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

2See T. Anderson & P.J. Hill, The evolution of Property Rights: A Study of the American West, 18 J. Law & Econ. 163 (1975).

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).

sources was not necessarily an impediment to legislation that would protect public resources in the future.

On the other hand, there may be resources to be careful in regulating of existing uses. For one thing, owners may have innocently sunk resources into their land uses, in the expectation of being permitted to continue to consume public resources like air, water, or wildlife stocks; halting a use may result in deadweight loss of those sunk resources. Moreover, the public may be quite late in recognizing that private actions or private land uses cause damage to others and to public resources. Thus considerations comparable to estoppel may sometimes speak for compensating owners to cease their inroads into public resources; but the preservation of the public resources themselves, for all users present and future, speaks for limiting any further private inroads.

7. The province of takings law is to balance these transition problems. Takings cases have traditionally deployed several compromises to avoid unfairness, undue burdens, and unforeseeable losses to individual property owners, while at the same time preserving the ability of legislatures to protect public rights.

For example, takings and due process considerations have typically required that pre-existing uses be "grandfathered" into new legislation aimed at protecting public rights. Zoning ordinances, for example, typically exempt pre-existing nonconforming uses, at least for some substantial period of time. Similarly, in state takings jurisprudence, there is much attention to what are called "vested rights" of private property owners. The much-used phrase in federal takings jurisprudence, "investmentbacked expectations," aims to identify and if necessary indemnify the property owners who may suffer particular loss, even from legislation that is otherwise a reasonable effort to protect public rights. Besides, early private uses have often not severely damaged such common resources as air, water or wildlife; in economic terms, the marginal costs of early uses may still be still low-unlike the costs of latecomers' additional uses.

These judicial techniques are compromises, or rather, they are all the same compromise. The compromise aims at protecting settled expectations, avoiding the demoralizing of private owners who can establish those settled expectations, and preventing the deadweight loss of pre-existing capital investments taken in good faith. But the other aim of the compromise is to permit legislatures, over time, to adjust the protections necessary for the preservation of public rights and resources, without the need for compensation beyond a point at which owners should reasonably adjust their own expectations.

8. Takings determinations are a judicial matter. The judicial compromise just described entails an inquiry-often detailed and fact-laden-into which rights are "vested" or legitimately expected and which are not, and how much damage is unacceptable burden on an existing owner. Such inquiries are necessarily case-by-case, messy though it seems. This is because the conditions of owners' expectations vary enormously, and include questions of timing and conditions of purchase, and other quite individualized questions.

9. Legislative redefinitions of taking upset the balance implicit in takings jurispru dence. Some legislative takings proposals would rigidify existing takings claims and defenses, to the detriment of judicial adjustments, over time, of a now rapidly-developing takings jurisprudence. Some add burden-shifting or administrative hurdles that may complicate, but not solve, the fact-specific issues that are very much a part of most takings jurisprudence. To posit at 10 percent or 20 percent or 30 percent diminution in value as a taking still does not answer the question "percent of what?"-a question that necessarily involves quite specific inquiries about a given owner's property and legitimate expectations about that property.

Some proposed bills attempt to resolve this by stating a percentage relating to a portion of the affected property. That seemingly innocuous phrase is an extremely radical position, and goes far beyond any existing takings jurisprudence. Once land can be apportioned into "relevant" portions, any diminution can be manipulated to become a 100 percent diminution. This effectively means that virtually any regulation with any adverse impact on an owner's parcel could become an occasion for compensation, without regard to the owner's expectations and whether they were reasonable.

This goes far beyond the Constitutional protections of private ownership in takings jurisprudence. Indeed, it seriously disrupts the balancing effort of takings jurisprudence that is, the balance between the protections of private rights and public rights. It illustrates the pitfalls with broad legislative approaches to what are necessarily quite fact-specific inquiries.

Takings cases are typically brought by private property owners, and hence takings jurisprudence normally focuses on the question whether legislatures have been over

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zealous in asserting public rights, to the unfair detriment of particular private owners. Some of the proposed current legislative redefinitions of takings go in the opposite direction, that is, they encourage overzealous assertions of private rights to the unfair detriment of public rights. These redefinitions, if enacted, can result in transfer of public rights to private owners.

10. Legislative transfers of public rights to private persons have many deleterious effects. First, such transfers require the public to pay for resources that by rights belong to the public, subject to private claims comparable to estoppel. This is a poor idea in any time, but particularly so in a time when the national deficit is at an all time high.

Second, and alternatively, if the public does not repurchase its rights, such transfers still effectively drain resources away from future generations of American citizens. This is again reminiscent of the deficit problem, insofar as the current generation of children will be impoverished by our present "expenditures" of public rights-that is, their giveaway to private persons, particularly owners of undeveloped land, who have little incentive to maintain those public values.

Third, and most important a pattern of such transfers encourages disrespect for public rights, and encourages private property owners to adopt an attitude of extortion and "in-your-face" about matters of known concern to the public. Property as a whole depends greatly on a civilized respect for the right of others, including the public, and citizens should expect that their legislators will avoid measures that can disrupt respect for public rights, and that could instead reward persons who had no reason to expect that they could indefinitely appropriate public resources for themselves.

11. Legislatures nevertheless can play an important role in bringing private property concepts into the preservation of public rights. Legislatures have often used limited property rights to preserve environmental resources. Later nineteenth-century legislatures, for example, charged for the right to hunt and fish through licensing requirements; this gives hunters a limited property right that both gives them security and helps to limit demand on the underlying resources. The 1990 Clean Air Act opened up an extremely valuable quasi-property-rights experiment, with the effective privatization of a large portion of US sulfur dioxide emissions. The tradeable emission rights established under that program, however, are bounded and limited to amounts that, in total, are considered not dangerous to the public health and welfare.

Because they are bounded and finite, emission rights of this sort are quite in keeping with traditional ideas of private property. Legislative approaches like these are very different from measures that would effectively hand over unrestricted rights to encroach on public resources, simply on the basis of ownership of land; under such measures, landownership becomes the basis for "piggybacked" rights to use or damage common resources with impunity. This effectively recreates a tragedy of the commons in the diffuse land-adjacent resources of air, water, and wildlife stocks. Limited tradeable emission rights, by contrast, have the virtues of traditional private property rights: they are bounded in scope; they allow a range of private choices; and they encourage thrift, planning for the future, and attentiveness to the rights of others.

Legislative definitions of this sort—that is, limited private rights in diffuse public resources could be immensely valuable both for the preservation of public resources and for the security of private ownership. Anyone genuinely interested in securing property rights might well consider how these limited, legislatively created property rights can be deployed to preserve the environmental resources-water, air, wildlife that so often set off Federal takings disputes.

12. Conclusion: Public rights are as essential to a free enterprise system as are pri vate rights. Public rights as well as private rights are essential because the goal of a free enterprise system, all other things being equal, is not to maximize the value of private goods. It is to maximize the value of the sum of private and public resources. Much of the literature of the takings debate points out the dangers to private owners from uncompensated public appropriations. These are real; public appropriations can unfairly single out those private owners to pay for public benefits, and writ large, they mean that we could impoverish ourselves as a nation by discouraging enterprise and undermining commerce. That is why we have constitutionalized judicial oversight of public regulation through the takings clause. But overzealous handouts to private owners are unfair to the public. They too can impoverish us as a nation, by decimating resources that are diffuse and difficult to turn into private property, but that are still immensely valuable to public as a whole, now and (it is to be hoped) the future. The only restraint we have on such handouts is the legislature itself.