Saturday, August 11, 2012

Can Eminent Domain Solve the Mortgage Crisis?

There has been some discussion over the past couple of months over an innovative proposal to have governments use the eminent domain power to take ownership of underwater mortgages, to decrease the risk of default and then refinance the obligations, all to promote the common good.  Here are some links to give you a sense of the major points of this debate.

The launch of this idea comes from a proposal by Law Professor Robert C. Hockett (Cornell) in his piece It Takes a Village: Municipal Condemnation Proceedings and Public/Private Partnerships for Mortgage Loan Modification, Value Preservation, and Local Economic Recovery.  The abstract:

Respected real estate analysts now forecast that the U.S. is poised to experience a renewed round of home mortgage foreclosures over the coming 6 years. Up to 11 million underwater mortgages will be affected. Neither our families, our neighborhoods, nor our state and national economies can bear a resumption of crisis on this order of magnitude.

I argue that ongoing and self-worsening slump in the primary and secondary mortgage markets is rooted in a host of recursive collective action challenges structurally akin to those that brought on the real estate bubble and bust themselves. Collective action problems of this sort require duly authorized collective agents for their solution. At present, the optimally situated such agents for purposes of mortgage market clearing are municipal governments exercising their traditional eminent domain authority.

I sketch a plan pursuant to which municipalities, in partnership with investors, can condemn underwater mortgage notes, pay mortgagees fair market value for the same, and systematically write down principal. Because in so doing they will be doing what parties themselves would do voluntarily were they not challenged by structural impediments to collective action, municipalities acting on this plan will be rendering all better off. They will also be leading the urgently necessary project of eliminating debt overhang nationwide and thereby at last ending our ongoing debt deflation.

Professor Hockett's idea was then promoted in the media by, among others, Prof. Robert J. Shiller (Yale--Economics & Finance), in the New York Times Piece Reviving Real Estate Requires Collective Action.  As the title indicates, Schiller theorizes the mortgage crisis as in part a collective action problem that can be addressed by Hockett's proposal to use eminent domain to seize underwater mortgages. 

But eminent domain law needn’t be restricted to real estate. It could be applied to mortgages as well. Governments could seize underwater mortgages, paying investors fair market value for them. This is common sense too. The true fair market value for these mortgages is arguably far below their face value, given the likelihood of default, with its attendant costs.

Professor Hockett argues that a government, whether federal, state or local, can start doing just this right now, using large databases of information about mortgage pools and homeowner credit scores. After a market analysis, it seizes the mortgages. Then it can pay them off at fair value, or a little over that, with money from new investors, issuing new mortgages with smaller balances to the homeowners.

Yesterday in The Atlantic Cities, Amanda Erickson published an excellent overview story about the proposal, Can Eminent Domain Solve our Mortgage Woes?.  Of note to us are the comments by the eminent eminent domain expert (that's not a typo) Prof. Thomas Merrill (Columbia). 

It's a clever idea. But is it legal? "It's very unusual," says Thomas W. Merrill, a law professor at Columbia University who specializes in property law. But, he notes, "this doesn't mean it's unconstitutional."

Before the landmark 2005 Kelo vs. New London decision, Merrill says, there's little doubt that the courts have upheld this kind of law. "Before Kelo, courts took a hands-off approach," Merrill says. In the 1984 case Hawaii Housing Authority vs. Midkiff, the Supreme Court ruled that the Hawaiian legislature could take a property controlled by landlords and sell it back to leasees. "Condemning a landlord's interest in property to transfer to a tenant is not too different," Merrill says.

But Kelo changed that. In that case, the Supreme Court ruled that cities could use eminent domain to transfer land from one private owner to another, and that doing so for economic development purposes constitutes a public use. "At this point, I guess you'd have to say all bets are off in terms of what is and isn't eminent domain," Merrill says.

And finally for now, Prof. Richard Epstein is critical of the idea. From More Nonsense on the Home Mortgage Front: Don't Let Municipal Governments Condemn Mortgages at Bargain Rates:

The idea has already been rightly panned by the Wall Street Journal. But the entire proposal needs still further consideration. First off, Hockett and his group insist that there is a huge collective action problem that prevents the rationalization of mortgage matters. And there is. It is called local government regulations that have blocked the foreclosure measures set out above. Handle those and the externalities to which they refer disappear. No longer do we have owners neglecting property or clogging the courts with endless motions.

Again, this post is just to give you some links to look at the arguments.  From my perspective, these are some fascinating arguments that illuminate not only the mortgage crisis but also the general debate over eminent domain. 

