Bit by bit, government's power is being eroded by wave of takings lawsuits

  • Diane Sylvain

Takings in its newest formulation has taken the West by surprise. It shouldn't have. Many reservoirs sit on taken ranches. Highways and railroads run across formerly private lands. Missile silos are embedded in once-private farms.

These lands were taken by government or corporations through the power of eminent domain. The only question was how much the government or corporation had to pay the landowner in compensation.

The current controversy does not involve eminent domain. It turns on the more subtle question of when land is merely being regulated for the public good and when it has been regulated so harshly that a "takings' has occurred. The issue traces back to the Fifth Amendment to the U.S. Constitution, which says that no private property shall be taken without just compensation.

Until recently, all levels of government were relatively free to regulate, whether for urban land-use planning or for environmental protection of undeveloped land. Today the courts increasingly say that some regulatory takings must be compensated. Three landowner victories in the last six months, including one at the U.S. Supreme Court, illustrate the trend.

In Dolan v. City of Tigard, Ore., Florence Dolan wanted a building permit to expand one of her 11 plumbing stores. The city of Tigard said that to receive the permit, she had to dedicate 10 percent of her property to green space and a bicycle path. She rejected the offer and sued, losing in lower courts. But the U.S. Supreme Court reversed the lower courts on the grounds that there was no apparent relationship, or "proportionality," between the building permit and the request for 10 percent of the land. Property rights advocates hailed the Dolan decision as a great victory.

But Michael Barker of the American Planning Association in Washington said the reaction to the decision is "terribly overblown." He said, "I don't think it's going to make a great deal of difference. It means municipalities will have to be more careful when considering proportionality. It also means more documentation and planning studies."

When undeveloped land is at stake, the zoning and municipal land-use cases shade into the question of environmental regulation. For instance, in another case, two weeks before Dolan, the Court of Appeals for the Federal Circuit said the government overstepped its regulatory power in protecting wetlands.

Loveladies Harbor Inc. v. the U.S. attracted attention because courts historically have shown little sympathy for property owners like William Ullmann and Helen Silvermaster, who lost only some difficult-to-measure part of the total value of their 12.5 acres of wetlands. Courts in the past had given short shrift to such cases because, in the words of Kim Cannon of Wyoming's Environmental Quality Council, "It was very hard to establish that government action, short of physical condemnation, was confiscatory."

Ullmann, a Harvard graduate who had taught himself how to build houses, and Silvermaster, a Russian immigrant who helped her husband prosper in the development business, are now dead. The case, typical of suits against the federal government, was litigated for 14 years. The plaintiffs argued that the government's wetland regulations had so restricted their New Jersey property that it lost all economic value. The court agreed.

These and preceding cases, such as Lucas v. South Carolina Coastal Commission, decided in 1992, challenge what had been a basic credo: that government has the right, in the name of protecting public resources such as air and water, to regulate private property. After all, be it Riverton, Wyo., or the Riviera, what you do to your land often affects your neighbor's property. As John Muir observed, "Everything is hitched to everything else."

Courts traditionally recognized this continuity and gave government extensive police power. But that has begun to change, although thus far mainly in cases where the regulating body changed the rules after a development was planned or under way.

At bottom, a landowner revolt

The shift has caught the attention of legal scholars. At a regulatory-takings conference in June at the University of Colorado law school, experts painted a picture of major changes afoot. Two hundred scholars attended, leading Jan Laitos of the University of Denver law school to observe, "How many people would have shown up at a takings conference 10 years ago? Maybe 10 or 15."

Conference speakers said that in 1993, only two cases out of 21 heard in the Court of Federal Claims, where all claims against the federal government must be heard, were successful. Yet litigants remain determined. Takings cases, both regulatory and physical (where the government condemns land, as in eminent domain), filed against the federal government have doubled in the last 10 years.

The Justice Department, defender of the government in takings cases, now has claims filed against it totaling $1.5 billion. And for the first time in 22 years, the California Coastal Commission has been ordered to pay compensation to a landowner who brought suit charging over-regulation.

Laitos called takings "a revolution in case law." He noted that while the government continues to win 95 percent of all takings cases, people still file them "because there are so many private-property owners who are tired of federal regulations."

A main theme emerged from the conference: Governments are losing their power to regulate private property to meet public needs without paying compensation. Richard Lazarus, a Washington University law professor involved with both the Dolan and Lucas cases, said, "The Supreme Court is very suspicious of environmental legislation. They don't like to see states use their plenary power as an excuse for wealth transfers."

Other speakers disagreed. "We don't recognize compensation for being in the (military) draft," said John Echeverria of the Audubon Society. "Why, then, do we demand compensation for protecting an ecosystem?"

And Peter Byrne of Georgetown University attacked Supreme Court Justice Antonin Scalia's opinion in the Lucas case, which Byrne said "sweeps aside precedents reaching back into the 19th century and establishes a new ground for invalidating state law that has no basis in the constitutional text or tradition, but enshrines his political preference."

Byrne said most of the revival in takings law "comes from the fertile mind of Loren A. Smith," chief judge of the Courts of Federal Claims and a Reagan appointee.

But Gary Guzy, an Environmental Protection Agency attorney, read a recent opinion by Smith that encapsulated the second major theme of the conference: that courts are a bad place to settle differences over property. Smith wrote in a takings decision in March:

"... To the extent that the constitutional protections of the Fifth Amendment are a bulwark of liberty, they should also be understood to be a social mechanism of last, not first, resort. Judicial decisions are far less sensitive to societal problems than the law and policy made by the political branches of our great constitutional system."

Virginia Albrecht of the Washington law firm Beveridge and Diamond was more to the point: "Litigation does not serve the public interest. It is not a way to mete out the rights we owe each other as citizens."

In 1994, six states passed laws strengthening private property rights. In Idaho, a bill passed requiring the attorney general to help state agencies figure out what constitutes a taking. A bill in Utah asks "all political subdivisions' to draw up guidelines on what constitutes a taking. The Arizona Legislature passed a similar law, but conservation groups have gathered enough signatures to place a challenge to the law on the November ballot.

While many bills are filed, and a few laws passed, there is no consensus on the best approach. Byrne said "the most persuasive argument for a regulatory-takings regime is that there are some losses that ought to be borne by the society as a whole rather than by the individual upon whom they fall."

Endangered Species Act tested

One critic of takings lawsuits is Oliver Houck of Tulane Law School. An expert on the legal aspects of the Endangered Species Act, he is disturbed by a recent court decision saying the act sometimes causes a takings that requires compensation. On March 11, a Court of Appeals in Washington ruled that the Department of Interior cannot prevent private landowners from modifying habitat, even if it is crucial to endangered species. In Sweet Home Chapter of Communities for a Great Oregon v. Babbitt, the court said if Congress wants to protect habitat on private land, Congress must pay for it.

Not so, said Houck. "Government has the responsibility as a trustee. Market hunting, for example, was regulated out of existence at great economic loss. Regulations on the salmon industry cost Pacific canneries 40 percent of their industry. The garbage industry suffered a 50 percent loss due to the Resource Conservation and Recovery Act regs."

According to Houck, "The government's policy has been to protect the animal, whatever the cost. The traditional view is that the private owner has no right to destroy endangered species habitat." Despite increased attacks in the law, Houck seemed optimistic that the Endangered Species Act would stand the test of time.

Sam Western is a free-lance writer in Big Horn, Wyoming.

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