TAKING IT TO THE LIMIT: Takings and the Supreme Court

Friday, February 22, 2002

Should property owners be compensated for the effects of government regulation? According to the Fifth Amendment to the Constitution "No person shall … be deprived of … property, without due process of law; nor shall private property be taken for public use, without just compensation." But what exactly is a property right and what constitutes a taking? Seizure of land by the government may be a taking, but what about environmental or zoning regulations that place restrictions on land use? With one such taking case already before the Supreme Court, the legal battle over these questions could alter the very nature of the relationship between the rights of the individual property owner and those of society as a whole.

Recorded on Friday, February 22, 2002

Peter Robinson: Today on Uncommon Knowledge, taking the Fifth on property rights...

Announcer: Funding for this program is provided by the John M. Olin Foundation and the Starr Foundation.

[Music]

Peter Robinson: Welcome to Uncommon Knowledge. I'm Peter Robinson. Our show today, takings and the battle over property rights.

The Fifth Amendment to the Constitution, "No person shall be deprived of property without due process of law nor shall private property be taken for public use without just compensation." But what exactly constitutes a property right and what exactly constitutes a taking. Government seizure of land seems clearly enough to constitute a taking but what about the imposition of a regulation that affects what a landholder can do with his land? With one such case now before the Supreme Court, the legal battle over these questions may alter the very nature of the relationship between the rights of the individual as against those of society as a whole.

With us today, three guests. Joseph Sax is a Professor of Law Emeritus at the University of California. Erwin Chemerinsky is a Professor of Law at the University of Southern California. And Douglas Kmiec is Dean of the Law School at the Catholic University of America.

Title: Taking It to the Limit

Peter Robinson: Dorothy Cook, seventy-seven years old. All her modest assets are tied up in a single holding, a vacant lot, sixty by a hundred feet, close to Lake Tahoe. She bought the lot for fifty-five hundred dollars in 1979. She estimates she's poured another six thousand into it in property taxes. But she's not allowed to build on it because of the California-Nevada Environmental Agency established to protect the Tahoe region, which in 1981, imposed a moratorium on development. She buys it, two years later, she's told she can't build on it and the moratorium has gone on for years now. Should Dorothy Cook receive compensation? Joe?

Joseph Sax: Yes.

Peter Robinson: Woo hoo that was as hedged a yes as I think I've ever--as potent a one-syllable answer as I've ever heard. Doug?

Douglas Kmiec: Yes, she should receive compensation or a right to develop.

Peter Robinson: Erwin?

Erwin Chemerinsky: No, because I think that the government needs to be able to protect Lake Tahoe and there isn't a permanent preclusion of development here.

Peter Robinson: Now the takings law that is at issue here is based on a clause in the Fifth Amendment to the Constitution that reads, "Nor shall private property be taken for public use without just compensation." That is a clause that even I think I'm pretty clear on this, that implies a profound respect for private property. John Locke, English Philosopher with whom all the founders were familiar went so far as to say, "The supreme power cannot take away from any man, any part of his property without his own consent for the preservation of property is the end of government." Strong view of property. On the other hand, a second view of property. I quote Joseph Sax, "We have endowed individuals," endowed individuals, "in enterprises with property because we assume that the private ownership system will allocate the property resource to socially desirable uses. Any such system will, of course, fail from time to time. Since such failures are becoming increasingly common, the property rights that lead to such failures are increasingly ceasing to be recognized." On the one hand, property preexists government and it's the government's job to protect it. On the other hand, property arises from government. Government endows individuals with property rights. What's the correct view? Doug? I've quoted you so I'll come back to you last. Doug?

Douglas Kmiec: Both views are correct. And, in fact, in fact…

Peter Robinson: Law professors…

Douglas Kmiec: No, no, it's not just…

Peter Robinson: All right. Go ahead.

Douglas Kmiec: …law professors, it's part of an essential aspect of what property is. Property is both a natural right, something that our founders gave great reverence to as you just suggested out of John Locke's quotation. But it also takes definition from positive or statutory law, what we can do with it, what uses we can make, who we can exclude, how can we transfer it during life and after death, depend upon specifications, rules that get written democratically within our republic. So property, Peter, really has two features to it. It has a feature that relates very much to who we are as a person and is pre-political, is before society, is before government, and that part has to be constitutionally secure and protected. And then there's a part that can be readjusted by virtue of the fact that the rules change from time to time by living within a democratic society.

