Tag: property rights

‘Temporary’ Takings That Cause Permanent Damage Still Require Just Compensation

By
Ilya Shapiro

This blogpost was co-authored by Trevor Burrus.

The Arkansas Game and Fish Commission owns and operates 23,000 acres of land as a wildlife refuge and recreational preserve; the preserve’s trees are essential to its use for these purposes. Clearwater Dam, a federal flood control project, lies 115 miles upstream. Water is released from the dam in quantities governed by a pre-approved “management plan” that considers agricultural, recreational, and other effects downstream.

Between 1993 and 2000, the federal government released more water than authorized under the plan. AGFC repeatedly objected that these excess releases flooded the preserve during its growing season, which significantly damaged and eventually decimated tree populations. In 2001, the government acknowledged the havoc its flooding had wreaked on AGFC’s land and ceased plan deviations. By then, however, the preserve and its trees were severely damaged, so AGFC sued the government, claiming damages under the Fifth Amendment’s Takings Clause.

The district court awarded $5.8 million in lost timber and reforestation costs based on the substantiality of the government’s flooding and the foreseeability of the damage it caused. The U.S. Court of Appeals for the Federal Circuit reversed that decision, holding that flooding can never be a taking unless that flooding is permanent. It further held that, in determining whether the government’s flooding was permanent or temporary, courts must focus on the character of the policy behind the intrusion rather the effects of the intrusion itself. A taking cannot have occurred here because each deviation from the plan constituted a “temporary” policy, the court concluded, so AGFC had no constitutional remedy.

In December, Cato joined the Pacific Legal Foundation on an amicus brief urging the Supreme Court to take the case, which it did. Now Cato again joins the Pacific Legal Foundation, as well as the Atlantic Legal Foundation, on a new brief urging the Court to uphold the Fifth Amendment rights of property owners whose land is destroyed by the federal government.

We argue that the length of time of the government’s physical invasion of property should not be used to determine whether a taking occurred, but rather only for calculating how much damage the taking caused. We further argue that the Federal Circuit’s focus on the “intent” of the government action—whether the flooding resulted from a “permanent or temporary policy”—is likewise irrelevant to whether a taking occurred. Instead, the inquiry should be whether the government caused permanent damage and, if so, how much. The lower court erroneously created a rule—that so long as it might be “temporary,” no government flooding can be remedied under the Fifth Amendment—that runs afoul of a constitutional provision meant to compensate property owners for government intrusions on their land.

The Supreme Court will hear the case of Arkansas Game & Fish Commission v. United States in October or November.

Topics: 
Law and Civil Liberties

Cato’s Amicus Brief Helps Persuade Supreme Court to Protect Private Property Rights

By
Ilya Shapiro

This blogpost was co-authored by Cato legal associate Anna Mackin.

Today, the Supreme Court agreed to hear Arkansas Game & Fish Commission v. United States, the Fifth Amendment Takings Clause case whose cert petition Cato supported with an amicus brief. In that brief, we joined the Pacific Legal Foundation in urging the Court to preserve a remedy long-recognized in American courts: compensation for government destruction of private property.

Over a year ago, the Federal Circuit blithely ignored this constitutionally guaranteed protection, ruling that so long as it might be characterized as “temporary,” no government flooding of private land can constitute a Fifth Amendment violation. If upheld, this sweeping opinion could prevent recovery for the destruction of private property whenever the government characterizes its own actions as “temporary,” without any assurances of the length of this “temporary” loss.

Notable Supreme Court commentators saw the importance of this case early on, and our amicus brief was featured on SCOTUSblog’s “petition of the day” page. Many thanks to Brian Hodges at PLF for working with Cato on the brief – one of just four filed in the case. Congratulations also and especially to Matthew Miller & Julie Greathouse of Perkins & Trotter, who represent AGFC, for their successful legal strategy.

It is gratifying to see the Court snap up this opportunity to protect private property rights – it is more likely than not that it will reverse the lower court – implicitly validating the position Cato and PLF advanced in this case. We’ll now be filing a brief on the merits that will urge the Court to maintain constitutional protections against government intrusions on private property. The Court will hear the case next term, probably this fall, with a final decision expected by early 2013.

For more on AGFC v. United States, check the case’s SCOTUSBlog page or its Supreme Court docket page. Jonathan Adler also blogged about the case at the Volokh Conspiracy.

Topics: 
Government and Politics, Law and Civil Liberties, Regulatory Studies

Why Hayek Would Have Hated Software Patents

By
Timothy B. Lee

In his famous essay “The Use of Knowledge in Society,” Friedrich Hayek argued that the socialists of his day falsely assumed that knowledge about economy could be taken as “given” to central planners. In reality, information about the economy—about what products are needed and where the necessary resources can be found—is dispersed among a society’s population. Economic policies that implicitly depend on omniscient decision-makers are doomed to failure, because the decision-makers won’t have the information they need to make good decisions.

