Tag: property rights

The Takings Clause Has No Expiration Date

Just a decade ago in Palazzolo v. Rhode Island, the Supreme Court rejected the idea that those who buy property subject to burdensome regulations lose the right the seller otherwise has to challenge those regulations. The Court ruled that the Takings Clause does not have an “expiration date.”

Sadly, not all government authorities or courts took Palazzolo to heart. In 1997, Daniel and Susan Guggenheim bought a mobile home park that, at the time of purchase, was in “unincorporated territory” of Santa Barbara County, California. The Guggenheims did not challenge the county’s 1979 rent control ordinance but instead challenged the 2002 adoption of that ordinance by the City of Goleta when the city incorporated the Guggenheims’ land.

The Ninth Circuit essentially limited Palazzolo to its particular facts and circumstances, deciding to convert the established three-factor test for regulatory takings (Penn Central) into a one-factor test focused solely on “investment-backed expectations.” The court did this largely on the premise that the Guggenheims did not present an “as-applied” challenge — as Palazzolo did — to the ordinance’s application to their mobile home park, but instead filed a facial challenge to the constitutionality of the ordinance itself. As a result, the Ninth Circuit turned two Supreme Court precedents on their head and put that “expiration date” on the Takings Clause in this case.

Significantly, the Ninth Circuit isn’t alone in its misapplication of Palazzolo; the Federal Circuit in CRV Enterprises v. United States (in which Cato will also be filing a brief) also recently issued an opinion severely narrowing Palazzolo’s scope and deepening a circuit split.

Cato filed an amicus brief supporting the Guggenheims’ request that the Supreme Court review the Ninth Circuit decision and reaffirm its decision in Palazzolo. The brief argues the Supreme Court should review the case because: (1) a rule that allows the transfer of title to immunize government regulation from constitutional or other legal challenge expands government power and diminishes property rights; (2) the Ninth Circuit “flouts” the rule of Palazzolo; and (3) this case — as well as CRV Enterprises — indicates the need for the Supreme Court to settle the spreading confusion about Palazzolo.

Otherwise, the existence of a “post-enactment” rule will create a “massive uncompensated taking” from small developers and investors that would preserve and enhance the rights of large corporations. The ability of property owners to challenge government interference with their property is essential to a proper understanding of the Fifth Amendment; the Court must reestablish the principle that transfer of title does not diminish property rights.

Thanks to legal associate Nick Mosvick and former legal associate Brandon Simmons (acting as our outside counsel in this case) for their work on this case, Guggenheim v. City of Goleta.

March Madness: Eminent Domain Abuse Goes Coast-to-Coast

This is a big week for private property rights.  Two epic eminent domain struggles are playing out on opposite sides of the country. 

First, National City, California, is ground zero for eminent domain abuse.  City officials declared several hundred properties blighted even before conducting a blight study that was riddled with problems. The city wants to seize and bulldoze a youth community center (CYAC) that has transformed the lives of hundreds of low-income kids, so a wealthy developer can build high-rise luxury condos:


CYAC has numerous volunteers, including local law enforcement officers, providing free mentoring in boxing as well as academics.  The gym is famous for getting kids off the street and back into school.  As Rick Reilly explained in a feature in Sports Illustrated (boy, how I miss his inside-back-page column):

You know what, Mayor? National City doesn’t need more luxury condos. It needs good men like the Barragans teaching kids respect for neighbors and property, manners you could use a little of yourself.

And if you kick the Barragans out so some slick in Armani can buy a bigger yacht, I hope your car stereo gets jacked—weekly—by a kid who would’ve otherwise been lovingly coached on their jabs and their math and their lives.

Question: Can you declare politicians blighted?

This week, the gym’s battle is in trial before the Superior Court of California.  Represented by the Institute for Justice (who else?), a victory will help protect private property far beyond National City and clarify the use and misuse of blight designations.

Second, moving to the other side of the country, we go to Mount Holly, New Jersey:


Mount Holly is another classic case of “Robin Hood-in-Reverse.”  Officials have been dismantling a close-knit community known as the Gardens for the last decade so a Philadelphia developer can bulldoze the area and build more expensive residential properties.

Homeowners in the Gardens are primarily minorities and the elderly.  The row-style houses are being torn down while still attached to occupied homes, and officials refuse to offer the remaining homeowners replacement housing in the new redevelopment.  Further, owners are being offered less than half the amount it would cost to buy a similar home blocks away.

