with the burdens imposed upon private persons, the law will not be permitted to stand.” State of Tex. v. City of Austin, 160 Tex. 348, 356, 331 S.W.2d 737, 743 (1960) (citations omit- ted) (holding that a state statute based on a federal statute providing for compensation for relocation of public utilities was constitutional). Nevertheless, “[o]ur fundamental law does not contemplate or require that every private injury and loss which may be necessary to protect or promote the public health,

9 quently, the police power is exercised by regulatory measures, such as by requiring a permit before an owner builds on his or her property.61 Although the po- lice power is broad and comprehensive,62 the courts have found it difficult to fix the boundaries of the po- lice power in a definitive way,63 in part because the scope of the police power changes from time to time to meet society’s changing conditions.64 Various regulations or restrictions have been held to be incidents of the exercise of the police power and to be of negligible loss to an individual property owner when compared to the benefits accruing to the community as a whole.65 In numerous cases in which landowners have challenged various kinds of land-use regula- tions, the courts have held that there was not a regulatory taking.66 For example, a state may exercise safety, comfort and convenience must always be borne by in- dividuals and corporations.” Id., 160 Tex. at 357, 331 S.W.2d at 743. 61 Viacom Outdoor, Inc. v. City of Arcata, 140 Cal. App. 4th 230, 44 Cal. Rptr. 3d 300 (Cal. Ct. App. 2006) (rebuild- ing of a billboard). 62 Robinson v. Crown Cork & Seal Co., 54 Tex. Sup. J. 71, 335 S.W.3d 126, 2010 Tex. LEXIS 796, at *99 (2010) (concur. op). 63 First Nat’l Benefit Soc’y v. Garrison, 58 F. Supp. 972, 981–82 (C.D. Cal. 1945). 64 Consol. Rock Prod. Co. v. City of L.A., 57 Cal. 2d 515, 370 P.2d 342, 20 Cal. Rptr. 638 (1962). 65 Schmidt v. Bd. of Adjustment of the City of Newark, 9 N.J. 405, 88 A.2d 607 (1952); see also Graybeal v McNevin, 439 S.W.2d 323 (Ky. 1969). 66 Allegretti v. County of Imperial, 138 Cal. App. 4th 1261, 1279–80, 42 Cal. Rptr. 3d 122, 136 (Cal. Ct. App. 2006) (hold- ing that the imposition of a condition on a property owner’s request to activate a well that limited the amount of water that the owner could extract from the aquifer beneath the owner’s property was not a taking); Herzberg v. County of Plumas, 133 Cal. App. 4th 1, 17, 34 Cal. Rptr. 3d 588, 599 (Cal. Ct. App. 2005) (county range ordinance that forced prop- erty owners to accept the physical invasion of their property by their neighbors’ cattle held not to be a taking when the owners had the right to keep cattle off their property with a law- ful fence); Tahoe-Sierra Pres. Council v. Tahoe Reg’l Plan- ning Agency, 535 U.S. 302, 122 S. Ct. 1465, 152 L. Ed. 2d 517 (2002) (moratorium to maintain the status quo of property surrounding Lake Tahoe to permit environmental research to be included in a future growth plan held a valid exercise of the police power); McElmurray v. Augusta-Richmond County, 274 Ga. App. 605, 607, 618 S.E.2d 59, 62 (Ga. Ct. App. 2005) (no regulatory taking when a property owner consented to the deposit of sludge on his property without knowing that the county also was depositing toxic waste on the property); Miskowiec v. City of Oak Grove, 2004 Minn. App. LEXIS 1236, at *16 (Mich. Ct. App. 2004) (Unpub.) (no unconstitu- tional taking because of the enactment of land-use regulations classifying wetlands near property as a natural environment lake or because of the imposition of a temporary moratorium on construction in a 100-year flood plain); Wild Rice River Estates, Inc., 2005 N.D. 193, at *P14, 705 N.W.2d 850, 855 (2005) (21-month moratorium on building permits held not to be a taking). its police power by prohibiting certain activities such as construction in areas prone to flooding.67 In New York, a town planning board’s conditioning of its ap- proval for a proposed building site on the owner’s ac- ceptance of a conservation restriction on development was held not to be a taking.68 In a Wisconsin case it was held that the transportation department’s enact- ment of set-back restrictions was not a taking.69 On the other hand, with respect to airport zon- ing and real property near airports, a