Panel discussion.

Large - Just to keep it brief, one fact I always thought was curious in Lucas was in the record - it was in the brief and it was argued, but it doesn't come up in any of the opinion - is that to purchase the property he paid $60,000 down and took a $900,000 mortgage, which also covered his principal residence. So, unlike a lot of these other cases, where the landowner just looses an expectancy whether justified or not, if he looses the case, he not only loses the expectancy, he loses his principal residence and probably has to declare bankruptcy. I'm not acquainted with the rest of his financial posture, but that is a hell of a lot of money to immediately wipe out and try and cover out of your home. Both Bill and Ed said things that sort of touched on this point. I particularly liked Ed's line that the Court knew where it wanted to be and sort of cobbled its way to justify its position. So to Ed: Do you think that Lucas' bankruptcy potential had any influence on what the Court did and, if so, is there any way factors like that can be more rationally included in the determination rather than just sort of hovering back, to be ignored until they simply become too unfair?

Sullivan - My view is that the Court took this case because it was an egregious fact situation. I think the Court wanted to move closer to finding a taking by regulation in a concrete case by eroding possible defenses such as ripeness. The opinion does not appear to be too much different from the line of taking cases over the last twenty years. The Court said if all value is deprived, then a taking occurs. But the real difference is found in the footnotes, which will be used as support for takings determinations in latter cases. So, there was strategic value in taking up this case and making it the vehicle for the 1991-92 Term.

Huffman - I think that's right. If viewed that way, I think it can be a nice precursor to cases that raise the question of the size of the parcel. For example, if a regulation requires maintaining twelve acres as a wetland, we could then say there is a total loss of value on those twelve acres, regardless of the size of the original parcel. The Lucas opinion is a nice grounding for that direction, which I'd love to see the Court pursue although I'm not optimistic that they will.

Funk - I want to ask Mike Blumm, what does he mean by a legislative fact? I could say a legislative fact is whatever a majority says is a fact. When political people act, we don't primarily expect them to act pursuant to some instrumental rationality - the way we expect agencies to act. That is, we expect political people to act politically, which is to say responsively to their publics. George Bush did at least one rational thing as President, and that was that he approved a tax increase. Every economist agrees that was a rational thing to do, but it is the one thing he's being pilloried for, because that's not what he was elected to do. He was elected on the basis of "read my lips, no new taxes." The voter punishes representatives who don't do what the voter wants. We send people to Washington to do what we tell them to do, not to do what somebody says is rational. So, I don't expect legislatures to act rationally in the way I expect agencies to. Indeed, I want them responsive to the people rather than some scientific rationality. I think that's their job. Now, I want to ask Jim Huffman ....

Blumm - Wait a minute. You can't move on like that. Can he? You did have a question for me, didn't you, Bill?

Funk - And you'll get a chance to answer it, too. But first, Professor Huffman, you threw out the idea that the Endangered Species Act is not part of property law, and my question is: why isn't it? I can agree that, for the people who owned property at the time it was enacted, it changed the system, altered their expectations, etcetera, so maybe it could effect a taking for them. But someone who buys subsequent to the passage of the Endangered Species Act, they go out, look at some property, and say, oh, this is a beautiful forest, look at those funny little owls, aren't they cute; I want to buy the land; I want to cut the trees. Aren't these people on notice? Isn't the Endangered Species Act now part of their background understanding of the law? Even if it is only subsequent events that identify those owls as endangered?

Huffman - It depends on whether you're a natural law sympathizer or a positivist. If you're a natural law sympathizer, which I am (although I'm also a bit of a positivist) then the answer is this: by natural law principles, if you read John Locke you'd find that he would have some conception of what property is in the abstract. Many of the so-called conservatives on the Court--and Michael Blumm and I do agree that these aren't conservatives in my understanding of the definition - have no absolute conception of what property is. I'm also sufficiently a positivist (which is to say I believe the law is whatever we say it is, including what the Supreme Court says it is) to acknowledge that maybe the Endangered Species Act does define property rights. If I'm a lawyer advising somebody about what they're buying when they are buying a piece of property, I'd say, given what the Courts' past interpretations of taking law, you'd better look at the Endangered Species Act. More than that, you'd better look at CERCLA(1) and RCRA(2) because those statutes and their implementation control an awful lot of your property's worth. So sure, I'm enough of a positivist to say these regulations are effectively part of one's property right. The only thing I'd add to that is to say that is not a very good property system, if property is to produce an efficient and fair allocation of scarce resources. But nevertheless that is the property system we have. We could have a property system that says, essentially what Holmes said in Pennsylvania Coal:(3) you have whatever property rights we decide tomorrow you have. If that is the system, I'm not going to invest much in a piece of property that is defined in those terms, but sure, I can imagine a property system like that.

