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Thursday, April 19, 2007

Rose on Federalism and Takings

Carol M. Rose (University of Arizona) has posted What Federalism Tells Us About Takings Jurisprudence on SSRN.  Here's the abstract:

This paper, one of several in a symposium on “constitutional niches,” discusses a niche within a niche: federalism considerations in theories of governmental takings of property. Several property theorists have argued that larger-scale and smaller-scale legislative bodies should be treated differently in takings jurisprudence, since these differently-scaled legislatures are likely to behave differently in dealing with individuals' property, and to respond differently to compensation requirements. The author agrees with this general proposition, but she sharply disagrees with the centralist drift of most of this literature, which would favor the national legislature while imposing strict takings requirements on local legislatures; she argues that these analyses overlook the existing constraints on smaller-scale governing bodies. Meanwhile, the courts have paid very little overt attention to federalism concerns of any kind in takings jurisprudence, string-citing cases about local, state, and national governments without distinguishing them. Instead of responding to federalism (and other) taking theories, actual takings jurisprudence vacillates between leniency toward all legislatures and contempt for them. The author argues, however, that federalism considerations might help courts to analyze the legislative process, and might be incorporated into takings jurisprudence by a distinction between Fifth Amendment and Fourteenth Amendment takings.

Ben Barros

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Carol Rose's review of the current state of takings is, as usual, insightful and accessible. Her essay addresses what she regards as the conventional wisdom about takings scholarship, which is that local governments ought to be scrutinized more closely than national governments. She thinks this is wrong, but not entirely wrong. I had something to do with making this idea conventional, if not wisdom, so I want to defend my position.

As Carol correctly points out, local governments are suspect not because of their perfidy but because of their efficiency. They give the local voters what they want. And what they want, I would add, is to promote their own home values in cost-effective ways. Police power (uncompensated) regulation is a lot more cost effective to them for this purpose than buying the undeveloped land or the farmland development rights. Carol casts some doubt on the idea that economic cost guides such decisions by adverting to a currently popular theory that governments are not really deterred by having to pay. This theory is wrong. Aside from some solid empirical evidence that governments are indeed responsive to the need to pay, one might ask why, if the theory were true, government agencies so stoutly resist the obligation to compensate?

But her main claim is that local governments have their own internal systems of fairness. I agree; most local officials do not arbitrarily scuttle reasonable land-use expectations. But many important land-use decisions are not made by local officials subject to reasoned argument. They are made by a local populace in the anonymity of the voting booth. We know from the divergence between exit polls and voting results that anonymity allows voters to do things they would rather not defend as fair. So at the very least, judges could make a simple procedural distinction between land-use regulations adopted by plebiscite and those proposed and adopted through ordinary political channels, where advocates have to reveal their reasons. I should note, however, that the judicial trend has been moving in the opposite direction, with the Supreme Court as well as most state courts regarding ballot-box zoning with as much deference as any other brand.

Carol also points out that most US Supreme Court takings decisions struck down excessive regulations adopted by state or regional governments, not local governments. She is perhaps too polite to explicitly point out that I mostly approve of these decisions, which seems to be contrary to my position that local governments deserve closer scrutiny. So here's my defense--actually, a rearticulation of previous points. The few landowner victories at the USSC -- Nollan, Dolan, Loretto, and Lucas -- can be seen as attempts by the USSC to keep states from reading the takings clause out of their jurisprudence. Each of the regulations challenged were upheld by state courts, and each would have given the green light to substantial end-runs around the takings doctrine. California courts in particular were out to end the "just compensation" aspect of regulatory takings doctrine, and since the clause is a right to a remedy, not a substantive right, this particular part of the Bill of Rights would have been disincorporated. Billy Brennan could see that (as did OW Holmes), which accounts for his famous dissent in San Diego Gas. So I see the USSC as mainly telling the states that they have to have SOME form of takings jurisprudence that includes monetary compensation for regulatory takings. Without the threat of damages, it becomes a simple exercise for state and local agencies to just downzone the property they covet and then acquire it by eminent domain for a small price or negotiate "voluntary" contributions in return for building permits.

The remaining question is why the states have not developed a robust regulatory takings doctrine. Most simply grudgingly follow the broad outlines of USSC doctrine--no physical invasion, no denial of all economic use--which provides very little discipline on the local governments and politically-isolated state agencies (think Coastal Commissions) that are most likely to discount the well-being of development-minded landowners and the outsiders whose interests they represent. I offer some reasons in a little-noted essay (cited below; it's not accessible on line, but I'll send it to anybody who is interested). My bottom line is that "just compensation" is too attractive a remedy. Here I agree with Carol, who keeps a file of "weird" takings claims. (My "weirdest" claim is that regulated power companies should be compensated for having to face the rigors of competition.) The prospect of monetary damages appears to invite considerable creativity by plaintiffs (as in private antitrust with its triple damages) and overentry by attorneys (as in class action torts), and so state judges worry about opening the floodgates if they award damages even to obviously deserving plaintiffs. Richard Epstein has in a sense fueled that anxiety by sweeping all infringements on the property bundle into the hopper of potential takings. State judges are wary of expanding the grounds for litigation, and I can hardly blame them. It is for this reason that I have embraced the substantive due process approach of the Pennsylvania Supreme Court as an alternative to regulatory takings. (See The Homevoter Hypothesis, chapter 11.) The threat of monetary damages should still be there--the anti-development folks will just delay developers to death otherwise--but compensation should only occasionally be the first remedy.

William A. Fischel, “Why Are Judges So Wary of Regulatory Takings?” in Harvey M. Jacobs, editor, Private Property in the Twenty-First Century. Northampton, MA: Edward Elgar, 2004 (pp. 50-74).

Posted by: Bill Fischel | May 2, 2007 10:40:21 AM

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