Property Rights Essay, Research Paper
CONTENTSSUMMARYI. Some Basics A. Public Goals and Private Rights B. Who has power and why of the Property Rights Debate C. The Concern with Land D. Unresolved Threshold Issues II. Takings Law Overview A. History B. Supreme Court Takings Law Today C. Takings Law in the Lower Courts of Greatest Interest to the Federal Government III. Federal Programs That Raise Takings Issues IV. Federal Property Rights Legislation A. Before the Property Rights Movement B. Property Rights Movement Approaches C. Pros and Cons: Assessment Bills D. Pros and Cons: Compensation Bills V. Elaboration on Two Key Issues Underlying Property Rights Legislation A. Whether Amendments to the Federal Programs of Greatest Concern Might Be Sufficient B. Adequacy of the Constitutional Remedy VI. Conclusion SUMMARYThe property rights issue arises because societal goals are sometimes pursued through government restrictions on the use of private property. At bottom, it is the age-old conflict between public goals and private rights.The property rights issue has flared up because of (1) an increase in government restrictions on private land use in recent decades; (2) increased Supreme Court protection of private property, and (3) the political appeal of the property rights issue as an indirect means for easing regulatory controls. Almost always, it is land, rather than some other form of property, on which the debate centers. Two threshold issues deserving treatment in the debate are the definition of a property right, and how many such rights actually are being affected by federal programs.The property rights issue should not be confused with the taking issue, which deals solely with how the courts interpret the Takings Clause of the Fifth Amendment. The issues are linked, however, since a premise of the property rights movement appears to be that relegating owners to their constitutional remedy is unjust.As it applies to real property, Supreme Court takings law requires plaintiff to first show a cognizable property interest, and then to satisfy ripeness requisites. As to the taking question itself, plaintiff must show that the effect of the government use restriction on his property is severe, as measured by case-by-case application of the “Penn Central factors.” In a few circumstances, a per se taking rule applies, as when government effects a permanent physical occupation or complete elimination of economic use (without implicating the “nuisance exemption”). If a taking is found, compensation must be paid.Recent takings lawsuits against the United States stem from a wide range of federal programs, though Congress focuses chiefly on the environmental ones. Federal environmental programs involved in a significant amount of takings litigation in recent years include the wetlands program, mining restrictions, rails to trails, and “Superfund” cleanups. The Endangered Species Act has generated only a handful of cases, but one cannot necessarily infer therefrom that the Act is having little impact on private property.Most property rights legislation falls into either the assessment bill or compensation bill category. Assessment bills call on federal agencies to evaluate the takings implications of their proposed actions, while compensation bills set a statutory threshold for compensation independent of the Constitution. Intense policy arguments swirl around each. Two issues worthy of special attention are whether amendments to the federal programs of greatest property rights concern might obviate any need for freestanding property rights legislation, and whether the constitutional compensation remedy is adequate.We’ve always had property rights. But now we have a property rights movement and a property rights issue. In just a few years, the notion that government efforts to protect environment, public health and safety, natural resources, historic sites, and so on may threaten the rights of property owners has gone from occasional mention to ubiquitous political presence. Roughly two dozen bills containing provisions explicitly directed at protecting property rights were introduced in the 103rd Congress. (1) Most observers believe that the new political makeup of the 104th Congress and the existence of a property rights provision in the House Republican “Contract with America” signal even greater congressional attention to the issue.I. Some BasicsA. Public Goals and Private RightsThe property rights issue arises because societal goals are sometimes pursued through government restrictions on the use of private property. Reduced to its essentials, the issue is but another aspect of the multifaceted tension in any society between public goals and private rights. The property rights controversy is made particularly intractable by the fact that some of the public goals (such as environmental integrity) and the private right (in property) are among our most fundamental and broadly supported.Assuming that Congress continues to embrace regulatory means for achieving these goals, the property rights issue will remain with us. Stated in economic terms, as the issue often is, the question is where the cost burden of public programs should fall. If Congress does not intervene and leaves property owners to their constitutional remedy in the courts, some costs will inevitably fall on property owners. This is because landowner wins in constitutional “taking’ lawsuits are few. On the other hand, if Congress creates a generous compensation remedy for landowners, the costs will fall more heavily on the taxpaying public, or alternatively produce a major rollback in regulatory programs affecting private land.Striking this balance between public and private costs is inevitably bound up with political philosophy — with one’s view of the proper balance between the interests and responsibilities of society on the one hand, and those of the individual on the other.B. Who has the power