Pure Profit for Landowners At Environment's Expense?

Federal compensation to owners when environmental laws change land value would be inconsistent with the Constitution

THIS session of Congress will see a strong push by conservative critics of environmental laws to enact the ``property rights'' bills they have introduced during the past several years. Those bills would give landowners far greater rights to taxpayer-funded compensation than they already have under the Fifth Amendment of the United States Constitution.

For example, the ``Private Property Rights Restoration Act,'' introduced last August by Sen. Phil Gramm (R) of Texas, would provide that a landowner has a claim against the US whenever a federal law limits a right to real property and causes a ``nonnegotiable reduction'' in its ``fair market value.''

The bill specifies that a landowner establishes a ``prima facie case'' upon showing a temporary or permanent loss in fair market value of the lesser of either 25 percent or $10,000. The only exception to this compensation right would be if the government proves that the land use being restricted is a public nuisance under state law. In his speech introducing the bill, Senator Gramm singled out federal laws protecting wetlands and endangered species as ``regulatory takings'' for which the bill would require payment of compensation.

A broader concept of property

Unfortunately, the property-rights bills are based more on such dislike for particular environmental laws than on concern for legitimate private-property rights. Although the bills' sponsors claim they simply believe that government should pay whenever a property owner suffers economic loss as a result of regulation, most of the bills, like Mr. Gramm's, protect only landowners.

The property-rights bills are not consistent with the view of James Madison and the other drafters of our Constitution and Bill of Rights. In his 1792 essay on ``Property'' in The National Gazette, Madison described the property that government should protect as including a person's interest in his or her occupation, merchandise, and even opinions and personal safety. In today's largely urbanized society, these other forms of property are even more important than they were in Madison's time.

While ignoring other forms of property, the property-rights bills would provide far greater rights for landowners than the Fifth Amendment's ``just compensation'' clause requires.

The Supreme Court has held that when government does not take possession of or invade land, but only regulates the owner's use, no compensation is due under the Fifth Amendment, so long as the regulations do not deprive the owner of all economically beneficial use.

No compensation with other laws

This limited scope of the ``just compensation'' clause is a practical necessity. Most laws limit some profitable use of property.

For example, federal civil rights laws deprive real estate developers of the higher price bigots would pay to live in subdivisions with racially restrictive covenants. National defense laws prevent aircraft manufacturers from selling fighters to hostile nations, even when they offer a premium price. Zoning ordinances often prohibit opening so-called ``adult'' businesses next-door to churches or schools, even when such businesses are not public nuisances under state law.

Many other laws were as unexpected to the owners of affected property as some landowners claim the environmental laws were to them. If government were required to pay compensation in all such cases, either we would need to have few laws and allow property owners to do as they please despite the social consequences, or else we would have to pay most of our income in taxes so that the government would be able to fulfill myriad demands for ``just compensation.''

Most advocates of property-rights bills probably would agree that the property owners in the above examples should not be compensated.

But, so far as the principles of property rights are concerned, the property owners in these examples are no different from a timber company that is required to leave some of its trees uncut in order to preserve habitat for endangered species. They are all being deprived of some of the market value of their property in order to prevent harm to society.

The only reason to require compensation for the timber company, but not for the other property owners, would be a belief that the law protecting endangered species is less legitimate than the laws in the other examples.

If Gramm and his cosponsors believe our environmental laws are not legitimate, they should prove that point head-on instead of muddling the issues with abstract notions of property rights that go beyond what the Fifth Amendment requires. Their property-rights proposals would not work if consistently applied to all forms of property, or even if they were applied only when laws affect the value of land. The Opinion/Essay Page welcomes manuscripts. Authors of articles we accept will be notified by telephone. Authors of articles not accepted will be notified by postcard. Send manuscripts to Opinions/Essays, One Norway Street, Boston, MA 02115, by fax to 617 -450-2317, or by Internet E-mail to OPED@RACHEL.CSPS.COM.

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