Tuesday, September 28, 2010

Cole on Property Creation by Regulation

Daniel H. Cole (Indiana-Indianapolis) has posted what looks like another interesting article, Property Creation by Regulation: Rights to Clean Air and Rights to Pollute.  The abstract:

This paper, prepared for a Lincoln Institute conference on "Evolution of Property Rights Related to Land and Natural Resources," argues that, contrary to both the suppositions of some legal scholars and the theoretical underpinnings of Regulatory Takings doctrine, government regulations do not only impose on existing private property rights but also vindicate, and sometimes even create, public, private, and/or common property rights. 

After examining conflicting common law and Roman law rules relating to property rights in the atmosphere, the paper focuses on how assertions of state sovereignty and regulations combine to create Hohfeldian rights and duties respecting the atmosphere, where none previously existed or were unclear. An explicit (but hardly novel) claim is advanced that acts of sovereignty themselves amount to assertions of public property. The claim is supported by evidence from both civil aviation regulation and air pollution control. The paper also addresses how regulations have created private property rights to pollute in emissions trading programs (regardless of congressional assertions to the contrary). In some cases, assertions of public property via acts of sovereignty are a prerequisite to the allocation of private property rights, and not just in the atmosphere but in other natural resources, such as marine fisheries. 

The paper concludes with a discussion of normative implications for property theory generally and Regulatory Takings doctrine in particular. A more dignified treatment of public regulations that are designed to protect public rights would raise a serious question about which set of property rights should prevail in the several Regulatory Takings cases where privately-owned lands meet publicly-owned waters. That question cannot, however, be answered reasonably until a theory (or multiple theories) of public property are better developed to complement existing theories of private and common property. So, the paper ends with a call for more research into the theory and empirics of res publica (beyond equally naive public interest and public choice models).

I find the idea that government regulation creates property rights to be particularly fascinating.  I've considered it before in the context of zoning-- we usually focus on the question of whether new zoning restrictions effect a regulatory taking.  But when you buy into an existing zoning scheme, does the regulatory regime comprise part of your investment-backed expectations?  It could be an important question for advocates of deregulation.  Putting that tangent aside, it is certainly important for the environmental issues that Cole addresses in this interesting paper.  

Matt Festa


Environmental Law, Environmentalism, Property Rights, Property Theory, Scholarship, Takings, Water, Zoning | Permalink

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Matt - Interestingly, Justice Scalia thinks that Transferable Development Rights create a new right, which he characterizes (I'm paraphrasing here) as an entirely new right to get a developer to pay the landowner to conserve their land, rather than a recognition and commodification of the current right to develop land. (This is why he thinks, contrary to the Penn Central decision, that the value of TDRs should not go to the calculation of the impact of the regulation on the economic value of the sending parcel, if TDRs are granted.)

Posted by: Jamie Baker Roskie | Sep 28, 2010 8:44:00 AM