property owner could bring a claim in inverse condemnation based on restrictive airport zoning.70 Airport zoning ordinances that restrict land use in order to permit safe flight approaches may result in a de facto taking of property.71 Some courts have held that ordinances re- stricting heights of structures and objects in the vicin- ity of an airport constitute a taking with regard to an owner’s property.72 However, other courts have held that airport zoning ordinances restricting land use may be a reasonable exercise of the police power.73 An Illi- nois appellate court held that height-restriction ordi- nances near an airport are a proper use of the police power to protect the public from aircraft hazards.74 Although the statutory restrictions were much greater than would be true with an airport disclosure act, Davis v. Brown75 is one case suggesting that an airport disclosure law is a noncompensable exercise of the police power. In Davis, an Illinois statute allowed the state transportation agency to prepare and record maps setting forth a right-of-way for a proposed high- way. The statute also required property owners within the proposed right-of-way to give notice if they planned to develop their property so that the depart- 67 City of Dover v. City of Russellville, 363 Ark. 458, 215 S.W.3d 623 (Ark. 2005). 68 Smith v. Town of Mendon, 4 N.Y.3d 1, 14, 822 N.E.2d 1214, 1221, 789 N.Y.S.2d 696, 703 (2004). 69 Wis. Builders Ass’n v. Wis. Dep’t of Transp., 285 Wis. 2d 472, 505, 702 N.W.2d 433, 448 (2005). 70 Katsos v Salt Lake City Corp., 634 F. Supp. 100, 104 (Utah 1986); Cheyenne Airport Bd. v. Rogers, 707 P.2d 717, 729–30 (Wyo. 1985). 71 Osborne Enters. Inc. v. Chattanooga, 561 S.W.2d 160, 164–65 (Tenn. App. 1977). 72 See McCarran Int'l Airport v. Sisolak, 122 Nev. 645, 137 P.3d 1110 (2006) (affirming district court’s holding and a jury award of compensatory damages of $6.5 million in connection with a county height restriction ordinance that limited the development of Sisolak's airspace because the ordinance ef- fected a "per se" taking of the airspace above Sisolak’s property located within the “departure critical area” of an airport ap- proach zone); Ind. Toll Road Com. v. Jankovich, 244 Ind. 574, 582, 193 N.E.2d 237, 242 (1963); Yara Eng’g Corp. v. Newark, 132 N.J.L. 370, 40 A.2d 559 (1945). 73 Kimberlin v. Topeka, 238 Kan. 299, 710 P.2d 682 (1985); La Salle Nat’l Bank v. County of Cook, 34 Ill. App. 3d 264, 340 N.E.2d 79 (1975). 74 La Salle Nat’l Bank, 34 Ill. App. 3d at 276, 340 N.E.2d at 88. 75 221 Ill. 2d 435, 851 N.E.2d 1198 (2006).

10 ment would be able to exercise its option to commence eminent domain proceedings. After a landowner’s re- quired notification to the department, the department had up to 165 days to decide whether to acquire the owner’s property by purchase or condemnation.76 Dur- ing the statutory period allowed for the department to make its decision, a landowner was not allowed to pur- sue development.77 Nevertheless, the court ruled that the statutory procedure was not a regulatory taking.78 Unlike the statute at issue in Davis, an airport disclosure act does not restrict an owner’s use or development of his or her property. A case that was thought would provide guidance on whether an airport disclosure act would be a regula- tory taking is Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, de- cided in 2010 by the United States Supreme Court.79 Although Justice Scalia’s opinion summarizes the types of regulatory takings, the Court did not undertake a regulatory takings analysis and decided the case nar- rowly based on Florida property law.80 C. Judicial Tests for Determining When Government Action Amounts to a Regulatory Taking C.1. Overview There are several bases used by the courts to de- termine when a regulation has gone too far and amounts to a compensable taking of private property for public use. The first issue is based on whether there has been an actual physical invasion of an owner’s property. Unless there is another basis for a taking, if there has been no physical invasion of the property, then there has not been a governmental tak- ing. Second, even when there has not been an actual, physical invasion of an owner’s property, there may have been under the circumstances a “categorical tak- ing.” One type of categorical taking occurs when a gov- ernment regulation completely deprives an owner of all economically beneficial use of his or her property. A categorical taking occurs as well when the government uses its own property without justification to destroy private property. A land-use exaction is another form of a categorical taking and occurs when the govern- ment requires a property owner to dedicate real prop- erty for public use; for example, as a condition to grant- ing a permit. Finally, based on the character of a regulation and an evaluation of case-specific factors, a 76 Id., 221 Ill. 2d at 446, 851 N.E.2d at 1205. 