Blumm - In response to Bill's question about the supposed irrationality of legislatures, I do not think it is too much to expect legislatures to act rationally. I don't think it is too much to expect legislatures to explain how and why their initiatives serve the public interest. And I think the role of the courts is to insist that they do. Doesn't the due process clause of the Fifth and Fourteenth Amendments forbid legislative irrationality? I also think that the courts have an important, overlooked role in insisting that legislatures follow their own procedures, in order to help ensure that the legislation they produce is the consequence of reasoned debate and deliberation. But pursuing that thought is better left to another article, I'm afraid.

Huffman - I have a lot of questions and I'll try to sort of merge them all into one and, not to disappoint Mike Blumm, I'll send it his way. Basically, as I understand your comments, you think that property is this fluid sort of thing that has been changing over time, as judges redefine concepts like nuisance and so forth. Then you threw in the traditional jab at Lochner,(4) which Ed Sullivan agreed with. This isn't my question, except rhetorically, then what is the difference between Lochner and Griswold(5) and therefore Roe?(6)

Blumm - I can answer that.

Huffman - I don't want you to. Not yet, anyway. You agree, I assume, that we have the Fifth Amendment in the Constitution, which does, after all, have the takings clause in it. So my question is: does that in any way change the rules of the game? That is, it may be quite true that in the common law nuisance law was evolving. But to what extent should the takings clause operate as a limitation on judges as well as on legislatures in their ability to change these background rights? That's a serious question.

Blumm - Let me first answer the question that you posed first. I think there is a big difference between Griswold and Lochner because I don't hear anybody saying that property rights holders aren't well represented in the legislature; they're in no sense a discreet and insular minority. Basically, what Jim wants to do is to turn the clock back before Carolene Products.(7)

Huffman - I would love to do that.

Blumm - Well, I know you would. Your whole project, like Richard Epstein's, is to undo the New Deal. But there is a sense in which some property rights might be thought to be fundamental where they are related to privacy, the right to be left alone. I think this helps explain the physical invasion cases like Loretto.(8) However, property rights to build on a beach or to fill a wetland are hardly privacy rights.

Huffman - Wait a minute, I asked you a hard question. Why don't you have the answer?

Blumm - As to whether judges can take property? Well, Justice Scalia's last footnote suggests that federal courts might review state court decisions to ensure that their application of nuisance and property constitutes an "objectively reasonable" construction of relevant precedents.(9) That might, as I earlier indicated, lead to a federalization of property law.(10) But where state judges simply apply background notions of nuisance and property law, there is no taking because, under Lucas, that background is shielded from the Constitution's takings clause. The real question is: What does the takings clause mean? Unlike Ed Sullivan, I think the Court got it right where it elevated footnote 30 of Penn Central(11) to the text of Lucas and said, we don't think the old noxious use cases should be thought of as noxious use cases at all; they really were cases in which a regulation was (1) reasonably related to the implementation of a policy thought to have widespread social benefit and, (2) applied to equally situated pieces of property.(12) That's how I would define nuisance for purposes of the takings clause. As Justice Stevens indicated in his dissent, the takings clause ought to be thought of as a kind of equal protection law for property holders.(13) The majority opinion comes close to saying as much,(14) but then it loses its way with background notions of nuisance and the like.

An interesting aspect of Lucas, as Bill Funk pointed out,(15) is that we may now have fifty different notions of the federal constitutional right because it is in part a product of state nuisance law. For example, I read Lucas as a ratification of the Oregon doctrine of "customary rights" concerning beach access, so long as Thorton v. Hay(16) constitutes an "objectively reasonable application of relevant precedents."(17) There's a case now pending before the Oregon Supreme Court as to whether a motel owner can build on the beach.(18) I think Lucas means he can't unless the Oregon Supreme Court decides to change its Thornton v. Hay ruling or unless the Oregon Supreme Court determines that Thornton was not an "objectively reasonable application of relevant precedents."(19) Under Lucas, the state court has the final word on background notions of property law.

