Lisa Moore, Esq.
Environmental Defense Fund
After all [if] a policeman must know the Constitution, then why not a planner?"(1)
Justice William Brennan
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Defending land use planners everywhere, Justice Stevens answered Justice Brennan by recounting the Courts own difficulty defining the limits and requirements the Constitution places upon laws regulating land use and asked, "How then can it demand that land planners do any better?"(2) Declining Justice Stevens invitation to throw in the towel, I attempt here to explain the body of notoriously confused law that officials acting to protect open space and environmentally sensitive land must follow.
In part one of this paper, I discuss the basis for the power to enact such protections, divide the challenges that may be brought against those protections under the Constitution into two analytically distinct categories, and examine those early challenges.(3) In parts two and three, I discuss the development of regulatory takings theory, the adoption of a more meddlesome standard of review for land use regulation, and suggest ways for land use planners to avoid challenges to those regulations. Finally, in part four, I discuss "takings" legislation, the true wildcard in the effort to protect open space and environmentally sensitive lands.
The Police Power
The relationship between the federal government and the states is defined in the Constitution. Under the Constitution, the federal government is a government of "enumerated" powers; that is, the Constitution specifically sets forth, or enumerates, the powers held by the federal government. The states, by contrast, are governments of "residual" powers which exercise powers contained in the Constitution that are not specifically reserved to the federal government. The authority of government to provide for the health, safety and welfare of its citizens, the so-called "police power," is a residual power held by the states.(4) It is this power that is the source of state, and where the state delegates the power, local authority to enact laws which aim to protect the health, safety and welfare of the community. Land use regulation, including laws which protect open space and environmentally sensitive land, are enacted in reliance upon this authority.(5)
There are two analytically distinct types of constitutionally-based challenges which may be brought against a law or regulation enacted in reliance upon the police power. In the first type of challenge, the property owner argues that the law at issue is beyond that power because the law does not further the public health, safety or welfare, and must therefore be struck. A property owner who argues that a land use regulation violates the Equal Protection Clause or the Due Process Clause of the U.S. Constitution or New Jersey Constitution is, at bottom, making this argument.(6)
In the second type of challenge, the property owner does not argue that the law itself is invalid per se, but rather argues that because the law so impinges upon his property rights the Constitution requires that he receive compensation if the law is to stand.(7) This type of challenge is distinct from the first type because it is not truly the law or regulation that is alleged to offend the Constitution, but rather the manner in which the government chose to exercise its power to enact that otherwise valid law (i.e., without paying compensation). This type of challenge is based upon the Takings Clause of either the U.S. Constitution or New Jersey Constitution.(8)
Due Process and Equal Protection Challenges
The Due Process Clause of the Fifth Amendment to the U.S. Constitution provides that no person shall be "deprived of ... property, without due process of law"(9) and the Equal Protection Clause guarantees individuals "the equal protection of the laws."(10) The New Jersey Constitution provides similarly worded protections.(11) In the realm of land use regulation, these provisions ensure landowners will not be bound by a law or regulation which does not protect the public health, safety, or welfare. Stated another way, without a valid police power justification for restricting the use of property or treating similarly situated property owners differently, government action is arbitrary and the Constitution will not tolerate impinging upon these individual rights.
In Village of Euclid v. Ambler Realty Co.,(12) the first challenge to a comprehensive land use regulation heard by the U.S. Supreme Court, the Court defined the limits of the police power by according great deference to the judgment of state and local officials. The plaintiff in Euclid alleged that a classic zoning statute which divided a town into use districts violated both his due process and equal protection rights. According to the Court, a plaintiff alleging that a land use regulation violated either clause had the burden of showing that the ordinance was "clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare."(13) By finding that a classic zoning statute failed to meet this test, the Court placed its seal of approval upon zoning as a land use planning device.
Euclid, then, set out a means-ends requirement that land use regulations must meet in order to survive due process and equal protection challenges. First, the regulation must have a valid, underlying public purpose grounded in the police power. Second, the regulation must be a reasonable way of achieving that valid purpose. In the cases following Euclid, the Court indicated that its test should be guided by a spirit of deference to the judgment of state and local officials. In accord with that call to deference, courts accept a wide range of goals as legitimate expressions of the police power, and give officials wide latitude in designing laws and regulations that will achieve those goals.(14) In general, courts rejected the invitation to become "super zoning boards" which would closely scrutinize land use decisions of state and local officials.(15)
Takings Challenges
While the right to hold private property is a central principle of American government, the exercise of that right has always been impressed with the obligation to refrain from using property in a manner which would harm neighboring landowners or the general public. Early interpretations of the Takings Clause of the Fifth Amendment, "...nor shall private property be taken for public use, without just compensation,"(16) reflected this obligation by limiting the application of the clause to actual government seizures of private property.(17)
Claims that government regulation of the use of property, even where a regulation caused a total or near total decline in economic value of that property, by contrast, were repeatedly rejected on the theory that the right to use property is not absolute, particularly if that use would cause harm to others or the public.(18) As a result, the concerns of courts and planners with the constitutionality of land use regulation were originally confined the two-part due process-equal protection inquiry: Does the law have a valid police power purpose, and does the law further that purpose?
The Supreme Courts 1922 decision in Pennsylvania Coal v. Mahon,(19) however, bluntly put an end to that certainty by accepting the proposition that a regulation adopted for a valid police power purpose could trigger the Takings Clause requirement of compensation even though no property was physically taken. Without much explanation, Justice Holmes ushered in the era of "regulatory takings" jurisprudence with the now famous warning: "While property may be regulated to a certain extent, if a regulation goes too far it will be recognized as a taking."(20) That is, a regulation that satisfied the Due Process and Equal Protection Clauses could have such a severe impact upon private property rights that compensation would be due the affected property owner if the regulation was to stand. Justice Holmes gave no further guidance to courts, land use planners, and other government regulators on how far would be considered too far under this novel legal theory.
Remedies for Successful Equal Protection, Due Process and Takings Challenges
In practical terms, Mahon and its progeny provided plaintiffs with another legal theory to advance when facing land use regulations perceived to be unduly burdensome. After Mahon, landowners who could have once only hoped to win a constitutionally-based challenge against a land use regulation under a due process-equal protection theory could sue under a takings theory with some chance for success.
While Mahon gave landowners another bow in their quiver, the remedies due the successful due process-equal protection and the takings plaintiff are quite similar. The victorious landowner suing on a due process-equal protection grounds will either see the law invalidated outright or secure an injunction that prohibits the government from applying the law to him.(21) In no case will he still be subject to that law. Under the Federal Civil Rights Act,(22) that landowner will also have a claim for actual damages sustained while the law or regulation was in effect.
