CONCLUSION

It is time to recognize that property rights are important for both economic and environmental reasons. Compensating landowners when they are deprived the reasonable use of their land will not produce environmental catastrophe. Far from it. In many cases it will eliminate the negative environmental incentives created by the heavy hand of existing government regulations. Properly understood, property rights do not undermine sound environmental conservation, they lie at its foundation.

Compensation to landowners is a simple matter of justice; private parties should not bear private costs. Protecting private property can also be a matter of environmental protection. In the words of Robert J. Smith:

Adopting a property system that directs and channels man's innate self interest into behavior that preserves natural resources and wildlife will cause people to act as if they were motivated by a new conservation ethic. This is a result that both property rights advocates and environmental activists should applaud.

7Smith, p. 456.

CEI

Competitive Enterprise Institute

PROPERTY RIGHTS AND 'TAKINGS'

The "takings clause" of the Fifth Amendment to the Constitution reads, “nor shall private property be taken for public use without just compensation." Despite this clear admonition, federal environmental regulations routinely "take" the property of American citizens without compensation. In the interests of fairness and Constitutional integrity, it is important that landowners be compensated for government takings of their land.

In the 1960 Supreme Court decision of Armstrong v. U.S., the Supreme Court wrote that the primary purpose of the Takings Clause is "to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." When a landowner is forced to provide a portion of his or her land for public purposes such as species habitat, "greenways," and so on — this principle should apply.

Environmental laws, such as the Endangered Species Act, were passed by Congress to benefit the public as a whole. It is only fair that the burden of these laws be paid for by the public as a whole, rather than by those unfortunate landowners whose property happens to have characteristics that are valued by the public at large.

Consider the following examples:

Just outside Moab, Utah, a small town known for its scenic beauty and proximity to
two national parks, Brandt Child planned to build a campground and golf course on
his property. The project came to an abrupt halt when the Fish and Wildlife Service
declared that the natural springs on Child's property were habitat for the endangered
Kanab Ambersnail. The site was fenced off and Child was forbidden to work in the
area. Child's land has been effectively taken by the federal government because he can
no longer use it. He has estimated his losses at $2.5 million. Child is being forced to
bear the financial burden of protecting an endangered species, while the public as whole
benefits.

In the case of Dolan v. City of Tigard, the Dolans learned that they could only receive
a permit to expand their plumbing supply store if they gave the city of Tigard 10 percent
of their land for use as a bike path and "greenway." The Supreme Court ruled in 1994
that this amounted to a taking of private property without just compensation.

Congress should reaffirm the Constitutional protections afforded to private property rights. In particular, Congress should:

•Explicitly instruct regulatory agencies to analyze their regulations to determine when
takings will occur;

Require that compensation be paid directly from the budget of the agency responsible
for the regulation that resulted in a "taking."

Property rights are the foundation of a free society and a free market economy. They must be protected.

1001 Connecticut Avenue NW Suite 1250 Washington, D.C. 20036 • telephone: (202) 331-1010, Fax: (202) 331-0640

CEI

Q: Isn't the "takings" movement really about forcing the taxpayer to pay polluters not to pollute? A: Not at all. All individuals should have the right to use their property as they see fit, provided that they are not inflicting harm upon others. This means that there is no right to pollute the property of one's neighbor. Compensation for "takings" is about compensating landowners when the government tells them that they cannot make reasonable use of their land, such as building a home, planting crops, or perhaps just maintaining species habitat. Yet these are all examples of actions that have been prohibited by the government on private lands. These are the type of injustices that the “takings" movement seeks to redress.

Q: Will compensating landowners for “takings" bankrupt the government?

A: If regulatory agencies continue to conduct business as usual, it will certainly cost the government a lot of money to compensate landowners. However, ensuring that landowners are compensated for regulatory actions that deprive them of the reasonable use of their land will restore accountability to regulatory actions by forcing agencies to consider the costs, economic and otherwise, of their regulatory decisions.

Q: Will forcing regulatory agencies to engage in "takings" assessments bog them down in red tape and prevent them from fulfilling their duties, such as protecting the environment?

A: Adding this small requirement onto existing review, public notice and comment procedures should not hinder any agency from achieving its mission. The federal government is always required to file an environmental impact statement when undertaking a new initiative. All that "takings" advocates ask, is that the federal government give the same deference to the Constitutional rights of American citizens and assess how those rights may be impacted by regulatory activities.

Q: Shouldn't landowners and developers be expected to anticipate possible regulatory actions and 10 take those considerations into account when purchasing land?

