Environment: Preservation Acts

The property-rights movement moves out of the shadows.

Brandt Child planned to build a campground and golf course on land he owns outside Moab, Utah. But after he started construction, the Fish and Wildlife Service claimed that the natural springs on Child's land provide habitat for the endangered Kanab Ambersnail. The government halted construction and forced Child to fence off the property, rendering it worthless. Child claims that the effective condemnation of his land has cost him $2.5 million.

In 1986, Maine residents Gaston and Monique Roberge wanted to provide money for their retirement by selling a lot they had purchased 22 years earlier. After the Roberges got an offer of $440,000 for the land, the U.S. Army Corps of Engineers claimed that the property was a wetland and that the Roberges had let the city illegally "fill" the property with dirt in 1976. When the Roberges removed the dirt, the property became less desirable as a home site; offers to buy the land disappeared. After spending thousands of dollars hiring consultants to comply with bureaucratic edicts, the Roberges have exhausted their retirement investments, still have no offers for their land, and live on Social Security.

Richard Ehrlich owns a piece of property in Culver City, California, on which he constructed a private tennis club. The tennis club went out of business. Ehrlich then tried to get permission to build 30 condominiums on the land. Culver City, a separately incorporated town surrounded by Los Angeles, approved Ehrlich's proposal on the condition that he pay the city $280,000 so that it could build public tennis courts to "replace" the courts at Ehrlich's club. The condo association would also have to maintain the public courts after they were built.

Stories like these have become all too common over the past decade or so, as state, city, and federal regulations have encroached ever further into the lives of even small property owners. But as such regulations, especially those ostensibly intended to protect wetlands and endangered species, affect average property owners and business operators, hundreds of grass-roots private property organizations and inholders groups are fighting back. And people like Child, the Roberges, and Ehrlich are increasingly winning. In legislatures, the courts, and among the general public, the property-rights movement is chalking up victories.

On July 14, for instance, the House of Representatives passed an amendment to the California Desert Protection Act that could deter some regulatory "takings" of private property like those mentioned above. The amendment, sponsored by Rep. Billy Tauzin (D- La.), would prevent the government from reducing the appraised value of private property it acquires when the land harbors threatened or endangered species. If Tauzin's amendment applied to the entire Endangered Species Act, environmental regulators would have to pay Brandt Child the fair market value of his property before the snails were found.

Even though the Tauzin amendment, which passed by a 281-148 vote, applies only to the desert bill, it should help the owners of 700,000 acres of private property who would have otherwise lost most uses of their land. (See "Parking Costs," July.) And the amendment caught environmentalist sponsors of the bill, led by Rep. George Miller (D-Calif.), off guard. After the amendment passed, Miller temporarily removed the bill from consideration; it passed two weeks later, 298 to 128, with the amendment attached. Sen. Bennett Johnston (D-La.) will head the conference committee that reconciles the Senate and House versions; he has assured Tauzin and the amendment's supporters that the amendment will be part of the final bill.

The Fifth Amendment to the U.S.Constitution requires the government to provide "just compensation" any time regulators or legislators "take" private property for public use. Until recently, individuals would receive payment only for those takings resulting from eminent domain—in other words, when land was condemned so that government could build a highway or some other public-works project.

But the 1985 publication of University of Chicago law professor Richard Epstein's Takings: Private Property and the Power of Eminent Domain provided intellectual ammunition for the argument that regulations can restrict a land owner's rights just as much as overtly condemning property. Epstein's reasoning swept through law schools and into the courts, where Reagan appointees used the new takings rationale to limit the reach of environmental regulators. Such public-interest law firms as the Pacific Legal Foundation, the Washington Legal Foundation, the Institute for Justice, and Defenders of Property Rights represented clients who were victims of regulatory takings and filed amicus briefs in federal and state court cases.

In three federal cases, Nollan v. California Coastal Commission (1987), Lucas v. South Carolina Coastal Council (1992), and Dolan v. City of Tigard (1994), the U.S. Supreme Court ruled that land-use planners could no longer expect a free lunch. Regulations meant to serve legitimate public purposes must not place a disproportionate burden on the property owners being regulated.

