Now that former Vice President Joe Biden is the presumptive Democratic nominee for President, it’s worth taking a closer look at the unsound ideas of progressive constitutionalism that have long been part of his legal thinking. Biden’s current political stances are far to the left of his positions as Barack Obama’s running mate in the 2008 Presidential election. But even in 1991, as head of the Senate Judiciary Committee, Biden took issue with the basic values of classical liberalism as they apply to constitutional law. During the confirmation hearings for then-Supreme Court nominee Clarence Thomas, he thrust a copy of my book Takings in front of Thomas, claiming that it was an unprincipled and radical manifesto.
In those years, Biden used his perch on the Senate Judiciary Committee as a bully pulpit to attack conservative nominees, most notably Robert Bork in 1987. Four years later, when Thomas appeared before the judiciary committee, Biden asked him if he accepted any of the principles in Takings, which argued for extensive protections for private property. Thomas responded that the Fifth Amendment to the Constitution—“nor shall private property be taken for public use, without just compensation”—did protect private property. He then wisely ducked addressing the book’s central conclusion: “The New Deal is inconsistent with the principles of limited government and with the constitutional provisions designed to achieve that end.” Here I shall offer a summary defense of that conclusion and explain why Biden’s progressive views are constitutionally infirm.
The text of the Constitution closely follows classical liberal principles. It does not say that private property shall never be taken without the consent of the owner, which would let a single landowner block the construction of a transcontinental railroad or keep all airplanes from flying over his land. By the same token, it would be equally intolerable to let the government claim whatever private land it wanted without compensating the owner, solely by announcing that the acquisition was for the public good.
The components of the Takings Clause stake out the ideal middle position. The government may take private property, but only for a public use, and only if just compensation is provided. The public use requirement prevents the government from acting as an illegitimate intermediary to facilitate one powerful individual acquiring the property of another against that individual’s will. The just compensation requirement places a binding financial constraint on the government so that it only takes property when its value in public hands exceeds its current value as held in private hands, preventing the socially inferior outcome that might well occur if the government could take property for public use at zero cost, or any other cost less than its value in private hands.
The unstated piece of the Takings Clause puzzle is the ubiquitous presence of the police power, which critically ensures that the government can act to protect the health and safety of the public, without paying compensation to the regulated party. Most important for this discussion is that this same limitation on private rights also attaches to defend all of the constitutional guarantees covered by other constitutional clauses. The technique here goes back to both Roman and common law times. It starts from the universal understanding that in ordinary private disputes, the freedom of speech, for example, does not entail the right to make threats to seize the property of another by force, to defame, or to deceive that person.
Similarly, the police power keeps the limitations on private property in place by incorporating, most notably, the common law of nuisance—which sets out the rules that limit non-trespassory invasions, such as noises, vibrations, smells, or pollutants. The reach of the Takings Clause therefore is as broad as the institution of private property, to which those three limitations are attached. However, any careful reading of the Supreme Court’s takings cases demonstrates the enormous gulf between the wisdom of the text and the interpretations of it.
It is not possible to fully address the Court’s multiple errors in a single column, so I shall take one case, Penn Central Transportation Co. v. City of New York (1978), to illustrate the utter intellectual poverty of the current interpretation of the Takings Clause. Like all great cases, Penn Central—which has been cited over 10,000 times—involved simple facts. Penn Central owned Grand Central Station and the air rights above the building. It proposed to erect a 55-story tower atop the building at its south end, which would have been similar in size to the PanAm building already built on the north end. The two locations were separated by only 375 feet.
The project in question had to obtain approval of New York City’s Landmarks Preservation Commission, which denied the permit in order to preserve the character of the neighborhood and the (partial) view down Park Avenue. The Commission offered Penn Central no cash compensation, except the ability to transfer the unused air rights to one of its other adjacent sites—which were both hard to value, and unequal to the losses sustained. Nevertheless, in his opinion for the Court, Justice William Brennan, a staunch defender of the prerogatives of countless similar programs throughout the nation, sided with the Commission.
Justice Brennan first denied that any per se rule gave federal protection to state-law air rights; only “ad hoc” considerations can resolve takings cases, by balancing (on hidden scales) the relative strengths of the relevant public and private interests. In his view, compensation was only required if the government effected a “physical invasion” of the property, but not where it merely restricted its use. For the laws that only imposed use restrictions, the relevant question for Brennan was no longer what did the landowner lose. Instead, the question became what fraction of the property’s value did the landowner retain. Since the property was defined as “the parcel as a whole,” the retained value was high, especially since Penn Central could, in theory, transfer the air rights for use at one of eight nearby sites under its control.
At that point, Brennan held that the Constitution does not protect private property as such, but only protects the undefined set of “investment-backed expectations” in that property, and concluded that “the law does not interfere with what must be regarded as Penn Central’s primary expectation concerning the use of the parcel.” What happens if the Terminal fails to turn a profit in the future was left undecided.
Contrast that with the alternative approach. On the first question, air rights (like mineral rights, mortgages, easements, and covenants) count as indisputable property rights under state law. Second, there is no real dispute about whether these rights were taken for public use. Opening up views along Park Avenue meets that definition, whether the City’s action was wise or foolish. But in other cases, the willingness to equate “public use” with indirect public benefits can open the way to massive abuse, as is evident from cases like Kelo v. New London (2005), where a private home on Long Island Sound was taken to build some as yet unplanned private development on the land.
Next comes the question of compensation for the air rights. The correct measure of Penn Central’s compensation in this case was equal to the reasonable expenses incurred, if any, in order to get the project underway—at least if those outlays could not be put to some alternative use—plus the lost profits to Penn Central owing to the forgone lease revenue. Making these calculations is no more difficult than doing the same exercise when a property owner terminates a contract with a builder for the construction of a new project. By putting those numbers on the table, the City would then have had to decide whether it thought the preservation of views was worth the price. My guess is that it would not have been prepared to raise the money to cover the cost, which should remind us that one key function of the Constitution’s just compensation requirement is to block the consummation of transactions that have no net social value.
In some cases, it may well be possible to avoid the need to pay cash compensation if some general regulation affords benefits to all parties equal to or greater than the property rights lost in the transaction. That is surely the case with respect to high overflights, where the broad benefits of air transportation to everyone swamp any individual right to use the upper air space. Hence at low administrative costs the correct takings analysis allows for sound large-scale social transfers of property rights. But in this case, the singling out of a given parcel excludes any possibility of in kind compensation from any other source, so that the cash measure remains proper.
Finally, no one can credibly claim that building a high structure in New York City is a nuisance, unless this is true of all the other buildings. No one can deny that rights of air, light, and view are of immense value, which is why the market prices their availability accordingly. But to condemn one building as a nuisance is to condemn all other buildings—a suicide pact between any local government and its real estate owners.
As with most takings cases, the Penn Central dispute is solved by answering these four questions in order: Is there a taking? Is that action justified under the police power? Is the taking for a public use? And is there just compensation in cash or kind? Penn Central insulates a huge range of deliberate wealth transfers from any serious constitutional scrutiny by a set of regulatory dodges that should have never been accepted. Biden was wrong to wave Takings in front of Thomas in 1991 in his effort to derail the Thomas nomination. He would do well to familiarize himself with the basic principles of classical liberalism constitutionalism.