The Government Must Compensate for Property Damage Even If Its Taking Was Only ‘Temporary’
Cato today filed an amicus brief supporting a request that the Supreme Court review Arkansas Game & Fish Commission v. United States. Here’s the case:
The Arkansas Game & Fish Commission owns and operates 23,000 acres of land as a wildlife refuge and recreational preserve; the preserve’s trees are essential to its use for these purposes. Clearwater Dam, a federal flood control project, lies 115 miles upstream. Water is released from the dam in quantities governed by a pre-approved “management plan” that considers agricultural, recreational, and other effects downstream.
Between 1993 and 2000, the government released more water than authorized under the plan. AGFC repeatedly objected that these excessive releases flooded the preserve during its growing season, which significantly damaged and eventually decimated tree populations. In 2001, the government acknowledged the havoc its flooding had wreaked on AGFC’s land and ceased plan deviations. By then, however, the preserve and its trees were severely damaged, so AGFC sued the government, claiming damages under the Fifth Amendment’s Takings Clause.
The district court awarded $5.8 million in lost timber and reforestation costs based on the substantiality of the government’s flooding and the foreseeability of the damage it caused. The Federal Circuit reversed that decision, holding that the flooding of private land can never be a taking unless that flooding is permanent. It further held that, in determining whether the government’s intrusion on AGFC’s land was permanent or temporary, courts must focus on the character of the policy behind the intrusion rather the effects of the intrusion itself. A taking cannot have occurred here because each deviation from the plan constituted a “temporary” policy, the court concluded, so AGFC had no constitutional remedy.
AGFC is asking the Supreme Court to review its case; the Court itself has recognized that something less than a permanent invasion of land can constitute a compensable taking. Cato joined the Pacific Legal Foundation on a brief urging the Court to hear the case and uphold the Fifth Amendment rights of property owners whose land is destroyed by the federal government. Our brief highlights the conflict between the Federal Circuit’s decision and both Supreme Court and lower court precedent. First, an invasion of land by flooding is no different from an invasion of land by any other means. Second, the government’s self-professed “intent” that a possible taking be “temporary” should have no bearing on whether a Fifth Amendment remedy exists when that taking has, in fact, occurred. Instead, the relevant inquiry should be whether the government caused permanent damage and, if so, how much.
The Federal Circuit’s new rule — that, so long as it might be “temporary,” no government flooding can be remedied under the Fifth Amendment — runs afoul of the letter and spirit of a constitutional provision meant to compensate property owners for government intrusions on their land. We urge the Court to grant AGFC’s petition and maintain constitutional protections for private property.
The Supreme Court will decide in the new year whether to take the case, and would hear argument in the fall if it does.
Rent Control Violates Property Rights and Due Process
This blogpost was coauthored by Cato legal associate Trevor Burrus, who also worked on the brief discussed below.
Rent control is literally a textbook example of bad economic policy. Economics textbooks often use it as an example of how price ceilings create shortages, poor quality goods, and under-the-table dealings. A 1992 survey revealed that 93 percent of economists believe that rent control laws reduce both the quality and quantity of housing.
As expected, therefore, New York City’s Rent Stabilization Law—the most (in)famous in the country—has led to precisely these effects: housing is scarce, apartment buildings are dilapidated because owners can’t charge enough to fix them, and housing costs have only increased (in part because costs are transferred to non-rent mechanisms such as “non-refundable deposits”). Yet the RSL persists, benefiting those grandfathered individuals who rent at lower rates but hurting the city as a whole.
Harmon v. Kimmel challenges New York’s law on the grounds that it is an arbitrary and unsupportable regulation amounting to an uncompensated taking that violates the Fifth Amendment.
Jim Harmon’s family owns and lives in a five-story brownstone in the Central Park West Historical District. The Harmons inherited the building—and along with it three rent-controlled tenants. Those tenants have occupied apartments in the building for a combined total of 91 years at a rate 59 percent below market. In their lawsuit, however, the Harmons face many unfriendly precedents that have given states free reign to regulate property, to the point that it is occupied on an essentially permanent basis while surviving Fifth Amendment scrutiny.
One way to challenge some of these laws is to argue they are so arbitrary and poorly justified that they violate the Fourteenth Amendment’s Due Process Clause. Because this is an especially difficult type of challenge to bring, Cato joined the Pacific Legal Foundation and the Small Property Owners of San Francisco Institute on a brief supporting the Harmons’ request that the Supreme Court review lower-court rulings against them. Although the Court has ruled that the Takings Clause does not permit challenges based on claims that the alleged taking fails to “substantially advance legitimate state interests,” the Due Process Clause is an independent textual provision.