In a new paper to be published by the NYU Annual Survey of American Law, Christina Mulligan (who drafted a recent amicus brief for Cato) and I argue that the contemporary patent debate suffers from a similar blind spot. A patent is a demand that the world refrain from using a particular machine or process. To comply with this demand, third parties need an efficient way to discover which patents they are in danger of infringing. Yet we show that for some industries, including software, the costs of discovering which patents one is in danger of infringing are astronomical. As a consequence, most software firms don’t even try to avoid infringing peoples’ patents.

Patents are often described as “intellectual property,” and patent law provides for harsh property-like remedies against patent infringers. But a property system that is so convoluted that ordinary firms can’t figure out who owns what isn’t a property system at all. Genuine property rights enhance economic efficiency by bringing predictability to the allocation of scarce resources and thereby promoting decentralized decision-making. Software patents retard economic efficiency by subjecting software firms to a constant and unavoidable threat of litigation for accidentally infringing the patent rights of others. Hayek would not have approved.

Our paper is available from SSRN.

Topics: 
Telecom, Internet & Information Policy

EPA Actions Should Be Subject to Judicial Review

By
Ilya Shapiro

Michael and Chantelle Sackett bought some Idaho land and began placing gravel fill on the site to prepare for laying a foundation for their dream home. Then they got something from the EPA: a “Compliance Order,” declaring that they were in violation of the Clean Water Act, because their land had been deemed a “wetland” subject to federal jurisdiction.

By beginning construction without a federal permit, the Sacketts were breaking the law and exposing themselves to civil and possibly criminal penalties, according to the Order. The Order instructed them to stop their construction and restore the property to its “original state” – it even told them what type of shrubbery to plant on the site, and exactly where to plant it. If they failed to comply with the order, they were subject to $37,500 fines per day.

The Sacketts were, understandably, shocked: they had no reason to think their property was a wetland; their neighbors had been allowed to build homes, and there was no indication in their title documents that the land was subject to federal control. So they asked for a hearing – and that was when they learned that the Compliance Order process does not entitle them to a hearing. They must either comply with the Order immediately to avoid the fines, or play chicken with the EPA – waiting until the EPA decides to file an “enforcement action.” At that time, they would be allowed to present their arguments that the land is not actually a “wetland.” But of course, by that time, the fines would have accumulated to hundreds of thousands or millions of dollars.

Worse, these Compliance Orders are issued by a single EPA bureaucrat, on the basis of “any evidence.” That’s the language of the statute itself – and federal courts have interpreted “any evidence” to mean even an anonymous phone call or a newspaper story.

And a Compliance Order doesn’t just demand that you obey EPA’s orders or face fines – ignoring a Compliance Order is a separately punishable offense against federal law, aside from the liability for any environmental damage. In other words, you can face penalties for violating the Clean Water Act and also for ignoring a Compliance Order. Worse still, ignoring a Compliance Order can serve as the basis of a finding of “wilfulness,” and thus the basis of criminal charges.

Pacific Legal Foundation represents the Sacketts and argues that they should have their day in court – either under federal statutes like the Administrative Procedure Act or under the Due Process Clause – without having to face the possibility of devastating penalties.  PLF lawyer Damien Schiff argued the case today before the Supreme Court; while the justices were active in probing the weaknesses of both sides, the government’s lawyer didn’t do the EPA any favors.  So today may have ended being a very good day for the Sacketts, even if the New York Times editorial page took the alarmist stance that allowing them to seek pre-enforcement judicial review would be a ”big victory to corporations and developers who want to evade the requirements of the Clean Water Act.”

The case is Sackett v. EPA; read the argument transcript here and the briefs here.

This blogpost was coauthored by adjunct scholar Timothy Sandefur, who is a principal attorney at PLF and wrote about the case in Regulation magazine.

Topics: 
Government and Politics, Law and Civil Liberties

Obama’s Top 10 Constitutional Violations

By
Ilya Shapiro

That’s the topic of my latest op-ed, in the Daily Caller.  Here’s the list:

  1. The individual mandate
  2. Medicaid coercion
  3. The Independent Payment Advisory Board
  4. The Chrysler bailout
  5. Dodd-Frank
  6. The deep-water drilling ban
  7. Political-speech disclosure for federal contractors
  8. Taxing political contributions
  9. Graphic tobacco warnings
  10. Health care waivers

For descriptions of what makes these things so constitutionally bad, read the whole thing.