Peter Robinson: But those are only adjustments of a preexisting right?

Douglas Kmiec: That's right. The adjustments in my view cannot be so profound that they take the property interest that one has as a matter of natural right.

Peter Robinson: Erwin has been shaking his head.

Erwin Chemerinsky: I certainly agree that the adjustments can't be so profound as to take somebody's property away. If the government confiscates somebody's land or the government physically occupies it, no one here would deny that that's a taking. Where I disagree with Doug is I don't think there are any such things as natural rights under our constitution. The rights that are protected by the constitution are those such as property that are found within it. And the Supreme Court has been clear as Joe says, that the property rights we have are those that the government has given us, the reasonable expectations we have to continued ownership, not anything that preexists the constitution.

Peter Robinson: Joe, I did a dirty trick to quote you and then left you out there unable to defend yourself.

Joseph Sax: The question that you raise is one that philosophers have argued about for many years. I don't think we really need to resolve that question.

Peter Robinson: To address takings law?

Joseph Sax: To address takings law because the question with which all of us are grappling now is that one who owns property also lives in a community. And one has to use one's property in a way that somehow is consistent with the interests and values of other people in the community. And the question--the difficult question is, at what point are these restrictions so great, so unreasonable, so far reaching, one uses many different ways of talking about it, that the public as a whole ought to share those burdens. That's the hard…

Peter Robinson: We come now to the arguments on either side of the takings debate which can be summarized as the views of Justice Oliver Wendell Holmes versus those of University of Chicago Law Professor, Richard Epstein.

Title: Takes for the Memories

Peter Robinson: Writing in 1922, big important takings case, Justice Oliver Wendell Holmes wrote that the rule is, "While property may be regulated to a certain extent, if regulation goes too far, it will be recognized as a taking." How far is too far? Well it turns out that in the decades after that 1922 decision, the court made a number of decisions indicating that it has to go really very far before it's too far. That is to say that the property at question has to have its economic value reduced almost to nothing before the court would hold that it's a taking. That's Holmes. Now comes Richard Epstein, not a dead revered figure like Holmes but a living controversial figure. And he is at the center of a new school of thought that says, wait a minute, not all that far is already too far. Epstein says that the ownership of private property consists of a bundle of rights, possession, use, disposition. If the government interferes with any of those, it owes the property owner something. Interferes with any of those rights amounts to a taking that must be compensation, "No matter how small the alteration and now matter how general its application." Is Epstein just way out there? Erwin?

Erwin Chemerinsky: Oh Epstein is clearly out there. He's a very fervent libertarian who wants to essentially eliminate government regulation. And if the Epstein position were ever the law, we would eliminate almost all government regulation because almost any government regulation is going to affect the value of somebody's property. If we make the government pay for it whenever it happens, we could have no environmental laws, virtually no zoning laws. And that's why the Supreme Court is constantly struggling with how to balance the government's need to regulate in the public interest versus the need to protect property owners. And I think the court's basically gotten it right.

Peter Robinson: Joe?

Joseph Sax: I agree that his views are way out beyond, I think, where the Supreme Court has ever been.

Peter Robinson: He's a provocateur; he's not really leading the emergence of a new school of thought.

Joseph Sax: Yes, he is a provocateur and I think he's played a very useful role in opening up these questions. But in terms of where the debate is within the court and in general within the profession, I think there's no doubt that he is an outlier.

Peter Robinson: Doug?

Douglas Kmiec: I think he does press the envelope greatly but the one contribution that…

Peter Robinson: But he creates space for you, doesn't he?

Douglas Kmiec: Of course he does but he creates a lot of space for all of us at the table but the contribution that I think he's been most useful in making is the connection between the understanding of property and the common law. And the Supreme Court has picked up that aspect, that theme of his work because when they are evaluating a very restrictive regulation, one of the most important questions that they ask is, could a property owner at common law have understood that they would have been limited in this way? That is, if you and I bought Black Acre, the proverbial piece of property, should we have understood that we could not possibly have erected a smoke stack that would bellow smoke out onto our neighbor's property because that would have been a common law nuisance. Richard Epstein in his groundbreaking work, and it has been groundbreaking and we've all benefited from it, has basically pointed out that there has to be a protection of that common law aspect of property under the takings clause if the constitutional protection is to have any meaning. And that's a good aspect. And the court has picked up on that in the Lucas case.

Peter Robinson: Lucas. All right...