The plaintiff who succeeds on a takings theory, on the other hand, may see the law stand and applied to him. Where a landowner has shown that a government regulation has taken his property, the government may either cease applying it to the plaintiff, or may apply it and pay compensation. Much like the successful due process-equal protection plaintiff, the successful takings plaintiff who sees the regulation lifted will be entitled to temporary damages for the time the law was applied to him.(23)
Early Cases and the Penn Central Test
In the years following Mahon, the Court reviewed regulatory takings without a coherent theory to guide its decisions. Eventually, however, a number of different factors emerged as touchstones in the Courts takings analysis. The Court would ask, for example, whether the government action could be characterized as authorizing a physical invasion of private property,(24) or whether the action could be more readily characterized as adjusting the "benefits or burdens of economic life to promote the common good."(25) Because the former were more akin to the physical appropriations of traditional takings doctrine, they were more likely to be characterized as a taking. The economic impact of the government action also emerged as a consideration in the inquiry, (26)as did the extent to which the action interfered with the property owners investment expectations with respect to the property.
In Penn Central Transportation Co. v. City of New York,(27) the Court reviewed the post-Mahon cases and clarified the approach it would take to regulatory takings cases. Drawing upon those early cases, the Court announced that the regulatory takings inquiry would require a fact-specific evaluation that considered the character of the government action, the economic impact on the property owner, and the extent of interference with the property owners distinct investment-backed expectations with respect to the property. No single factor would determine the outcome of a given case. These considerations shared the common focus upon the impact of the government action upon the property owner, rather than the focus upon the reasonableness of the law or regulation which characterized the Courts the due process-equal protection analysis.(28)
Evaluating Economic Impact and Expectations: Whats the Property Interest?
Property ownership is often conceptualized as a "bundle." Discrete property rights form separate strands which in the aggregate form the bundle, or the overall property interest. These distinct rights or strands have been described both as segments of a given parcel of property (e.g., one parcel divided into mineral rights, surface rights, and air rights) and as distinct actions that may be taken vis-à-vis that property (e.g., the right to possess, sell, devise, and exclude others from the property). In order to evaluate both the economic impact of a regulation and the nature of the landowners expectations with respect to a given parcel of property, a court must necessarily determine against what property interest that impact is to be measured. Should a court measure the economic impact of a regulation and a landowners expectations with reference to one strand or the entire bundle? The Court answered this critical question in Penn Central.
In Penn Central, New York City prohibited the plaintiff from constructing a 50-story office building atop Grand Central Station pursuant to the Citys historic preservation ordinance. The plaintiff argued that this action completely destroyed the economic value of his air rights, resulting in a taking for which compensation was due. Rejecting this claim, the Court held that "...taking jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated" but focuses upon "the nature and extent of the interference with rights in the parcel as a whole."(29) While the plaintiff in Penn Central might have been able to demonstrate a total economic deprivation on use if the Court focused upon his discrete "right" to build into the air, he could not demonstrate that the law had destroyed the value of the entire property involved.(30) In later cases the Court has affirmed this "whole property" rule.(31)
Consistent with this whole property rule, the Court in Penn Central considered not only the residual value of the property, but also the value of rights conferred upon the affected property owners by the preservation statute itself. The Court noted that transferable development rights ("TDRs"), which gave affected property owners the right to add density to other parcels or sell those rights to others, were valuable and should be factored into the equation.(32) After Penn Central, TDRs became an important method by which state and local governments could mitigate the economic impact of land use regulations, and help ensure that those regulations would not give rise to a taking.(33)
Like the overall economic impact, the expectations of the property owner are also considered with reference to the entire bundle of property rights. The Court in Penn Central, for example, based its finding in part upon the fact that the plaintiffs "primary expectation" with regard to the terminal had been fulfilled. That is, the owners expectations concerning the property had already been satisfied because he was putting the property to a profitable use.(34) The focus of New Jersey courts upon the remaining beneficial or economic uses held by the landowner, rather than the "rights" the landowner has ostensibly lost, is another way of asking whether a landowners expectations vis-à-vis the property have been fulfilled.(35)
Notably, the Supreme Court has not gone further to clearly set the criteria by which expectations should be judged. Does a landowner who purchases property that is subject to development restrictions have reasonable expectations to develop that property? What if, although the property had not been subject to a particular limitation, property of that kind was increasingly subject to regulation, such that limitations could be anticipated by a purchaser? In Bernardsville Quarry v. Bernardsville Borough,(36) however, the New Jersey Supreme Court answered some of these questions.
The quarry owner in Bernardsville Quarry was limited in his mining operations by a local ordinance enacted after he purchased the quarry. Rejecting his takings challenge, the court found that the quarry owners expectation to engage in unrestricted mining was not reasonable considering the fact that mining operations generally were subject to increasing regulation.(37) Because the concern underlying the consideration of expectations is primarily one of fairness, the approach of the New Jersey Supreme Court makes sense. Property owners who cannot be expected to anticipate a given regulatory restriction should have a better claim compensation than those property owners who purchased the subject property either knowing they were operating in a highly regulated field, or purchased property subject to a limitation at time of purchase.(38)
Development of (Not Quite) Per Se Rules: Regulations Authorizing Permanent Physical Invasions and Leaving No Economic Value
Although the Court in Penn Central did not elevate any one factor of the three-part test above the other, the Court would later carve out two circumstances under which a single factor could determine the outcome of a takings case. The Court announced the first per se rule in Loretto v. Teleprompter Manhattan CATV Corp.,(39) holding that a regulation which authorized a permanent, physical invasion of property would automatically trigger the Takings Clause requirement of compensation. In Loretto, the Court found that a New York law which required landlords to install a small cable box "took" plaintiffs property, entitling him to compensation. According to the Court, where the government action is of the character that it authorizes a physical invasion, a taking will be found without reference to the economic impact of that regulation, or the extent of its interference with investment expectations.(40)
The Court announced the second per se rule in Lucas v. South Carolina Coastal Council,(41) finding that where a regulation caused a total loss of economic value a taking would be found without reference to the other Penn Central factors. In Lucas, a South Carolina coastal protection law prohibited the plaintiff-developer from improving his coastal property. The Court announced that where the economic loss was total, the regulation would trigger the Takings Clause and require that compensation be paid.
Both of these bright line rules, however, came with broad exceptions. In Nollan v. California Coastal Commission,(42)the Court explained that a regulation that authorizes a permanent physical occupation of property as a valid condition to obtaining development permit would not fall within the Loretto per se rule. The justification for this distinction was that in the latter case, the property owner was obtaining a discernible quid pro quo from the government in the form of permission to engage in an activity within the governments power to restrict. Such cases would be judged according to the Penn Central three-part test.
