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Regrettably, in many instances S. 605 does not require compensation if the prop, erty owner does not suffer an economic loss greater than 33 percent of the affected portion of the regulated property's value. This is unjust, for a taking is a taking. Whether a landowner is sufficiently harmed is not the issue. Whether a landowner's right to her property has been violated by the federal government is. It is that simple.
This point was made by the Supreme Court with regard to takings resulting from physical occupations in the case of Loretto v. Teleprompter Manhattan CATC Corp.8 In that case the Supreme Court ruled that even occupations that impose “minimal" hardships were compensable takings. Essentially the Court held that the extent of the imposition is immaterial to the question of whether a taking occurred. If this is the case with physical takings, it should be with regulatory takings as well. The current takings compensation proposal falls short of this standard. S. 605 certainly would offer potential relief to many property owners that would not be likely to receive compensation in court today, but due to the 33 percent threshold, it does not go far enough. S. 605 would be a fairer and more equitable proposal were it to adopt a de minimis standard or supplement the 33 percent threshold with a monetary one.
Under S. 605, the owner of a $100,000 parcel that is devalued by “only" $30,000 could receive nothing, no matter what hardship the devaluation causes. As Justice John Paul Stevens has noted (albeit with differing intent), making a distinction as to who is entitled to compensation based on the amount of the devaluation is "wholly arbitrary.“. This rule is the equivalent of saying that a burglar has not committed a crime if he "only takes one third of the money in your wallet and leaves the rest. In S. 605, Section 203 (3XA), “just compensation" is defined as "compensation equal to the full extent of a property owner's loss * * ** Apparently this does not include those who do not suffer enough of an economic devaluation.
However, it is to bill author(s)' credit that the 33 percent threshold applies to the affected portion of the regulated property, and not the property as a whole. This rightly expands-the range of government actions that are potentially compensable. It should also be noted that the Lucas majority felt that it was “unclear" whether the Court should
focus on a regulation's impact on a whole tract or merely the affected portion. 10 S. 605 thus has the virtue of clarifying this issue for the court and potential litigants (an important point to consider for those who allege that S. 605 is too vague as to what it would require and allow).
WHEN COMPENSATION IS DUE Many have charged that compensation proposals, such as S. 605, would require the federal government to pay compensation "whenever" federal regulatory actions diminish property values. 11 Were this true, it is likely that all but the most extreme libertapan ideologues would balk at supporting such a bill, for there is little that the government can do, from raising interest rates to constructing a highway, that will not impact property values in some manner. As the Supreme Court has held fairly consistently “mere diminution in the value of a property, however serious, is insufficient to demonstrate a taking." 12 It is a mark in this bill's favor that it rejects a compensation standard that is wholly dependent upon the monetary impact of federal regulatory actions.
Compensation should be paid when the federal government acts so as to deprive a property owner of a right to use and enjoy that property. As already noted, property rights, properly understood, do not include the right to injure or harm the person or property of another. This is the basis of the common law principle that one should not use his own property so as to injure that of another.13 This means that when the government limits or prohibits the use of property in a manner that is likely to harm another person or property, it has not deprived the owner of a property right. However, should the government limit the use of property for some other purpose, such as the provision of wildlife habitat or some other “public good," compensation should be paid. The difference is the nature of the government action in
8 102 S. Ct. 3164 (1982).
Justice Stevens, dissenting, Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2919 (1992).
10 Lucas, p. 2894 n 7.
12 Concrete Pipe and Products of California v. Construction Laborers Pension Trust, 113 S. Ct. 2264, 2291 (1993).
18 The maxim is Sic utere tuo ut alienum non laedas, “one is so to use his own as not to injure another's property."
question. This should determine whether or not compensation is due, not the level of devaluation experienced by the landowner.
