Eminent Domain Report

The California Court of Appeal recently issued an interesting unpublished decision addressing a property owner's claim that a government entity's regulation of asbestos constituted a regulatory taking.  The owner's unsuccessful challenge presents a nice summary of what not to do when pursuing a regulatory takings claim, and just how difficult it is for an owner to succeed.

In Butte Equipment Rentals, Inc. v. California Air Resources Board, the property owner operated a rock mining and quarrying business.  The owner alleged that two regulations adopted by the California Air Resources Board (CARB) with respect to the quarrying and sale of rock containing asbestos resulted in the owner suffering a complete taking of its right to sell rock and of its right to engage in mining activities.

The trial court granted CARB's motion for summary judgment, holding that CARB was legitimately exercising its police power.  On Appeal, the Court agreed.  It explained the test is whether the "impact of a law or regulation as applied to a specific piece of property determines whether there has been a compensable taking."  In this case, despite the owner's claims to the contrary, the regulations only impaired one portion of the owner's rock quarrying business; the owner was still free to mine, quarry, and sell rock for many other unregulated purposes.  Thus, even with CARB's asbestos regulations in place, the owner was still able to make an economically viable use of its property.

The owner also failed to satisfy one of the key procedural hurdles necessary to bring a regulatory takings claim by not exhausting its administrative remedies and obtaining a final decision from CARB.  Finally, the Court explained that the owner could not successfully present a facial challenge to CARB's regulations unless it could show that the regulations inevitably posed a total and fatal conflict with the constitution.  In this case, the most the owner could do was show that a constitutional problem may arise in some future hypothetical situation.

Butte Equipment Rentals serves as a reminder of the uphill battle a property owner faces when bringing a regulatory takings challenge.  Navigating through the procedural landmines is one tough task on its own, but demonstrating a total taking under Penn Central and its progeny is many times insurmountable.