Matt Festa

August 11, 2012 in Constitutional Law, Eminent Domain, Finance, Housing, Local Government, Mortgage Crisis, Mortgages, Politics, Property Theory, Real Estate Transactions, Scholarship, Takings | Permalink | Comments (1) | TrackBack (0)

Thursday, August 9, 2012

Strahilevitz on Absolute and Relative Preferences in Property Law

Lior Strahilevitz (Chicago) has posted Absolute Preferences and Relative Preferences in Property Law, 160 University of Pennsylvania Law Review (2012).  The abstract:

This article suggests that the population is roughly divided between individuals primarily oriented toward absolute gains and losses, and those oriented toward relative gains and losses. That is, some people consistently care more about the absolute size of the pie slice they are eating, and others care more about how their percentage of the pie stacks up against their peers’ portions. This article examines how property law deals with that heterogeneity in relative and absolute preferences. It focuses initially on inheritance law, particularly cases in which a decedent with living children has adopted her grandchild or someone else within the bloodstream, engendering results that might be acceptable to an heir with absolute preferences but unacceptable to an heir with relative preferences. The article then shows how similar controversies play out in takings law and the law of easements. In many of these cases vehement disagreements between majority opinions and dissents can be understood as clashes between jurists who are focused on absolute resources and those who are focused on relative resources. The article then hypothesizes that some relatively low-stakes disputes explode into contentious lawsuits precisely because a landowner oriented towards absolute gains and losses is incapable of understanding a conflict from the perspective of his neighbor, for whom relative preferences are decisive. The article concludes by referencing examples from takings law and the law of waste, in which divergent assumptions about the prevalence of relative and absolute preferences render property doctrines ambiguous, tenuous, or incoherent.

In addition to being an important piece on property theory generally, Prof. Strahilevitz specifically examines the land use topics of takings and easements.  I think this analysis could also be extended to the debate over housing and urban form.  A must-read.

Matt Festa

August 9, 2012 in Property Theory, Scholarship, Servitudes, Takings | Permalink | Comments (0) | TrackBack (0)

Thursday, July 26, 2012

DeGennaro & Li on Business Formation in the Wake of State Responses to Kelo

Ramon P. DeGennaro (Tennessee--Finance) and Tianning Li (Hood College) have posted Business Formation in the Wake of States' Responses to Kelo.  The abstract:

On June 23, 2005, the U.S. Supreme Court ruled in Kelo v. City of New London, 505 U.S. 469 (2005) that the Public Use Clause allows governments to take private property for transfer to new private owners for the purpose of promoting “economic development.” Our theoretical model identifies the circumstances under which Kelo and subsequent state laws affect business formation. We show that business creation can be encouraged, unaffected, or discouraged as the probability of takings increases, depending on the level of compensation for the takings and the magnitude of the owners’ public use benefits. We also show that utility-maximizing entrepreneurs’ choices of investment depend on the probability of takings and the level of government compensation for the taking. Our empirical results yield three insights. First, states and municipalities can pass laws protecting property rights without fear of retarding business formation. Second, we identify explanations why Kelo and these laws do not measurably affect business formation in our empirical work. Specifically, we believe that either government entities correctly compensate entrepreneurs for the disruption in their businesses through eminent domain legislation, or that the change in the probability of such takings is very small, so that any effect on business formation is too small to measure. Third, takings open the possibility for political corruption and distortions in the economy by encouraging overpayment or underpayment for takings. Under this interpretation, local laws against takings are not pro-business laws or anti-business laws. Rather, they are anti-corruption laws.

Matt Festa

July 26, 2012 in Eminent Domain, Local Government, Property Rights, Scholarship, State Government, Takings | Permalink | Comments (2) | TrackBack (0)

Wednesday, July 18, 2012

Power on Stop the Beach: Property Rights, the 'Gang of Four' & the Fifth Vote

Garrett Power (Maryland) has posted Property Rights, the 'Gang of Four' & the Fifth Vote: Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection (U.S. Supreme Court 2010), 25 Widener Law Journal (2012).  The abstract:

In 2010 The U.S. Supreme Court decided the case of Stop the Beach Renourishment v. Florida Department of Environmental Protection (SBR v. Fla. EPA). Justice Antonin Scalia announced the judgment of the Court. All Justices agreed that Florida had not violated the Takings Clause of the Federal Constitution’s Fifth Amendment. But then in a plurality opinion Justice Scalia joined by the Chief Justice Roberts and Justices Thomas and Alito proposed profound changes in the law of “regulatory takings.” As the spokesman for the Court’s property rights absolutists Scalia advanced two novel legal propositions. First he argued that federal courts had the power to collaterally attack and reverse state court decisions which evaded the requirements of the Taking Clause with pretextual background principles of the State's law of property. Second he opined that each of the “essential sticks in the bundle of rights that are commonly characterized as property” was a separate distinct property right, and that any deprivation of an “established property right” was a compensable Taking under the Fifth and Fourteenth Amendments. If the “Gang of Four” can find a fifth vote, the law of regulatory takings will be radically revised.

Matt Festa

July 18, 2012 in Beaches, Caselaw, Coastal Regulation, Constitutional Law, Eminent Domain, Property Rights, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Thursday, June 28, 2012

Mulvaney on Exactions for the Future

Timothy M. Mulvaney (Texas Wesleyan) has posted Exactions for the Future, Baylor Law Review vol. 64, p. 101 (2012).  The abstract:

New development commonly contributes to projected infrastructural demands caused by multiple parties or amplifies the impacts of anticipated natural hazards. At times, these impacts only can be addressed through coordinated actions over a lengthy period. In theory, the ability of local governments to attach conditions, or “exactions,” to discretionary land use permits can serve as one tool to accomplish this end. Unlike traditional exactions that regularly respond to demonstrably measurable, immediate development harms, these “exactions for the future” — exactions responsive to cumulative anticipated future harms — admittedly can present land assembly concerns and involve inherently uncertain long-range government forecasting. Yet it is not clear these practical impediments are sufficient to warrant the near categorical prohibition on such exactions that is imposed by current Takings Clause jurisprudence. After analyzing the features of takings law that constrict the use of such an exactions scheme, this article offers an alternative approach to exaction imposition involving temporal segmentation of the government’s sought-after interest, which could provide a public tool to address anticipated future harms while offering at least some protection against takings claims.