And the Lucas Court itself announced an exception to its economic value rule, finding that if the restriction at issue could be said to be part of the title of the property by virtue of principles of the states law of property and nuisance, a total economic devaluation would not give rise to a taking.(43) The basic premise of this exemption is that, due to prohibitions found within state law, the right to engage in the proposed use of property never became part of the owners title. Because the property owner never had a right to engage in the activity barred by the regulation, he could not claim to have had that right taken.(44)
The Courts treatment of due process-equal protection challenges on the one hand, and takings challenges on the other, then, could be viewed as falling into two analytically distinct categories. The due process-equal protection cases focused upon the legitimacy of the government action, asking whether the land use regulation was enacted for a proper police power purpose, and whether the regulation furthered that purpose. A wide range of government purposes were found to be legitimate expressions of the police power, and courts accorded state and local officials wide latitude in designing laws and regulations to accomplish those valid objectives.
Takings cases, on the other hand, generally presumed that the government action was legitimate, and focused upon the impact of that government action upon the property owner. In other words, it was the impact upon the property owner that turned an otherwise legitimate government action into one that would be illegitimate unless accompanied by compensation. The takings inquiry balanced the character of the government action, the economic impact on the plaintiff, and the extent to which the action interfered with his reasonable, investment-backed expectations. When that inquiry showed the burden upon the landowner to be too great, government payment of compensation would be required if the regulation was to remain in effect.
In practical terms, only those regulatory takings cases that felt like the outright physical taking of property were likely to be successful. The first analogous case was posed by regulations that authorized the physical occupation of private property. Here, a taking likely would be found unless the landowner received some fairly direct quid pro quo from the government in exchange for bearing the burden of occupation. The second analogous case was posed by regulations that had the effect of totally destroying the economic use of a parcel of property. In this case, a taking likely would be found unless a review of states law of property and nuisance revealed that the owner did not actually possess the right to put his property to the prohibited use.
Whether based upon the Due Process and Equal Protection Clauses or upon the Takings Clause, a landowner seeking to overturn a land use regulation or obtain compensation for the burden on constitutional grounds had a difficult case to make. The landowner either had to show that the government had acted unreasonably by subjecting him to that regulation, or had to show that the impact of that regulation was significantly and especially burdensome.
While the Court would at times clearly maintain the distinction between the requirements of the Due Process and Equal Protection Clauses on the one hand and the Takings Clause on the other,(45) at times it would blur that distinction. So, in Penn Central, for example, Justice Brennan conducted a lengthy assessment of the purposes underlying the New York historic landmark law even though the plaintiff focused his attack of that law under a taking, rather than due process-equal protection theory. Many other takings cases contained a similar inquiry into the validity of the government action. Finally, without explanation, the Court absorbed the due process-equal protection inquiry into a new formulation of the takings test in Agins v. City of Tiburon.(46)
While the new formulation adopted in Agins was conceptually confusing, it initially did not expand the likelihood that a government action would be found to be a taking. That is, it did not expand potential government liability. Drawing upon the rule in Agins, however, the Court in later cases deviated from the traditional rule of according deference to police power regulations, adopting a somewhat more meddlesome standard of review. In effect, those cases increased the chances that a government act would be deemed a taking, and hence expanded potential government liability.
The Agins Test
In Agins, the plaintiff argued that a municipal open space zoning ordinance was a taking, entitling him to compensation. Rejecting that claim, the Court formulated a new takings test holding that an ordinance would not give rise to a taking unless the ordinance "does not substantially advance legitimate state interests ... or denies an owner economically viable use of his land." (47) The Court cited a due process case for the first part of its test,(48) and a takings case for the second. (49) According to the first part of this new test, an invalid exercise of the police power could trigger the Takings Clause requirement of compensation.
Apart from the cloud the Court cast over the status of its three-part Penn Central test, the Courts new formulation was perplexing because made little sense conceptually.(50) The theory that an invalid exercise of the police power could be sustained if the government paid compensation was illogical.(51) How could the government pay to take an arbitrary action that would by definition be unconstitutional under either the Due Process or Equal Protection Clauses? In effect, the Court seemed to be saying that officials could act beyond their power if they were willing to pay.
While conceptually confusing, the Courts incorporation of the due process-equal protection inquiry into its regulatory takings analysis initially had little practical impact. The Court accorded the same deference to the judgment of government officials when evaluating the reasonableness of land use regulation in a takings case as they would in a due process or equal protection case. Since the remedies accorded to the successful due process-equal protection plaintiff were almost identical to those accorded the takings plaintiff,(52) land use planners were not faced with new potential liability.
In two subsequent cases, however, the incorporation of the due process-equal protection inquiry into takings analysis actually had the effect of expanding potential government liability. With no precedential support, the Court would later find that the Takings Clause required closer scrutiny of the reasonableness of land use regulation than was required under the Due Process or Equal Protection Clauses. Today, while the Court still looks upon the purposes to be served by government police power regulations with deference, it will more carefully scrutinize whether a regulation will give effect to that purpose. That is, the Court will require that the regulation bear a close nexus to the problem it is meant to address both in kind (does it address the specific type of problem) and in degree (does it address the problem is a way proportional to that problem).
Heightened Scrutiny for Land Use Regulations
In Nollan v. California Coastal Commission,(53) the plaintiffs were required by the California Coastal Commission to grant a public easement across their beach front property as a condition for permitting the development of a three-story house to replace their small, existing bungalow. The Commission justified the easement condition primarily upon the rationale that the construction of the new home would impair the ability of the public to view the beach. Declining to accord deference to the judgment of the state body, the Court found that while the purpose of the condition was valid, the condition worked a taking because it "utterly failed" to achieve that purpose. According to the Court, the condition did not bear a nexus to the purpose it sought to achieve because while it would improve the public the view of the beach from the beach, would not improve the view from the landward side of the plaintiffs home.(54)
The Court introduced the second novel element of its heightened review in Dolan v. City of Tigard.(55) Reaffirming Nollans rule demanding that regulations and conditions designed to further a proper police power purpose be of the same kind or nature of the problem meant to be addressed (e.g., a problem with visual access addressed by a condition improving visual access), the Dolan Court added that those conditions must also be 'roughly proportional to the harm those conditions are meant to ameliorate.
In Dolan, a hardware store owner sought a permit to double the size of her store located in a busy business district and abutting a local stream. The local land use board conditioned the plaintiffs permit on two things. First, the plaintiff would not be permitted to construct any structure in the floodplain portion of her property, and would be required to dedicate that property to the city for inclusion within its public greenway system. The land use board based this requirement upon the finding that the expansion of the plaintiffs store and parking lot would increase stormwater runoff from the property, raising potential flooding problems should development be permitted to encroach upon the stream. The dedication of that property to the city would further the protection of open space, a stated purpose of its local land use law.
Second, the plaintiff would be required to dedicate a small portion of property on the periphery of the floodplain property for a bicycle path. This requirement was based upon a city-wide transportation study documenting traffic congestion in the business district which showed that walking and biking paths held the potential to reduce that congestion. The land use board based the imposition of this condition upon a specific estimate of the additional congestion which would be caused by the expansion of the plaintiffs store, and the finding that the bike path could lessen that congestion.
