A Question of Property Rights and Wrongs

Do Americans really want their neighbors to be able to do whatever they want with their land?

10-01-1994 // Doug Harbrecht

The nation's largest estuary, Chesapeake Bay is a crown jewel of the East Coast ringed by wetlands, towns, farms and industry. Without its environmental laws, the region's already suffering health would be even more at the mercy of each landowner's own decisions.

Ralph Seidel's livelihood depends on the clean waters of Natrona Creek in rural Pratt County, Kansas, where he owns a golf course, a private fishing resort and a trailer park. But for more than two decades, starting in the late 1960s, neighboring cattle outfit Pratt Feeders dumped livestock wastes into the creek, causing repeated fish kills, according to state environmental officials. When the company's pollution-control permits came up for renewal a few years ago, Seidel organized a public uprising that led to state changes in Pratt Feeders' permits requiring more stringent treatment of its waste water.

Seidel's property rights, not Pratt's, were the issue. "That's what 'property rights' has always meant for conservationists: protections for average Americans and their property," says National Wildlife Federation attorney Glenn Sugameli. But a new property-rights movement is afoot, one that could lead polluters like Pratt Feeders to claim loss of their property rights through regulations. All over the country, ranchers, developers, mining companies and others are charging that property owners should be "compensated" if obeying the law lowers the value of private property or results in less-than-anticipated corporate profit.

The notion may seem absurd. "The whole idea that the government needs to pay people not to do bad things is ridiculous," says John Humbach, a property-rights expert at Pace University. "The reason the government exists in the first place is to define what is for the common good and what's not."

Absurd or not, the movement has become a political force to be reckoned with, linked as it is to the powerful notion that landowners should be allowed to do what they want with their property. "People better start taking this movement seriously," says Robert Meltz, a property-law expert at the Congressional Research Service. "This isn't just some fringe element anymore." The proof can be found in Congress, where proposed property-rights amendments are delaying nearly all major environmental legislation.

The new movement has the potential to disrupt a delicate balance between private greed and public need forged over two centuries of U.S. property law, legal experts say. The outcome will affect the survival of endangered wildlife, and it threatens not only environmental protections like pollution laws, but also zoning regulations and even obscenity laws. "Extremists are trying to take away the ability of Americans to act through their government to protect neighboring private-property owners and the public welfare," says NWF's Sugameli.

In Congress, property-rights debates have held up renewal of the Endangered Species Act, originally slated for 1993, and reauthorization of the Clean Water Act. Property-rights issues have also helped hold up bills to reform the Mining Law of 1872, elevate the Environmental Protection Agency to Cabinet status and reauthorize the Safe Drinking Water Act. The delays are due in large part to property-rights lobbying for amendments such as a ban on volunteers collecting data on private land for the National Biological Survey or a requirement that the government do "loss-of-value" assessments when regulations "could" cause a change in the worth of private property ranging from land to stocks and bonds.

At the state level, "takings" bills similar to those in Congress have been introduced in 37 state legislatures in the past two years; nearly all have been defeated. Many of the bills would require taxpayers to "compensate" landowners, including corporations, for property values diminished because of regulation. Such payments could be extremely costly, and the measures could erode state authority to protect public health and safety - as well as wreak havoc on long-established planning tools such as zoning.

For the most part, the new movement is not faring well in the courts either, but it has scored some wins. In one case directly affecting wildlife, last March the U.S. Court of Appeals for the District of Columbia struck down a U.S. Fish and Wildlife Service regulation that prevented private landowners from destroying habitat of federally listed species.

The court declared the provision as "neither clearly authorized by Congress nor a 'reasonable interpretation'" of the Endangered Species Act. The Clinton Administration has asked the court to reconsider the decision. If it stands, the ruling would allow landowners to take actions such as chopping down a tree containing the nest of an endangered red-cockaded woodpecker or bulldozing a beach where threatened sea turtles lay their eggs-as long as the animals are not around. No matter that the animals later would return to their habitat; no protections would exist in their absence.

While that case raises the issue of how much conservation laws apply to private land, it is technically a question of the intent of Congress in passing the Endangered Species Act. In contrast, the heart of most of the property-rights debate lies in a Fifth Amendment clause in the Constitution's Bill of Rights: ". . . nor shall private property be taken for public use, without just compensation." Legal historians interpret the original intent as requiring that landowners be paid when the government seizes property for public conveniences like roads and dams.

