The takings debate

The county of San Bernardino, Calif., was about to build a new hospital. But less than 24 hours before groundbreaking, the U.S. Fish and Wildlife Service (FWS) listed the Delhi Sands flower-loving fly as an endangered species. A few of these flies inhabit the land on which the county was to build, so the agency made the county set aside several acres for the fly, including a corridor to nearby sand dunes. To do so, the hospital had to be moved 250 feet at a cost of $4 million, according to the Washington Post (April 3, 1997).

Welcome to the "takings" problem. Was it fair for the government to take control of the county's property to protect the endangered fly? Or should compensation have been required? As yet, there is no clear answer. To some, the federal intervention was costly but appropriate government regulation. To others, it was unfair government intrusion that took property without compensation.

The takings issue begins with the Fifth Amendment to the U.S. Constitution, which states: "... nor shall private property be taken for public use, without just compensation." For most of U.S. history, this takings clause referred to eminent domain, the right of a governmental unit to take property to build a road or a public building or for some other public purpose. It confirmed the government's right to take property, but also required the government to compensate the former owner.

As the government expanded during the 20th century, regulations ranging from rent-control to zoning laws gave the government greater control over property without actual ownership. For decades, the courts did not view these regulations as takings, and thus compensation was not required. However, the growth of environmental regulation that can involve increasingly costly compliance has started to change this view.

The role of environmental regulation
Environmental regulations can dramatically reduce the value of property, especially land. For example:

  • Under the Endangered Species Act (ESA), the federal government can prevent owners from building on their property, harvesting timber and even walking on land in order to protect endangered animal species. In the case of San Bernardino county, the result was not only loss of the use of its land, but extra expenses in building the hospital.
  • The current interpretation of provisions in the Clean Water Act allow the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers to prevent an owner from building on property deemed an official "wetland." To obtain permission to build, owners must sometimes pay thousands of dollars in "mitigation," paying for the preservation of another wetland in return for the one they fill in. People have gone to jail for failing to comply with wetland requirements.
  • Other laws, from protection of beach erosion to requirements for public access, have also raised the takings question.

Keep in mind that these are not situations where someone is polluting the environment. Rather, these examples illustrate cases where the government requires a person to take on an extra burden that others are not required to shoulder. A property owner is being told to provide an environmental good, often at great personal expense. If he or she were doing something environmentally harmful, that would be different. Environmental activists who oppose compensation for takings sometimes confuse the two situations, perhaps deliberately.

The Lucas case
In recent years, the U.S. Supreme Court has recognized the possibility that some regulations may be takings. While rulings have been few in number, some decisions suggest a possible trend toward protecting landowners from these regulations. The best-known of these is the case brought by the plaintiff David Lucas.

In 1986, Lucas, a Charleston, S.C., developer, purchased two oceanside lots with the intention of building homes on them. In 1988, before Lucas began construction, the state of South Carolina enacted the Beachfront Management Act. This made building on beachfront lots against the law. Although other people had built homes on neighboring beachfront property, Lucas was prevented from doing so. His property, for which he had paid $975,000, lost virtually all its value.

Lucas sued the state for compensation. After a protracted legal struggle, the U.S. Supreme Court ruled in Lucas' favor and he was compensated for the loss of his property (Lucas v. South Carolina Coastal Council: 60 U.S.L.W. 4842, Supreme Court of the United States, June 29, 1992). The Supreme Court ruled that the government had to show that its regulation was designed to prevent a specific harm, or public nuisance, and the government failed to do this. The court decided that the state had effectively taken Lucas's property and, by law, had to compensate him.

Although the decision identified the impact on Lucas as a taking, it failed to settle the issue of whether or not a partial taking requires compensation. In most cases, regulations to protect endangered species and wetlands take only part of the value of the property. This ruling disappointed property rights advocates, as did the fact that the Lucas decision has not been strengthened by subsequent property rights cases.

Shoot, shovel and shut up
As the takings issue unfolds in the next few years, the ESA could well become a centerpiece of the debate. The following are two typical endangered species situations that some would call takings:

  • In 1991, when landowner Ben Cone decided to log trees on his 7,200-acre property in Pender County, N.C., he hired a wildlife biologist. The biologist informed him that his property had several colonies of red-cockaded woodpeckers. Regulations at the time required him to set aside a circle of land a mile wide around each colony in which no logging could be done. Cone effectively lost the use of more than 1,500 acres. (Eventually, however, Cone worked out an agreement with the FWS.)
  • John W. Taylor owns a small residential lot in Mason Neck, Va., on which he wants to build a modular home. A pair of bald eagles has nested on a neighbor's property. The FWS has prevented Taylor from clearing land to build a home for the past two and a half years because it might damage the eagles' nest, even though Taylor has agreed not to do any construction during the eagles' nesting period.

Reactions to such cases may be one reason why the act has been ineffective at protecting endangered species. Landowners have an incentive to keep endangered species away from their property. It is often fairly easy to manage one's land in a way that discourages endangered species. In the case of the red-cockaded woodpecker, for example, all you have to do is cut down your trees sooner so they don't get old, because the woodpecker likes to nest in old trees.

In some extreme cases, landowners may take drastic action. A term has sprung up to express this: "Shoot, shovel and shut up." No one knows how often this illegal activity occurs. The ESA, by taking away one's control over one's property and reducing its value, is having consequences the opposite of those intended.

We eould expect the ESA to be much more effective if the government had to compensate owners for its dictates. Then, like anyone who works with a limited budget, the FWS would look for cost-effective ways of protecting habitat.

In return, landowners would be more responsive. For example, Montana rancher Dave Cameron wants to bring back a fish species, the Montana grayling, that long ago disappeared from the waters in his region. However, as long as the government considers the grayling a candidate for the endangered species list, Cameron is reluctant to do so. He fears that the FWS could control his ranch. Yet without the penalties of the act, he would be eager to restore and protect the fish.

With progress slow in the courts, property rights advocates are promoting laws that require compensation for regulatory takings. Defenders of Property Rights, a public interest law foundation based in Washington, D.C., lists 26 states that have enacted some form of property rights protection since 1992. In January 1999, seven states had property rights legislation pending.

State property rights legislation generally takes two forms. "Look before you leap" laws require state regulatory agencies or state attorneys general to consider the takings implications of land regulations before they are enacted. "Takings compensation" laws establish "trigger points" in the loss of property value, such as 30 to 40 percent. When a regulation cuts the value of property by this amount, compensation is required. Several bills have also been introduced in the 106th Congress, but none have been enacted.

Thus, the takings debate continues, with more questions than answers. However, the evidence suggests that treating the constitutional rights of landowners with greater respect could lead to more effective environmental protection. Until these rights are respected, the takings issue will remain.

This article originally appeared in the 06/01/1999 issue of Environmental Protection.

comments powered by Disqus