Here, IJ just launched a billboard campaign and did a study that concludes the eminent domain abuse project may result in a loss of a million taxpayer dollars a year, or one-tenth of the Township’s budget.

I previously wrote about eminent domain shenanigans here and you can read more from Cato on property rights here.

Property Rights and the Takoma Park Tree Tussle

It’s enviro vs. enviro in Washington’s most “progressive” suburb, Takoma Park. Indeed, the Washington Post reports, “a potentially bough-breaking debate between sun-worshipers and tree-huggers.” That is, which is more environmentally desirable, solar power or tree cover?

The modest gray house in Takoma Park was nearly perfect, from Patrick Earle’s staunchly environmentalist point of view. It was small enough for wood-stove heating, faced the right way for good solar exposure and, most important, was in a liberal suburb that embraces all things ecological.

Or almost all. When Earle and his wife, Shannon, recently sought to add solar panels to the house, which they have been turning into a sustainability showplace, the couple discovered that Takoma Park values something even more than new energy technologies: big, old trees.

When they applied to cut down a partially rotten 50-foot silver maple that overshadowed their roof, the Earles ran into one of the nation’s strictest tree-protection ordinances. Under the law, the town arborist would approve removing the maple only if the couple agreed to pay $4,000 into a city tree-replacement fund or plant 23 saplings on their own.

So now the rival environmentalists are squaring off in front of the city council:

Takoma Park City Council members, who are considering revising the 1983 tree-protection law, listened Monday night as otherwise like-minded activists vied to claim the green high ground.

Tree partisans hailed the benefits of the leafy canopy that shades 59 percent of the town: Trees absorb carbon, take up stormwater, control erosion and provide natural cooling….

Solar advocates at the hearing said that they are tree lovers, too, but that scientific studies support the idea of poking select holes in the tree cover to let a little sun power through.

Being an environmentalist homeowner can become a full-time job:

But even some veteran solar users don’t like the idea of trading trees for panels. Mike Tidwell, founder of the Chesapeake Climate Action Network, installed solar panels on his Takoma Park house 10 years ago. As the trees have grown, the panels’ effectiveness has diminished, and Tidwell now buys wind power credits to supplement them.

Still, he said, “I don’t believe you should cut down trees for solar.” Rather, he thinks neighbors should work together to place shared panels on the sunniest roofs.

The city’s “official arborist” turned down Earle’s application to tear down one rotting tree to accommodate his solar panels. Now the council is debating the issue.

The Earles’ council member, Josh Wright, said he was sympathetic to their plight. He said it should remain hard to cut down a tree, but he’d like to see a break for people installing solar power. Wright also wants all homeowners to get credit for trees they may have planted in the years before they remove a tree.

It all sounds very complicated. And who knows what the right answer is? Or if there is a right answer? Or if the right answer might change next year?

And that’s where property rights come in.  They allocate both jurisdiction and liability over scarce resources, like roofs, trees, and access to sunlight.  A little “law and economics” can help to understand the Takoma Park Tree Tussle.  Nobel Laureate in Economics Ronald Coase, who just turned 100, brought law and economics together to study the way that people externalize costs (make others pay for them) or internalize them (take them into account when making decisions).  When property rights are well defined and legally secure, and rights can be exchanged at low cost, resources will be directed to their most highly valued use.  In fact, the initial allocation of property rights doesn’t affect the allocation of resources, if the transfers are freely and easily negotiable.

That, unfortunately, is no longer the case in Takoma Park, where instead of a fairly straightforward transaction (facilitated by a purchase), there is a tussle over ill-defined rights and obligations that have little or no legal security, in a very expensive and costly process of negotiation that will almost certainly consume more wood pulp for memos than is contained in the tree in question.  Well-defined and legally secure property rights save us the rather substantial trouble of sitting down like the Takoma Park City Council and trying to judge the advisability of every proposed purchase, all the while consuming large amounts of paper and exuding large amount of hot air.

Judicial Takings and Scalia’s Shifting Sands

Last term, the Supreme Court decided what could end up being an important precedent for protecting property rights – even as the Court ruled unanimously against the property owners in that particular case!  How is this possible?  Read the new article by Cato legal associate Trevor Burrus and me, “Judicial Takings and Scalia’s Shifting Sands.”