77 Id. 78 Id. at 447, 851 N.E.2d at 1206. 79 130 S. Ct. 2592, 177 L. Ed. 2d 184 (2010). 80 J. Peter Byrne, Rising Seas and Common Law Baselines: A Comment on Regulatory Takings Discourse Concerning Cli- mate Change, 11 VT. J. ENVTL. L. 625, 629 (2010) (discussing the Florida Supreme Court decision in SBR) (footnotes omit- ted). court may determine that a regulation is a noncategori- cal taking because of the regulation’s economic impact and its interference with a property owner’s invest- ment-backed expectations. C.2. No Physical Invasion of Private Property by an Airport Disclosure Act The most recognizable form of a taking is when there is an actual appropriation of private property by a con- demning authority. A categorical, or per se, taking81 occurs when there is a permanent, physical invasion of an owner’s real property,82 no matter how minor.83 In Loretto v. Teleprompter Manhattan CATV Corp.84 the United States Supreme Court held that a requirement that television cables be installed on a landowner’s property without compensation pursuant to a statute permitting such installations was a taking. There is a taking when governmental action results in a permanent, physical occupation of private property.85 81 Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 537, 125 S. Ct. 2074, 2081, 161 L. Ed. 2d 876, 887 (2005) (discussing cate- gorical or per se takings and noncategorical takings). 82 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 432, 102 S. Ct. 3164, 73 L. Ed. 2d 868, 880 (1982). However, in cases of emergency (e.g., a fire or flood) private property may be used temporarily or damaged or even de- stroyed to prevent injury or loss of life or to protect the remain- ing property in a community. In Thousand Trails, Inc. v. Cal. Reclamation Dist. No. 17, 124 Cal. App. 4th 450, 21 Cal. Rptr. 3d 196 (2004), a California appellate court held that it was a valid exercise of the police power for the public authority to cut a levee to prevent potentially massive flooding without a preexisting flood prevention plan even though the act re- sulted in the flooding of the property owner’s campground. 83 Lingle, 544 U.S. at 538, 125 S. Ct. at 2081, 161 L. Ed. 2d at 887 (citing Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S. Ct. 3164, 73 L. Ed. 2d 868 (1982)). See also Allegretti, 42 Cal. Rptr. 3d at 128 (quoting Lingle v. Chevron USA, Inc., 544 U.S. at 537, 125 S. Ct. at 2081, 161 L. Ed. 2d at 887). In First English Evangelical Lu- theran Church of Glendale v. County of L.A., 482 U.S. 304, 318, 107 S. Ct. 2378, 96 L. Ed. 2d 250 (1987), the Court held, inter alia, that “‘temporary takings’ which, as here, deny a landowner all use of his property, are not different in kind from permanent takings for which the Constitution clearly requires compensation.” Id. at 318, 107 S. Ct. at 2388, 96 L. Ed. 2d at 266 (citation omitted). 84 458 U.S. 419, 431, 102 S. Ct. 3164, 3173, 73 L. Ed. 2d 868, 879 (1982); on remand, see 58 N.Y.2d 143, 446 N.E.2d 428, 459 N.Y.S.2d 743 (1983) (Although not determining the measure of damages (see id., 446 N.Y.2d at 431), the New York Court of Appeals observed that “so far as the record discloses…the amount recoverable by any single owner is small….” Id. at 434). 85 Loretto, 458 U.S. at 428, 437, 125 S. Ct. at 3172, 3177, 161 L. Ed. 2d at 877, 883–84. Other courts have held that if a government entity either directly or indirectly physically in- trudes upon private property without compensation, there is a physical taking of property. Town of Clinton v. Schrempp, 2005 Conn. Super. LEXIS 92, at *7–8 (2005) (Unrpt.) (citing Eamiello v. Liberty Mobile Home Sales, Inc., 208 Conn. 620, 640, 546 A.2d 805 (1988).