Peter Robinson: The Lucas case. Let's take a closer look at just what the Rehnquist court decided in that case.

Title: Swept Away

Peter Robinson: Lucas versus South Carolina Coastal Council. Case decided in 1992. The plaintiff purchases a couple of vacant beachfront lots in a newly developed residential area. The state then enacts legislation banning construction on the shore. They want a pristine shore. Plaintiff demands compensation. Trial court says yes, he's entitled to it, orders the state to pay a million dollars. The State Supreme Court says no. Preventing beach erosion was a valid exercise of the police power, "to prevent serious public harm," which did not require compensation. And then the Supreme Court reversed the State Supreme Court and said that was a taking. Let me read one paragraph from the court's decision and ask you to comment on it. "Total deprivation of beneficial uses is, from the landowner's point of view, the equivalent of a physical appropriation. Surely when no productive or economically beneficial use of land is permitted, we cannot indulge our usual assumption that the legislature is simply adjusting the benefits and burdens of economic life." Sounds perfectly reasonable, right Erwin?

Erwin Chemerinsky: I think it's consistent, what the Supreme Court has said with regard to, it becomes a regulatory taking if the government action leaves almost no reasonable economically development of the property. The problem is though that South Carolina needed a coastal protection law and by requiring them to pay people like Lucas, it puts into question whether the government's going to be able to do something that it really needs. I think what we've left out of the discussion is the political dimension to this. Conservatives tend to come down against government regulation and one way they can do that is by bolstering the takings clause. And I think that's what's going on now in the Supreme Court.

Peter Robinson: Okay. But suppose, Joe, that there's a political dimension say to Brown versus the Board of Education, that there were segregated schools and the court said, the political system must operate in a different way henceforth. So suppose you say as a result of Lucas, the court is simply saying, we have nothing against nice beachfront property but you're going to have to raise the tax revenues to compensate people when you engage in takings. It's just a kind of--the government has to go about this differently.

Joseph Sax: The problem is that this notion of diminution of value as the measure is a direction that the court has gone off and is unfortunate. And I think it reflects a misunderstanding of the Holmesian quote that you used. When we talk about going too far, I think a better way to look at that would be to say, if the extent of the burden imposed on the landowner does not bear a reasonable relationship to the harm the owner is causing the public, then you've gone too far. Let me give you this example: If someone owned a tract of land that turned out to be so unstable that it would be unsafe to build a house on it and we have examples like that…

Peter Robinson: Here in Northern California, we have lots of them.

Joseph Sax: I think virtually everyone would agree that if the government says, we're sorry, you can't build on this unstable tract of land, that that's an appropriate public response and that the owner would simply have to bear the cost of that. And let me add one other thing. If we wouldn't have said that a hundred years ago because we didn't have the scientific knowledge, for example, to understand those dangers, then it seems to me it's perfectly appropriate today to say, in light of new knowledge, we now find that it's unsafe and inappropriate to build there. You may not build. And even if that has reduced the value of your land to make it economically useless, the public need not pay.

Peter Robinson: South Carolina in defending itself in this case, in the Lucas case, asserts the "noxious use doctrine" which is roughly, I think, what Joe has been laying out here. That the landowner couldn't build on that because that was in some way harmful to the public. And the Supreme Court says not so fast. That's not--you're not actually trying to protect the public against harm, you're trying to create a public benefit, a public good, a pristine shore. And you can't make one person pay for everyone else's enjoyment, in effect.

Douglas Kmiec: Right, and that's why the takings clause is really about fairness. It's not so much and I can see how it might be looked at government versus anti-government but I think it's more about fairness among citizens. Who bears the burden of a particular public good or the avoidance of a particular public harm? That's the question that's at the heart of the takings clause. And Professor Sax and I have no disagreement about the hypothetical that he's outlined, namely the--a property that we would all agree is unstable should not be built upon because it's going to have externalities, external effects on others that need to be handled. But that…

Peter Robinson: Even if there was no way for the landowner to know that when he purchased it?

Douglas Kmiec: Landowner has some…

Peter Robinson: That doesn't bother you at all, right?

Douglas Kmiec: Some landowner that has due--a due diligence requirement to know what he's buying and what type of responsibility he's undertaking. But the real difficult cases are where regulations that are not designed to prevent harms or address real environmental considerations but instead to advance a public program that people think is nice…

Peter Robinson: On now to the Lake Tahoe case, which is before the Supreme Court right now.

