All Commentary
Tuesday, June 1, 1993

A Subtle Seizure

Private property should enjoy some protection against excesses by government.

Daniel F. McInnis is a member of the Georgetown Law Journal at the Georgetown University Law Center. This article was written as part of a fellowship at the Institute for Justice, a public-interest law firm in Washington, D.C.

Talk about birdbrained ideas. After Woodman, Wisconsin, resident Gene Luebker erected a birdhouse by his front window, local authorities objected. State legislators had designated Luebker’s property, along with 92 miles of nearby real estate, part of the protected Lower Wisconsin Waterway. No new structures in view of the river would be tolerated, including bird houses.

As Mr. Luebker and other property owners have discovered, state and federal zoning, historic preservation, and environmental regulations are decreasing private landholders’ ability to use their land. “Private” property means less today than in any other time of our Republic.

David Lucas learned this hard lesson when the South Carolina Beach Front Managment Act barred construction of two houses on his two coastal lots.

What makes Lucas different from the millions of other property owners who have had the use of their land restricted by government is that he sued and won. His claim was based on the “takings clause” of the U.S. Constitution’s Fifth Amendment.

“If we ignore the Constitution,” said Mr. Lucas, “then we will become a country ruled by men, instead of by the law.”

The framers of the Constitution understood well that the excesses of government had to be contained. Schooled in the English common law tradition that held that even the poorest hovel in Britain was protected from the uninvited entry of the King, they included the takings clause in the Constitution’s Bill of Rights. The clause prohibits government from taking private property except for a public purpose and then only if fair compensation is paid.

Applying the takings clause is difficult, however, when government stops short of seizing title or possession of property and instead restricts an owner’s use. The U.S. Supreme Court has been reluctant to broadly deny these “regulatory takings.” It was not until 133 years after the creation of our government that the Supreme Court in Pennsylvania Coal Co. v. Mahon first held that government action could rise to the level of a taking without an actual physical occupation of the property. The Court ruled that the owner of surface property could not use a Pennsylvania law to prevent mining under the property where the mining company had previously purchased all the necessary property rights to do exactly that. Justice Holmes wrote that “[t]he general rule . . . is, that while property may be regulated to a certain extent, if the regulation goes too far it will be recognized as a taking.”

But how far is too far? No acceptably consistent doctrine of regulatory taking has evolved. Justice Brennan, in a decision infamous to property rights advocates, admitted in Penn Central Transportation Co. v. City of New York that taking law was “essentially ad hoc.” While noting that the “Fifth Amendment’s guarantee . . . [was] designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,” the Court nonetheless found that New York City’s historic landmark laws could prevent the owners of the Penn Central Terminal from adding multiple stories on top of the existing building. Applying an ad hoc “standard,” the majority was able to decide that limiting the ability to increase the size of a building contravened no property right at all. For the good of the citizens of New York City, the owners of Penn Central had to keep the station as is without being compensated.

Personal Preference versus The Rule of Law

When courts are guided by uncertain rules, personal preference rather than the rule of law can control. In practice, over-riding public interest and deference to the legislative branch and its “police power” have become broad jurisprudential exceptions to the Fifth’s seemingly simple command.

Especially troublesome is the “nuisance” exception: the doctrine that the government does not have to pay compensation when it restricts land uses that harm others. Rather than locating the definition of nuisance in the common law or another restrictive basis, courts in the tradition of New Deal economic regulations allow legislators great deference in mandating what is and is not a nuisance. Property rights become whatever legislatures say they are.

The South Carolina Supreme Court, in reviewing Lucas’ victory in trial court, relied upon the state’s police power and reversed the lower court’s decision. Building close to the beach was a nuisance, since the Beach Front Management Act was designed to protect dune systems that serve as a storm barrier. Development on Lucas’ lot would endanger the coastline and lives and property, at least according to the South Carolina General Assembly. No compensation was owed under the “nuisance” exception.

Fortunately for Lucas, the U.S. Supreme Court disagreed. On the last day of the 1992 term, the Court ruled that the South Carolina government had indeed “gone too far.” Accepting the trial court’s finding that South Carolina’s law confiscated Lucas’ land so that there was no remaining economically viable use, the Court was willing to put the burden on the state to justify why it shouldn’t pay compensation. Thus, where 100 percent of the use of property is prohibited, the state must pay compensation unless it can prove that the potential use constituted a common law nuisance to other property owners.