We thus clarify the relationship between property rights and due process, arguing that a law which advances no legitimate governmental purpose can be challenged under the Due Process Clause. To hold otherwise would be to deny property owners any meaningful avenue for defending their property from onerous and irrational regulations.
A Property Rights Victory in the Magnolia State
One of the unambiguously good results from last Tuesday’s off-year elections came in Mississippi, the state I called home the year before I moved to D.C. By the impressive margin of 73% to 27%, voters in the Magnolia State took a stand against judicially sanctioned eminent domain abuse, specifically the government’s taking of private property in the name of so-called “economic development.”
By passing Measure 31, which prohibits most transfers of condemned land to private parties for 10 years after condemnation, Mississippi joins 44 other states in enacting legislation that strengthens property rights in the wake of the Supreme Court’s horrific ruling in Kelo v. New London. In Kelo (2005), you’ll recall, the Court held that state and local governments can condemn private property not for some sort of public project like a highway or military base nor because it is a “blight” that creates a health or safety risk, but simply to transfer to another private party who claims to put it to better economic use.
We at Cato are all in favor of economic development, of course, but not if that development comes via raw government power that treads on constitutionally protected individual rights. If a developer thinks he can put a given piece of land to a higher-value use, let him buy that property fair and square from the owner rather than effectively forcing a sale at below-market value.
Indeed, Kelo’s holding was flawed precisely because its rationale that transferring ownership of “economically blighted” property would promote economic development is bad economics. If a proposed project were actually a better use of a given property, the developer would be willing to pay a price sufficient to induce the current owners to leave.
Kelo also undermines property security, making owners less willing to invest in their property and use it productively, lest the government swoop in, declare it “blighted,” and sell it to someone else. And securing property rights is not just a good thing economically. It also helps prevent powerful private interest groups from undercutting the property rights of minorities and other groups who may be vulnerable due to prejudice or political disadvantage.
And the American people agree: Kelo turned out to be a Pyrrhic victory for developers and their public-official cronies, such that most of the country is now better protected against eminent domain abuse than it was before Kelo. Notably absent from the list of states where property rights are better off, however, is New York (see my comment on a recent instance of eminent domain abuse in the Empire State).
The judiciary’s abdication of its role as a protector of property rights is bad enough, but our elected officials haven’t done much better. Tellingly, the drivers of successful anti-Kelo legislation have tended not to be state legislators (with some exception) but rather citizen-activists. While special-interest groups, such as big car companies in Mississippi, may pressure legislators to avoid anti-Kelo legislation, even as referenda show that popular opinion is on the side of the property rights activists.
Measure 31 is not perfect, but it is a step in the right direction. The Founders took care to protect private property rights in the Constitution, and it’s heartening to see citizens taking an active role to vindicate those protections even when the Supreme Court abdicates its duty to do so.
For more commentary on the Mississippi vote, see Ilya Somin’s recent op-ed.
Another Judicial Takings Case Reaches the Supreme Court
For over a century, Montana citizens have used non-navigable streambeds along their properties for various purposes without objection from the state government. The hydroelectric energy company PPL Montana and thousands of other private parties exercised their rights over these non-navigable stretches that the state never claimed.
Last year, however, the Montana Supreme Court overturned well-settled state property law by effectively converting the title in hundreds of miles of riverbeds to state ownership. The majority of the court ruled that the entirety of the Missouri, Clark Fork, and Madison rivers were navigable at the time of Montana’s statehood, producing a broad holding that eradicates the right to use rivers and riverbanks that Montanans had enjoyed for over a century.
PPL Montana thus asked the U.S. Supreme Court to review the state court’s decision; Cato filed an amicus brief supporting that request, which the Court granted. Now that the case is before the Court, Cato has joined the Montana Farm Bureau Federation, American Farm Bureau Federation, and National Federation of Independent Business on a brief supporting the property owners.
We are chiefly concerned with two parts of the Montana Supreme Court’s ruling: First, the court incorrectly evaluated navigability for the purpose of establishing title — finding the entirety of the rivers at issue navigable (and thus belonging to the state) because portions of them are — contravening the legal standard established by the U.S. Supreme Court in United States v. Utah (which analyzed the riverbeds section-by-section to achieve a “precise” assessment of navigability). Second, the court effectively transferred a substantial quantity of land from private owners to the state — a judicial taking that violates either the Fifth or Fourteenth Amendments (as the Court described in the recent Stop the Beach Renourishment case, in which Cato also filed a brief).
