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United States v. Fuller

Supreme Court of the United States
35 L. Ed. 2d 16, 409 U.S. 488, 1973 U.S. LEXIS 141 (1973)
ELI5:

Rule of Law:

The Fifth Amendment's requirement of 'just compensation' does not require the government to pay for an element of value that it has created, such as the increased value of private land resulting from its use in conjunction with adjacent federal lands under a revocable permit.


Facts:

  • Respondents operated a large 'cow-calf' ranch in western Arizona.
  • The ranching operation utilized a combination of lands: 1,280 acres owned by respondents in fee simple, 12,027 acres leased from the State of Arizona, and 31,461 acres of federal land.
  • Respondents' use of the federal land was authorized by revocable permits issued under the Taylor Grazing Act.
  • The Taylor Grazing Act explicitly states that the issuance of a permit does not create any 'right, title, interest, or estate in or to the lands.'
  • The United States government initiated proceedings to condemn 920 acres of respondents' privately owned fee lands for a public project.

Procedural Posture:

  • The United States filed a condemnation action in the U.S. District Court to take 920 acres of respondents' fee simple lands.
  • At trial, the District Court, over the Government's objection, instructed the jury that it could consider the value accruing to the fee lands from their use in conjunction with the federal permit lands.
  • The jury returned a verdict, and the District Court entered a judgment for respondents based on that valuation.
  • The United States, as appellant, appealed to the U.S. Court of Appeals for the Ninth Circuit.
  • The Court of Appeals affirmed the District Court's judgment, holding that the jury instruction was proper.
  • The United States, as petitioner, successfully petitioned the U.S. Supreme Court for a writ of certiorari.

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Issue:

Does the Fifth Amendment's just compensation clause require the government, when condemning private land, to pay for the incremental market value attributable to the land's use in combination with adjacent government-owned lands held under a revocable Taylor Grazing Act permit?


Opinions:

Majority - Mr. Justice Rehnquist

No. The Fifth Amendment does not require the Government to pay for an element of value based on the use of a condemnee's fee lands in combination with the Government’s permit lands. The constitutional requirement of just compensation does not include elements of value that the government itself has created and could destroy by exercising its authority, such as revoking a permit. Citing United States v. Rands, the Court reasoned that allowing compensation for such value would be tantamount to creating private claims in the public domain. The Taylor Grazing Act itself makes clear that permits create no compensable property rights, and it would be illogical for Congress to then authorize compensation for the value these non-rights add to adjacent fee lands.


Dissenting - Mr. Justice Powell

Yes. Just compensation requires payment of fair market value, which includes all elements of value a willing buyer would consider, such as the strategic location of the land. The jury was properly instructed to consider the value added by the 'availability and accessibility' of the adjacent public lands, not the value of the revocable permit itself, while also weighing the risk of permit revocation. The majority's holding creates a new and unwarranted exception to the market value rule, distinguishing this case from precedent involving the government's unique servitude over navigable waters. It is unfair to disregard what the property would command on the open market in favor of a value artificially 'denuded of its surroundings.'



Analysis:

This decision establishes the 'government-created value' exception to the fair market value standard in eminent domain law. It clarifies that the government is not required to compensate a landowner for value that it could unilaterally destroy through its sovereign powers, such as by revoking a license or permit. The ruling extends the principle from United States v. Rands beyond the specific context of navigable servitudes to other revocable government-conferred benefits. This precedent significantly impacts the valuation of private property that relies on or is adjacent to public resources, limiting the scope of 'just compensation' under the Fifth Amendment.

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