American Business


Takings clause

The phrase takings clause refers to the U.S. Constitution’s Fifth Amendment, which provides that no “private property [shall] be taken for public use without just compensation.” Individuals and businesses before the U.S. Supreme Court have extensively disputed the meaning and scope of the takings clause. Traditional takings disputes, such as government acquisition of private land by EMINENT DOMAIN to build roads, focus on questions of just compensation. Broadly speaking, the duty of governments is to pay fair MARKET VALUE for their takings, although determining fair market value is often elusive. In recent decades, the concept of a “taking” that triggers the duty of just compensation has been expanded somewhat to include so-called “regulatory takings.” The basic idea is that by issuing regulations, for example concerning land use or environmental protection, governments may take private property by reducing the scope of the full range of options that normally comes with ownership that (unlike the road example above) remains in private hands. Gradually the U.S. Supreme Court has recognized the concept of regulatory takings of private property.