This is the latest important piece of Prof. Mulvaney's work on exactions and time.  Check it out, and Gig 'em Aggies! 

Matt Festa

June 28, 2012 in Constitutional Law, Property Rights, Property Theory, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Monday, May 28, 2012

Memorial Day

Memorial Day Houston National CemeteryToday was Memorial Day in the US.  There are lots of land use issues that we can associate with Memorial Day, which, stripped to its essence, is designed as a day to remember the military members who died in service to the nation.  There is the obvious land use issue of cemeteries, and the related legal and cultural norms governing how we memorialize the dead (check out any of the interesting blog posts or scholarship by Al Brophy and Tanya Marsh on cemeteries).  It gets even more relevant when we start talking about government-owned national or veterans' cemeteries, and the attendant controversies about First Amendment and other issues.  [The photo is from last year's Memorial Day ceremony at Houston National Cemetery, which my daughter attended to honor fallen Marine Lance Corporal Matthew Sauer Medlicott.]  Of course, there are always land use and local government issues involved with things like parades and public ceremonies, and in many communities there are specific rules that govern the "summer season" informally commenced on Memorial Day weekend.

For this post, though, I'll go back to the origins of the holiday.  Interestingly, it started as a private or quasi-public endeavor (perhaps like most civic affairs in the nineteenth century).  In the immediate aftermath of the American Civil War--and for much of the rest of the lives of the generations that fought it--Americans on both sides focused a great deal of attention on preserving its history and creating/controlling its public memory.  In 1868 General John Logan, head of the Union veterans' organization the Grand Army of the Republic (a private society with a great deal of government involvement), issued General Order No. 11, creating what became known as Decoration Day:

The 30th day of May, 1868, is designated for the purpose of strewing with flowers or otherwise decorating the graves of comrades who died in defense of their country during the late rebellion, and whose bodies now lie in almost every city, village, and hamlet church-yard in the land. In this observance no form of ceremony is prescribed, but posts and comrades will in their own way arrange such fitting services and testimonials of respect as circumstances may permit.

Even though this Decoration Day was only adopted in Union states until after World War I (when it was renamed Memorial Day and formally associated with all American wars), the former Confederate states had their own versions to remember the war dead at cemeteries and public venues.  And according to eminent Yale historian David Blight, the first Memorial Day celebration was performed in Charleston, SC, by newly-liberated blacks:

Thousands of black Charlestonians, most former slaves, remained in the city and conducted a series of commemorations to declare their sense of the meaning of the war. The largest of these events, and unknown until some extraordinary luck in my recent research, took place on May 1, 1865. During the final year of the war, the Confederates had converted the planters' horse track, the Washington Race Course and Jockey Club, into an outdoor prison. Union soldiers were kept in horrible conditions in the interior of the track; at least 257 died of exposure and disease and were hastily buried in a mass grave behind the grandstand. Some twenty-eight black workmen went to the site, re-buried the Union dead properly, and built a high fence around the cemetery. They whitewashed the fence and built an archway over an entrance on which they inscribed the words, "Martyrs of the Race Course" . . . . Then, black Charlestonians in cooperation with white missionaries and teachers, staged an unforgettable parade of 10,000 people on the slaveholders' race course. The symbolic power of the low-country planter aristocracy's horse track (where they had displayed their wealth, leisure, and influence) was not lost on the freedpeople.

Anyone interested in the contested history of these issues--with full attention to the negative aspects as well--should read the magnificent book by Prof. Blight (with a name like that, it's a shame he didn't go into land use!), Race and Reunion: The Civil War in American Memory.  And a related part of this history, along with the Decoration/Memorial Day commemorations, was the incipient historic preservation movement.  This confluence of impulses, as well as the also-new movement for environmental conservation, led to the novel idea of having the federal government acquire and administer large tracts of land for the purpose of preserving Civil War history.  As noted in the fascinating monograph by the late National Park Service Historian Ronald F. Lee, The Origin & Evolution of the National Military Park Idea, this was a new and not-uncontroversial exercise of government power over land use:

The idea of the Nation acquiring an entire battlefield and preserving it for historical purposes was new in 1890. It is therefore not surprising that it soon engendered a serious controversy, which arose, fittingly enough, at Gettysburg. The controversy involved two questions of fundamental importance to the future of historic preservation by the Federal Government. Is preserving and marking the site of an historic battlefield a public purpose and use? If so, is it a purpose for which Congress may authorize acquisition of the necessary land by power of eminent domain? The circumstances of this dispute, which had to be settled by the Supreme Court of the United States, are of unusual interest and provide an appropriate introduction to our story.