11 In Lingle v. Chrevon USA Inc.,86 the Court held that whether a regulation “substantially advances le- gitimate state interests” is no longer a valid method of discerning whether private property has been taken.87 The Court explained that “[t]he paradigmatic taking requiring just compensation is a direct government ap- propriation or physical invasion of private property.”88 An airport disclosure act, as described in Section VI, would be neither an actual appropriation of private property nor a physical invasion, even minimally, of an owner’s property. C.3. No Deprivation of “All Economically Beneficial Use” of Property by an Airport Disclosure Act Even in the absence of an actual, physical taking of property, a categorical taking may occur when govern- ment regulations completely deprive an owner of “all economically beneficial use” of his or her property.89 As one court has observed, “[a]lmost all of the Supreme Court’ holdings on regulatory takings involve the adop- tion of ordinances, regulations, or other legislation that limit development or regulate land use.”90 The Su- preme Court of Idaho stated that “courts have long held that governmental conduct not involving the physical appropriation of property may so interfere with private interests in property as to constitute a taking.”91 Because a claim for a regulatory taking fails when land retains “substantial economic value,”92 the 86 544 U.S. 528, 125 S. Ct. 2074, 161 L. Ed. 2d 876 (2005) (involving a challenge to a state-imposed cap on rent that oil companies in Hawaii could charge dealers leasing company- owned service stations). 87 Id. at 542, 125 S. Ct. at 2083–84, 161 L. Ed. 2d at 890– 91 (rejecting the test applied in Agins v. City of Tiburon, 447 U.S. 255, 260, 100 S. Ct. 2138, 65 L. Ed. 2d 106 (1980)). 88 Id. at 537, 125 S. Ct. at 2081, 161 L. Ed. 2d at 887. 89 Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1016, 112 S. Ct. 2886, 2894, 120 L. Ed. 2d 798, 813 (1992). The Lucas Court held that the government must pay just compensation for such “total regulatory takings,” except to the extent that “background principles of nuisance and property law” independently restrict the owner’s intended use of the prop- erty. I d . at 1030, 125 S. Ct. at 2901, 161 L. Ed. 2d at 823. See also Allegretti, 138 Cal. App. 4th at 1270, 42 Cal. Rptr. 3d at 128 (emphasis in original) (quoting Lingle, 544 U.S. at 538, 125 S. Ct. at 2081, 161 L. Ed. 2d at 888 (quoting Lucas, 505 U.S. at 1019, 112 S. Ct. at 2895, 120 L. Ed. 2d 814) (some in- ternal quotation marks omitted)). 90 STS/BAC Joint Venture v. City of Mt. Juliet, Tenn., 2004 Tenn. App. LEXIS 821, at *15–16 (Tenn. App. 2004); City of Coeur d’Alene v. Simpson, 142 Idaho 839, 846, 136 P.3d 310, 318 (2006) (observing that “courts have long held that governmental conduct not involving the physical appropriation of property may so interfere with private interests in property as to constitute a taking”) (citation omitted). 91 City of Coeur d’Alene, 142 Idaho at 846, 136 P.3d at 318 (citing Pa. Coal Co. v. Mahon, 260 U.S. 393, 414–15, 43 S. Ct. 158, 67 L. Ed. 322 (1922). 92 Kafka v. Mont. Dep’t of Fish, Wildlife and Parks, 2005 ML 241, 2005 Mont. Dist. LEXIS 729, at *1, 57 (Mont. Dist. 2005) (citing Tahoe Sierra Pres. Council, 535 U.S. at 330, 122 “determinative factor” is whether there has been a “complete elimination of a property’s value.”93 (empha- sis supplied). The seminal case is Lucas v. South Carolina Coun- cil.94 In Lucas a landowner challenged regulations in- tended to prevent erosion that restricted private de- velopment on state beaches. The landowner purchased two lots in 1986 on a South Carolina barrier island with the intention of building single-family homes. Thereafter, in 1988, the state legislature enacted the Beachfront Management Act that barred the landowner from erecting any habitable structures on the land.95 The purpose of the legislation was to protect the beaches from erosion from the ocean, wind, and vari- ous other causes.96 The landowner filed an inverse condemnation action, claiming that the state’s action was a taking because it deprived the owner of all eco- nomic use of the property. The United States Supreme Court held that compensation could be required “if, on remand, the state court found that the development regulations were restrictive enough to amount to a tak- ing of the beachfront property.”97 The Court held that no matter how “weighty the asserted ‘public interests’ involved” are, the government may not deprive an owner of “all economically beneficial use of