WOULD PROPOSED PROHIBITIONS AGAINST INTERNAL COMBUSTION ENGINE VEHICLES CONSTITUTE TAKINGS OF GAS STATION PROPERTIES?

Spoiler Alert, I don’t know, but it is interesting to contemplate.

In recent years, government regulations prohibiting internal combustion engine powered vehicles in the future have been the subject of headlines. California actually passed a ban to take effect in 2035. There has been discussion of President Biden taking action nationally. This led me to contemplate whether these regulations would constitute takings of gas stations.

Certain businesses become anachronistic through the passage of time and changes in technologies. We can all recall the winding down of the video store business and all the empty Blockbuster or Hollywood Video locations that needed to be repurposed. But that shift in business paradigm was driven by consumer adoption of improved technology, not government regulation. Proposals to regulate gas powered vehicles out of existence could be different. The government is prohibited from employing regulations that destroy the value of real estate in certain circumstances. Penn Central Transportation Co. v. New York, 438 US 104 (1978) is a landmark case in that area. That case recognized that regulations can go too far and that interference with investment based expectations can violate the United States Constitution. These cases generally focus upon the impacts of zoning restrictions or environmental laws like wetland preservation regulations. For example, Penn Central evaluated whether New York City acted improperly when prohibiting the construction of an office tower on top of the iconic Penn Central train station for historic preservation reasons (it did not, in part, because the building as it stood could still be operated profitably and the City granted valuable development rights to offset the restrictions). Cases like this involve the direct application of the regulations at issue to specific real property. 

But what about regulations that do not directly target specific real estate but rather regulate products in a manner that renders real estate modified to service those products unusable for the purpose for which it was developed? Candidly, I do not know the answer as I have not researched it and I do not recall reading cases applied to this circumstance. But if I were a legislator, I would want to know the answer and I would want to tailor my legislation to avoid triggering taking claims. My practice is built upon agencies either not understanding or willfully ignoring the consequences of their actions when acquiring private property.  Governments have at least a decade to evaluate this issue. It will be interesting to see if they get their evaluation correct.