and why, of the Property Rights DebateCertainly a key reason for the burgeoning property rights movement is that at all levels of government, restrictions on the use of private land have become more common in recent decades. Such regulation has long existed; indeed, it was well-established in colonial times. (2) Yet today these controls –federal, state, and local — appear to be more pervasive, and are often accused of being vague and arbitrarily enforced. The filling in of certain wetlands, the serious modification of endangered species habitat, the strip mining of land, the use of contaminated land — all of these activities have been subjected to federal restriction only since the 1970s. Two high-profile incidents that catalyzed the property rights movement were the federal government’s adoption in 1989 of an expansive definition of wetlands (since abandoned) and the designation of the northern spotted owl as a threatened species in 1990, requiring logging restrictions on old-growth forest in the Pacific Northwest.A second reason for the movement’s ascendancy, obviously an outgrowth of the first, is the drift of the U.S. Supreme Court in recent years toward expanded protections for property owners under the Takings Clause of the Fifth Amendment. (3) These decisions of the High Court have been subjected to intense media and scholarly scrutiny. In a related vein, the movement has drawn inspiration from a prominent libertarian reinterpretation of the Takings Clause by Professor Richard Epstein. (4)A third factor is the political appeal of the property rights issue as an indirect mechanism for bringing about legislative retrenchment of environmental and other federal programs. Some scholarly comment on President Reagan’s “federal takings” executive order of 19885 saw the order in this light, as aimed at regulatory reductions as much as protecting property rights, (6) and its legislative counterparts today may serve the same dual function. Prior to the Republican electoral sweep in 1994, the perception was that a Democrat-controlled Congress would be unlikely to significantly curtail regulatory environmental programs. Hence, bills aimed nominally at protection of property rights, but likely as well to bring about an easing of environmental regulation, became appealing vehicles to some Members.By and large, supporters of the property rights agenda come from three identifiable groups. (7) The first consists of landowners — sometimes of modest means, sometimes not — who have personally experienced governmental frustration of proposed land uses, or fear they someday might. In addition, this group includes those who do not wish their lands condemned for inclusion in national parks, wild and scenic rivers, etc. — the assurance of compensation through the condemnation proceeding notwithstanding. Descriptions of encounters between individual landowners and the government provide the property rights movement with its most emotionally appealing, though often most anecdotal, cases in point.The second group embraces industries with direct economic interests in reducing government regulation of land — both their own and federally owned. Most obviously, it includes real estate developers, farmers, ranchers, and the extractive industries (mining, timber, oil and gas). (8) The third group consists of those who come to the property rights issue as a matter of political philosophy — conservatives, libertarians, certain economists, and others who adopt a platform of minimal government presence and/or market (rather than regulatory) solutions.Opposed to property rights legislation are a wide array of groups that stress the societal benefits deriving from government’s ability to regulate private property use, and regard such legislation as hindering that ability. While environmentalists are undoubtedly key players, there are many others. Also included are certain groups representing hunters and fishermen, historic preservationists, labor, the handicapped, senior citizens, consumers, architects and planners, and scientists. Some civil rights and public health organizations have voiced opposition as well, as have some religious groups. Finally, several groups representing state and local governments have urged Congress not to enact property rights legislation. (9)C. The Concern with LandTypically, when property rights proponents plead their case, the focus is on direct government interference with the use of privately owned land –secondarily, perhaps, water rights. Only rarely is it suggested that the countless actions taken by government that indirectly affect property value — taxes, interest rates changes, trade policy, relocation of government employees, permitting of locally undesired facilities, highway construction, etc. — should figure in the debate. Neither is it often claimed that property other than land and water rights should be of major concern.Why this focus on land, rather than personal property, is itself a fascinating question. No one appears to advocate that when the Federal Reserve Board hikes the federal funds rate and stock prices tumble, the government should compensate for the diminution of stock value. To what extent are the reasonable expectations of a stock owner, in terms of future value fluctuations, different than those of a landowner? Is it that the stock owner may be assumed to know that the risk of substantial losses is part of the game, while such risk traditionally has not been a concern of the landowner? Or should the landowner, too, be held to expect wide fluctuations, given the ubiquity of government land-use regulation today? (10)A major factor explaining the land emphasis in the property rights debate is the unique status of land among species of property. Questions of land use “are inexorably tied up with issues about the nature of society, issues of freedom and responsibility, community and democracy.” (11) A key attraction of the New World to