judgment that you both made of sending me to the bench. I would ask Senator Biden as a personal matter to give my best to my former colleagues at a great law school, and particularly Bill Quillan. Senator BIDEN. I will, judge. The CHAIRMAN. That is great. Judge SMITH. Thank you both. The CHAIRMAN. Thank you so much. We appreciate the efforts you have made. Our last two witnesses will be Professor Carol Rose and Mr. John Chaconas. Professor Rose comes from the Yale Law School, and Mr. Chaconas comes from St. Amant, LA. We will take you first, Professor Rose, and we would like you to summarize. I needed to leave, really, an hour ago. We would like you to summarize, if you could, in 5 minutes or less, and hopefully we can complete this hearing in a few more minutes. PANEL CONSISTING OF CAROL M. ROSE, PROFESSOR OF LAW AND ORGANIZATION, YALE LAW SCHOOL, NEW HAVEN, CT; AND JOHN J. CHACONAS, ST. AMANT, LA STATEMENT OF CAROL M. ROSE Ms. ROSE. Thank you, Senator. I will do my best to do that. Ms. ROSE. I should say who I am. I am Carol Rose. I am a teacher of property and environmental law and some natural resources at Yale. I also want to say that I am a very committed proponent of property rights. I guess I should mention I was a law student at the University of Chicago and I was a student of Richard Epstein's, so I know well his views. I want to talk to you about the tradition of property rights in American law, and I also want to talk to you about why I think that the takings proposals that are up now seem to disrupt that tradition. I don't think it is a surprise that our history has a very strong tradition of property rights and protecting individual property rights. This is really essential to a free enterprise system, and I don't think there is any question about that. Our legal system, however, also has a very strong tradition in defense of public rights and what were explicitly called public rights in the 19th century. These public rights concern resources that have wide and diffuse impacts and are not very easily reduced to private property, but are still nevertheless very important to large numbers of people. Traditionally, they include air, water, waterways, and wildlife stocks. Public rights act as a restraint on private uses of property, and that is because private land owners when they are using their property also use resources in common with other people. Some of these are very simple. When you burn trash, the smoke affects your neighbors' air. You may be able to work this out in your neighborhood. You probably can. Nevertheless, your use of your land is affecting other people's property as well. When you burn sulphur, as you were mentioning, Senator Biden, the emissions from your plant may affect land quality and timber resources 1,000 miles away. When you fill riparian land, you may alter a water body and you may alter the water flow that disrupts your downstream neighbors, as I think Mr. Chaconas is going to talk to us about, and you may disrupt uses of others much further away. Those common uses, as it were, piggybacked on to private ownership, don't matter very much if there are only a few of them and if the underlying resource is very large and can correct the problems. But if a lot of people do the same thing, they can use up or destroy all of the common resources, and those common resources are valuable to everybody. In the American legal tradition, that is the occasion for the active assertion of public rights. What that means is that the public, through legislators, restrains individual uses of common resources so that they are not damaged for everybody. That is why as long ago as the 13th century, London restricted the burning of coal, so that the people could breathe the air within that city. That is why American legislatures in the 19th century started restricting hunting and fishing in wildlife stocks that were becoming depleted. That is why those same legislatures took some at least halting steps to try to control air and water pollution. Now, those assertions of public rights are not necessarily occasions for compensation, and they have not been in American law. The fact that land owners and others have been using common resources does not give them any permanent rights to continue. There is case law on that. I think the major example is Hadacheck v. Sebastian, a 1915 case about air pollution. Nevertheless, there are sometimes reasons for compensation. Those are usually cases where a legislative action disturbs an owner's reliance and settled expectations. Takings jurisprudence usually concerns that kind of case, those cases of reliance, and that is why courts look for investment-backed expectations. That is also why those issues are so fact-specific. There are a lot of variations in owners' reliance. There are a lot of variations in the owner's commitment of resources, and there are also great variations in the reasonableness of their reliance, given background, law, and custom. But the basic idea in takings jurisprudence is to secure fairness to individual owners, while at the same time preserving the general public's ability to manage diffuse resources and avoid what is often called the tragedy of the com mons. My own view is that takings legislation of the sort that we are seeing can disrupt this kind of delicate balance. The compensation requirements that are spelled out in these proposals are far beyond constitutional requirements, as other witnesses have said, and they are actually much greater than owners have any reason to expect. Insofar as this legislation discourages assertions of public rights, it recreates a tragedy of the commons, allowing holders of land to use that land holding as an access to use up much wider resources more or less at will. Finally, I think there is a more subtle point. Property regimes depend a great deal on respect for the rights of others, and that includes respect for the rights of the public as well. The Wall Street Journal had an article on Tuesday that suggests how much these proposals are already encouraging what I think most of us would think of as private overreaching against the public. Water subsidy holders are saying that they have permanent rights. Grazing permit holders are saying the same thing. Miners, who have already been heavily subsidized, claim that their property is being taken because they were not regulated and now have cleanup costs. The International House of Pancakes' example about the ADA was brought up earlier. These are assertions of special entitlement that don't just disrupt environmental law, which we all know is at stake here. They also disrupt the free enterprise system. The object of a free enterprise system is not simply to enhance private wealth. It is, rather, to enhance the sum of private and collective