Lee describes the case, United States v. Gettysburg Electric Ry. Co., 160 U.S. 668 (1896), in the on-line version of the book provided by the NPS.  The case was brought by a railway which objected to the federal government's use of eminent domain to condemn their right of way for construction of a railway to take tourists to the significant "Devil's Den" area of the battlefield, "claiming that establishment of Gettysburg National Park was not a public purpose within the meaning of earlier legislation and that 'preserving lines of battle' and 'properly marking with tablets the positions occupied' were not public uses which permitted the condemnation of private property by the United States."  [What a long way from Kelo that was!]  Justice Rufus Peckham wrote for the unanimous majority in upholding the taking for preservation purposes (and not simply because members of the public could visit the park):

Such a use seems necessarily not only a public use, but one so closely connected with the welfare of the republic itself as to be within the powers granted Congress by the constitution for the purpose of protecting and preserving the whole country.

The Court thus established the constitutionality of taking land by the federal government for national parks, and struck an important legal blow for historic preservation generally.

So from cemeteries to public memory to national parks and historic preservation and much more, Memorial Day is tied to land use law in many ways.  I hope that our US readers have had a good one, and with remembrance for those whom the holiday commends.

Matt Festa

May 28, 2012 in Caselaw, Constitutional Law, Eminent Domain, Environmentalism, Federal Government, First Amendment, Historic Preservation, History, Houston, Politics, Property Rights, Race, Scholarship, State Government, Supreme Court, Takings | Permalink | Comments (0) | TrackBack (0)

Thursday, May 24, 2012

Nolon on Regulatory Takings, Property Rights, and Sea Level Rise

John R. Nolon (Pace) has posted Regulatory Takings and Property Rights Confront Sea Level Rise: How Do They Roll.  The abstract:

Under the Beach and Shore Preservation Act, the State of Florida is authorized to conduct extraordinarily expensive beach renourishment projects to restore damaged coastal properties. The statute advances the State’s interest in repairing the damage to the coastal ecosystem and economy caused by hurricanes, high winds, and storm surges. The effect of a renourishment project conducted under the statute is to fix the legal boundary of the littoral property owner at an Erosion Control Line. Plaintiffs in Walton County v. Stop the Beach Renourishment, Inc. claimed that the statute took their common law property rights to their boundary, which would, but for the Act, move gradually landward or seaward, maintaining contact with the water. The Florida Supreme Court disagreed and the U.S. Supreme Court granted certiorari in Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection to determine whether the state court reinterpreted Florida’s common law as a pretext for upholding the statute against the plaintiffs’ taking claim and, if so, whether that reinterpretation constituted a “judicial taking.” The Court ultimately decided that the Florida court’s interpretation was correct and that there was no regulatory taking. A majority of the Court could not agree as to whether a state court’s interpretation of state common law could constitute a “judicial taking.”

This article discusses greenhouse gas emissions, global warming, sea level rise, and the ferocity of coastal storms associated with climate change. It explores the tension between these movements in nature and the policy of the State of Florida to fix property boundaries, which under common law would move landward as sea level rises. The property rights and title to land of littoral landowners are described and the effect of the Beach and Shore Preservation Act on them discussed. The article contrasts the Florida coastal policy regarding beach and shore protection with the policies and programs of federal, state, and local governments that use other approaches such as accommodating rolling easements, prohibiting shoreline armoring, requiring removal of buildings, purchasing development rights or the land itself, and imposing moratoria on rebuilding after storm events. These may be less expensive and more realistic approaches to long-term coastal erosion and avulsive events and the inevitability of sea level rise as the climate warms and worsens. The article concludes with a recommendation that the framework for federal, state, and local cooperation in coastal management be revisited and strengthened so that the critical resources and knowledge are brought to bear on this critical issue. It suggests that strengthening those ties, rather than radically restructuring the relationship between state and federal courts, is a more productive method of meeting the needs of a changing society.

This is the latest in a series of articles by Prof. Nolon addressing how local land use law can be used to manage climate change, including  The Land Use Stabilization Wedge Strategy: Shifting Ground to Mitigate Climate Change; Land Use for Energy Conservation: A Local Strategy for Climate Change Mitigation; and Managing Climate Change through Biological Sequestration: Open Space Law Redux.  The article also discusses Stop the Beach and our favorite Texas Open Beaches Act "rolling easement" case Severance v. Patterson, and offers some solutions toward an integrated federal-state-local framework for coastal management.

Matt Festa

May 24, 2012 in Beaches, Caselaw, Climate, Coastal Regulation, Conservation Easements, Constitutional Law, Environmental Law, Environmentalism, Federal Government, History, Judicial Review, Local Government, Property Rights, Scholarship, State Government, Supreme Court, Sustainability, Takings, Texas, Water | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 22, 2012

Oswald on Deference in Judicial Review of Public Use Determinations

Lynda J. Oswald (Michigan--Business) has posted The Role of Deference in Judicial Review of Public Use Determinations, forthcoming in 39 Boston College Environmental Affairs Law Review (2012).  The abstract:

In Kelo v. City of New London, the United States Supreme Court emphasized its longstanding practice of deferring to legislative determinations of public use. However, the Court also explicitly acknowledged that the federal Constitution sets a floor, not a ceiling, on individual rights and that the state courts are entitled to take a less deferential approach under their own state constitutions or statutes. This manuscript examines: (1) the ways in which the role of deference in judicial review of public use determinations can vary between federal and state courts and among state jurisdictions; and (2) the difficult issues raised by the interplay between legislatures and courts in public use determinations. Because the Supreme Court’s deferential approach to public use disputes provides little succor to property owners challenging takings, state court challenges to takings are likely to assume increasing importance. Property owners, therefore, need to understand the issues raised by deference in judicial review of public use challenges in both federal and state courts.