Europeans prior to the Twentieth Century was land, often granted by the Crown or colonial and federal governments on generous terms. (12) Indications are that the Framers, most of them major landowners, viewed private property as securing a sphere of personal liberty against arbitrary government. (13) More recently, the Supreme Court indicated it would be less deferential to government regulation of real property, as contrasted with personal property, in adjudicating takings challenges. (14)In any event, there are two principal ways that government programs in the United States directly affect private land use. First, government may physically invade private land, by its own agents or by external forces set in motion by government actions. The classic example, amply reflected in the early Supreme Court takings cases, is when government dams, levees, etc., cause flooding of private land lying outside the flowage easement condemned. A contemporary illustration is the Superfund cleanup, in which a private landowner may be required to allow installation of monitoring equipment for an indefinite period.It is not physical invasions, however, but rather use restrictions, that are the flash point in the property rights controversy. The targeting of use restrictions may be because permanent physical invasions, no matter how minor, are per se compensable under constitutional takings law. Hence, invasive government actions are usually accompanied by formal condemnation proceedings in which the landowner is compensated. By contrast, for a mere use restriction to trigger constitutional compensation the drop in land value must be severe. The contention of the property rights movement is that government has become callous to such non-physical, regulatory impacts on landowners because it knows that few will meet the constitutional threshold for compensation. Environmentalists and others dispute the charge, however, and argue that forcing government to pay for less-than-severe restrictions on land use would be prohibitively expensive, compromising the achievement of social goals that polls indicate are widely endorsed by the American public.D. Unresolved Threshold IssuesThe property rights debate tends to mire down in part because no one knows precisely how much adverse (or beneficial) impact on private landowners federal programs are having. Property rights groups tell of small landowners being robbed of any economic use of their property, and developers being needlessly delayed, by arbitrary federal bureaucrats; environmental groups assert that such instances are relatively few and that in any event there is no right to put one’s land to harmful use. The Corps of Engineers notes that out of 15,000 individual wetlands permits applied for each year, only 500 are denied, but opponents allege that many wetland owners withdraw their applications out of frustration with the process, or because they believe the permit will be denied. No detailed survey of the private property impacts of any federal program appears to exist, and given the complexity of the issue, there may never be one.
Yet another basic issue — what is a property right? — is often left entirely unmentioned in the property rights debate. Almost no one asserts that property rights are absolute and unqualified, such that the purchase of land confers upon its owner a right to compensation for any subsequently adopted use restriction. Most property rights advocates acknowledge that the right to use one’s land is limited by the ancient common law maxim “Sic utere too at alienum non laedas” — one should use his own property so as not to injure others. But the range of injuries conceded to condition property rights under this maxim is narrow –often, only direct, physical impacts on the property of one’s neighbors such as would constitute common law nuisance. (15)By contrast, those more kindly disposed to government programs that may restrict property use point out that property rights historically have evolved. Such evolution, it is contended, has been driven by new societal understandings and values, even when to the disadvantage of existing owners. (16) The evolving-rights view is embodied in the Supreme Court’s Lucas decision, which teaches that no taking occurs when a government restriction could have been imposed under nuisance or property law existing when the plaintiff’s land was acquired. (17) Under this rule, a change in the law means that a subsequent buyer of an affected parcel obtains a different bundle of property rights than his predecessor had. 18 Regulatory advocates also cite the adage about the landowner’s rights being limited when harms may result, but for them the range of conditioning harms is broader than for property rights advocates, embracing not only direct harms to one’s neighbors but also indirect impacts on endangered species, ecosystem services, and biodiversity. (19)Each side has a weakness. That of the property rights position is its resistance to acknowledging the historical mutability of property rights as societal values and priorities change. That of the other side is its resistance to accepting any bounds on that mutability — that is, on the government’s ability to define which property uses will be deemed harmful, hence regulable without compensation.II. Takings Law OverviewThe property rights issue should not be confused with the “takings” issue. The takings issue, strictly speaking, deals with how the courts determine when the Takings Clause of the Fifth Amendment demands compensation. It is a matter of constitutional law. By contrast, the property rights issue is much broader, embracing a lengthy agenda of proposals by which government interferences with private land use might be minimized, or might trigger compensation beyond what is constitutionally required. It is a matter of policy.But while the two issues are different, they are inextricably linked. The takings issue may be