Here’s the background:  Seeking to restore beaches damaged by hurricanes, the Florida Department of Environmental Protection began dredging sand from the Gulf of Mexico ocean floor and transporting it to Florida’s gulf coast. The expanded area of the beach became state property, depriving beachfront landowners of their littoral rights. In reviewing the landowners’ lawsuit against the state, the Florida Supreme Court (SCOFLA, if you remember your Bush v. Gore trivia) departed from long-established state law principles protecting littoral property rights and held that littoral rights are an ancillary concept subsumed by the right of access. In so doing, the court effectively discarded 100 years of property law and rewrote the definition of property.

The U.S. Supreme Court had never formally addressed whether state court rulings eliminating formerly established property rights can effect a taking, or violate an owner’s due process rights, under the Fifth and Fourteenth Amendments to the U.S. Constitution. Cato joined the National Federation of Independent Business Small Business Legal Center and the Pacific Legal Foundation on a brief supporting the landowners.

In June, Court finally decided Stop the Beach Renourishment v. Florida Department of Environmental Protection.  The decision waded through a jumbled mass of arcane waterfront law to reach a very simple and unanimous holding: the Florida Supreme Court did not subvert an existing property right to such an extent that its decision constituted a “judicial taking.”  The state won.  The property owners lost.  SCOFLA was vindicated.

Still, while all eight justices ultimately ruled for the state – Justice Stevens recused himself because his Florida property is subject to the renourishment program – six accepted the idea that judges can violate the Constitution by reinterpreting pre-existing property rights (albeit under two different theories), and the other two declined to reach the question.  Although the Stop the Beach Court found that SCOFLA had not departed from sufficiently established state property law to constitute a taking, the idea of a judicial taking – whether through the Fifth Amendment’s Takings Clause or the Fourteenth Amendment’s Due Process Clause – is very much alive.

And that’s where our article in the Vermont Law Review picks up.  In this article, Trevor and I examine the background of the judicial takings doctrine, react to the Court’s decision here in light of Cato’s amicus brief, and contrast Justice Scalia’s views of Substantive Due Process as expressed in Stop the Beach with that in another high-profile case whose plurality opinion he joined, McDonald v. City of Chicago, to argue that the judicial takings doctrine is necessary to a robust constitutional protection of property rights.

Cato Unbound: Property, the State, Libertarians, and the Left

Talk between libertarians and the left usually follows one of two scripts, each of which frustrates me.

In the first script, both sides find things that they can safely dislike together – war, eminent domain, small business licensing – while carefully avoiding all the contentious areas. They’re a lot like that recently divorced couple at the Christmas party you’ve just attended, chattering as much as they dare… but mostly about the weather.

In the second script, someone yells “Taxation is theft!” or “You hate the poor!” and it’s not long before someone gets a drink thrown in their face. Perhaps also like that Christmas party you’ve just attended.

If I may say so myself, this month’s Cato Unbound has been quite different. The disagreements have been sharp, but well-informed and polite. (Even the libertarians are disagreeing among themselves; it’s a good sign that our movement isn’t just a set of dogmatic propositions, as some have claimed.)

As readers may already know, the December issue is about the role of property rights in social democracy. Discussants Daniel Klein, David D. Friedman, Ilya Somin, and Matthias Matthijs are arguing about whether social democracy entails the concept of overlordship – that is, the idea that the state must be the final, true owner of all property in a social democracy. If it’s not explicitly and by declaration, then at least it’s implicitly and by inference from its actions.

Klein shows that social democrats were once quite explicit on the point, and did indeed portray themselves as would-be overlords. Today they have to be cagier, but the claim remains logically implicit, he says.

Friedman argues that property has existed without the state, and perhaps even before the dawn of the human race. The state might claim any number of things, but we should judge it by what it actually accomplishes.

Somin suggests that today’s social democrats aren’t really overlords; they’re pragmatists without much in the way of theoretical principles at all.

And Matthijs actually is a social democrat. A proud one, by the look of it. He’s even European! Rights aren’t meaningful unless something enforces them, he argues, and the state does the work we all depend on. In this sense, all rights are artificial; all rights are created by the state. And he’s gamely defending his claims against a barrage of libertarian criticism.