While the Court found that both conditions were related in kind to the purposes they sought to achieve and so satisfied Nollan, it found that both conditions still gave rise to a taking. First, while the Court agreed that a bicycle path would generally serve the purpose of lessening traffic congestion in the city, it disputed whether the dedication requirement in the plaintiffs case would further that purpose. Because the board had not made a specific finding that the additional traffic caused by the expansion of the plaintiffs store would be lessened by the construction of a bicycle path, that condition worked a taking. According to the Court, while local land use boards are not required to make "precise mathematical calculations" to support such conditions, they must make "some effort" to quantify findings in support of such dedications.(56)
Second, while the prohibition upon placing structures within the floodplain portion of the property was related in degree to reducing the potential flooding which would otherwise result from the expansion of impervious surfaces on the site, the Court found that the condition went too far when it required the plaintiff to dedicate that property to the city for use in its public greenway system. The dedication feature of the condition went too far, according to the Court, because the land use board had made no findings concerning the impact the expansion would have upon available open space in the city. Without such a finding, the only problem arising from the plaintiffs expansion to be addressed by the board was the potential flooding problem; a problems that was adequately addressed by the prohibition on building in the floodplain. Rejecting the dedication portion of the condition, the Court held that such conditions must be 'roughly proportional to the problem they are meant to address in order to avoid takings liability.(57)
Constitutional Challenges to Land Use Regulation After Agins, Nollan, and Dolan
Agins, Nollan, and Dolan essentially rendered due process-equal protection challenges to land use regulations obsolete. In the wake of these cases, a landowner challenging the reasonableness of a land use regulation has an easier case to make under the Takings Clause because the courts will more closely scrutinize the land use restriction in a takings cases. Because the remedies due the successful due process-equal protection and takings challengers are essentially the same, property owners have no reason to pursue a tougher to win due process-equal protection challenge. As a result, today the landscape of challenges to land use regulation based upon the Constitution should be dominated by the Takings Clause.
Although a confused area of the law, a number of clear rules can be discerned from takings cases. First, regulations that feel like the outright physical taking of property are most susceptible to successful landowner challenge. The first analogous case is posed by regulations that authorize the physical occupation of private property. These cases are decided without reference to the economic impact of the limitation or the investment expectations of the landowner. So, in Loretto, a taking was found even though the installation of the cable box had little or no effect upon the economic value of the apartment building. Such regulation can survive legal challenge so long as the occupation is authorized as a valid condition to development that is tailored to harm it is meant to address. That is, the condition should reveal that the landowner has received some fairly direct quid pro quo from the government in exchange for bearing the burden of occupation.
The second analogous case is posed by regulations that have the effect of totally destroying the economic use of the property. Courts engage in this inquiry by viewing the entire unit of property owned by the landowner, and the remaining uses to which the property may be put. Tradeable development rights will also be considered in this analysis. If the property owner may continue to put the property to productive use, or receives valuable property rights as part of the regulatory program, he is unlikely to win a takings claim. And, even if a regulation denies the owner of all use, he may lose his takings claim if the state law of property or nuisance would have prohibited that use. In the rare case that deprivation in use is total, and has no justification in state law, a takings plaintiff will be successful.
The Court in Agins, in a decision based upon a faulty legal premise, specifically incorporated the due process-equal protection inquiry into the reasonableness of land use regulation into this takings analysis. The premise that a land use regulation beyond the police power of state or local officials to enact could give rise to a taking made little sense. Arbitrary actions are simply beyond the power of the government, and paying to take such an action does not transform an unconstitutional action into a constitutional one. Nollan and Dolan at once reinforced the presence of this inquiry in takings cases, and ratcheted up the level of scrutiny courts would be required to lavish on the purposes and scope of land use regulations.
In the wake of those cases, land use planners must be prepared to demonstrate that a given land use regulation is both related in nature to the problem meant to be addressed, and that the regulation is a roughly proportional way of tackling that problem. In order to allow courts to conduct this more careful inquiry, land use planners should base their decisions upon some rough empirical demonstration that the regulatory imposition will actually further the purposes it sought to achieve. Ultimately, these cases do not severely limit the ability of state and local officials to regulate land use. Rather, they require that land use planners more carefully document the rationale underlying limitations on the development of land.
Precisely because the Constitution affords officials relatively wide latitude to protect open space and environmentally sensitive lands, proposals that would legislatively reduce or eliminate that latitude have become commonplace.(58) President Reagan brought the issue to the national agenda in 1988 with the enactment of a "takings" executive order. A now oft-quoted passage from Order and Law: Arguing the Reagan Revolution, A First Hand Account by Charles Fried, the U.S. Solicitor General at that time, indicates both the origins and the purposes guiding the effort to enact "takings" legislation:
"... Attorney General Meese and his young advisors -- many drawn from the ranks of the then fledgling Federalist Societies and often devotees of the extreme libertarian views of Chicago law professor Richard Epstein -- had a specific, aggressive, and it seemed to me, quite radical project in mind: to use the Takings Clause of the Fifth Amendment as a severe brake upon the federal and state regulation of business and property. The grand plan was to make government pay compensation for a taking of property every time its regulations impinged too severely on a property right -- limiting the possible uses for a parcel of land or restricting or tying up a business in regulatory red tape. If the government labored under so severe an obligation, there would be, to say the least, much less regulation."
Bearing resemblance to the Constitution in name only, the "takings" legislation sparked by this effort would take us where the courts have refused to go by requiring the public to pay property owners where regulations have a small impact on the overall property interest at issue, irrespective of what the property owner knew when he purchased the property. There are two basic types of takings legislation: assessment and compensation.
Assessment Legislation
As the name suggests, assessment bills require the government to conduct analyses of whether a law or regulation may work a taking under the Fifth Amendment as a prerequisite to enacting the regulation. Typical assessment proposals require the government to study whether the limitation is likely to effect a taking, alternatives to the regulation that would have a less adverse impact on private property rights, and estimate the cost of compensating property owners. Many proposals allow the resulting agency analyses to be challenged in court for noncompliance with the standards set forth in the law.
The structure of assessment legislation appears to be patterned after the National Environmental Policy Act ("NEPA").(59) Like assessment legislation, NEPA is a short statute that requires the government to evaluate the impact of its actions, and which opens those evaluations up to judicial challenge. Unlike assessment legislation, however, NEPA is not an empty, abstract study requirement because it asks the government to assess the environmental impact of a specific government action or project. Assessment legislation, by contrast, is not triggered by the application of a specific rule to a specific property owner; rather, it is triggered by promulgation of a general rule. Because the question of whether or not a given regulation will effect a taking requires a fact specific inquiry into the impact of the regulation upon a specific and unique property interest, it is unlikely that a takings assessment would ever uncover useful information. Instead of providing that information, takings assessment legislation appears to be designed to offer landowners a means by which to block laws and regulations that protect the public health and safety.