In short, the Court should reaffirm the Utah standard for navigability in the context of establishing title and protect private property owners against judicial takings. By doing so, it would send a strong message to state courts across the nation that judicial usurpations of property rights are just as unconstitutional as those undertaken by other branches of government.
The Court will hear the case of PPL Montana, LLC v. Montana late this year or in early 2012. Again, you can find Cato’s brief here.
Boxing Gym Scores Knockout Blow for Property Rights
Last month, I wrote about a major eminent domain struggle in National City, California. City officials had decided to declare almost seven hundred properties blighted even before conducting any sort of blight study, which eventually turned out to be riddled with errors.
At the center of the fight is a private, nonprofit boxing gym that has helped keep hundreds of at-risk kids in school and off the streets. The city wanted to bulldoze the center so a wealthy developer can build luxury condos and stores.
In 2007, the Institute for Justice teamed up with the gym and filed suit to stop the city from taking the property, and here’s video about their legal fight:
Four years later, IJ scored a knockout blow against eminent domain abuse: Last Thursday, the Superior Court of California struck National City’s entire 692-property eminent domain zone and found that National City lacked a legal basis for its blight declaration.
This is a major victory for California property owners, and the first case to apply the property reforms that the state enacted to counter the 2005 Kelo decision. Learn more about the victory here.
I previously wrote about eminent domain shenanigans here and you can read more from Cato on property rights here.
March Madness: Eminent Domain Abuse Goes Coast-to-Coast
This is a big week for private property rights. Two epic eminent domain struggles are playing out on opposite sides of the country.
First, National City, California, is ground zero for eminent domain abuse. City officials declared several hundred properties blighted even before conducting a blight study that was riddled with problems. The city wants to seize and bulldoze a youth community center (CYAC) that has transformed the lives of hundreds of low-income kids, so a wealthy developer can build high-rise luxury condos:
CYAC has numerous volunteers, including local law enforcement officers, providing free mentoring in boxing as well as academics. The gym is famous for getting kids off the street and back into school. As Rick Reilly explained in a feature in Sports Illustrated (boy, how I miss his inside-back-page column):
You know what, Mayor? National City doesn’t need more luxury condos. It needs good men like the Barragans teaching kids respect for neighbors and property, manners you could use a little of yourself.
And if you kick the Barragans out so some slick in Armani can buy a bigger yacht, I hope your car stereo gets jacked—weekly—by a kid who would’ve otherwise been lovingly coached on their jabs and their math and their lives.
Question: Can you declare politicians blighted?
This week, the gym’s battle is in trial before the Superior Court of California. Represented by the Institute for Justice (who else?), a victory will help protect private property far beyond National City and clarify the use and misuse of blight designations.
Second, moving to the other side of the country, we go to Mount Holly, New Jersey:
Mount Holly is another classic case of “Robin Hood-in-Reverse.” Officials have been dismantling a close-knit community known as the Gardens for the last decade so a Philadelphia developer can bulldoze the area and build more expensive residential properties.
Homeowners in the Gardens are primarily minorities and the elderly. The row-style houses are being torn down while still attached to occupied homes, and officials refuse to offer the remaining homeowners replacement housing in the new redevelopment. Further, owners are being offered less than half the amount it would cost to buy a similar home blocks away.
Here, IJ just launched a billboard campaign and did a study that concludes the eminent domain abuse project may result in a loss of a million taxpayer dollars a year, or one-tenth of the Township’s budget.
I previously wrote about eminent domain shenanigans here and you can read more from Cato on property rights here.
If Only Hawaii’s Government Were as Beautiful as Its Beaches
Throughout history, people have fought over beaches, including in the legal arena. In the latest case in which Cato has filed an amicus brief, a state has once again redefined property rights to take possession of highly-valued beachfront property.
In 2003, Hawaii passed Act 73, which took past and future title to accretions (the slow build-up of sediment on beaches) from landowners and gave it to the State, changing a 120-year-old rule. While waterlines are unpredictable, the original rule — common to most waterfront jurisdictions — helped establish legal consistency. Indeed, without such a rule, beachfront property becomes beachview property in just a few years.
In response to Act 73, homeowners sued the state, claiming that the law violated the Takings Clause of the Fifth Amendment or, in the alternative, the Due Process Clauses of the Fifth and Fourteenth Amendments. The state appellate court held that compensation was owed only for the accretions that had accumulated before Act 73′s enactment because the right to subsequent accretions had not “vested” (the legal term for when an expectation becomes an actual property right). Hawaii’s Supreme Court declined to review that ruling, so the property owners asked the U.S. Supreme Court to do so.