A: In many of the "takings" cases that are mentioned, individuals owned their land well in advance of any regulatory action. It was only after the fact that government agencies decided to bar reasonable land-uses, such as farming or building a home. More importantly, the fundamental issue is what types of land-use should be barred without compensation from the government.

JONATHAN ADLER

The GOP "Contract with
America" encompasses "a
secret war on the environ-
ment" and a "polluter's bill
of rights," according to the Sierra
Club.

New York Times columnist
Anthony Lewis agrees, calling the
Contract's regulatory reform pro-
visions "the Death and Desertifica-
tion Act." Jessica Matthews, envi-
ronmental pundit and senior fellow
at the Council on Foreign Relations,
charges that the Contract "would do
nothing less than dismantle envi-
ronmental law." In pursuing regu-
latory reform, "extremists are try-
Ing to take away the ability of
Americans to act through their gov
ernment to protect neighboring
property owners and the public
welfare," according to National
Wildlife Federation attorney Glenn
Sugameli.

What has environmental leaders
so upset is the eighth bill of the Con-
tract, The Job Creation and Wage
Enhancement Act" that, among
other things, is designed to rein in
the regulatory excesses of the fed-
eral government. If passed, the law
will require federal agencies to eval-
uate the scientific justification, costs
and benefits of new proposed rules,
limit the imposition of unfunded reg
'ulatory mandates upon state and
local governments and create due
process protections for subjects of
regulatory proceedings.

Such reforms are long overdue.
This year, Americans will spend
well more than $150 billion com-
plying with environmental laws,
and there is increasing evidence
that these massive expenditures are
purchasing little environmental
protection. Indeed, the Environ-
mental Protection Agency's own
Science Advisory Board has con-
cluded that the lion's share of the
EPA's budget goes to inconscquen-
tial or unproven environmental
risks.

The most contentious plank in
the GOP's agenda for regulatory
reform is the so-called "takings
compensation" provision. This por-

tion of the bill would increase the
protection of private property
rights by requiring the federal gov
crnment to compensate landowners
when regulations deprive them of
the reasonable use of their land. If
this provision passes, according to
Jessica Mathews, "government
would have to pay polluters not to
pollute." In fact, property rights
protection would do no such thing.

A "takings compensation" law is
about compensating landowners
when the government denies rea-
sonable uses of private land, i.e.
those land uses that do not directly
infringe upon the person or prop
erty of another. Compensation
would be required when the feder-
al government tells a landowner
that he cannot build a home, cut a
tree or plant a crop. Compensation
would not be required when the
federal government prevents a
landowner from harming the per-
son or property of his neighbor.

Hyperbole is to be expected from
environmental leaders, especially
when the proposals that they are
attacking are popular with the
American people. The push for reg
ulatory reform and protection of
private property rights is not "anti-
environment." It is about restoring
accountability to the federal regu-
latory process and ensuring that
the burdens of federal regulation
are borne fairly, and not imposed on
an undeserving few.

In the case of property rights, the
arguments for compensation are
rather simple. If the public wants to
protect endangered species or pre-
serve a scenic vista, the public
should be willing to pay for it, just
as it pays for highways, military
bases, parks and other "public
goods." The costs should not be
imposed on whoever is unfortunate
enough to hold title to a coveted
piece of land. This is the principle
behind the Fifth Amendment to the

(The Wall Street Journal, Monday, January 16, 1995) Property Rights and Wrongs

By JONATHAN TOLMAN
Over the last decade the environmental
movement has undergone a subtle but pro-
found shift. Originally, environmental
laws were designed to curb the pollution of
large corporations. But as Congress and
federal agencies have expanded the scope
of these laws, they have begun to reach far
beyond big industry polluters.

Russell Jacobs, for example, is not a ty
coon. Married, he lives in Raymond, Wis.,
and works for the post office. His wife,
Gall, provides day-care for neighborhood
children while their own three children are
in school. In 1990,
Mr. Jacobs did what
many middle-class
Americans dream
of-he bought a plot
of land in the sub-
urbs to build his
family a home. Be-
fore buying the lot
he checked with the
Racine County gov
ernment, which as
sured him that he

could build his house. The house would
have been 80 feet from his neighbor's
house and 50 feet from the highway.

Unfortunately for Mr. Jacobs, the fed-
eral government considered his small plot
of land in the suburbs a "calcareous fen."
For those unfamiliar with bureaucratic
jargon, a. fen is an area not quite wet
enough to be a marsh but still wet enough
to qualify as a wetland. Calcareous only
means that it sits on top of limestone, typ-
ical of much of Wisconsin.