Compensation Legislation
Compensation legislation requires the government to pay landowners any time a limitation on land use diminishes the value of land by a certain percentage.(60) Many proposals give the landowner the option of requiring an outright government purchase if the devaluation exceeds 50 percent. The main innovations of compensation legislation is that the impact of a given land use regulation is measured only against the limited portion of property, and landowner expectations are not considered. It is these innovations which render compensation bills such a costly proposition(61) and ensure that taxpayers would not get the benefit of all the government actions which may have increased the value of the property at issue.
Both of the "takings" bills pending in the 1996 Congress (S. 605 and H.R. 925), for example, would require the taxpayers to pay landowners where the landowner can show that a single limitation devalued a limited part of the property by some small percentage, and do not consider whether the landowner purchased property already subject to a limitation. Under both of these bills, the owner of a 90 acre parcel of property who is permitted to build a shopping center and parking lot on 80 acres, but not permitted to develop 10 acres of wetland on that property would be owed compensation because devaluation would only be measured against the 10 acre wetland parcel. By focusing upon one government rule (the wetland limitation) and a discrete part of the overall property (the 10 acres of wetland) these proposals fail to consider the extent to which other government actions may have increased the value of that overall 90 acre parcel. Taxpayer givings like a new interchange near the shopping center or subsidized flood insurance to the landowner, which greatly increase the value of that property, are not figured into the equation under "takings" proposals. (62)
"Takings" proposals would not only cause landowner windfalls at the taxpayers expense, but they would operate to the disadvantage of precisely those individuals that have become the rhetorical justification for adopting an extra-Constitutional takings rule. Proponents of "takings" legislation argue that a takings rule is necessary to protect the "little guy" from an overzealous government. They argue that if the government faces liability each time it regulates, it will be far less likely to regulate, reducing the burdens currently placed on small landowners. But land use regulations like those protecting open space and environmentally sensitive land benefit the overwhelming majority of small property owners in the United States.
Homeowners, the "little guys" for whom the proponents of takings legislation claim to speak, make up 75 percent of the total number of private property owners in America but hold only 2 percent of privately held land. That means that your typical small property owner owns some land in connection with his home. Beyond the construction of a home, this property owner does not seek to "do" anything with his land. That is, he does not take any action that would trigger the right to payment under a compensation bill. Actually, according to economic literature, land use controls and limitations maintain or increase the value of this homeowner land.(63)
By contrast, 3 percent of total private property owners in America--generally large real estate development, mining, timber and agricultural interests--own over 80 percent of private land in the U.S. These landowners, rather than the "little guy," are affected by limitations on land use and, as a result, would be entitled to payment under a compensation bill. As government budgets for paying these large landowners run dry, agencies will face the choice of requesting more federal dollars to enforce the law, or not enforcing the law at all. Despite the rhetoric of "takings" groups, small landowners and the public will be left to pay the price, whether in the form of increased taxes or lower property values.(64)
The Constitutions property protections are designed to ensure that property owners are not unfairly burdened by government actions. In keeping with that concern, courts ask whether a given government restriction is a fair and reasonable exercise of the police power. So long as a given land use restriction is related in kind and degree to the problem meant to be addressed, the restriction will likely be regarded as a reasonable exercise of that power, and will survive constitutional challenge. And, even when that restriction is itself a reasonable exercise of that power, courts will still ask whether it is fair to ask a particular landowner to bear the burden of that restriction. Only in the unusual case where that restriction leaves the property owner with no economic use of the property, or causes the property owner to suffer a physical invasion of his property, may the Constitution require that compensation be paid.
The Constitutions carefully drawn protections are designed to balance the need for laws and regulations which preserve and protect the natural environment and our communities and the individuals right to hold private property. "Takings" legislation would upset this careful balance, elevating the interests of a small number of private property owners above the interests of most private property owners and the community at large in protecting the environment and the quality of life.
2. First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 340, n. 17 (1987)(Stevens, J., dissenting).
3. First Amendment challenges to land use regulations are beyond the scope of this chapter because those regulations will rarely implicate the protection of open space or environmentally sensitive land. For a discussion of the limitations the First Amendment places upon the exercise of the police power see Schad v. Borough of Mount Ephraim, 452 U.S. 61 (1981)(local prohibition of live entertainment violated First Amendment); Young v. American Mini Theatres, Inc., 427 U.S. 50 (1976)("anti-skid row" ordinance which prohibited the concentration of adult entertainment establishments and related uses did not violate the First Amendment); Bell v. Stafford Tp., 110 N.J. 384, 541 A.2d 692 (1988)(prohibition on billboards); State v. Miller, 83 N.J. 402, 416 A.2d 821 (1980)(restrictions on billboards); Burlington Assembly of God. v. Zoning Board, 238 N.J.Super. 634, 570 A.2d 495 (Law Div. 1989)(restriction on construction of radio tower).
4. See Lawton v. Steele, 152 U.S. 133, 136 (1893); Roselle v. Wright, 21 N.J. 400, 122 A.2d 506 (1956).
5. See, e.g., Agins v. City of Tiburon, 447 U.S. 254, 262 (1980)(open space preservation is a legitimate government goal and within the police power of the state); Texas E. Transmission Corps. v. Wildlife Preserves, Inc., 48 N.J. 261, 268; 225 A.2d 130 (1966)(natural resource conservation is a legitimate government goal and within the police power of the state). The New Jersey Constitution explicitly recognizes that land use regulation is within the police power of the state, and authorizes the state to delegate this authority to municipalities. n.j. const.1947, Art. 4, sec. 6, par 2. New Jerseys Municipal Land Use Law ("MLUL"), N.J.S.A. 40: 55 D et seq. contains both this delegation and sets forth the basic rules within which municipalities must exercise this delegated power.
6. Challenges to local land use regulations based upon the argument that the local action is beyond the authority delegated to the local body under MLUL, or is otherwise preempted by state legislation, are based upon the different premise that the local municipality has overstepped its authority vis-à-vis the State, not the Constitution. See, e.g., Crow-New Jersey 32 Ltd. v. Township of Clinton, 718 F. Supp. 378 (D. N. J. 1989)(ordinance excluding steep slopes and wetlands from FAR calculation struck on ground that MLUL required FAR calculation to consider total area of the site); New Jersey Builders Association v. Bernards Township, 108 N.J. 223; 528 A.2d 555 (1987) (requirement that developer pay pro rata share of municipalitys $20 million road improvement plan beyond authority granted to municipality under MLUL). While a successful challenge based on this theory would result in the invalidation of the ordinance, the State could potentially step in and exercise the power impermissibly exercised by the local municipality. I focus here upon the challenges to land use regulation based upon the Constitution which may place regulation beyond the authority of any government body, or where that regulation must be accompanied by compensation to be sustained.