Matt Festa

May 22, 2012 in Caselaw, Constitutional Law, Eminent Domain, Environmental Law, Property Rights, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Sunday, May 20, 2012

Penalver & Alexander: An Introduction to Property Theory

Eduardo M. Penalver (Cornell) and Gregory S. Alexander (Cornell) have posted the introduction to their new book on Property Theory.  The book is An Introduction to Property Theory, in the series Cambridge Introductions to Philosophy and Law.  The intro chapter is on SSRN, and here is the abstract:

This book surveys the leading modern theories of property – Lockean, libertarian, utilitarian/law-and-economics, personhood, Kantian, and human flourishing – and then applies those theories to concrete contexts in which property issues have been espe- cially controversial. These include redistribution, the right to exclude, regulatory takings, eminent domain, and intellectual property. The book highlights the Aristotelian human flourishing theory of property, providing the most comprehensive and accessible introduction to that theory to date. The book’s goal is neither to cover every conceivable theory nor to discuss every possible facet of the theories covered. Instead, it aims to make the major property theories comprehensible to beginners, without sacrificing accuracy or sophistication. The book will be of particular interest to students seeking an accessible introduction to contemporary theories of property, but even specialists will benefit from the book’s lucid descriptions of contemporary debates.

Matt Festa

May 20, 2012 in Eminent Domain, History, Property Rights, Property Theory, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Friday, May 18, 2012

Eagle on Judicial Takings and State Takings

Steven J. Eagle (George Mason) has posted Judicial Takings and State Takings, forthcoming in the Widener Law Journal.  The abstract:

In Stop the Beach Renourishment v. Florida Department of Environmental Protection, a Supreme Court plurality asserted that takings liability could arise from judicial acts, as well as from state or local legislation and executive agency decisions. The Plurality’s rationale supporting “judicial takings” was that the Just Compensation Clause of the Fifth Amendment applies to State acts, not to particular State actors.

This article starts by reviewing the doctrinal bases for the Stop the Beach plurality opinion. It provides prudential reasons why rulings affecting property rights might be legitimate under state law, but nevertheless constitute compensable takings under the federal constitution. It then analyzes the implications of the “state acts and not state actors” doctrine to existing regulatory takings law. Viewed through the lens of “state acts,” the rationales of the Supreme Court’s Williamson County “state litigation” prong and its Dolan “legislative vs. adjudicative” bifurcation are undermined. Similarly, takings distinctions pertaining to whether small-scale rezonings are “legislative” or “quasi-judicial” acts are drawn into question.

Matt Festa

May 18, 2012 in Beaches, Caselaw, Constitutional Law, History, Judicial Review, Property Rights, Scholarship, State Government, Takings | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 16, 2012

Pipelines, Eminent Domain, and Property Rights

Up until now the Keystone Pipeline issue has been cast mainly as a contest between an economic development imperative and environmental conservation.  Legal commentators have analyzed it as an environmental issue.  As most people can infer, though, the notion of building an "infrastructure" project from Canada to the Gulf of Mexico will require some land rights.  Perhaps only in Texas can we see the underlying tension between two principles that are very often in direct conflict: the exploitation of oil and gas resources, and the property owner's rights to her land.  The New York Times last week did a fascinating story on one Texas landowner's fight against the eminent domain authority of the Keystone Pipeline, An Old Texas Tale Retold: The Farmer versus the Oil Company.

Ms. Crawford is worried about the possible contamination of her creek. She pointed out that the Keystone 1, TransCanada’s first pipeline, had a dozen spills in its first year of operation.

“I called my farm insurance agent and asked what happens if there’s a spill, I can’t water my crops, and my corn dies,” she said. “He said my insurance won’t cover that. I’d have to sue TransCanada for damages.”

The Crawfords are the last holdouts in Lamar County. (It is unclear how many are left in Texas; the company says it has 99 percent of the rights of way secured.) TransCanada asserts that it has used eminent domain only as “an absolute last resort” in an estimated 19 out of 1,452 land tracts in Texas. Critics dispute this number. . . .

Asked if she would take TransCanada’s offer now — if it meant the full $21,000, with all of her conditions met — she did not hesitate. “No,” she said. “There’s a $20,000 check sitting in the courthouse waiting for us,” she said. “But if we touch it, game over. We lose the use of our land, and we admit what they’re doing is right.”

This is a longstanding issue, both historically and today, but it often gets overlooked when people conflate Texas stereotypes about both property rights and solicitude for oil and gas.  Ilya Somin commented on the article at the Volokh Conspiracy, noting correctly that despite its pro-property rights reputation and cosmetic legislation, Texas law still empowers quite a bit of eminent domain for economic development purposes:

Such efforts are unlikely to succeed in Texas. As I described in this article, Texas is one of many states that have passed post-Kelo reform laws that pretend to constrain economic development takings without actually doing so. They might have a better chance in one of the other states through which the pipeline must pass.

