March 27, 2020 4:57PM

A Takings Rationale For Some Shutdown Payouts?

In the past two weeks governments across the United States have ordered the closure of countless businesses and in so doing ordered into idleness the workers, suppliers, and contractors whose livelihood depended on those businesses, along with many others affected in less direct ways.

Are these takings of property for public use? If so, would the Supreme Court rule that they require just compensation under the Fifth Amendment’s Taking Clause? If not, is there nonetheless a case for some such compensation, such as emergency rescue payments, as rough justice?

Those interesting questions have been aired lately at the Volokh Conspiracy, the liberty‐​friendly legal blog. In one post, Keith Whittington begins by saying “I am a libertarian” before going on to argue that the “immediate crisis calls for relief, plain and simple”:

It is certainly the case that some on the left want to use the present moment to launch expansive new social programs. Those debates can wait until another day, and politicians on the left are doing no one any favors by trying to exploit the crisis by tying aid to a host of onerous restrictions or attempting to erect new permanent programs. Crises are often exploited to expand the state, and we should be vigilant in resisting such efforts.

That having been said, this is entirely different from the debates we were having a few weeks earlier about the proper scope if any of the welfare state and subsidies to business and employment:

With good reason, the government has disrupted people’s livelihoods and restricted individual activity for the sake of the common good. Even if we were to think the government has been misguided in some of the steps it has taken, the fact remains that the government has taken steps that have unavoidably done substantial economic damage.

In such circumstances, the government should compensate individuals for the damage it has wrought and relieve individuals from the unforeseen burdens that they have been asked to assume.

And more:

The government has instantly thrown millions of people out of work in what was previously a full‐​employment economy. There will be unavoidable economic consequences to that, and the government can only take steps to mitigate those consequences. It should, however, act as quickly to provide financial support for those adversely affected by the societal lockdown as it has to impose that lockdown. If the government had been more fiscally responsible in the past, we would be in a better position to take the necessary steps now. But we cannot fix past mistakes by closing our eyes to current needs.

In a second post, Ilya Somin, professor at George Mason University’s Scalia Law School and a leading libertarian voice on eminent domain, looks at the question of whether the courts would order compensation for shutdowns based on the Fifth Amendment. He concludes that they mostly wouldn’t. To begin with, they would be unlikely to dispute the government’s assertion of broad police powers during an epidemic:

Perhaps more relevantly, large numbers of businesses were forcibly shuttered by state and local governments during the influenza epidemic of 1918–19, the last time the US faced a public health crisis comparable in scale to this one. To my knowledge, none of them were ever held to be takings requiring compensation.

Moreover, under the doctrine of the famous Penn Central case, courts have typically declined to order compensation over regulatory takings, even severe, so long as there was not a physical occupation of the property. (For this latter reason, owners of hotels or college dormitories pressed into service as field hospitals might be entitled to compensation.) Penn Central is a bad case, but it’s unlikely to be overruled any time soon.

So suing is not the answer. And yet:

That said, I do think the principle underlying the Takings Clause points the way towards a moral rationale for compensation, even if such compensation is not legally required. …

owners and employees of the shuttered enterprises are bearing a hugely disproportionate share of the burden of protecting the population as a whole against the virus.

Moreover, the people in question haven’t done anything wrong. They simply own and operate businesses that—in normal times—are not only innocent but actually make important contributions to the community.

I am not sure what the best way to compensate them is. But I do think there is a strong case for providing at least some substantial relief.