Cato, joined by the Pacific Legal Foundation, filed a brief supporting that petition and argues that the appellate court’s decision was contrary to long-standing definitions of waterfront property rights. Our brief highlights the increasing need for the Court to establish and enforce a judicial takings doctrine.
More and more states are using backdoor tricks — like legislative “guidelines” and judicial creativity — to take property in violation of constitutional rights: This Hawaii case is distressingly similar to last term’s Stop the Beach (in which Cato also filed a brief). In that case, Florida took property by adding sand to the beach and then laying claim to the newly created land — in essence asserting that property that was defined by contact with the water (in technical terms, “littoral” or “riparian”) had no right to contact the water. The Court ruled that while Florida’s actions did not rise to the level of a judicial taking, a large enough departure from established common-law rules could constitute a constitutional violation.
In this latest brief, we highlight both the largeness of Hawaii’s departure from established law and the spate of such actions in recent years — which circumstance calls out for Supreme Court review. The case is Maunalua Bay Beach Ohana 28 v. Hawaii and the Court will decide later this fall whether to take it up.
More on Property Rights (Plus Privileges, Immunities, Due Process)
Yesterday I blogged about the Florida property rights case, which I now consider the best unanimous opinion against my position I could ever imagine. Although the property owners lost, four justices stood for the idea that courts no less than legislatures or executive bodies are capable of violating the Takings Clause (Fifth Amendment), while two others endorsed remedying such violations via Substantive Due Process (Fourteenth Amendment), and the remaining two didn’t express an opinion one way or the other. For more on the case, see the blogposts of Cato adjunct scholars Tim Sandefur, Ilya Somin, and David Bernstein.
An interesting side note involves Justice Scalia’s excoriation of Substantive Due Process (and Justice Kennedy’s use of it):
Moreover, and more importantly, JUSTICE KENNEDY places no constraints whatever upon this Court. Not only does his concurrence only think about applying Substantive Due Process; but because Substantive Due Process is such a wonderfully malleable concept, see, e.g., Lawrence v. Texas, 539 U. S. 558, 562 (2003) (referring to “liberty of the person both in its spatial and in its more transcendentdimensions”), even a firm commitment to apply it would bea firm commitment to nothing in particular.
…
The great attraction of Substantive Due Process as a substitute for more specific constitutional guarantees is that it never means never—because it never means anything precise.
Scalia also calls Kennedy’s method “Orwellian” — after having said that Justice Breyer uses a “Queen-of-Hearts” approach “reminiscent of the perplexing question how much wood would a woodchuck chuck if a woodchuck could chuck wood?” Really, this is classic Scalia, a delight to read (and you should, here).
Mixed Result in Complicated Property Rights Case
Today the Supreme Court came down with its ruling in Stop the Beach Renourishment v. Florida Department of Environmental Protection, a case I previously blogged about here and here, and in which Cato filed a brief.
While the Court’s 8-0 ruling against the Florida oceanfront (now ocean-view) property owners was not the result we wanted, the part of the decision that was unanimously unfortunate turned on a narrow and probably mistaken interpretation of state property law. Much more importantly, the remainder of Justice Scalia’s opinion makes clear that judicial takings are just as much a violation of the Fifth Amendment as any other kind. “If a legislature or a court declares that what was once an established right of private property no longer exists,” Scalia writes for a four-justice plurality, “it has taken that property, no less than if the State had physically appropriated it or destroyed its value by regulation.” And the test for whether the government—any part of it—has committed a taking turns on “whether the property right allegedly taken was established.”
Moreover, that the Court ultimately found no taking here should provide no succor to courts and other state actors who wish to abuse property rights in the future. The case could have easily swung the other way in a non-oceanfront circumstance or under a different state’s laws. Indeed, two justices (Kennedy and Sotomayor) said that federal courts can still police judicial takings—under a different name—by using the Fourteenth Amendment’s Due Process Clause, while the remaining two (Breyer and Ginsburg) decided to leave the question for another day. Nobody accepted outright the idea that courts cannot be held accountable for subverting property rights!
In short, state courts are now on notice that they violate long-held property rights at their peril.
Likely Supreme Court Tie Would Be a Loss to Property Owners
Today, the Supreme Court heard argument in Stop the Beach Renourishment v. Florida Department of Environmental Protection, which is a Fifth Amendment Takings Clause challenge involving beachfront property (that I previously discussed here).