regarded as the point of departure for the property rights issue, since a premise of the property rights movement is that the current system of redressing landowners by requiring them to file “taking” suits against the government has not proved fair and just to landowners. Thus, a brief sketch of the case law interpreting the Takings Clause is needed at this point. (20)A. HistoryThe Takings Clause is a late bloomer. It was almost a century after the Bill of Rights’ adoption before the Supreme Court, in 1871, granted that the Takings Clause could be invoked by the landowner against the government, as contrasted with its traditional use in an eminent domain action by the government against the landowner. (21) After that, it was another half century, until 1922, before the Court was willing to expand the availability of such landowner “taking” actions from physical invasions and outright appropriations of land to mere regulation of land use, the hot topic today. (22) And after taking that bold step — the birth of the “regulatory taking” concept — the Court largely ignored the land use aspects of its new doctrine for yet another half century.It was not until 1978 that the Supreme Court began a sustained effort to inject order into this frustrating area. In that year, in Penn Central Transportation Co. v. New York City, the Court found that application of New York City’s historic preservation ordinance so as to block the construction of a 40-story office tower atop Grand Central Station effected no taking. (23) In reaching its holding, the Court set out a comprehensive, yet vague, list of “influential factors” for fixing the line between compensable and noncompensable regulation. These factors, repeated mantra-like since 1978 by almost every court deciding a regulatory taking case, are (1) the economic impact of the government action, (2) the extent to which the government action interfered with reasonable investment-backed expectations, and (3) the “character” of the government action. (24)At the same time as it announced the above three factors, the Penn Central court reiterated that whether a government regulation is a taking cannot be based on mechanical application of fixed principles. Rather, it is a determination based on “fairness and justice,” combining close scrutiny of the facts with ad hoc, case-by-case analysis. (25) Thus, Penn Central factors notwithstanding, takings law continued to be sensitive to the balancing of interests and harms in each particular case, though inevitably at the expense of clarity and predictability of outcome.In the seventeen years since Penn Central, the Supreme Court has maintained its presence in the takings area through more than two dozen decisions. This case law began what will doubtless be a continuing effort by the Court to lend greater clarity to this murky — some would say incoherent — realm of constitutional law. Decisions during this period tackled a variety of questions as to ripeness (When is a taking claim sufficiently concrete to warrant judicial intervention?), standards for determining takings (as for physical invasions, complete elimination of economic use, conditions on permits, etc.), and remedy (Once a court finds a taking, what response does the Takings Clause require?). Despite its general preference for ad hoc analysis of takings claims, the Court in these decisions identified several circumstances where a “bright line” rule applies — that is, where the complex balancing of Penn Central factors can be bypassed.With some exceptions, one may say that the Court’s more recent decisions (1987 to the present) moved Takings Clause jurisprudence toward greater protection of property rights. However, this move has been modest — much less than many conservatives might desire. To date, for example, the Court has never found a regulatory taking in the absence of a governmental physical invasion of land or a virtually total elimination of a tract’s economic use.As, for the future, the balance between the Court’s conservatives, moderates, and liberals will be key. Votes in several of the Court’s recent land use/taking cases make unequivocally plain that where a justice stands on the taking question may depend largely on his or her political philosophy. Justices Rehnquist and Scalia, generally regarded as among the Court’s most conservative members, have emerged as strong advocates for greater private property protection. Justices generally regarded as liberal or moderate, such as Stevens and Blackmun, have usually taken the government side. Compounding the importance of this ideological element is the fact that many of the recent land use/taking cases in the Court were decided on razor-thin margins. (26) Thus, future appointments to the Court may be pivotal.B. Supreme Court Takings Law TodayGiven the ambiguity of some Supreme Court takings decisions, here is as clear a synthesis of the Court’s takings law that one can offer — as it applies to real property.First, plaintiff must demonstrate the existence of a property interest, one which he or she owned on the date of the alleged taking. (Lately, the lower federal courts, perhaps taking a cue from the Lucas rationale, have added a requirement that plaintiff show a “compensable expectancy” in the use sought to be made of the property.)As a second threshold matter, the takings plaintiff has to avoid dismissal on ripeness grounds. To succeed in this, plaintiff must, before suing, obtain a final and authoritative determination from government as to what use may be made of the land. The fact that a government agency has merely asserted jurisdiction over a property is not by itself a basis for a taking, since the requisite agency approval, once applied for, may be granted. Showing merely that one’s first choice for how to develop a tract has been rejected also is not enough, since scaled-down (yet still economically viable) versions of the project may be approved. If