land….”98 Nevertheless, it should be noted that a regulation that diminishes, even destroys, the value of a business operated on an owner’s property typically is not a taking within the meaning of Lucas: “the categorical taking rule applies only to claimed takings of land.”99 An airport disclosure law is not a Lucas-type, categori- cal taking of a landowner’s property; an airport disclo- sure law would not deprive the owner of all beneficial use of the property. It could be argued, moreover, that a disclosure law would not diminish the value of an owner’s property that obviously is located near an air- port. Even if the law were to have a deleterious effect on a landowner’s business located on his or her prop- erty (assuming an airport disclosure act applied to such S. Ct. 1465, 152 L. Ed. 2d 517 (2002) (quoting Lucas, 505 U.S. at 1019, 122 S. Ct. 1465, 152 L. Ed. 2d 517)); see Palazzolo v. Rhode Island, 533 U.S. 606, 631, 121 S. Ct. 2448, 2464, 150 L. Ed. 2d 592, 616 (2001) (“A regulation permitting a landowner to build a substantial residence on an 18-acre parcel does not leave the property economically idle.”). 93 Lingle, 544 U.S. at 539, 125 S. Ct. at 2082, 161 L. Ed. 2d at 888 (citing Lucas, 505 U.S. 1003, 1017, 112 S. Ct. 2886, 120 L. Ed. 2d 798). 94 505 U.S. 1003, 112 S. Ct. 2886, 120 L. Ed. 2d 798 (1992). 95 Id. at 1006, 112 S. Ct. at 2889, 120 L. Ed. 2d at 808. 96 Id. at 1022, 112 S. Ct. at 2897, 120 L. Ed. 2d at 817. 97 See Manning v. Mining and Minerals Div., 140 N.M. 528, 2006 NMSC 27, at *12, 144 P.3d 87, 90 (N.M. 2006) (cit- ing Lucas, 505 U.S. at 1027–30, 112 S. Ct. 2886, 120 L. Ed. 2d 798). 98 Lucas, 505 U.S. at 1028–29, 112 S. Ct. at 2900, 120 L. Ed. 2d at 821 (citations omitted). 99 Kafka, 2005 Mont. Dist. LEXIS 729, at *54–55 (citing Unity Real Estate Co. v. Hudson, 178 F.3d 649, 674 (3d Cir. 1999).

12 property), any alleged loss likely would be noncom- pensable under present law. C.4. No Use by the Government of Its Own Property to Cause a Taking As the Supreme Court stated in SBR, “when the gov- ernment uses its own property in such a way that it destroys private property, it has taken that property. Similarly, our doctrine of regulatory takings "aims to identify regulatory actions that are functionally equiva- lent to the classic taking."100 However, an airport dis- closure requirement imposed on a seller of property is not a use by the government of its own property to de- stroy private property resulting in a taking. C.5 No “Exaction” by an Airport Disclosure Act Another form of a categorical taking is when the government requires a dedication of real property known as a land-use exaction.101 As discussed briefly herein, an airport disclosure law is not an exaction. An exaction is a per se taking that occurs when a landowner must give up a constitutional right to just compensation when property (e.g., an easement) is taken “‘in exchange for a discretionary benefit by the government where the benefit has little or no rela- tionship to the property.’”102 Exactions are defined as “land-use decisions conditioning approval of develop- ment on the dedication of property to public use.”103 An exaction is a forced dedication of property, usually by a developer who is required to dedicate some of the land to acquire a permit or to gain approval of a devel- opment plan. In Dolan v. City of Tigard104 and Nollan v. Califor- nia Coastal Commission105 the United States Supreme Court established a two-pronged “nexus” and “rough proportionality” test in determining whether there has been a regulatory taking resulting from an exaction. In the Dolan case the granting of a landowner’s request 100 Stop the Beach Renourishment, Inc., 130 S. Ct. 2592, 2601, 177 L. Ed. 2d 184,196 (2010) (quoting United States v. Causby, 328 U.S. 256, 261–62, 66 S. Ct. 1062, 90 L. Ed. 1206, 106 Ct. Cl. 854 (1946); Pumpelly v. Green Bay Co., 80 U.S. 166, 13 Wall. 166, 177–78, 20 L. Ed. 557 (1872). 101 Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 107 S. Ct. 3141, 97 L. Ed. 2d 677 (1987); Dolan v. City of Tigard, 512 U.S. 374, 114 S. Ct. 2309, 129 L. Ed. 2d 304 (1994). 102 Lingle, 544 U.S. at 547, 125 S. Ct. at 2087, 57 L. Ed. 2d at 894 (citation omitted). 103 City of Monterey, Ltd. v. Del Monte Dunes, 526 U.S. 687, 702, 119 S. Ct. 1624, 1635, 143 L. Ed. 2d 882, 900 (1999). 104 512 U.S. 374, 385, 114 S. Ct. 2309, 129 L. Ed. 2d 304 (1994) (reversing the Oregon Supreme Court’s ruling that the city’s decision to grant a permit to the landowner conditioned on the owner’s dedication of her land was not a taking). 