wealth, things that we own individually taken together with the things that we enjoy in common. Those are both essential in a free enterprise system and they require respect for public rights as well as private. I will be glad to take questions. [The prepared statement of Ms. Rose follows:] PREPARED STATEMENT OF CAROL M. ROSE MR. CHAIRMAN AND DISTINGUISHED MEMBERS OF THE COMMITTEE: My name is Carol Rose. I teach at the Yale Law School; my subjects are property, environmental law, and a variety of areas related to natural resources, particularly in their historical context. I would like to begin by thanking the members of the committee for this opportunity to speak to you today about proposed legislation on “takings" issues. My testimony today is aimed at clarifying some property concepts relating to takings jurisprudence. I will concentrate on the common-law and historical legal principles relating to these issues. Briefly, my position is that historic Anglo-American legal principles recognized the importance of private property rights, but also recognized what were called "public rights," particularly in resources that are not easily turned into private propertyair, water and fish and wildlife stocks. Takings law has been aimed essentially at balancing private and public rights, and it is principally a judicial function. I believe, however, that there are important ways, in which legislatures can use new forms of private property in order to further both private and public rights, especially in relationship to the environment. 1. Private property rights are essential in a free-enterprises regime. Property's importance for capitalism has been recognized at least since Locke, and later Blackstone. An owner must have reasonable secure expectations of continued ownership if he or she is going to expend efforts to improve resources. Similarly, reasonably secure definitions of property are essential to trade, since trading partners must know who has what in order for their trades to mean anything. These elementary building blocks of capitalism-encouragement to labor and trade are important reasons for security of property, and they are very widely recognized in the common law of property. 2. Property rights need to be reasonably secure, but their content can change with changing conditions. Property rights in traditional law have never had fixed characteristics that apply under all conditions and for all time. Indeed, it would be undesirable and probably impossible for property rights to have such fixed definitions. This is a point that is recognized even by such libertarian writers as Richard Epstein.1 Since it is costly to establish property rights, there is no point in doing so until the need becomes clear. Both Locke and Blackstone gave narrative versions of the origins of property rights. In these narratives, people did not bother to assert property rights when natural foodstuffs were plentiful, but only defined property rights when the relevant resources became more scarce. This is in fact a typical pattern in common law property rights; for example, grazing rights were only very loosely defined in the early years of Western settlement, but they became much more 1 Richard Epstein, Private and Common Property, in Property Rights 17, 41 (1994). sharply defined as more settlers arrived with more grazing animals, which of course raised the possibilities for strife over grasslands.2 This pattern responds to the benefits and costs of establishing defining property rights: unrestricted common usage is not a problem when resources are plentiful, but with increased congestion, open access resources may deteriorate-a situation often called "the tragedy of the commons." Individual private property is one response to congestion and strife over open-access resources, but it is not the only response, and indeed it is not always the best response, since some resources require larger-scale management, even public management. This too has been recognized in the common law of property. The use of waterways, for example, has been considered a public property right continually since the Romans. 3. It is easier to define individual property rights in some resources than others. Land is a resource in which it is relatively easy to define private property rights; it is fixed in location and can be visibly marked. Water is more difficult, since it moves around and cannot be so easily designated as belonging to one person or another. Stocks or wild animals and fish are similar to water, even though individual animals or fish can be taken by individual people. Most difficult of all to "propertize" is air. 4. Diffusely-enjoyed resources were traditionally the subject of public rights. The difficulty of defining and enforcing private property rights in air, water and wildlife did not and does not now mean that these resources are not valuable, but simply that they are not necessarily considered private property rights. In traditional American law, these diffuse resources were often treated as limited common rights (for example, in the limited use rights common to riverbank owners); sometimes they were designated as "public rights," reflecting the fact that although a resource could not easily be privatized, it was nevertheless valuable to many people and subject to a kind of easement for public use.3 When people define individual property rights in land, they often use their land as the means of access to adjacent common resources, effectively "piggybacking" the use of common resource like air or water onto their individual landownership. This is not a problem so long as these common resources are relatively plentiful. As with individual property rights, there is no particular need to assert and formalize public rights in common resources, so long as the resources remain plentiful. Thus it does not matter if one landowner disposes of small quantities of wastes in a fast-flowing stream, as long as the water can aerate and biodegrade the wastes. Similarly, no one cares much if a single landowner burns wood or coal, if the amounts of smoke are small and quickly dispersed. But where population is dense, these unrestricted uses of the "commons" can become a problem. That is why London had restrictions on burning coal as long ago. as the 13th century. That is why early 19th century American states restricted access to shellfish in their waters. That is why later 19th-century American law increasingly recognized rights of action for nuisance against landowners who caused undue smoke, fumes, noise, and water pollution-private nuisance in the case of nearby and specially-affected owners, public nuisance where the issue involved the larger public. 