7. The state may, of course, statutorily require that landowners obtain payment for certain regulatory restrictions. New Jerseys MLUL provides such a right to payment in the case where land is reserved for public use by an official map or master plan. N.J.S.A. 40: 55 D-44. See Lomarch Corp. v. Mayor & Common Council of the City of Englewood, 51 N.J. 108, 237 A.2d 881 (1968). Note, however, that temporary moratoria on development have been distinguished from reservations, and sustained in the face of takings challenges. See, e.g., Tocco v. New Jersey Council on Affordable Housing, 242 N.J. Super. 218, 576 A.2d 328 (App. Div), cert. denied, 122 N.J. 403, 585 A.2d 401 (1990), cert. denied, 111 S. Ct. 1389 (1991); Orleans Builders & Developers v. Byrne, 186 N.J. Super. 432, 453 A.2d 200 (App. Div. 1982); Cappture Realty Corp. v. Board of Adjustment of Elmwood Park, 133 N.J. Super. 216, 336 A.2d 30 (App. Div. 1975).
8. Many commentators have noted the differences between the two inquiries. See, e.g., John D. Echeverria, The Takings Issue and the Due Process Clause: A Way Out of a Doctrinal Confusion, 17 VT. . . L. Rev. 695 (1993); Jerold S. Kayden, Land-Use Regulations, Rationality, and Judicial Review: The RSVP in the Nollan Invitation (Part I), 23 Urb. Law. 301 (1991); William B. Stoebuck, San Diego Gas: Problems Pitfalls and a Better Way, 25 J. Urb. & contemp. L. 3 (1983); Ross A. Macfarlane, Note, Testing the Constitutional Validity of Land Use Regulations: Substantive Due Process as a Superior Alternative to Takings Analysis, 57 Wash. L. Rev. 715 (1982).
9. U.S. const. amends. v, xiv.
11. Because the Fourteenth Amendment to the U.S. Constitution applied the Bill of Rights, including the Due Process, Equal Protection and Takings Clause guarantees, to citizens of the states, see Chicago, Burlington & Quincy Ry. v. Chicago, 166 U.S. 26 (1896), a plaintiff raising a constitutional challenge to a state or local land use law may allege that the law violates the U.S. Constitution and/or the state constitution where the state has provided similar protections. While New Jersey courts are bound to apply the pronouncements of the U.S. Supreme Court to claims based upon the U.S. Constitution, they are not bound to apply that law to claims based solely upon the New Jersey Constitution. This could result in the confusing situation where similarly worded provisions would be interpreted under different standards.
As in many states, however, New Jersey courts generally apply the U.S. Supreme Court interpretations of the U.S. Constitution when passing upon claims based upon practically identical provisions of the N.J. Constitution. As a result, U.S. Supreme Court interpretations are usually followed by New Jersey courts in cases based entirely upon the N.J. Constitution. See, e.g., Gardner v. New Jersey Pinelands Commission, 125 N.J. 193, 205, 593 A.2d 251, 257 (1991); Littman v. Gimello, 115 N.J. 154, 161, 557 A.2d 314, 317, cert. denied, 493 U.S. 934 (1989). The one notable exception to this general rule is in the interpretation of the Equal Protection Clause, where the New Jersey Supreme Court applies more stringent standards to claims brought under the New Jersey Constitution. Compare Southern Burlington County NAACP v. Township of Mount Laurel, 67 N.J. 151, 336 A.2d 713, cert. denied and appeal dismissed, 423 U.S. 808 (1975)(Mount Laurel I); Southern Burlington County NAACP v. Township of Mount Laurel, 92 N.J. 158, 456 A.2d 390 (N.J. 1983)(Mount Laurel II) with Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252 (1977).
14. Nectow v. Cambridge, 277 U.S. 183 (1928)(successful due process challenge to zoning ordinance which prohibited commercial uses on a potion of parcel owned by landowner where remainder property and all surrounded property permitted such use); Gorieb v. Fox, 274 U.S. 603 (1927)(setback ordinance did not violate equal protection or due process clauses); Zahn v. Board of Public Works, 274 U.S. 325 (1927)(ordinance restricting use of property for residential purposes does not violate the equal protection or due process guarantees).
15. New Jersey courts conduct a similar deferential means-ends inquiry. See, e.g., Pascack assoc.n. Ltd. v. Mayor and Council of the Township of Washington, 74 N.J. 470, 379 A.2d (1977); Bow and Arrow Manor, Inc. v Town of West Orange, 63 N.J. 335, 307 A.2d 563 (1973). But see Sheerr v. Evesham Township, 184 N.J.Super 11, 38-50, 445 A.2d 46, 59-67 (Law Div. 1982) where the superior court more closely scrutinized the proffered environmental purposes for a zoning restriction.
16. U.S. const. amend. V, XIV. The New Jersey Constitution similarly provides "[private property shall not be taken for public use without just compensation." 1947 n.j. const. art. 1, P 20. The power to take property granted to the government in the Fifth Amendment is referred to interchangeably as the power of eminent domain and the power of condemnation. When the government moves to exercise this power, it institutes a legal action called a condemnation action. The term "inverse condemnation" refers to legal action which may be brought by a property owner who alleges that although the government has nott instituted a condemnation action, it has de facto condemned property. An inverse condemnation action allows the affected landowner to sue to force the government to formally condemn the property and pay the landowner compensation. See United States v. Clarke, 445 U.S. 253, 255-258 (1980); N.J.S.A. 20:3-1 et. seq., the Eminent Domain Act of 1971.
17. The proposition that the government should pay compensation even for the direct physical takings of private property was not commonly accepted in colonial or revolutionary America. Uncompensated takings of private property comported with the prevalent republican ideology of that time which emphasized the common good over individual rights, and were common in that time period. The adoption of the Fifth Amendments Takings Clause reflected the limited success of the competing liberal ideology which was born of a distrust of legislative power and its potential to impinge upon individual rights. Historical evidence, however, supports the view that the clause was intended to be limited to direct, physical government takings. See William M. Treanor, The Origins and Original Significance of the Just Compensation Clause of the Fifth Amendment, 94 Yale L. J. 694 (1985).
18. See, e.g., Hadacheck v. Sebastian, 239 U.S. 394 (1915)(ban on brick making to protect encroaching residential property owners which greatly devalued brickyard not a taking); Mugler v. Kansas, 123 U.S. 26 (1896)(prohibition on sale of alcohol which rendered brewery worthless not a taking); Commonwealth v. Algar, 7 Cush. 53 (Mass. 1833)(state law prohibiting construction of wharf in Boston Harbor did not take property of waterfront owner by devaluing that property); Coates v. The City of New York, 7 Cow. 585 (New York 1827)(city ordinance prohibiting burial of dead did not take property bound by private contract for use as a cemetery).