105 483 U.S. 825, 107 S. Ct. 3141, 97 L. Ed. 2d 677 (1987) (reversing California, the appellate court’s ruling that the Coastal Commission could condition the grant of a building permit on the owner’s transfer of an easement across its beach- front property). for a permit to expand a store and parking lot was conditioned improperly on the dedication of the prop- erty for a “greenway,” including a bike/pedestrian path. In Nollan a permit to build a larger residence on beachfront property was conditioned improperly on the landowner’s dedication of an easement allowing the public to cross part of the property.106 In Wisconsin Builders Association v. Wisconsin De- partment of Transportation107 the Wisconsin Court of Appeals held that the Wisconsin Department of Trans- portation’s (DOT) set-back restrictions were not ease- ments in the Nollan and Dolan sense. The set-back re- strictions did not deprive the landowners of the right to exclude others and thus were not a taking.108 Simi- larly, in Smith v. City of Mahon the New York Court of Appeals declined “to extend the concept of exaction [to a situation] where there is no dedication of property to public use and the restriction merely places conditions on development.”109 The Smith court held that the gov- ernment’s requirement in that case was “a modest en- vironmental advancement at a negligible cost to the landowner [that] does not amount to a regulatory tak- ing.”110 An airport disclosure act neither would involve a dedication of property to public use nor would it place conditions on the use or development of property. C.6. No Taking of Private Property by an Airport Disclosure Act Under a Penn Central Analysis A taking described by the courts as a noncategorical taking is “case-specific,” one that involves a “considera- tion of the economic impact of the regulation, the [regu- lation’s] interference with reasonable investment- backed expectations, and the character of the regula- tion.”111 To establish a taking by reason of an air- port disclosure law’s effects on an owner’s property, a landowner would have to establish that there had been a taking based on an evaluation and balancing of the factors (the “Penn Central factors”) enumerated by the United States Supreme Court in Penn Central Trans- portation Co. v. City of New York.112 The Lingle Court reaffirmed that noncategorical takings are governed by the standards set forth in Penn Central.113 Indeed, 106 See discussion in Lingle, 544 U.S. at 546–47, 125 S. Ct. at 2086, 161 L. Ed. 2d at 892–93. 107 285 Wis. 2d 472, 702 N.W.2d 433 (2005). 108 Id. at 505. 109 Smith v. Town of Mendon, 4 N.Y.3d 1, 12, 822 N.E.2d 1214, 1219, 789 N.Y.S.2d 696, 701 (2004). 110 Id. at 15, 822 N.E.2d at 1221, 789 N.Y.S.2d at 703. 111 Miskowiec, 2004 Minn. App. LEXIS 1236, at *8 (citing Penn Central Co. v. City of N.Y., 438 U.S. 104, 124, 98 S. Ct. 2646, 2659, 57 L. Ed. 2d 631 (1978)); see also Agins v. City of Tiburon, 447 U.S. 255, 261–62, 100 S. Ct. 2138, 2141–42, 65 L. Ed. 2d 106 (1980). 112 438 U.S. 104, 124, 98 S. Ct. 2646, 2659, 57 L. Ed. 2d 631 (1978); see discussion in Wis. Builders Ass’n v. Wis. Dep’t of Transp., 285 Wis. 2d 472, 702 N.W.2d 433 (2005). 113 The Court stated:

13 “[m]ost regulatory takings claims are of the non- categorical type….”114 In Penn Central the Landmarks Preservation Com- mission denied Penn Central’s application to build an office atop its property—Grand Central Terminal in New York City—by reason of the city’s Landmark Pres- ervation Law. Previously, the terminal and location had been designated as a landmark and as a landmark site, respectively, under the applicable New York City laws.115 Penn Central challenged the denial in the courts, but the United States Supreme Court held that Penn Central’s property had not been taken without just compensation. In part, the Court held that New York City law does not interfere in any way with the present uses of the Terminal…. [T]o the extent appellants have been denied the right to build above the Terminal, it is not literally accurate to say that they have been denied all use of even those pre- existing air rights…. [T]he application of New York City’s Landmarks Law has not effected a “taking” of appellants’ property. The re- strictions imposed are substantially related to the pro- motion of the general welfare and not only permit rea- sonable beneficial use of the landmark site but also afford appellants opportunities further to enhance not only the Terminal site proper but also other properties.116 Thus, in light of Penn Central and its progeny, for a