Section 204 (d)(1) of S. 605 explicitly spells out a “nuisance exception” to the payment of compensation by the federal government:
No compensation shall be required by this Act if the owner's use or proposed use of the property is a nuisance as commonly understood and defined by background principles of nuisance and property law as understood
within the State in which the property is situated This language is clearly modeled on the language of the Supreme Court's majority opinion in Lucas v. South Carolina Coastal Council, in which the Court held:
[T]he question must turn, in accord with this Court's “takings” jurisprudence, on citizens' historic understandings regarding the content of, and the State's power over, the 'bundle of rights that they acquire when they take title to property. Because it is not consistent with the historical compact embodied in the Takings Clause that title to real estate is held subject to the State's subsequent decision to eliminate all economically beneficial use, a regulation having that effect cannot be newly decreed and sustained, without compensation's being paid the owner. However, no compensation is owed—in this setting as with all takings claims—if the State's affirmative decree simply makes explicit what already inheres in the title itself in the restrictions that background principles of the State's law of property and
nuisance already place upon land ownership. (Emphasis added) 14 The primary difference between S. 605 and Supreme Court precedents is not the character of the government actions that can trigger compensation. Rather, S. 605 seeks to make explicit that less-than total takings are still worthy of compensation, provided that they amount to more than 33 percent of the affected property's value, or otherwise fail to meet the standards set forth in S. 605. Moreover, the Lucas majority explicitly left open the possibility that those who have suffered less than total economic deprivations could be entitled to compensation. 16 Thus it is hard to argue, as the Clinton Administration and others have, that S. 605 represents a "radical departure from the Constitution” 16 without similarly impugning Supreme Court jurisprudence on this subject. (It should also be stressed that s. 605 merely seeks to dehne a statutory right to compensation, and thus supplement, not redefine, Supreme Court jurisprudence.)
The reason for the emphasis on nuisance law is clear: There is a meaningful distinction between government exercises of the police power to protect individuals, their properties, and the public at large from a threat posed by the actions of an individual landowner, and government flats that otherwise control the use of private property. This is a distinction that has long been a part of Constitutional jurisprudence, and is one that is properly included in any proper takings compensation proposal.
IS THE NUISANCE EXCEPTION SUFFICIENT? Much of the more substantive criticism of S. 605 has challenged whether its nuisance exception sufficiently distinguishes between those government actions for which compensation should be required and those for which it should not. Joseph Sax, Counselor to the Secretary of the Interior and Deputy Assistant Interior Secretary for Policy acknowledges that “Compensation bills contain narrow exemptions which would avoid a duty to compensate if the regulated use constitutes a nuisance," but argues that such an exception "fails to recognize that there are many important public interests that are not related to health and safety * *** 17 Sax submitted a memo to the House Resources Committee Private Property Rights Task Force Prepared by Interior Department personnel that seeks to demonstrate this
To gauge the likely impact of the nuisance exception on takings compensation claims, it is useful to look at the Lucas court's
understanding of the issue, as the language in S. 605 is based upon this decision. The court gave examples of the sorts
14 Lucas, p. 2888. 16 Lucas, 2895n8.
16 This charge has been made by, among others, Joseph Sax, Counselor to the Secretary of the Interior and Deputy Assistant Secretary for Policy. See Sax, Statement before the Private Property Rights Task Force, House Resources Committee, May 17, 1995.
18 Memo on the Nuisance Exceptions in H.R. 925 and S. 605, United States Department of the Interior, May 1, 1995.
of regulations it would uphold, without requiring compensation, under the nuisance exception:
On this analysis, the owner of a lake bed, for example, would not be entitled to compensation when he is denied the requisite permit to engage in a landfilling operation that would have the effect of flooding others' land. Nor the corporate owner of a nuclear generating plant, when it is directed to remove all improvements from its land upon discovery that the plant sits aside an earthquake fault. Such regulatory action may well have the effect of eliminating the land's only productive use, but it does not proscribe a productive use that was previously permissible under relevant property and
nuisance principles. 19 A cursory historical review of recent cases also provides numerous examples of the sorts of activities, such as water pollution caused by a paper mill, landfill seepage that contaminated groundwater, and even air pollution, that have been declared common law nuisances in court. 20 Thus, it seems reasonable to conclude that the nuisance exception is likely to achieve its intended purpose: to prevent compensation in those cases where the regulated or prohibited activity is likely to cause harm to other individuals or their properties, and to allow for compensation in those other instances in which the federal government has regulated proposed land-uses. It may not be perfect, but perfection is not the standard for federal legislation. If it were, the entire U.S. Code would fit in a letter-size envelope.
Critics charge that the nuisance exception will be insufficient because courts often rule against plaintiffs that claim to have suffered nuisances inflicted by their neighbors. In those cases where courts have looked unfavorably upon plausible nuisance claims it is often for one of two reasons: (a) failure to demonstrate harm or sufficient likelihood of harm, or (b) federal law has preempted nuisance actions. These are hardly reasons to reject the appropriateness of a nuisance standard to determine whether compensation is due for regulatory takings. If a plaintiff would not be able to demonstrate a sufficient likelihood of harm, what then is the purpose of the regulation other than to control land-use or economic activity? The fact is that courts have upheld common law claims against a wide range of nuisances, and there is every reason to believe that they will continue to do so.