19. 260 U.S. 393 (1922). The first New Jersey case to find that a zoning regulation enacted for environmental purposes gave rise to a taking was Morris County Land Improvement Co. v. Township of Parsippany-Troy Hills, 40 N.J. 539, 193 A.2d 232 (1963). In Morris County Land, the court found that a zoning statute which prohibited the use of a 1500-acre swamp for residential or urban development, but did allow certain less intensive uses, gave rise to a taking. The case is no longer good law in New Jersey. See, e.g., AMG Assoc. v. Township of Springfield, 65 N.J. 101, 112, n.4, 319 A.2d 705, 711, n. 4 (1974); Gardner, 593 A.2d at 261.
21. The former remedy is given where the property owner has succeeded in a "facial" challenge to the law; that is, he has demonstrated that the law is unconstitutional on its face, in every possible application. The latter remedy is given where the property owner has succeed in an "as applied" challenge to the law; that is, although the law may be generally constitutional, as applied to him in a given factual circumstance, it is not. In an as applied challenge, the law is left on the books, but no longer applied to the property owner.
22. 42 U.S.C. 1983 provides: "Every person, who under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory of the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress." In Monell v. Department of Social Services, 436 U.S. 658 (1978), the Court held that municipalities are "persons" for the purpose of 42 U.S.C. 1983.
23. First English, 482 U.S. 302.
24. United States v. Causby, 328 U.S. 256 (1946)(government authorized flights destroying its use as a chicken farm characterized as a direct use of plaintiffs land and a taking).
26. See Goldblatt v. Town of Hempstead, 369 U.S. 590, 82 S. CT. 987 (1962)(ordinance which prohibited further mining of land to protect groundwater not a taking); Armstrong v. United States, 364 U.S. 40 (1960)(governments total destruction of materialmans lien in property a taking).
28. See, e.g., Goldblatt, 369 U.S. 590 (maintaining the distinction between the due process-equal protection and takings inquiry); Pappas v. Board of Adjustment, 254 N.J.Super. 52, 603 A.2d 65 (App. Div. 1992)(maintaining the distinction between the due process and takings inquiry).
29. Penn Central, 434 U.S. at 130.
31. See, e.g., Concrete Pipe & Products, Inc. v. Construction Laborers Pension Trust, 113 S. CT. 2264 (1993); Keystone Bituminous Coal Assoc.n v. DeBenedictis, 480 U.S. 470, 498-499 (1987). New Jersey courts follow this rule. See, e.g., Gardner, 593 A.2d at 260; American Dredging Co. v. Department of Environmental Protection, 161 N.J. Super. 504, 514, 391 A.2d 1265, 1270 (1978). For an early New Jersey case which took a narrow view of property see AMG Associates, 319 A.2d 705.
32. Penn Central 434 U.S. at 137. In Gardner, the New Jersey Supreme Court relied upon Penn Central to find that the development credits which were part of the Pinelands regulatory scheme provided offsetting benefits which should be considered when evaluating the economic impact of the program upon individual landowners. Gardner, 593 A.2d at 261.
33. For a review and analysis of TDR programs see James T.B. Tripp and Daniel J. Dudek, Institutional Guidelines for Designing Successful Transferable Rights Programs, 6 Yale J. on Reg. 2 (1989).
34. For a review and analysis of TDR programs see James T.B. Tripp and Daniel J. Dudek, Institutional Guidelines for Designing Successful Transferable Rights Programs, 6 Yale J. on Reg. 2 (1989).
35. See Gardner, 593 A.2d at 260 and cases cited therein. So, for example, in ruling that a local ordinance which placed limitations on mining did not give rise to a taking, the New Jersey Supreme Court was persuaded by the fact that the property owner could put the property to a number of existing profitable uses. Bernardsville Quarry, 608 A.2d at 1387-1390.
37. Id. at 1387-1390. The superior court strayed from the reasoning of the New Jersey Supreme Court in Moroney v. Mayor and Council, 268 N.J.Super. 458, 633 A.2d 1045 (App. Div. 1993). In Moroney, the plaintiff purchased two noncontiguous lots, and subsequently improved and sold one of those lots. He then applied for a hardship variance to build on the second, undersized lot. The court held that the denial of that variance gave rise to a taking even though the zoning restriction was in place when he purchased the lot, and the prior owner had actually been denied the variance the plaintiff was seeking. The court seemed to apply the principle of New Jersey statutory land use law which holds that subsequent purchasers may apply for a hardship variance even if a prior purchaser had been denied a variance to its takings analysis in finding that the landowner could reasonably expect to develop the property in question. It is difficult to see why equity would demand that a landowner who purchased a restricted piece of property, and paid a price which reflected that limitation, should receive an award of compensation when his speculative expectations are upset.
38. See, e.g., Ciampitti v. United States, 22 Cl. Ct. 310 (Ct. Cl. 1991)(landowner knowledge of regulatory restrictions at time of purchase basis for rejection of takings claim). For an in depth discussion of this element of the Courts takings analysis see Daniel R. Mandelker, Investment-Backed Expectations in Taking Law, 27 Urb. Law. 2 (1995).
40. See also Kaiser Aetna v. United States, 444 U.S. 164 (1979); Bernardsville Quarry, 608 A.2d at 1382 (citing Lorettos per se rule); Littman, 557 A.2d at 318.
43. Lucas, 112 S. CT. at 2901.
44. Interwoven through many regulatory takings cases is the premise that the government will not owe compensation where the regulation at issue is designed to prevent harm. This 'harm preventing rationale would relieve the government of liability even where challenged action totally devalued a portion of property, and was relied upon by the Court in many early decisions. See supra note 18. This same rationale is relied upon by New Jersey courts. See, e.g., Bernardsville Quarry, 608 A.2d at 1384; Usdin v. Environmental Protection Department, 173 N.J.Super. 311, 329, 414 A.2d 280, 296 (a property owner "has no absolute and unlimited right to change the essential natural character of his land so as to use it for a purpose for which it was unsuited in its natural state and which injures the rights of others").
Although the Court in Lucas attempted to disclaim this reasoning, the "nuisance exception" to its per se rule merely recreates the harm preventing rationale. While the invocation of nuisance law as a means of sustaining open space and environmental regulation in the face of takings challenges has a major drawback (direct causal proof is often required to demonstrate that a particular activity is a nuisance and may often be absent in an environmental case), it has positive elements. Statutes, for example, are often relied upon by courts to determine whether a given act is a nuisance. Restatement (Second) of Torts 821 B(2)(b)(1977). The Court acknowledged this element of nuisance law when it noted that the extent of those state-based limitations were not frozen in time, but rather could evolve as "changed circumstances and changed knowledge may make what was previously permissible no longer so." Lucas, 112 S. CT. at 2901. Notwithstanding the Courts attempt to carve out this per se rule, it would appear that a regulation which prohibits nuisance-like conduct, as defined by the common law or statute, which leaves property devoid of all economic use would still fail to trigger the right to compensation.