noncategorical taking to succeed, the owner must show “the magnitude” of a regulation’s economic impact and the degree to which it interferes with le- gitimate property interests.117 There is “no precise rule” in cases involving land-use regulations; “a weighing of private and public interests” is required to determine whether a regulatory taking has occurred.118 A deter- mination of whether a “challenged regulatory restric- Primary among [the Penn Central] factors are “the economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct in- vestment-backed expectations.” In addition, the “character of the governmental action”—for instance whether it amounts to a physical invasion or instead merely affects property interests through “some public program adjusting the benefits and bur- dens of economic life to promote the common good”—may be relevant in discerning whether a taking has occurred. The Penn Central factors—though each has given rise to vexing subsidiary questions—have served as the principal guidelines for resolving regulatory takings claims that do not fall within the physical takings or Lucas rules. Lingle, 544 U.S. at 538–39, 125 S. Ct. at 2081–82, 57 L. Ed. 2d at 888 (citations omitted). 114 City of Coeur d’Alene, 142 Idaho at 847, 136 P.3d at 318. See also 8 NICHOLS ON EMINENT DOMAIN § G14E.04[4]. 115 Penn Central, 438 U.S. at 115, 98 S. Ct. at 2655, 57 L. Ed. 2d at 645. 116 Id. at 136–38, 98 S. Ct. at 2666, 57 L. Ed. 2d at 657. 117 City of Coeur d’Alene, 142 Idaho at 853, 136 P.3d at 324. 118 County of Alameda v. Superior Court, 133 Cal. App. 4th 558, 566, 34 Cal. Rptr. 3d 895, 900 (2005) (citations omitted). tion constitutes a compensable taking necessitates ‘[a]n individualized assessment of the impact of the regula- tion on a particular parcel of property and its relation to a legitimate state interest….’”119 In Penn Central the Court emphasized three factors: the economic impact of the regulation on the claimant; the extent to which the regulation has interfered with distinct investment-backed expectations; and the character of the governmental action. The California Supreme Court has identified other nonexclusive fac- tors based on Penn Central and other United States Supreme Court cases that may be relevant considera- tions in an alleged Penn Central-type regulatory taking analysis.120 The purpose of Penn Central balancing is “to prevent the 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.’”121 Under a Penn Central “ad hoc factual inquiry,” a court may find “that a particular regulation ‘goes too far’ and constitutes a taking.”122 It does not appear that under the Penn Central factors a statute requiring the deliv- ery of an airport disclosure statement or even the re- cording of one in the land records would constitute a taking. An airport disclosure statement would not alter the character of property, restrict its use or develop- ment, or have any bearing on whether and to what extent aircraft noise affected the property. D. The Difference Between a Facial and an “As Applied” Challenge to an Airport Disclosure Act Because an airport disclosure act could be chal- lenged on constitutional grounds, it is important to con- sider the difference between a facial and an “as applied” challenge to such a statute. A facial claim is a challenge to a law’s constitutionality without showing the law’s effect on or application to a claimant’s property.123 As the Ninth Circuit has stated, a property owner “may challenge [a] zoning restriction on the basis that the ‘mere enactment’ of the restriction constitutes a tak- ing of its property.”124 The Penn Central factors, dis- 119 Id. at 566, 34 Cal. Rptr. 3d at 900 (emphasis in original) (citations omitted). See also MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340, 348, 106 S. Ct. 2561, 2566, 91 L. Ed. 2d 285, 294 (1986) (noting that the Court has no “set for- mula” to determine where regulation ends and a taking be- gins). 120 Herzberg, 133 Cal. App. 4th at 14, 34 Cal. Rptr. 3d at 597. 121 Id., 133 Cal. App. 4th at 15, 34 Cal. Rptr. 3d at 598 (cita- tions omitted). 122 Kafka, 2005 Mont. Dist. LEXIS 729, at *58. 123 8 NICHOLS ON EMINENT DOMAIN § G14E.04[3], at G14E- 45. 124 Lake Nacimiento Ranch Co. v. County of San Luis Obispo, 841 F.2d 872, 877 (9th Cir. 1987) (holding, inter alia, that a county ordinance reducing the allowed residential densi- ties and reclassifying most of the remaining privately owned, undeveloped land around the lake from a “Recreation” zone to a more restrictive “Rural Lands” zone was not facially uncon- stitutional).