No one disagrees that if the government takes all of a person's property for public use, then just compensation is required. But the new movement pushes the argument a big step further, contending that regulation of landowners' ability to do as they wish with their property is a "taking" as well. The movement was sparked by the 1987 book Takings, by University of Chicago professor Richard Epstein. Epstein argued that the broad definition of a taking "invalidates much of the 20th-century legislation."

Such arguments mask the myriad ways governments increase the value of public property. Partly for this reason, editorial boards at newspapers across the country have condemned property-rights legislation. In one April 1994 editorial, The Atlanta Constitution called the demands of property rights forces "pure hypocrisy." As an example, it cited Arizona, "one of the fastest-growing states in the country and a hotbed of property-rights legislation. But its cities and suburbs would still be worthless desert if not for water brought from hundreds of miles away, at huge expense to the federal government."

Other examples: Developers in coastal areas that depend on taxpayer-subsidized insurance and agri-businesses that thrive with federal price support and crop insurance. Property values often exist only because of sewers, roads and other government-paid amenities.

The takings argument has quickly reached the level of the absurd. "Compensation" has been asked for costs incurred in widening restroom doors to allow wheelchair access required by law, losses due to limits on the sale and import of assault rifles-and even losses due to restrictions on "dial-a-porn" services.

In Mississippi and Georgia, religious groups have joined environmentalists in opposing proposed property-rights legislation. The bills would require taxpayers to compensate pornography dealers prevented from locating next to schools and churches. "Where this leads is to the end of government's role as protector of the little guy and provider of amenities the market alone cannot provide," says Jessica Mathews, a senior fellow at the Council on Foreign Relations. "Things like public health, worker safety, civil rights, environment, planning, historic preservation and anti-discrimination measures."

The rule of law in the United States has long been that landowners must not use their land in any way that creates a public or private nuisance (in other words, harms the public or neighbors). "(A)ll property in this country is held under the implied obligation that the owner's use of it shall not be injurious to the community," the Supreme Court ruled 100 years ago. In a string of cases since then, the high court has consistently reaffirmed that bedrock principle.

In 1992, the Supreme Court did rule conditionally in favor of South Carolina developer David Lucas, who had been denied permission to build on two oceanfront lots after the state adopted a coastal-zone management plan. Lucas owned two lots appraised at $1 million. The Court ruled he was entitled to compensation in part if the action deprived him of "all economically viable use" of his land. The case then went back to the state courts, where it was eventually settled. Justice Antonin Scalia, who wrote the Supreme Court's majority opinion, warned that anyone who purchases property always takes a risk that government regulation will diminish its value. He wrote that a lakebed owner "would not be entitled to compensation when he is denied the requisite permit to engage in a landfilling operation that would have the effect of flooding others' land." In other words, says NWF attorney Sugameli, "Property ownership does not include the right to flood your neighbors."

Even permits for livestock grazing on public land, claim "takings" advocates, are property. In Nevada, rancher Wayne Hage is suing the U.S. government for $28 million in damages for diminishing the value of his property (his permit) in a number of ways. But the range that Hage's cattle roamed is not his. It's yours: 700,000 acres of the Toiyabe National Forest in Nevada he leased from the federal government. In 1990, the Forest Service warned Hage he was letting his cattle overgraze. The animals were devouring vegetation along clear-running streams among the mountain meadows and pinion pine, birch and aspen trees-and in the process destroying key habitat for fish, birds, elk and other wildlife.

After Hage didn't respond to repeated warnings, in July 1991 contract cowboys protected by armed Forest Service rangers rounded up 73 of Hage's scofflaw bovines. Later, 31 more were taken in. Hage sold off the remainder of his herd of 2,000 and has taken his grievances to court. Among them are his claims that the government ruined his business by introducing elk, which competed with his cattle for grass; allowing backpackers and elk to drink from springs used by his livestock; and restricting how heavily his cattle could graze streamside vegetation. Federal officials say that by ignoring grazing regulations, Hage has only himself to blame for his troubles. On behalf of several environmental groups and the state of Nevada, the National Wildlife Federation is actively participating in the case as a friend of the court.