Topics: 
Law and Civil Liberties

A Property Rights Victory in the Magnolia State

By
Ilya Shapiro

One of the unambiguously good results from last Tuesday’s off-year elections came in Mississippi, the state I called home the year before I moved to D.C.  By the impressive margin of 73% to 27%, voters in the Magnolia State took a stand against judicially sanctioned eminent domain abuse, specifically the government’s taking of private property in the name of so-called “economic development.”  

By passing Measure 31, which prohibits most transfers of condemned land to private parties for 10 years after condemnation, Mississippi joins 44 other states in enacting legislation that strengthens property rights in the wake of the Supreme Court’s horrific ruling in Kelo v. New London.  In Kelo (2005), you’ll recall, the Court held that state and local governments can condemn private property not for some sort of public project like a highway or military base nor because it is a “blight” that creates a health or safety risk, but simply to transfer to another private party who claims to put it to better economic use. 

We at Cato are all in favor of economic development, of course, but not if that development comes via raw government power that treads on constitutionally protected individual rights.  If a developer thinks he can put a given piece of land to a higher-value use, let him buy that property fair and square from the owner rather than effectively forcing a sale at below-market value.

Indeed, Kelo’s holding was flawed precisely because its rationale that transferring ownership of “economically blighted” property would promote economic development is bad economics. If a proposed project were actually a better use of a given property, the developer would be willing to pay a price sufficient to induce the current owners to leave.

Kelo also undermines property security, making owners less willing to invest in their property and use it productively, lest the government swoop in, declare it “blighted,” and sell it to someone else. And securing property rights is not just a good thing economically.  It also helps prevent powerful private interest groups from undercutting the property rights of minorities and other groups who may be vulnerable due to prejudice or political disadvantage.

And the American people agree: Kelo turned out to be a Pyrrhic victory for developers and their public-official cronies, such that most of the country is now better protected against eminent domain abuse than it was before Kelo.  Notably absent from the list of states where property rights are better off, however, is New York (see my comment on a recent instance of eminent domain abuse in the Empire State).

The judiciary’s abdication of its role as a protector of property rights is bad enough, but our elected officials haven’t done much better. Tellingly, the drivers of successful anti-Kelo legislation have tended not to be state legislators (with some exception) but rather citizen-activists.  While special-interest groups, such as big car companies in Mississippi, may pressure legislators to avoid anti-Kelo legislation, even as referenda show that popular opinion is on the side of the property rights activists.

Measure 31 is not perfect, but it is a step in the right direction. The Founders took care to protect private property rights in the Constitution, and it’s heartening to see citizens taking an active role to vindicate those protections even when the Supreme Court abdicates its duty to do so.

For more commentary on the Mississippi vote, see Ilya Somin’s recent op-ed.

Topics: 
Government and Politics, Law and Civil Liberties

Another Judicial Takings Case Reaches the Supreme Court

By
Ilya Shapiro

For over a century, Montana citizens have used non-navigable streambeds along their properties for various purposes without objection from the state government.  The hydroelectric energy company PPL Montana and thousands of other private parties exercised their rights over these non-navigable stretches that the state never claimed. 

Last year, however, the Montana Supreme Court overturned well-settled state property law by effectively converting the title in hundreds of miles of riverbeds to state ownership. The majority of the court ruled that the entirety of the Missouri, Clark Fork, and Madison rivers were navigable at the time of Montana’s statehood, producing a broad holding that eradicates the right to use rivers and riverbanks that Montanans had enjoyed for over a century.

PPL Montana thus asked the U.S. Supreme Court to review the state court’s decision; Cato filed an amicus brief supporting that request, which the Court granted.  Now that the case is before the Court, Cato has joined the Montana Farm Bureau Federation, American Farm Bureau Federation, and National Federation of Independent Business on a brief supporting the property owners.

We are chiefly concerned with two parts of the Montana Supreme Court’s ruling:  First, the court incorrectly evaluated navigability for the purpose of establishing title – finding the entirety of the rivers at issue navigable (and thus belonging to the state) because portions of them are – contravening the legal standard established by the U.S. Supreme Court in United States v. Utah (which analyzed the riverbeds section-by-section to achieve a “precise” assessment of navigability).  Second, the court effectively transferred a substantial quantity of land from private owners to the state – a judicial taking that violates either the Fifth or Fourteenth Amendments (as the Court described in the recent Stop the Beach Renourishment case, in which Cato also filed a brief).  

In short, the Court should reaffirm the Utah standard for navigability in the context of establishing title and protect private property owners against judicial takings.  By doing so, it would send a strong message to state courts across the nation that judicial usurpations of property rights are just as unconstitutional as those undertaken by other branches of government.

The Court will hear the case of PPL Montana, LLC v. Montana late this year or in early 2012.  Again, you can find Cato’s brief here.

Topics: 
Government and Politics, Law and Civil Liberties

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