Meanwhile, hundreds of grass-roots property-rights groups were springing up nationwide. Often these "groups" consist of the members of one family whose land was made worthless by wetlands regulations, the Endangered Species Act, or other environmental statutes. Legislators are responding to these groups, and the property owners they represent, by enacting laws that pare back new regulations.

The property-rights agenda is advancing on three fronts:

1) State legislatures and state referenda. The high-profile court cases and environmental bills focus on federal court decisions and two national laws—the Endangered Species Act and the wetlands provision of the Clean Water Act. But most regulatory takings result from the actions of state environmental agencies and local planners. Not surprisingly, much property-rights ferment takes place outside Washington.

Since 1991, 36 states have considered property-protection laws. Six states enacted bills before 1994; five others passed them this year. Peggy Riegle, chairman of the Fairness to Landowners Committee, says 86 bills were introduced this year alone. These bills either require regulators to study the costs of proposed regulations or they establish procedures that allow land owners affected by regulations to receive compensation.

Voters in as many as three states will decide property-rights referenda this fall. Massachusetts voters will determine whether to repeal rent control. If it qualifies for the ballot, Floridians will vote on a property-rights amendment to the state constitution. And in Arizona, voters will resolve the fate of a property-rights bill that would require every state agency to determine the impact of new regulations on property owners and decide how to compensate land owners when any proposed regulation reduces property values.

The Arizona initiative passed the state legislature in 1992. But green groups exercised a provision in the state constitution that allows a bill signed by the governor to be brought before voters as a referendum; if the initiative fails at the ballot box, the law won't go into effect. The November vote on Proposition 300 could have national implications for the property-rights movement. Phoenix political consultant Bob Robb says the outcome "will be cited by the winning side as an indication of the popular support for property rights."

Local politics could hurt the initiative. Robb points out that the Grand Canyon State is an unusual mix of populist conservatives and conservationists, a state that simultaneously sent Barry Goldwater to the Senate, Mo Udall to the House, and Bruce Babbitt to the governor's mansion. "The legislature is strongly pro-business and hostile to environmentalists," says Robb. "On environmental issues," by contrast, "the people have a strong preservationist ethic." Property-rights protections, though they benefit many average citizens, aren't really populist measures but protections against tyrannical majorities or powerful activist groups.

And while initiatives and referenda often provide legislative vehicles for political outsiders, qualifying and passing an initiative can take years of education and promotion and cost hundreds of thousands of dollars. Peggy Riegle says backing initiatives isn't as important for the property-rights movement as lobbying legislators because many lawmakers are receptive to land owners and have passed property-rights bills. Arizona's vote may test the movement's broader appeal.

2) Federal courts. The Dolan decision marks a departure from earlier takings cases for two reasons: It prohibits the regulators' use of "unconstitutional conditions" in land-use restrictions, and it requires the government to prove—before enforcing regulations—that there is a "rough proportionality" between its regulations and the "legitimate state interests" it is trying to advance.

The Court has traditionally prohibited governments from forcing individuals to surrender civil liberties in exchange for other rights. For instance, it clearly would be unconstitutional for a city to permit a person to build a home only if the home owner gave up his right to vote in the next election. The Dolan decision extended the unconstitutional conditions doctrine to property rights. Here, it ruled that a business owner can't be forced to build a public bike path in exchange for a permit to expand an existing hardware store without giving the owner compensation.

The Court also challenged the long-standing notion that business regulations are less important than restrictions on free speech or other civil liberties. Since the 1930s, the courts have established a hierarchy of rights: Certain civil liberties, such as voting and free speech, have received greater protection than property rights. As a result, most business regulations, no matter how draconian, have withstood constitutional challenges.

In Dolan, the Court began to restore property rights to the level of other civil liberties. Governments must now prove that their regulations, including land-use restrictions, are proportional to the public purposes they are trying to achieve. Otherwise, courts can strike down those regulations. Chief Justice William Rehnquist wrote for the majority: "We see no reason why the Takings Clause of the Fifth Amendment, as much a part of the Bill of Rights as the First Amendment or Fourth Amendment, should be relegated to the status of a poor relation in these comparable circumstances."

While the Dolan case dealt with an "exaction" (a condition placed on land use) that involved an actual invasion of private property, the Court strongly suggested that certain development fees and other monetary exactions might be unconstitutional as well. Three days after Dolan was decided, the Court ordered the California Court of Appeals to reconsider its ruling against Richard Ehrlich, the California tennis-club owner.