So-called property-rights advocates like to portray themselves as average Janes and Joes fighting the daunting power of federal bureaucrats and tree-hugging elites. Says J. T. "Jake" Cornmins, executive vice president of the anti-regulation Montana Farm Bureau, "Walt Whitman was speaking to the universal aspiration of humanity throughout history when he said, 'A man is not whole and complete unless he owns a house and the ground it stands on.' "

But loss of regulations often benefits big landowners most. Charles Geisler, a sociologist at Cornell University, has found that the nation's land is concentrated in the hands of the wealthy few. According to the Department of Agriculture, almost three quarters of all the privately owned land in the country is owned by less than 5 percent of the landowning population. "This is important to keep in mind when the property-rights people talk about fighting for the little guy," says Geisler.

Who are the nation's largest private landowners? Timber and mining companies, agri-businesses, developers and energy conglomerates, says Geisler. These owners appear to be prime movers behind the property-rights movement.

One example: When M & J Coal Company of Marion County, West Virginia, was ordered by federal officials not to mine portions of coal deposits because a gas line ruptured and huge cracks opened on the land of homeowners living over the underground mine, the company sued. Though it earned a 34.5 percent annual profit on the mine, the company claimed the restrictions were a "regulatory taking" for which it was entitled to $580,000 in lost profits. The court rejected the claim earlier this year; the company has appealed.

In Wyoming, the Clajon Corporation recently challenged in court state limits on the number of hunting licenses issued to large landowners. As owner of a large ranch, Clajon contended that it owned the right to hunt wildlife on its land and that the state's hunting-license limit was a taking of the company's property rights. The Wyoming Wildlife Federation and NWF's Rocky Mountain Natural Resource Center were leaders in fighting the claims, which were thrown out by Wyoming's federal district court in June.

Despite such cases, legal experts do not dismiss the takings movement in general. Even Humbach of Pace University maintains environmentalists have two decades of their own success partly to blame for the current backlash. "People concerned about the wise use of land should be equally concerned about misapplied and heavy handed government rules that turn average Americans into poster children for the the property-rights movement." he says.

Environmentalists might even agree with that notion at least up to the mention of poster children. "I am convinced that there is no actual case of an American poster child for the property rights movement," says NWF's Sugameli. NWF has examined hundreds of such purported cases. "And every single case either falls apart or doesn't exist at all," he says.

One example: the well-publicized 1988 jailing of Hungarian immigrant John Pozsgai for filling in a small wetland next to his Pennsylvania diesel mechanic shop. Property-rights advocates portray Pozsgai as a hapless victim who only meant to make his own land useful. But according to the Environmental Protection Agency, engineers told Pozsgai before he bought the property that there were wetlands on it; he even used that information to negotiate a $20,000 reduction in the land's purchase price. He then refused to obtain the required federal permit to fill his wetlands, filled them without the permit and ignored repeated official notification to stop doing so. Said the judge during Pozsgai's sentencing, "It is hard to visualize a more stubborn violator of the laws that were designed to protect the environment."

Such cases aside, environmentalists say they do recognize a need for collaboration. "The whole environmental community should be advancing the view that environmental laws are vital to protecting property rights, not taking them away," says Michael Bean, chairman of the Wildlife Program of the nonprofit Environmental Defense Fund. To that end, the group is exploring a plan to help save the endangered red-cockaded woodpecker in the pine forests of North Carolina, where private landowners own most of the prime habitat. The idea involves "land-use credits" for leaving large stands of trees untouched. The credits could take the form of lower taxes, regulatory relief from parts of the Endangered Species Act or some other tangible asset.

And in Kern County, California, conservationists have long supported a plan aimed at allowing developers to build near habitat of the endangered kit fox in return for undisturbed parcel set-asides and a developer-funded conservation program, both of which would aid the fox.

That sort of thinking may be the best hope for habitat and wildlife in the future. "In recent years, proponents of various private property-rights amendments have come to view the protection of private-property rights and government regulation as mutually exclusive goals," says Senator John Chafee (R-Rhode Island). "That view is wrong." In the end, property rights are as much an issue for Ralph Seidel and the elk in Toiyabe National Forest as for Wayne Hage. The framers of the Constitution wouldn't have had it any other way. "

Doug Harbrecht is a Washington, D.C., Business Week correspondent.

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