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See some of Saul Fenchel's eminent domain articles covering various subjects in Eminent Domain Condemnation.

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The answer to this question is “yes”, but it is difficult to prove.

In recent years, much attention has been focused on these so-called “regulatory” or “de facto” takings. These are situations where the government places such onerous restrictions on the use of the property that the property owner may claim that the government has “de facto” (as opposed to formal or “de jure”) taken the property, entitling the property owner to just compensation. This claim of de facto taking is called an “inverse condemnation.”

The evidentiary burden upon a property owner to show a de facto taking and be entitled to just compensation is demanding. Generally speaking, the property owner must prove that the property has lost virtually all its value by reason of the governmental action, or sometimes “inaction”, by refusing to grant development approvals.

In certain circumstances, New York’s environmental statutes provide relief to recover for a “de facto” condemnation where the government’s application of the environmental rules and regulations deprive a property owner of substantial value. See, ECL 24-0705(7) which provides:

“In the event that the court finds the action reviewed constitutes a taking without just compensation, and the land so regulated merits protection under this article, the court may, at the election of the commissioner, either (i) set aside the order or (ii) require the commissioner to proceed under the condemnation law to acquire the wetlands or such less than fee rights therein as have been taken.”

The statute requires a two-step analysis. It must first be determined whether the administrative denial of the permit is rational and supported by substantial evidence. Once this is established, it must be determined whether the denial of the permit is so oppressive that it rises to the level of a taking of petitioner’s property.

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