Ehrlich challenged the impact fee Culver City assessed, arguing that the tennis courts he operated were private. The Court of Appeals agreed with the city: "We do not find the distinction between public and private recreational facilities to be compelling," ruled the court. "The City had a legitimate need for community recreational facilities, whether public or private, and both the land-use restriction and the mitigation fee served that same need."

Counters James Burling, senior property-rights attorney at the Pacific Legal Foundation, "The city may need additional lights, sewage treatment, and streets" as a consequence of building new condos. "But there's not a need for a new park or tennis courts." PLF will file an amicus brief in support of Ehrlich.

Since nearly 90 percent of local governments impose monetary exactions on new development (up from 10 percent in 1960), a favorable ruling in Ehrlich could foreclose many land-use restrictions. "Applied consistently," says attorney Scott Bullock of the Institute for Justice, "the Dolan precedent will strike down unjustified exactions and largely end what was a growth industry in government-condoned extortion."

3) Congress. Tauzin's amendment to the desert bill was the fourth major victory for the property-rights movement in this session. Earlier, property protections were added to the bills establishing the National Biological Survey and elevating the Environmental Protection Agency to cabinet status. After the amendments were added, greens removed both bills from consideration.

The Senate also added amendments to the Safe Drinking Water Act requiring a "takings-impact analysis" for any regulation that might cause a taking of property and mandating cost-benefit analyses for any regulations costing more than $100 million. (See "Bill Killers," August/September.) In the House, property-rights advocates and representatives from small towns that might not be able to afford expensive new purification systems may add even tougher amendments. Greens may take the drinking water bill off the table for the rest of the year as well.

Until now, property-rights advocates in Congress have mostly played defense, attaching amendments to noxious bills with the hope that they could weaken them. Democratic congressional barons have bottled up stand-alone proposals by Tauzin, Rep. Jimmy Hayes (D-La.), and former Sen. Steve Symms (R-Idaho) in the environment committees, never letting them reach the floor of the House or Senate for a vote.

But property protectors are fighting back. Tauzin has proposed HR 3875, the Private Property Owners Bill of Rights. Tauzin's bill would define as a taking any regulation under the Endangered Species Act or the wetlands provision of the Clean Water Act that reduces a land owner's property value by 50 percent or more. To keep the bill from being gutted or bottled up in committee, he has filed a discharge petition—a procedure that requires the entire House to consider the bill without any modifications. Before the petition can take effect, Tauzin must collect the signatures of 217 other members. At press time, the discharge petition had 140 signers.

In the Senate, Phil Gramm (R-Tex.) will soon introduce a more radical bill, the Private Property Rights Restoration Act. Gramm's bill would assume that a taking occurs when any new regulation "restricts, limits, or otherwise infringes a right to real property that would otherwise exist." The bill would give a property owner standing to sue the government for compensation when a regulation temporarily or permanently reduces the owner's property value by at least 25 percent or $10,000, whichever is less. (The bill would exempt regulations that prevent pollution and other "public nuisances.")

The Institute for Justice's Bullock says lawmakers are proposing bills that more closely conform with court rulings. "Legislators are saying, `If the Court takes the Constitution seriously, we should too,'" he says. "These decisions encourage [legislators] to be bolder."

Such boldness may be needed. Paul Kamenar, president of the Washington Legal Foundation, warns that bills that rely on "neat formulas" for determining compensation won't keep regulators entirely at bay. "The government will still try to get around the formula," he says. "A bigger help would be to clear the underbrush of procedural hurdles"—such impediments as obtaining permits, hiring consultants, and going through lengthy administrative appeals—"a property owner has to get through to make a claim against the government." Those hurdles, he says, "discourage 99.9 percent of property owners who do have a legitimate claim from pursuing it in court."

While constitutional law changes incrementally, property owners seem to have the momentum. Riegle says environmentalists, who have relied upon bluster and apocalyptic rhetoric to frighten legislators into action, have lost control of the legislative agenda. In the past, she says, property-rights advocates were on the defensive, "always holding a shield while environmentalists were carrying the sword. Now we have the sword. And they're not good at playing defense."