Title: Lake Woe Goes On

Peter Robinson: Several hundred families brought suit against the Tahoe Regional Planning Compact for preventing them from building on their land. These people bought the land, many of them in the late '70s. Tahoe Regional Planning Compact says in 1981, stop building. And District Judge, Edward Reed says, the families are entitled to compensation. In 2000, the Ninth Circuit Court of Appeals in San Francisco reverses the decision. Now let me read you two quotations. Judge Steven Reinhardt writing for the majority, "Because the temporary development moratorium did not deprive the plaintiffs of all the value or use of their property, we hold that it did not affect a categorical taking." In dissent, Judge Alex Kozinski, "Let's say the government decides to use your house as a warehouse for three years. Is there any doubt that you would have suffered a taking? Why should the case be any different if the government simply prohibits you from using your house for three years but never gets around to using it as a warehouse itself." Okay…

Joseph Sax: May I jump in now?

Peter Robinson: Please do. You may now jump in.

Joseph Sax: Thanks. You know, I completely agree with Doug's comment about fairness. I think this fundamental fairness is the issue in all these hard takings cases. And if the court were just willing to embrace that, a kind of due process notion, they could get rid of most of these takings cases. If you look at it this way, if in the name of a development moratorium, you deprive somebody of the use of their property for twenty years, I think that is…

Peter Robinson: That's what's going on in Tahoe.

Joseph Sax: …I think that is deeply unfair and inappropriate and the person ought to be compensated. If however, you have a moratorium that is suitable for the need to develop a regional plan to protect other property owners in the area, then it seems to me that is fair and three years may be appropriate in terms of the Tahoe situation. And I think it would be appropriate for the court to look at how long a time is appropriate and whether this would…

Peter Robinson: So the test there would be diligence, are they going about the study diligently and so forth? Erwin?

Erwin Chemerinsky: I agree with everything that Joe just said.

Peter Robinson: And nothing he said?

Erwin Chemerinsky: Well the place where we disagree is he wants to draw a distinction between what we call a public benefit and what we call public harm. To me, that's just a matter of characterization. To prevent a harm is to gain a benefit. Not gaining the benefit is a harm. And then we just have it all turn on a label. The reality is…

Peter Robinson: Hold on. Let me--that strikes me as a very interesting point and one that has now got me thoroughly befuddled. The Tahoe case is a terrific example of a hard decision to make there because the reason this Regional Planning Commission or Compact, whatever it's called, was set up was that the Lake Tahoe which is famous for crystalline clarity was turning muddy. And there were--where's the runoff coming from, why is there algae growing in there? Then they say to folks who bought, stop building. Now on the one hand you could say that's a clear public nuisance. Pollution, that's a nuisance. You can do what you want to to prevent that. On the other hand, wait a minute, they buy the property under one set of expectations, any due diligence in 1979, that Dorothy Cook would have performed would have come up with the answer, you've got clear title. You can go ahead and build and then the rules changed on her.

Douglas Kmiec: And you had hundreds of landowners who already built and who are the real source of the environmental problem at Lake Tahoe. And the question of fundamental fairness is, why were they allowed to build and the person, Dorothy, who has the vacant lot now has to keep her lot vacant in order to mitigate the harm, the environmental harm…

Peter Robinson: This poor lady gets wiped out to boost the property values of the people who are neighbors.

Douglas Kmiec: That's right. And so why isn't compensation created to pay her?

Peter Robinson: And the whole notion of environmental law was brand new.

Erwin Chemerinsky: I think you've changed the case.

Peter Robinson: I have.

Erwin Chemerinsky: As Joe pointed out here, what's before the Supreme Court is a three-year delay in development.

Peter Robinson: That is true.

Erwin Chemerinsky: The government has to be able to delay development so as to be able to have plans devised, so as to be able to make sure we do things in environmentally proper ways. It can't be that every delay in development is a taking or the government's never going to be able to do land use planning. And I think what Joe said is…

Peter Robinson: Time to poll our guests. How will the Court decide the Tahoe case and how should it?

Title: Take Your Time

Peter Robinson: On the case before the court now, which does for technical reasons that I frankly didn't have the strength to go into when I was reading all of this, they are--the plaintiffs are not being permitted to bring suit for the full moratorium period which is now dragged on years but only for a three-year period. If that's all the time the moratorium lasted, would you say that a taking had occurred or not? Doug?