approval is denied, plaintiff must exhaust all possibilities of variances or other administratively granted exceptions, unless pursuing them would be futile under the circumstances. Finally, plaintiff must exhaust any avenues for administrative compensation (rarely available at the federal level).Once these hurdles are surmounted, the case moves to the taking issue itself. Here, it is useful to organize discussion around the Penn Central factors noted above.First, the “economic impact” factor. The Court has been emphatic that not all economic impacts and diminutions in land value as a result of government action are takings. In fact, the recitation of economic impact as a taking factor notwithstanding, it seems that very few such injuries are. For example, there is no right to put land to its most profitable (”highest and best”) use. Rather, it seems that all, or nearly all, economic uses of a parcel must be eliminated by a regulation before the taking claim is viable. Using the parallel concept of value loss, the Court has said that diminutions in land value, standing alone, are never sufficient to ground a taking claim, and has upheld government regulation subjecting properties to 92-1/2 and 75 percent value loss.When, however, the economic impact of the government’s action reaches the degree that all use of a parcel has been destroyed, there is a categorical taking — no other Penn Central factors need be considered. Even in this extreme case, however, there is an exception. If the uses proposed by the landowner could have been prevented under background principles of nuisance and property law existing at the time the land was acquired, there is no taking. One should not be compensated, reasons the Court, for the denial of a right one never had. Apparently, such “background principles” may be drawn from both common law and statutory law, both federal and state.Second, the “interference with reasonable investment-backed expectations” factor. Though actually a corollary of the economic impact factor, investment-backed expectations are usually discussed separately. Underlying this factor is a land purchaser’s reliance interest in being able to realize the lawful use or uses of the tract that motivated the purchase. This factor has been developed chiefly in the land use/taking decisions of the lower courts.In gauging either economic impact or interference with investment-backed expectations, courts look at the “parcel as a whole,” not merely the affected portion.Third, the “character of the government action” factor. First and foremost, this factor subsumes the great divide in takings law between physical and regulatory interferences with private property. Because a physical invasion undermines the most precious property right — the right to exclude others — it has consistently been subjected to greater judicial scrutiny in takings cases. Physical occupations, when they are permanent and not consented to, are per se takings in most instances. On the other hand, temporary physical invasions may or may not be takings, depending on which way the other Penn Central factors point.A second major component of the “character” factor is the rules for the dedication and exaction conditions often imposed by governments as preconditions for granting a development permit. Such conditions must address the same problems as the permit scheme itself, and may not impose a burden on the permit applicant that is greater than “roughly proportional” to the burden that the proposed land use would impose on the community. A failure to meet these mandates is a per se taking.A third major component is interest balancing. Though often only implicit in the Court’s decisions, it seems that a weighing of the government purpose being advanced by the property restriction against the burden on the property owner remains part of takings law.Often part of “character” analysis, too, is the degree to which impacts on landowners are accompanied by offsetting benefits; the phrase “average reciprocity of advantage” is often mentioned by the Supreme Court in this regard. The classic illustration is zoning law, which may limit the use of a parcel but benefit it as well, by similarly restricting the use of neighboring properties. Still other judicial inquiries often made under the rubric of “character” analysis are whether the burdens of the government act are borne by a few but the benefits shared in by many, and whether a property owner has been singled out to bear greater burden under the regulatory program than others similarly situated.If after applying these factors or per se rules a court discerns a taking, the property owner must be compensated. But the government has options. At least where practical, it may rescind its offending action and pay the owner solely for the temporary taking during the time that the action was in effect. Or, it may leave the action in place, accepting liability for the permanent taking of property.C. Takings Law in the Lower Courts of Greatest Interest to the Federal GovernmentWhile the Supreme Court’s decisions on takings are obviously important, only a miniscule portion of litigation ever reaches that stratospheric level. For takings claims against the United States, the large majority of cases are finally determined in the U.S. Court of Federal Claims, a trial court, and the U.S. Court of Appeals for the Federal Circuit, with appellate jurisdiction over the Court of Federal Claims. Under the Tucker Act, almost all takings claims against the federal sovereign must be filed in the Court of Federal Claims, (27) placing this once-obscure court at the eye of the storm.For two additional reasons, the takings decisions of these two lower courts have taken on particular significance. First, there are elephant-sized gaps in the Supreme Court’s case law on takings — major issues that the Court has not yet had the opportunity or will to resolve. This provides a vacuum for the