14 cussed in Section C.6, supra, which are evaluated and balanced to determine the effect of a regulation on spe- cific property, would not be relevant in a facial chal- lenge.125 In contrast to a facial challenge, in an “as ap- plied” challenge an owner “is disputing…the constitutionality of the regulation to a specific tract of property.”126 Because facial challenges are less likely to succeed, most challenges are “as applied” challenges. However, an as applied challenge to an airport disclosure law likely would be unsuccessful. First, a disclosure statute is not an actual appropriation of private property nor a physical invasion of an owner’s real property.127 Second, neither requiring a disclosure statement nor requiring the recording of one would “den[y] all eco- nomically beneficial or productive use” of a prospective seller’s land.128 For there to be a taking, the diminution in value of a property “must be near total.”129 With an airport disclosure law, an “owner of real property [is not being] called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle….”130 Arguably, the owner is not being required to sacrifice anything—only to disclose a condition, the proximity of an airport to the property, that may affect a prospective buyer’s use and enjoyment of property that is offered for sale. As for whether a statute requiring the delivery and/or recording of an airport disclosure statement would constitute a taking, once again it appears unlikely based on the Penn Central factors that such a disclosure requirement would result in a taking of an owner’s property. One reason is that “even severe economic loss is not, at least by itself, sufficient to give rise to a taking.”131 For example, even zoning regulations that affect the value of real estate usually do not implicate the Takings Clause.132 In a challenge to an airport disclosure law, a prop- erty owner would have to identify property taken, not just an interest or right in property. Regardless of whether a taking is a categorical or noncategorical one, an alleged taking must damage all of the owner’s rights in his or her parcel of property.133 In other words, an 125 See 8 NICHOLS ON EMINENT DOMAIN § G14E.03[3][b][ii], at G14E-25–27 and nn. 38–39 (citations omitted). 126 Id. § G14E.04[3], at G14E-45. 127 Lucas, 505 U.S. at 1015, 112 S. Ct. at 2893, 120 L. Ed. 2d at 812. 128 Id., 505 U.S. at 1016, 112 S. Ct. at 2894, 120 L. Ed. 2d at 813 (citations omitted). 129 8 NICHOLS ON EMINENT DOMAIN § G14E.03[3][b][ii], at G14E-25 and n.37 (citations omitted). 130 Lucas, 505 U.S. at 1019, 112 S. Ct. at 2895, 120 L. Ed. 2d at 815. 131 2A NICHOLS ON EMINENT DOMAIN § 6.01[13][c] at 6-36. 132 Id. 133 Wild Rice River Estates, Inc. v. City of Fargo, 2005 N.D. 193, 705 N.W.2d 850 (2005) (upholding a 21-month morato- rium on the issuance of building permits). owner would have to show in respect to his or her prop- erty that the disclosure law denies him or her any “‘economically viable use of [the] land….’”134 One of the provisions of the Typical Airport Fair Disclosure Act, discussed in Section VI, requires, inter alia, that a seller disclose when a property offered for sale is within an AICUZ as shown on a map prepared for a military airport or air installation, the map being the result of an AICUZ study. In Branning v. United States,135 the court held that intensive military flight training in navigable airspace more than 500 ft above the plaintiff’s property had resulted in a tak- ing.136 However, the court rejected the plaintiff’s argu- ment that there had been a taking of all property that was within two delineated AICUZ zones simply because they were plotted on an AICUZ map. The evidence in this case clearly establishes that the CNR Zone 3 and CNR Zone 2 “footprints” include por- tions of plaintiff’s property on Lady’s Island. This is not, in and of itself, sufficient to establish a taking of plaintiff’s property by the defendant. It does, however, constitute valuable evidence of the impact of defendant’s aircraft operations on that part of plaintiff’s prop- erty….137 In Branning there was a taking because the noise level suffered by the landowner was “peculiarly bur- densome,”138 not because the government had con- ducted a study to determine where noise in relation to property was “‘normally unacceptable’ for residential use.”139 Thus, although a taking may occur when the government imposes regulations “that seek to restrict the use of property after title has been taken,”140 there is no per se taking unless a regulation denies an owner all economically viable use of the owner’s property. An airport disclosure law would not restrict a present or prospective owner’s use or enjoyment of his or her prop- erty. E. Summary An airport disclosure act does not come within any of the categories of possible regulatory takings. An airport disclosure act would not be a “classic taking,”141 nor would it be one that is “functionally equivalent to [a] 134 Hodel v. Va. Surface Mining & Reclamation Ass’n, 452 U.S. 264, 296, 101 S. Ct. 2352, 2370, 69 L. Ed. 2d 1, 28 (1981) (citations omitted). 135 228 Ct. Cl. 240, 654 F.2d 88 (1981). 136 Id. at 257, 654 F.2d at 99 (stating that “it is clear that the Government’s liability for a taking is not precluded merely because the flights of Government aircraft are in what Con- gress has declared to be navigable airspace and subject to its regulation”). 137 Id. at 252, 654 F.2d at 96 (emphasis supplied). 138 Id. at 242, 654 F.2d at 90. 139 Id. at 245, 654 F.2d at 92. 140 A2 NICHOLS ON EMINENT DOMAIN § 6.01[13][f]. 141 Stop the Beach Renourishment, Inc., 130 S. Ct. at 2601, 177 L. Ed. 2d at 195.