Douglas Kmiec: I would be inclined to say yes but I would have to look at the record more closely for the following reason. Professor Chemerinsky said, well you can't tell what a harm or a benefit is because one person's harm is another person's benefit. In my judgment, the common law gives us that definitional line. And the Supreme Court has said that as well. The Supreme Court said back to David Lucas, if South Carolina's going to take your property without compensation, they have to prove that their environmental laws are basically doing the same thing that the common law of nuisance would do. And they couldn't prove that. And so your question about Lake…

Peter Robinson: And the common law of nuisance would have gone to questions of runoff or smoke or obvious damage or harm to…

Douglas Kmiec: Of external harms. And Professor Sax and his writing would enlarge that to say, new environmental knowledge as well as the common law of principles and I think that's a question well worth examining. But it's here where we decide the appropriate length of the moratorium. Is this an appropriate length in light of what needs to be done in terms of planning and environmental sensitivity? That's the question that needs to be asked.

Peter Robinson: Erwin, you agree with him on the…

Joseph Sax: Completely agree with that.

Peter Robinson: Amazing and right on time too. And do you agree with that?

Erwin Chemerinsky: I agree with that as the question.

Peter Robinson: Absolutely marvelous. I've never had a show tidy itself up so wonderfully.

Joseph Sax: Well it's easier to get agreement on what the question is than on what the answer is.

Peter Robinson: Which is however, my last question. At the beginning of the show, I asked you each whether you believe Dorothy Cook should receive compensation in this court case now before the Supreme Court. Let me ask you as a matter of judgment whether you think she'll get it. I'm asking you to call the case. How will the Supreme Court decide the Tahoe case?

Joseph Sax: Easy. That's easy.

Peter Robinson: Is it really?

Joseph Sax: Plainly, they will not say that--they will not go with the plaintiff who argued that any moratorium is a taking. That was the claim that the plaintiff made. In fact, he said…

Peter Robinson: That's Epsteinian.

Joseph Sax: In fact, he said in the oral argument, even ten minutes' delay would be a taking. They plainly will not go that way. I suspect what they'll say is a moratorium is not necessarily a taking but a moratorium could evolve into a taking if it goes on too long and that's a question that would have to be looked at. I think along the lines that that's…

Peter Robinson: They'd remand that to the--back down for deci--how would they handle it?

Joseph Sax: Yeah.

Peter Robinson: I see. Erwin, that's what's going to happen?

Erwin Chemerinsky: I think they're going to reverse the Ninth Circuit's approach. The Ninth Circuit's approach in its enbanc decision was that it's only a taking if the government intends that it be permanent. No matter how long it goes on, I don't think they're going to take that approach anymore than I think they're going to take the plaintiff's approach. I think they're going to say, it involves a question of fairness in balancing the particular circumstances.

Peter Robinson: Is this a step--maybe a little mincing step in the direction of Epstein's position that no matter how small the government interference, there must be--is it a little bit of a step in that direction or no?

Erwin Chemerinsky: Well they've already done that. About fifteen years ago, the court made it clear that temporary takings do require compensation. I don't think the court's going to say, any delay in development requires compensation because there need to be delays just to handle permit requirements. But I think they're going to say at some point the delay goes on long enough that it becomes a taking.

Peter Robinson: So this case is not going to be significant at all. Doug?

Doug Kmiec: No, I think it will be a significant case because it's fleshing out what is a compensable temporary taking. They established the basic principle fifteen years ago that some temporary takings would be paid compensation. The question is, which ones? And I think there's agreement at this table that basic permitting, some planning elements can be accepted. You know, some length of time is allowed to get that kind of work done. But when it starts to stretch from one year to two years to three years and if we had the whole case before the court seventeen years, then I think we're well across the line. And why this case is important is is that we'll get an opinion that tells us when we step across that line, where we should see the warning flags. I was at the oral argument. This is a very difficult case for the justices to work their way through. It's going to be closely divided. I agree the plaintiff is unlikely to prevail on the categorical any delay is a taking but the Ninth Circuit; no delay is ever a taking is going to lose as well. So what the court is going to do is going to eliminate the extreme positions and they're going to find the middle.

Peter Robinson: And so Holmes remains intact? It's just a question of how far is too far?

Douglas Kmiec: Of definition. Exactly.

Peter Robinson: Got you. Joe Sax, Erwin Chemerinsky and Doug Kmiec, thank you very much.

Peter Robinson: I'm Peter Robinson for Uncommon Knowledge. Thank you for joining us.