Is your blood boiling? Or are you giggling behind your hand? Either way, grab yourself another egg nog, promise not to throw it at anyone, and go read the discussion for yourself.

More on Columbia’s Abuse of Property Rights

Six weeks ago, Cato filed an amicus brief supporting a challenge to Columbia University’s strong-armed attempt to condemn and take over certain land in Upper Manhattan.  Tomorrow, the Supreme Court will consider the cert petition our brief supports, with a decision on whether it hears the case expected Monday.

In what is probably not a coincidence, then, the Columbia Spectator today came out with a lengthy feature story examining the story behind the dispute, controversial “blight” designations and all.  This is excellent student journalism – heck, excellent journalism, period – and here are some key excerpts (full disclosure: the author interviewed me for the piece):

Since it proposed the expansion, Columbia has rapidly made deals with property owners and gained control over nearly every lot in the zone – except for two who have fought to hold on to their land….

And Columbia has repeatedly said that those parcels, which represent a total of around nine percent of the expansion zone, are vital to the vision. 

Eminent domain – the process by which the state seizes private property for the “public good,” providing just compensation for the owner – officially came into the picture in 2004, when the University asked the state to consider condemnation.

And here’s the crux of the legal dispute:

Some neighborhood tenants and owners – most no longer in Manhattanville as Columbia continues to break ground and demolish properties – have strongly contested this blight label.

Nuss remembers a community vibrant enough to support his improvisational group – the No-Neck Blues Band – local businesses, and his family. He raised his daughter in the Hint House….

But it’s sometimes hard to believe Nuss is talking about the same area as other residents who say they agree with the determination of blight….

This disparity in views on Manhattanville’s conditions touches upon a fundamental question when evaluating the process that paved the way for Columbia’s expansion: Was the neighborhood really blighted, and given the process by which the criteria of blight were determined, was the state’s designation of blight an appropriate justification for the use of eminent domain for a private university?

My sense is that whatever ”blight” there is was caused by Columbia itself:

“It’s akin to the kid who kills his parents and begs the court’s mercy for being an orphan,” says Ilya Shapiro, senior fellow with the Cato Institute, which filed an amicus brief to the U.S. Supreme Court supporting the Manhattanville property owners. “You’re creating your own blight. It doesn’t pass the smell test.”

Read the whole thing.

How Capitalism Saved the Pilgrims

When I was growing up, my father would occasionally tell me the story around this time of year of how private property rights saved the Pilgrims from starvation.

When the Pilgrims first arrived in 1620, as my father told the story, they tried to live communally according to the spirit of the Mayflower Compact. What crops they grew were put in a common storehouse and then apportioned according to each family’s need. The small colony struggled to survive for two or three years until its leaders declared that every family henceforth would be responsible for growing its own food. The new system proved much superior at putting food on the table.

Years later, when I was writing editorials for the Colorado Springs Gazette, I would tell the story in print on Thanksgiving Day, this time quoting from Governor William Bradford’s first-hand account. One of my fellow editors objected to my version, claiming it was Squanto the friendly Indian who saved the Pilgrims by teaching them how to fertilize their crops with dead fish. We agreed to disagree and I stuck to my version.

Earlier this year, as I was reading Nathaniel Philbrick’s bestselling book, Mayflower: A Story of Courage, Community, and War (New York: Penguin Books, 2007, paperback edition), I came across a passage that weighs in decisively on our editorial dispute. It appears my father did know best after all.

From page 165 of Mayflower:

The fall of 1623 marked the end of Plymouth’s debilitating food shortages. For the last two planting seasons, the Pilgrims had grown crops communally–the approach first used at Jamestown and other English settlements. But as the disastrous harvest of the previous fall had shown, something drastic needed to be done to increase the annual yield.

In April, Bradford had decided that each household should be assigned its own plot to cultivate, with the understanding that each family kept whatever it grew. The change in attitude was stunning. Families were now willing to work much harder than they had ever worked before. In previous years, the men had tended the fields while the women tended the children at home. “The women now went willingly into the field,” Bradford wrote, “and took their little ones with them to set corn.” The Pilgrims had stumbled on the power of capitalism. Although the fortunes of the colony still teetered precariously in the years ahead, the inhabitants never again starved.

Among the many things I’m thankful for this week is that I live in a country that was founded on the solid rock of property rights and free markets.

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