The larger question that he poses is whether and how environmental concerns will play a part in future discussions about eminent domain and the never-ending debate over the essentially contested concepts of property rights and the common good.  In the real world of land use, the alignment of stakeholders, interests, policy preferences, and legal interpretations isn't always as easy to predict as the cartoon versions might imply.

Matt Festa

May 16, 2012 in Agriculture, Economic Development, Eminent Domain, Environmental Law, Environmentalism, History, Houston, Judicial Review, Oil & Gas, Property Rights, Scholarship, State Government, Takings, Texas | Permalink | Comments (1) | TrackBack (0)

Monday, April 30, 2012

Carlson on Priceless Property

Kirsten Matoy Carlson (Wayne State) has posted Priceless Property, forthcoming in the Georgia State University Law Review.  The abstract:

In 2011, the poorest Indians in the United States refused to accept over $1 billion dollars from the United States government. They reiterated their long held belief that money – even $1.3 billion dollars – could not compensate them for the taking of their beloved Black Hills. A closer look at the formation of the Sioux claim to the Black Hills helps us to understand why the Sioux Nation has repeatedly rejected over $1 billion dollars in compensation for land taken by the United States over 100 years ago. This article seeks to understand why the Sioux view the Black Hills as priceless by studying the formation of the Black Hills claim. It constructs a new, richer approach to understanding dispute formation by combining narrative analysis with the sociolegal framework for explaining dispute formation. The article argues that narratives enrich the naming, claiming, and blaming stages of dispute creation and illustrates the usefulness of this new approach through a case study of the Black Hills claim. It uses the autobiographical work of an ordinary Sioux woman to provide a narrative lens to the creation of the Sioux claim to the Black Hills. American Indian Stories by Zitkala-Sa presents a narrative of Sioux life around the time of the claims emergence. By contextualizing and humanizing the claim, my analysis provides insights into why the Sioux claim to the Black Hills emerged into a legal dispute and helps to explain why the Black Hills remain priceless property to the Sioux Nation today.

This article employs more of a law-and-humanities approach focusing on social and historical context and personal stories, which I think makes it an interesting read.

Matt Festa

April 30, 2012 in Constitutional Law, Federal Government, History, Property, Property Rights, Race, Scholarship, Supreme Court, Takings | Permalink | Comments (0) | TrackBack (0)

Friday, April 6, 2012

Mulvaney's Hectic Week in Takings

In the past week there have been two major state court takings decisions--both involving beachfront property--and a U.S. Supreme Court cert grant in a takings case from the Federal Circuit.  Our erstwhile guest blogger Prof. Tim Mulvaney has a terrific analysis over on the Environmental Prof Blog: A Hectic Week on the Takings Front.  From the post:

For Takings Clause enthusiasts, the past week has proven a busy one.  Two state court decisions out of Texas and New Jersey, coupled with a grant of certiorari at the U.S. Supreme Court, threaten to constrain governmental decision-making at the complex intersection of land and water.

Tim's post discusses the Texas Supreme Court's final decision in Severance v. Patterson; the New Jersey case of Harvey Cedars v. Karan; and the SCOTUS cert grant in Arkansas Game & Fish Comm'n v. U.S.  Exciting times in the takings world.  Read Tim's whole post for a good analysis. 

Matt Festa

April 6, 2012 in Beaches, Caselaw, Coastal Regulation, Constitutional Law, Federal Government, Property Rights, State Government, Supreme Court, Takings, Texas, Water | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 4, 2012

Fennell Helps us Picture Takings

One of my (few) disappointments this semester was that I was out of town the day Lee Fennell (Chicago) came to ND Law to present a really interesting paper broadening legal theory's view of resource-allocation-relevant costs beyond the conventional focus on "transaction costs."  I did have the consolation of hearing many terrific papers at the ALPS Conference at Georgetown on the day she presented here in South Bend. Hopefully, that paper, Resource Access Costs, will be finding its way to SSRN and this blog soon.  

In the meantime, she has posted Picturing Takings, 88 Notre Dame L. Rev ___ (forthcoming 2012), an article that makes visual sense of a doctrine that has so successfully defied textual explanatory efforts. Here's the abstract:

Takings doctrine, we are constantly reminded, is unclear to the point of incoherence. The task of finding our way through it has become more difficult, and yet more interesting, with the Supreme Court’s recent, inconclusive foray into the arena of judicial takings in Stop the Beach Renourishment. Following guideposts in Kelo, Lingle, and earlier cases, this essay uses a series of simple diagrams to examine how elements of takings jurisprudence fit together with each other and with other limits on governmental action. Visualizing takings in this manner yields surprising lessons for judicial takings and for takings law more generally. [Note: a PowerPoint version of the diagrams is available on the author's faculty webpage or can be obtained by emailing the author]. 

 I am very hopeful that this article will be helpful not only to my understanding of takings but also to my (first-time) teaching of Land Use Planning next spring. Here is a link to the PowerPoint presentation referred to at the end of the abstract.