The Army Corps of Engineers told Mr.
Jacobs that he needed a permit in order to
build In his calcareous fen. He applied for
his permit and received a letter, 242 days
later, informing him that his permit had

been denied. Richard W. Craig of the
Corps of Engineers wrote, "The purpose
of the project is to facilitate the construc
tion of a single family home. I have de-
termined that issuance of the requested
permit would be contrary to the public in-
terest."

Why the federal government concluded
that Mr. Jacobs's half an acre of "calcare-
ous fen" was ecologically vital remains a
mystery. Nonetheless, the government de
cided that the public should continue to en-
joy benefits from the calcareous fen. With
the stroke of a pen, the federal government
effectively stripped Mr. Jacobs of the right
to use his property. Mr. Jacobs's case rep-
resents a glaring violation of the Takings
Clause of the Fifth Amendment, which
reads, "Nor shall private property be.
taken for public use without just compen-
sation."

The new 104th Congress has an oppor
Tunity to step in and ensure that federal
bureaucracies adhere to the Fifth Amend-
ment. Well-designed property rights legis-
lation, such as a bill sponsored by Texas
Sen. Phil Gramm in the last Congress or
the current property rights provisions in
the House GOP's Contract With America,
would go a long way in preventing the type
of abuse suffered by Mr. Jacobs..

Not all property rights legislation
would solve the problem, however.
Proposition 300, a property-rights ballot
initiative that failed in November in Ari-
zona, is an example. Under the proposi
tion, the state would have had to estab-
lish a five-step review process for all reg-
ulations prior to their enactment. In ad-
dition, the, state attorney general's office
would have had to develop takings guide-
lines that would cover all regulations. In
essence, Proposition 300 attempted to
solve the problem of overzealous bureau-

cracies by creating another bureaucracy
that could have cost hundreds of millions
of dollars.

The Contract With America avoids the
problem of Proposition 300 and focuses on
the direct compensation of individuals
when their property is taken for public use.
When a municipality decides to build a
park, or an agency decides to create a
wildlife refuge, the government must com-
pensate the landowners for the use of their
property. The case of land-use regulation
should be no different. When the Fish and
Wildlife Service prohibits activities be-
cause of endangered species, the agency
In effect creates a wildlife refuge. Unfor
tunately, when regulations lake away
property rights, individuals are rarely, if
ever, compensated.

Environmental groups have argued
that compensating people when govern-
ment regulations restrict their ability to
develop land is tantamount to paying peo-
ple not to pollute. Nothing could be further
from the truth. Property rights do not In-
clude the right to pollute. Pollution, like
many other activities, is considered a pub-
lic nuisance because it infringes on the
property rights of others.

Governments have and will continue to
regulate nuisances like noise pollution.
The critical difference is that in the case of
taking property, the actions, the federal
government prohibits are not considered
nuisances. A home, for example, is gener-
ally considered a necessity of life no less
basic than food or clothing; few would con-
sider a single-family home pollution.

Taking away a landowner's property
rights decreases the value of his property.
But the current House GOP legislation
does not the compensation solely to the
economic value of the property. Many
kinds of government actions can affect the

value of land without infringing on prop-
erty rights. Interstate highway construc
tion, for example, can raise the value of
the land near the interstate exits while
lowering the value of land on the previ
ously used roads. Route 29 used to be one
of the only highways into Washington,
D.C. from the west. When Interstate 66
was built the land in many of the small
towns along Route 29 understandably de-
clined. But building the interstate did not
violate anyone's property rights along
Route 29; their ability to use their land
was in no way limited by 1-GG.

In the 1960 decision Armstrong v. U.S.,
the Supreme Court determined that the
primary purpose of the Takings Clause
was "to bar Government from forcing
Some people alone to bear public burdens
which, in all fairness and justice, should
be borne by the public as a whole." When
a landowner is forced to provide a portion
of his or her land for public purposes this
principle should apply.

This is the fundamental reason why the
government must compensate when it pro-
hibits people like the Jacobses from build-
ing their house. A house does not infringe
upon anyone else's property rights. The
government prohibition, did not seek to
protect the property rights of others,
rather it sought to benefit the "public in-
terest." Hundreds of other government ac
tions are also designed to benefit the pub-
lic interest.

. Whether the government builds a
school, a park or a military base, the gov:
ernmont must compensate when it takes
the property of landowners, regardless of
how important the activity is to the public
interest. The case is no different with reg-
ulations, even when they protect "public
interests"

Mr. Tolman is an analyst at the Compet itive Enterprise Institute in Washington.