Activities that constitute nuisances under the common law may be legally prohibited by harmed parties. In essence, the Court recognized that the state is merely protecting those rights when it prohibits those activities: “The individual whose nuisance is enjoined gets no compensation, however large his loss, because he had no right to that activity to begin with,” says Roger Pilon, the director of the Center for Constitutional Studies at the Cato Institute. Conversely, where no common law rights exist, government cannot prohibit without compensating those who bear the burden of the regulation. Common law rights rather than legislative preference limit the power of government to regulate property.

Lucas, however, is no revolutionary breakthrough for property rights. The decision creates a rule only for those laws which are so heavy-handed that an owner is left with “worthless” property. No doubt, future legislation will be crafted with this limitation in mind. Some uses will be specifically left to land owners. As Justice Blackmun pointed out in his dissent, Lucas could still use his property to “picnic, swim, camp in a tent, or live on the property in a movable trailer.” Courts still have to determine what exactly the phrase “all economically viable use” means.

Also left unresolved is the issue of how courts will view the extent of property interests. As every first-year law student learns, a piece of property can be compared to a “bundle of sticks” that can be divided into numerous interests including the right to possess, use, and transfer. The right to each of these interests can be held by one or separate owners. Likewise, land can be divided into parcels. What would have happened if the South Carolina government had denied Lucas the ability to build on only one of his lots? Lucas does not answer the question of how finely government can slice property interests and avoid the issue of whether all economically viable use has been taken.

In light of 50 years of New Deal era precedent, the Lucas decision moves toward protecting individual rights and limiting the role of government in the economic sphere. Government regulations on property, rather than having the presumption of validity, are held to a judicial standard of review that puts the onus on government to justify its actions.

No doubt even this minor burden on government in an admittedly rare case will cause dire concern among those who think that government should be able to burden property at whim. Their loss in the Supreme Court presages a new battle in the court of public opinion.

Opponents of a broad-based private property protection offer two policy arguments why the Supreme Court should not protect property owners like Lucas and Luebker. First, they present apocalyptic scenarios where all zoning regulation or building codes, no matter how beneficial, would be declared unconstitutional. Second, they complain that laws, like wetlands regulations, would not exist if property owners had to be compensated for their losses.

Courts are not going to declare all zoning unconstitutional anytime soon, unfortunately. Property rights advocates have more modest goals. Government should bear the burden of justifying all property regulations in terms of the general welfare, whether the reduction in value is one or 100 percent. The Lucas precedent should be expanded, and the standard by which to measure regulations should be the same as the common law of trespass and nuisance, which allow property owners to use their land as long as they don’t harm others. If government can’t justify a regulation on health and safety grounds, they can still take private land. However, they must pay the owner for his loss.

Can Wisconsin justify banning birdhouses? Many property regulations make little sense when viewed in terms of harm to the public rather than benefit.

Rent control may benefit renters, but allowing a homeowner to charge the going rate for his property harms no one in any way our legal tradition recognizes.

Zoning likewise may not always be an innocent public good. Requiring large lots for new housing may increase the value of real estate, but it purposefully prices out teachers, policemen, and other working people.

Historic preservation laws allow preservationists to benefit from property without having to purchase it. But replacing old buildings with new often revitalizes neighborhoods. Preservationists complain not because they are harmed by improved property, but because they will no longer be able to enjoy older structures for free.

Those who argue it would be disastrous to make government pay for land taken in the name of environmental protection are admitting that their goals would not pass muster if they had to be paid for by the polity.

If environmental protection is a public good that must be provided by the government, in all fairness, the public should bear the burdens of paying for it.

After untangling himself from bureaucratic red tape, Gene Luebker got to keep his birdhouse. But not satisfied, he erected a flagpole and invited the local Veterans of Foreign Wars and the National Guard over to raise the American flag. A red-faced attorney general quickly announced that flagpoles were not banned by state law.

The lesson is clear. Private property should enjoy some protection against excesses by government. The Fifth Amendment’s taking clause can justifiably provide that security for all Americans.