Essentially, Florida’s ”beach renourishment” program created more beach but deprived property owners of the rights they previously had — exclusive access to the water, unobstructed view, full ownership of land up to the “mean high water mark,” etc. That is, the court turned beachfront property into “beachview” property. After the property owners successfully challenged this action, the Florida Supreme Court – “SCOFLA” for those who remember the Bush v. Gore imbroglio – reversed the lower court (and overturned 100 years of common property law), ruling that the state did not owe any compensation, or even a proper eminent domain hearing.
As Cato adjunct scholar and Pacific Legal Foundation senior staff attorney Timothy Sandefur noted in his excellent op-ed on the case in the National Law Journal, “[T]he U.S. Constitution also guarantees every American’s right to due process of law and to protection of private property. If state judges can arbitrarily rewrite a state’s property laws, those guarantees would be meaningless.”
I sat in on the arguments today and predict that the property owners will suffer a narrow 4-4 defeat. That is, Justice Stevens recused himself — he owns beachfront property in a different part of Florida that is subject to the same renourishment program — and the other eight justices are likely to split evenly. And a tie is a defeat in this case because it means the Court will summarily affirm the decision below without issuing an opinion or setting any precedent.
By my reckoning, Justice Scalia’s questioning lent support to the property owners’ position, as did Chief Justice Roberts’ (though he could rule in favor of the “judicial takings” doctrine in principle but perhaps rule for the government on a procedural technicality here). Justice Alito was fairly quiet but is probably in the same category as the Chief Justice. Justice Thomas was typically silent but can be counted on to support property rights. With Justices Ginsburg, Breyer, and Sotomayor expressing pro-government positions, that leaves Justice Kennedy, unsurprisingly, as the swing vote. Kennedy referred to the case as turning on a close question of state property law, which indicates his likely deference to SCOFLA.
For more analysis of the argument, see SCOTUSblog. Cato filed an amicus brief supporting the land owners here, and earlier this week I recorded a Cato Podcast to that effect. Cato also recently filed a brief urging the Court to hear another case of eminent domain abuse in Florida, 480.00 Acres of Land v. United States.
Taking Land for Public Uselessness
Over at the Washington Examiner, Tim Carney reports that Pfizer is abandoning its New London offices and deciding what to do with the property it gained in the infamous Kelo v. New London land-grab:
The private homes that New London, Conn., took away from Suzette Kelo and her neighbors have been torn down. Their former site is a wasteland of fields of weeds, a monument to the power of eminent domain.
But now Pfizer, the drug company whose neighboring research facility had been the original cause of the homes’ seizure, has just announced that it is closing up shop in New London.
To lure those jobs to New London a decade ago, the local government promised to demolish the older residential neighborhood adjacent to the land Pfizer was buying for next-to-nothing. Suzette Kelo fought the taking to the Supreme Court, and lost. Five justices found this redevelopment met the constitutional hurdle of “public use.”
That this purported “public use” is now exposed as the façade for corporate welfare that it always was is, of course, little comfort to Suzette Kelo and the other homeowners whose land was seized. But hopefully this will be an object lesson for other companies considering eminent domain abuse as a route to acquire land on the cheap — and especially for state and local officials who acquiesce in this type of behavior.
You can read Cato’s amicus brief for the ill-fated case here. Cato also hosted a book forum for the story of Suzette’s struggle, Little Pink House, featuring the author, Jeff Benedict, the attorney who argued the case, the Institute for Justice’s Scott Bullock, and Ms. Kelo herself, here.
HT: Jonathan Blanks
More Property Rights Shenanigans on the West Coast
Cato recently filed an amicus brief urging the Supreme Court to review a Ninth Circuit decision that tramples on property rights. (See also this oped I co-authored with co-counsel.)
Well, tomorrow the Ninth Circuit hears another case involving property rights violations, and this time the plaintiffs, in exchange for a building permit, were forced to give up their right to vote. Arguing for the beleaguered property-owners will be none other than Cato adjunct scholar Tim Sandefur. You can read more about the case in Tim’s own blogpost on PLF’s site.
Here’s the basic principle with these cases: just as the government can’t take your property (for public use) without just compensation, it can’t attach arbitrary regulations and fees. After all, if you own an acre of land and the government tells you you can’t do anything on it — be it run around or drain puddles or build – it might as well have “taken” it by eminent domain. And if it says you can do these things only if you give up some other entitlement you have — not necessarily money, but, say, the right to put up signs criticizing the local government – it has imposed an unconstitutional condition on your enjoyment of your property.
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