Jim K.

April 4, 2012 in Eminent Domain, Inverse Condemnation, Judicial Review, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 28, 2012

Saxer on Managing Water Rights Using Fishing Rights

Shelley Ross Saxer (Pepperdine) has posted Managing Water Rights Using Fishing Rights as a Model, forthcoming in Marquette Law Review Vol. 95 (2011).  The abstract:

This Article addresses the need to view water rights as licenses subject to government revocation, without just compensation, in the same way that fishing rights are viewed as licenses subject to government management. It focuses specifically on the methods used to address water resource allocation in the Sacramento-San Joaquin River Delta in California, and on fish allocation issues in the Pacific Northwest. It explores property rights in water and fish, particularly in regard to Fifth Amendment takings challenges when government regulations diminish water rights and fishing rights. The Article concludes by recognizing that both water and fish resources should be managed as ecosystems and governed by the public trust doctrine, and rejecting private property rights in either fish or water as a violation of the public trust doctrine, in which public resources are given away to private interests.

Matt Festa

March 28, 2012 in Environmental Law, Property Theory, Scholarship, Takings, Water | Permalink | Comments (0) | TrackBack (0)

Saturday, March 24, 2012

Harris on a Railway, a City, and Public Regulation of Private Property

Douglas C. Harris (UBC Faculty of Law) has posted A Railway, a City, and the Public Regulation of Private Property: CPR v. City of Vancouver, published in CANADIAN PROPERTY LAW STORIES, James Muir, Eric Tucker, and Bruce Ziff, eds., Osgoode Society and Irwin Law, 2012.  The abstract:

The doctrine of regulatory or constructive taking establishes limits on the public regulation of private property in much of the common law world. When public regulation becomes unduly onerous — so as, in effect, to take a property interest from a private owner — the public will be required to compensate the owner for its loss. In 2000, the City of Vancouver passed a by-law that limited the use of a century-old rail line to a public thoroughfare. The Canadian Pacific Railway, which owned the line, claimed the regulation amounted to a taking of its property for which the city should pay compensation. The case, which rose to the Supreme Court of Canada in 2006, marked that court’s first engagement with the doctrine of regulatory taking (also known in Canada as de facto expropriation) in nearly twenty years. This chapter explores the intertwined histories of a railway company and a city that gave rise to CPR v. City of Vancouver. It then analyzes the court decisions and considers the role of courts in mediating the appropriate boundary between private property and public regulation in a jurisdiction where there is no constitutional protection for private property.

Matt Festa

March 24, 2012 in Caselaw, Comparative Land Use, Property Rights, Property Theory, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Friday, March 16, 2012

Rule on Airspace and the Takings Clause

Troy A. Rule has a very interesting article up: Airspace and the Takings Clause, forthcoming in the Washington University Law Review.  The abstract:

This Article argues that the U.S. Supreme Court’s takings jurisprudence fails to account for instances when public entities restrict private airspace solely to keep it open for their own use. Many landowners rely on open space above adjacent land to preserve scenic views for their properties, to provide sunlight access for their rooftop solar panels, or to serve other uses that require no physical invasion of the neighboring space. Private citizens typically must purchase easements or covenants to prevent their neighbors from erecting trees or buildings that would interfere with these non-physical airspace uses. In contrast, public entities can often secure their non-physical uses of neighboring airspace without having to compensate neighbors by simply imposing height restrictions or other regulations on the space. The Supreme Court’s existing regulatory takings rules, which focus heavily on whether a challenged government action involves physical invasion of the claimant’s property or destroys all economically beneficial use of the property, fail to protect private landowners against these uncompensated takings of negative airspace easements. In recent years, regulations aimed at keeping private airspace open for specific government uses have threatened wind energy developments throughout the country and have even halted major construction projects near the Las Vegas Strip. This Article highlights several situations in which governments can impose height restrictions or other regulations as a way to effectively take negative airspace easements for their own benefit. The Article describes why current regulatory takings rules fail to adequately protect citizens against these situations and advocates a new rule capable of filling this gap in takings law. The new rule would clarify the Supreme Court’s takings jurisprudence as it relates to airspace and would promote more fair and efficient allocations of airspace rights between governments and private citizens.

Troy, our excellent guest blogger, has written before about sun, wind, and air, so this article is coming from one of the emerging experts in property rights above the dirt. 

Matt Festa

March 16, 2012 in Clean Energy, Constitutional Law, Property Rights, Scholarship, Servitudes, Supreme Court, Takings, Wind Energy | Permalink | Comments (0) | TrackBack (0)

Monday, March 5, 2012

Somin on What if Kelo had Gone the Other Way?

Ilya Somin (George Mason) has posted What if Kelo v. City of New London had Gone the Other Way?, published at Indiana Law Review, Vol. 45, No. 1, pp. 21-39, 2011 (What If Counterfactuals in Constitutional History Symposium) .  The abstract:

Kelo v. City of New London is one of the most controversial decisions in U.S. Supreme Court history. The Kelo Court held that the Public Use Clause of the Fifth Amendment allows government to condemn private property and transfer it to other private parties for purposes of “economic development.” This Article considers the question of what might have happened if the Supreme Court decided Kelo v. City of New London in favor of the property owners. Such counterfactual analysis may seem frivolous. But it is, in fact, useful in understanding constitutional history. Any assessment of the impact of a legal decision depends on at least an implicit judgment as to the likely consequences of a ruling the other way. Analysis can be improved by making these implicit counterfactual assumptions clear and systematically considering their implications.