In the case of statutory preemption, it is unreasonable to oppose compensating individuals who have been adversely affected by federal regulation merely because the federal government has, in other instances, preempted traditional common law causes of actions against nuisances. There are certainly cases where federal law has preempted common law claims, in some cases to the detriment of property owners and true environmental protection. For instance, the Federal Aviation Administration has certainly preempted nuisance claims by landowners near airports that object to excessive noise. The proper policy response in these instances is to restore the common law causes of action, by removing or modifying the preempting regulation or statute, not to oppose other efforts to allow individual property owners to seek justice administratively or in federal courts.
When those arguing against S. 605 are not claiming the nuisance exception is too narrow, they are claiming it is too broad and vague. The Interior Department memo makes both claims, in the latter instance protesting that the bill poses “the vague and open-ended question: What is the scope of the phrase ‘a nuisance as commonly understood and defined by background principles of nuisance and property law?“ The memo argues that S. 605 provides insufficient guidance in determining what - sorts of activities qualify as nuisances. Yet since S. 605 merely incorporates the Lucas language on nuisance, this is as much a criticism of the Supreme Court as it is of S. 605. Here as elsewhere, opponents of S. 605 cannot have it both ways; they cannot appeal to the jurisprudential tradition that produced Lucas while simultaneously disparaging Lucas' nuisance exception as "vague and open-ended.”.
Were the administration truly concerned about the "vague and open-ended” nature of Lucas' nuisance exception, one would expect to see some sort of proposal to reduce uncertainty and establish a true “bright-line test” for takings cases. As the administration has not forwarded any such proposal, and has instead opposed every property rights protection proposal that has been introduced in the past two years, it is hard to take the claim seriously. Indeed, it seems that opponents of takings compensation are not opposing S. 605's handling of the nuisance issue so much as they are objecting to the idea that the federal government could ever be required to compensate landowners for anything other than a physical taking or regulatory action that leaves a landowner destitute.21
19 Lucas, 2900.
20 Several of these cases are summarized in Roger E. Meiners, "Elements of Property Rights: The Common Law Alternative,” in Land Rights, B.Yandle, ed. (Lahham, MD: Rowman and Littlefield, 1995).
MODIFYING AGENCY BEHAVIOR Requiring the federal government to pay compensation when reasonable land uses are restricted or prohibited can also encourage a more proper calculation of the costs and benefits of proposed regulatory actions. If political entities are able to effectively take property through regulatory activities without paying compensation, there is no incentive to consider the costs of the proposed regulation and such costs are likely to be ignored. There is thus no incentive to prioritize, and every incentive to take as much
as possible. This was explained by the New York State Court of Appeals in Fred F. French Investing Co. v. City of New York:
[T]he ultimate economic cost of providing the benefit is hidden from those who in a democratic society are given the power of deciding: * * * When (the social cost is) successfully concealed, the public is not likely to have
any objection to the 'cost-free benefit.22 An example of this can be seen in the case of wetlands regulations, the primary means by which the federal government seeks to prevent the net loss of wetlands. The cost of protecting a single acre of wetlands can reach the hundreds of thousands of dollars due to the costly delays and legal conflicts that the regulatory process produces. However, other approaches to wetlands conservation, such as mitigation, restoration, and the purchase of conservation easements can preserve wetlands at a fraction of the cost. Forcing agencies to pay for the private property rights that they take through regulatory action will encourage them to examine non-regulatory approaches to achieving their statutory goals.
S. 605 achieves this purpose by providing that compensation for regulatory takings be taken from the annual appropriation of the agency responsible for the regulatory taking. Such a provision is likely to achieve the desired result of modifying agency behavior and restoring regulatory accountability.
Agencies seeking to regulate private land use will be forced to consider whether regulatory actions would produce a regulatory taking, and, if so, whether the benefits of the proposed regulatory action are worth the costs of paying compensation. This will induce agencies to prioritize and forego regulating nonharmful land uses when regulation is not truly necessary. This is because irresponsible regulation of reasonable land uses could deprive agencies of resources necessary to achieve their statutory missions. Agencies will no longer view land-use regulation as a cost-free solution of first resort. Rather, land-use
regulation will only be pursued when the benefits appear to justify the costs or when other options are impractical or more costly. Arguing against takings compensation proposals, Joseph Sax asserts that S. 605
would force a choice between two equally unacceptable alternatives. Because compensation would be paid directly out of agency budgets, agencies would be required to either redirect funds from priorities established
by the legislative process or refrain from executing mandated programs altogether.
