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Wednesday, September 6, 2006

Kowal on Just Compensation

Tim Kowal (Chapman University School of Law) has posted The Restitutionary Approach to Just Compensation on SSRN.  Here's the abstract:

In the wake of the Court's near-total refusal to impose a check on the legislature through the public use clause, this paper discusses whether any confidence in our property rights be restored through the just compensation clause in the form of restitutionary compensation, rather than the traditional, and myopic, "fair market value" standard. This paper discusses the historical presumption against restitution, elucidated through Bauman v. Ross over a century ago, is founded upon (1) the idea that the public should not be made to pay any more than necessary to effect a public project, and (2) the idea that the public utility of the project flows to the condemnee, providing him with value.

Determining just compensation is not merely the second half of the inquiry; in certain instances, it is an inextricable component of determining when a public use in fact exists, assuming a cost-benefit model. By analyzing condemnations that fail the public use standard set forth in the Michigan Supreme Court's County of Wayne v. Hathcock - that is, takings that generate only nonspecific and attenuated public benefits - we find that not only have the traditional policies against restitution been erased, but unless the project provides enough surplus gain to pay restitution to the condemnee, the project would not be feasible to begin with, and thus not in the public interest.

The paper also addresses the following question: once the developer is adequately incentivized to proceed with a publicly useful project, to whom do the surplus gains owe? Analyzing the utilitarian considerations of public interest, the property rights of the owner, and Lockean labor theory, the paper concludes that the condemnee is the only one with an cognizable claim to the surplus gains of the forced transfer.

Ben Barros

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