5. Traditional American law recognized public rights as well as private rights. Traditional Anglo-American law generally recognized a duty for legislatures to compensate owners for private rights that were appropriated for the public benefit. Compensation was and continues to be the norm, for example, when land is taken for roadways, though compensation was contingent on several defenses; compensation was not due, for example, where large numbers of landowners shared more or less equal regulatory burdens, and it was not due when regulation was implicitly recompensed by reciprocal benefits going to the affected landowners. More importantly, compensation was not due when regulation effectively prevented private owners from doing something to which they were not entitled. Thus traditional American law did not necessarily regard landownership as a license for the unrestricted use of adjacent diffuse resources such as water, air, and wildlife, in situations in which one landowner's use could have serious effects on many other owners and persons. Restraint on such uses was not necessarily a compensable event. One matter for concern was the effect on immediately neighboring 2 See T. Anderson & P.J. Hill, The evolution of Property Rights: A Study of the American West, 18 J. Law & Econ. 163 (1975). 8 See H. Scheiber, Public Rights and the Rule of Law in American Legal History, 72 Cal. L. Rev. 217 (1984); M. Selvin, The Public Trust Doctrine in American Law and Economic Policy, 1789-1920, 1980 Wisc. L. Rev. at 29-31 (both arguing that 19th-century American law was replete with "public rights," characterized as property rights). landowners or other easily identifiable people; but these persons could bring an action on their own. Of more pressing concern were the diffuse and less recognizable general public, whose collective interests might be great even though their individual interests were too small for any of them to bring an action. Massachusetts, for example, required 19th century milldam owners to install rudimentary fish ladders, in an effort to protect both private and public rights in fishing stocks. These protections of the general public rights were not occasions for compensation. Rather, the public was regarded as the owner of such diffuse resource rights, and a private owner's action was considered an act of unjust appropriation, unless authorized as a net public benefit. Although with growing industrialization, air and water pollution often was authorized (as with municipal sewerage, railroad smoke, and some mining and industrial operations), the usual theory was that any damage to public rights had to be justified by an even greater benefit to the public's wellbeing. This is a continuing feature of nuisance law, in which courts ask whether a use that is otherwise damaging to the public is justified as a net public benefit. Recent Supreme Court "takings" cases have shown considerable attention to the importance of historic property categories, including the traditional background concept of public nuisance, discussed in the 1992 case Lucas v. South Carolina Coastal Comm'n. As Lucas makes clear, the mere invocation of "public nuisance" is not an excuse for public appropriation of private property. But traditional "public nuisance" was a catchword for private encroachment and public rights, which were themselves defined by their common and diffuse-but congestible characteristics. Moreover, historical American law took into account the need for changes in the protection of public rights; as population increased and knowledge about pollution grew, courts in the later 19th century recognized a wider scope of public rights in connection with air, water, and wildlife protection. We are much more aware today of the impact of human uses on common environmental resources, but modern environmental laws are the successors to the London prohibitions on coal burning, the early American restrictions on obstructions to waterways, the later 19th century public assertion of responsibility for protecting fish and wildlife stocks, and a whole panoply of public efforts to protect health, safety and welfare from overuse "piggybacked" onto private property. Thus public rights in traditional American law concerned diffusely-used resources that were valuable but costly to privatize. It would have been wasteful-a tragedy of the commons to allow individual owners to appropriate resources that were effectively shared by many others, and traditional American law did no such thing. Parenthetically, the House Bill diverges from this tradition in exempting legislation from takings claims if it protects the interest only of specific and identifiable owners. This is laudable, but by no means exhausts the range of traditional American law. Landowners were not allowed to encroach on public rights either. Economic logic suggests the reasons: identifiable private owners can sue in their own behalf, in private nuisance law, while diffuse members of the general public have much smaller incentives to sue in their own behalf; hence the latter require particular protection. Protection of these resources were all considered a part of the police power rather than takings of private property. 6. Takings jurisprudence typically occurs in instances of legal transition to the protection of public rights. So long as public rights are not threatened by private use, there is no need for public authorities to limit private use. If anything, principles of generosity should lead to permissive attitudes about resources that are not endangered. In recognition of this point, many aspects of traditional American law encouraged property owners to be generous in allowing others to use their land. But the quid pro quo was that those using the land acquired no permanent rights to continue indefinitely. The 1915 case Hadacheck v. Sebastian (239 U.S. 394) applied this same idea to public rights: a private brickyard could emit smoke and fumes so long as the surrounding areas were lightly populated, but public authorities could halt the use when the area became more heavily populated, and when the public was actually more threatened by the private encroachments on public rights, in the form of noise and air pollution. Thus in traditional American takings law, the fact that private owners had "piggybacked" a use of public resources onto their private land uses did not give permanent rights to use diffuse public resources, and past private usage of public re 4For example, Chicago and Cincinnati passed smoke ordinances in 1881; see J. Laitos, Legal Institutions and Pollution, 15 Nat. Resources J. 423 (1975); for the development of fish and game commissions in the later 19th century, see J.A. Tober, Who Owns the Wildlife? The Political Economy of Conservation in Nineteenth-Century America 179-254 (1981). 5 See, e.g. Pearsall v. Post, 20 Wend. 111, 135 (N.Y. Sup. Ct. 1838). |