Part I briefly describes the Kelo case and its aftermath, focusing especially on the massive political backlash. That backlash led to numerous new reform laws. However, many of them turned out to be largely symbolic. Part II discusses the potential value of a counterfactual analysis of Kelo. It could help shed light on a longstanding debate over the effects of Supreme Court decisions on society. Some have argued that court decisions have little impact, mostly protecting only those rights that the political branches of government would protect of their own accord. Others contend that this pessimistic view underrates the potential effect of Supreme Court decisions.

Part III considers the possible legal effect of a ruling in favor of the property owners. Such a decision could have taken several potential forms. One possibility is that the Court could have adopted the view advocated by the four Kelo dissenters: that economic development condemnations are categorically forbidden by the Public Use Clause. This would have provided strong protection to property owners and significantly altered the legal landscape. On the other hand, the Court could easily have decided in favor of the property owners on one of two narrower grounds. Such a ruling would have led to much weaker protections for property owners.

Part IV weighs the potential political impact of a decision favoring the property owners. Such an outcome might have forestalled the massive political backlash that Kelo caused. Ironically, a narrow ruling in favor of the owners that did not significantly constrain future takings might have left the cause of property rights worse off than defeat did. On the other hand, a strong ruling categorically banning economic development takings would likely have done more for property rights than the backlash did, especially considering the uneven nature of the latter. Furthermore, political movements sometimes build on legal victories, as well as defeats, as happened in the case of the Civil Rights movement in the wake of Brown v. Board of Education. It is possible that property rights advocates could have similarly exploited a victory in Kelo.

Matt Festa

March 5, 2012 in Caselaw, Constitutional Law, Eminent Domain, History, Judicial Review, Property Rights, Scholarship, Supreme Court, Takings | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 29, 2012

Salkin on Callies on Regulation in Hawai'i

Patricia Salkin (Albany) has posted a review essay called David L. Callies, Regulating Paradise: Land Use Controls in Hawai’i (2d Ed. 2010) (Book Review), published in The Urban Lawyer, Vol. 43, No. 4, p. 1107, 2011. The abstract:

In 1984, Professor David Callies wrote Regulating Paradise to describe the regulatory scheme in Hawai’i. In 2010, he followed up that book with Regulating Paradise: Land Use Controls in Hawai’i to reexamine the issues as they have developed over the last 25-plus years: housing affordability, the subjects of development agreements, condemnation, defining open space and agricultural lands, takings, cultural sensitivity, environmental assessment, the prevalence of covenanted communities, and redevelopment.

This essay is a review of Professor Callies work which is a must read for anyone involved in land use in Hawaii. What emerges from his work are lingering questions about whether the regulatory scheme has over protected paradise.

Matt Festa

February 29, 2012 in Affordable Housing, Agriculture, Beaches, Coastal Regulation, Environmental Law, History, Homeowners Associations, Property, Redevelopment, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 28, 2012

Stein on the Modest Impact of Palazzolo

Gregory M. Stein (Tennessee) has posted The Modest Impact of Palazzolo v. Rhode Island, forthcoming in the Vermont Law Review.  The abstract:

Before 2001, state and federal courts did not agree on the extent to which a property owner’s regulatory takings claim should be weakened by the existence of legal restrictions on her use of the property at the time she acquired it. The Palazzolo Court addressed this doctrinal confusion but did not completely resolve it, offering six opinions that partially contradict each other. Some of this discord has persisted, with Palazzolo already cited in nearly five hundred judicial opinions, and not always consistently.

This Article examines the impact Palazzolo has had on state and lower federal courts. After reviewing the law before Palazzolo and the Supreme Court’s decision in that case, the Article offers suggestions as to how courts ought to interpret the contradictory opinions in Palazzolo. More specifically, cases arising at different points in the ripening process should be treated differently, and only a small subset of takings claims should benefit from Palazzolo’s relaxation of the notice rule.

Next the Article assesses the evidence, in an effort to determine whether courts interpreting Palazzolo have actually been following these suggestions. First, it examines the small number of claims in which an owner that probably would have lost before 2001 prevailed. It then compares these results with the far more numerous cases in which an owner that probably would have lost before 2001 still lost even after that decision.

The Article closes by offering a more generalized assessment of the effects of Palazzolo. It concludes that nearly all of the courts to cite Palazzolo have heeded its requirements, but only a few cases have turned out differently than they would have before 2001. The Court’s ripeness rules dictate that few landowners should benefit from the holding in Palazzolo, and only a small number actually do benefit. Lower courts understand Palazzolo, they have been applying it correctly, and they should continue to do what they have been doing.

Matt Festa

February 28, 2012 in Caselaw, Constitutional Law, Judicial Review, Property Rights, Scholarship, Supreme Court, Takings | Permalink | Comments (0) | TrackBack (0)