* * * the public suffers.23 This argument presumes that the public interest is served whenever government regulates private land-use. Speaking as one who focuses on federal environmental regulation, this is simply not the case.24 Much federal environmental regulation does nothing to protect public health. Some environmental regulation actually causes environmental harm. When fires swept through Riverside County, it was not only people that lost their homes—the endangered Stephens' Kangaroo Rats did as well as their habitat went up in flames. The sad fact is that existing administrative requirements are insufficient to ensure that agencies consider the likely impacts of their options. Therefore many rules are enacted that produce minimal benefits while imposing extraordinary costs. Only those with an unquestioning faith in the wisdom of regulatory bureaucracies would wish to leave this situation as it is.
21 In fact, this charge could certainly be made against Joseph Sax, who has led Interior Department opposition to takings compensation proposals. See Sax, “Takings, Private Property and Public Rights," 81 Yale Law Journal 149 (1971).
22 39 N.Y.2d 587, 596–7, 385 N.Y.S.2d 5, 11(1976).
24 See, for example, Stephen Breyer, Breaking the Vicious Circle: Toward Effective Risk Regulation (Cambridge: Harvard University Press, 1993); and, Environmental Politics: Public Costs, Private Rewards, M. Greve and F. Smith, ed. (New York: Praeger, 1992).
Under current law, so long as the government can provide for public goods through the imposition of regulatory takings, it will continue to do so, with little regard for the impact such actions have on landowners. Indeed, given the fact that government does not pay for the costs of regulatory takings, it should be no surprise that the government typically opts for coercive land-use regulations to achieve environmental goals, even when other approaches are available, are far less costly and would more effectively safeguard the environment.
PROPERTY RIGHTS VS. THE ENVIRONMENT As alluded to above, a standard charge against paying compensation for regulatory takings is that it would amount to "paying polluters not to pollute” and therefore would undermine the protection of public health and safety. This represents a fundamental misunderstanding of the nature of property rights and the proper role of government in protecting them.
The proper aim of federal government efforts to protect "the environment” is to prevent the imposition of harmful substances upon unconsenting persons and their properties; and, failing that, punishing those who transgress against others in this manner. This is the aim of controlling pollution-controlling the unwanted imposition of wastes or toxins by one party on another. Pollution, properly defined, is a "trespass” or “nuisance" under the principles of common law. If the imposition is so minor that it creates no impact or inconvenience for the property owner, it will normally be tolerated. Otherwise it will likely result in legal action of some kind.
Many of the pollution problems with which people are familiar are not the result of too many private property rights, but too few. These problems are often the result of what is essentially a universal “easement granted by the state to polluters, even to producers of significant and damaging pollution.26 This action by the state is of the same kind as regulatory takings-in each case the government is violating the rights of property owners in order to pursue some conception of the “public good.” In the case of easements that permit "acceptable” levels of pollution the “public good” is efficiency or some other utilitarian measure. In the case of most current federal land use restrictions, the "public good” is the preservation of an environmental amenity or value that "the public” has deemed worthwhile. The federal government certainly has the power to pursue these objectives, however it is imperative that its power be restrained by requiring the payment of compensation to those landowners who are injured in the process.
TAKINGS VS. THE ENVIRONMENT It must also be recognized that efforts to regulate land use_to "take" private land without compensation—is often bad for both landowners and the environmental values that the government regulation is designed to protect. If the specter of environmental regulation hangs over private land use decisions, private landowners will be less likely to invest in environmental improvements on their lands. Such stewardship actions will entail costs to the landowner with no reasonable expectation of fu. ture benefits. One can understand this phenomenon if one thinks of the likely result were the government to declare a policy of “protecting”. pretty houses by imposing a series of regulatory restrictions upon families living in any homes that met the federal definition of “pretty.” Under such a regime, no rational homeowner would beautify his or her home, lest it fall prey to government regulation that could restrict their freedom within their home. Rather than preserve the stock of pretty houses in America today, such a policy would likely prevent the construction or restoration of pretty homes ever again.
Even the Fish and Wildlife Service has acknowledged that the threat of federal regulation on private land has led to habitat loss. In the Pacific northwest, habitat destruction has been encouraged by land-use restrictions imposed to protect the northern spotted owl. Earlier this year the FWS reported in the Federal Register that these regulations have made private landowners fear the lost use of their land and that “this concern or fear has accelerated harvest rotations in an effort to avoid the regrowth of habitat that is usable by owls. 26
That landowners would respond in this manner to the imposition of federal landuse controls should not be surprising. Michael Bean characterizes them as “fairly rational decisions motivated by a desire to avoid potentially significant economic
26 Indeed, it is important to recognize that many federal statutes have effectively preempted traditional common law remedies to pollution problems. See Illinois v. Milwaukee, 406 U.S. 91 (1972) and Milwaukee v. Illinois, 451 U.S. 304 (1981).
26 60 Federal Register 9507–8 (February 17, 1995).