45. See, e.g., Goldblatt, 369 U.S. 590.
47. Id. at 260. The landowner in Agins had purchased five acres of undeveloped land surrounding San Francisco Bay with the intention of building townhomes. After purchase, the local government adopted a zoning statute restricting the development of the property to five residential units and open space. In denying plaintiffs takings claim, the Court found that open space preservation is a legitimate exercise of the police power, and that the zoning restriction had not totally devalued plaintiffs land. Id. at 262.
49. Penn Central, 438 U.S. at 138.
50. Both U.S. Supreme Court and New Jersey courts rely upon both the Penn Central and Agins tests, often within the same decision. See, e.g., Gardner, 593 A.2d at 257-261.
51. In fact, the "public use" limiter in Takings Clause prohibits the government from using its authority to take for an arbitrary purpose. Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984).
52. See discussion supra text accompanying notes 21-23.
54. In finding a taking, the Court made two observations worth noting. First, the Court conceded that the Commission could refuse the Nollans a permit to construct a larger home without triggering the takings clause (the Nollans after all, already had a home on the property). Second, because it could refuse the permit outright, the Court found that the Commission could place conditions upon the permit designed to achieve the purposes which would be served by an outright denial. So, the Court illustrated, the Commission could require the Nollans to construct a permanent viewing station on their property without triggering the takings clause; it could require density, height and fencing restrictions. It could not, however, impose conditions that bore no relation to the harm the Commission was trying to address. Id. at 835.
58. The U.S. House of Representatives passed a "takings" bill (H.R. 925) in March, and a broader "takings" bill (S. 605) is currently pending in the Senate. Senator Scott of New Jersey introduced a state "takings" bill in 1994, which failed in committee. A compensation bill (S.B. 1935) and assessment bill (A.B. 2106) are currently pending in New Jersey. In 1995, 39 states considered over 90 "takings" bills, and eleven states enacted some form of "takings" legislation. Although some state legislatures have enacted "takings" measures, voters have rejected such proposals when put to a direct vote. This past November, for example, Washington voters rejected a compensation referendum by a 60%-40% margin. Last year, Arizona voters rejected an assessment bill by the same margin.
60. While nearly all compensation bills define property as in terms of interests in land, the Senate legislation (S. 605) defines property broadly to include any interest understood to be property.
61. A Congressional Budget Office estimate of the cost of a far more restrictive compensation bill (H.R. 1330) put the figure at between $10 to $45 billion. Unlike S. 605 and H.R. 925, H.R. 1330 would have only applied to wetland rules, and measured devaluation by reference to the entire piece of land owned. The cost of current proposals, lacking as they do these limitations, would be far greater.
62. Federal farm programs provide another good illustration of the absurdity of the "takings" rules contained in S. 605 and H.R. 925. Under H.R. 925, for example, a farmer limited by a Clean Water Act wetland rule would simply have to show that the limitation devalued the wetland by 20 percent or more. Because the 20 percent devaluation is measured only against the wetland portion of the property, and considers solely one government action (the wetland limitation), the farmer has an easy case to make. If the whole property and other government programs were considered, the farmer probably wouldnt be able to make that showing -- on average, federal farm programs increase the value of farmland by 15 to 20 percent.
63. Economic studies confirm that environmental restrictions often increase homeowner property values. See, e.g., Parsons, G.R., "The Effect of Coastal Land Use Restrictions on Housing Prices: A Repeat Sale Analysis," Journal of Environmental Economics and Management 22:25 (1992); W. Patrick Beaton and Marcus Pollock, "Economic Impact of Growth Management Policies on Land Surrounding Chesapeake Bay," Land Economics 68:434 (1992); Beaton P. W., "The Impact of Regional Land-use Controls on Property Values: The Case of New Jersey Pinelands," Land Economics 67:172 (1991).
At the same time, a huge number of studies confirm the intuition that pollution and certain land uses tend to lower residential property values. See, e.g., Crecine, J.P., O. A. Davis and J. E. Jackson, "Urban Property Markets: Some Empirical Results and Their Implications for Municipal Zoning," Journal of Law and Economics 10:79-99 (1967)(general literature review); Greenberg, M., "Impact of Hazardous Waste Sites on Property Value and Land Use: Tax Assessors Appraisal." Appraisal Journal 61:42 (1993); Abdalla, C.W., R.A. Roach and D.J. Epp, "Valuing Environmental Quality Changes Using Averting Expenditures: An Application to Groundwater Contamination," Land Economics 68(2):163 (1992); OByrne, "Housing Values, Census Estimates, Disequilibrium, and the Environmental Cost of Airport Noise: A Case Study of Atlanta," Journal of Environmental Economics and Management 12:169 (1985); Nelson, J.P., "Highway Noise and Property Values," Journal of Transport Economics and Policy 16:117 (1982); Hughes, W. T., "Traffic Externalities and Single-Family House Prices," Journal of Regional Science 32:478 (1992); Delaney, C.J., "High Voltage Power Lines: Do They Affect Residential Property Value?" Journal of Real Estate Research 7(3):315 (1992); Ridgker, R. G. and J. A. Henning, "The Determinants of Residential Property Values with Special Reference to Air Pollution," Review of Economics and Statistics 246-257 (May 1967); Nelson, J.P., "Residential Choice, Hedonic Prices and the Demand for Urban Air Quality," Journal of Urban Economics 5:357-69 (1978); Folland, S.T., and R.R. Hough, "Nuclear Power plants and the Values of Agricultural Land," Land Economics 67:30-36 (1991).
64. Both S. 605 and H.R. 925 contain exemptions which would relieve the government from paying compensation. Under the first, compensation would not be due if the government could demonstrate that the limit was designed to protect the public health or safety in the face of an identifiable threat, or damage to specific property. The language of the exemption, however, with references to "identifiable" threats and "specific" property belies the limited nature of the protection. That is, while neighboring property owners and the public generally now broadly enjoy the protections afforded by health, safety and environmental laws, under "takings" proposals they would only benefit from these protections to the extent that they could identify a specific threat that would be posed by non-enforcement of the law. This, in effect, places a burden on the public or neighboring landowners where none had before existed.
Under the second exclusion, the government would not be required to pay for limitations that, in effect, mimic the nuisance law of the state in which the property is located. Nuisance law, however, is of no help to neighbors who experience small harms from individual sources that have a serious cumulative impact. In fact, the very inadequacy of nuisance law in dealing with the cumulative effects of environmental degradation gave rise to the very environmental laws "takings" legislation aims to dismantle. The presence of state nuisance law, of course, also fails to ensure a minimum level of environmental quality throughout the nation; again, the provision of such minimum national standards was a driving force behind the enactment of our federal environmental laws.
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