Blumm - My question is in two parts. Bill, you say that the takings clause doesn't necessarily mean that we're not going to have environmental regulation. But isn't that the kind of theoretical thinking that the fellow on your left [Jim Huffman] usually engages in? Won't there be widespread chilling effects on regulation from a discovery of a fundamental property right here? My second question is more or less rhetorical, and that is: didn't both Penn Central and Keystone resolve the size of the property issue? In Penn Central, the Court looked at the property very broadly;(20) in Keystone, it refused to be limited by the state's definition of the mineral estate.(21) Isn't Justice Scalia in effect questioning the holdings of these two cases?

Funk - I'm taking your second question first. You know you're giving me a nice softball because I agree with you. Scalia's footnote cites Rehnquist's dissent as authority.(22) Now, when you start having a majority opinion citing dissent for authority, you know something's going on. It is true that we thought the question of what constitutes the parcel was decided. But we also thought that the nuisance issue was decided; that is, we thought that legislatures could expand the category of things that would fall under the nuisance exception and, in fact, Keystone said that too.(23) So, the law can change and develop, and that may be what we are seeing here.

As to your question of whether this will have a chilling effect on environmental regulation: Sure. That was my point. But it shouldn't change the outcome under any 404 case, for example. The 404 program has standards that govern whether or not to grant a permit.(24) One of those standards is not: will it cost us money? The Corps is supposed to deny the permit on the various listed bases, and, if the permit gets denied, it gets denied. Period. Lucas shouldn't change that. Even the Executive Order on takings says that the Corps is not supposed to change the outcome of what it does just because it will affect a takings claim.(25) The takings claim just means we will then pay for it. Ultimately, of course, the impact of a takings finding, I think, will be on what Congress will authorize. And it may be one more reason to amend the Endangered Species Act(26) or some other statute. Lastly, think about the impending election. We have a choice to be made because there are still old members of the Supreme Court there who are unlikely to last another four years, and the question is: who will replace them? President Bush or President Clinton?

Sullivan - This is for Professor Huffman. Assume that we have a Supreme Court that's dominated by Justices Bork, Epstein, and Huffman. Describe the likely effect of their theories of takings, particularly paying for regulation on the political process. Explain how the theory is consistent with the text and background of the Constitution and the Bill of Rights.

Huffman - How much time do I have to do this? Well, it's an odd trio because Bork will, I'm afraid, not be helpful to Epstein's and my cause. Bork is sort of Scalia, but more so, due to his ideas about judicial restraint. If it were Epstein and Huffman (and who knows, maybe we could bring Bork around, although I doubt it) we would have a rule much like Epstein's formula, which is to say, we would look at three questions separately: First, is it a takings? Second, if it is, has it been compensated? Third, if it is and has not been compensated, is it for a public use? If not, it is not a proper governmental regulation. How is that consistent with the language of the Constitution? Well, it is because it reflects precisely the language of the takings clause. The puzzling thing about the takings clause to me, one of a multitude of puzzling things about the way it's been interpreted, is why we view it as an obstacle to government's doing good? Why did we put a provision in our Constitution which has basically been treated as sort of an unfortunate accident that we have to work our way around all the time? Why don't we look at that provision the way we look at the First Amendment? What's the positive reason that it was put in here? There wasn't anything that said we had to put it in there, even though it was going to be a hinderance to the pursuit of the public good. It was put in there, I would argue, for a good reason, and the Court's task is to figure out what that reason might be, or at least figure out some plausible reason for it to be there. It seems to me that the reason that it's there is to provide that sense of security that is essential to the wise management of resources through a private property system. To adopt a private property system like Mike Blumm proposes, I think, is to essentially read the takings clause out of the Constitution, which of course has been the ambition of many people on the Court from the beginning. Mike mentioned Carolene Products, and I think the problem I have with takings law is a problem that I have with almost all of the Supreme Court's constitutional jurisprudence over the last thirty years; that is, it's all been rooted in the Carolene Products case, all reduced to essentially ad hoc balancing. Even the First Amendment gets balanced, and the only question, again rooted in Carolene Products, is what is this level of scrutiny that we are going to apply in takings cases? And Michael says it should be this way because otherwise how could we make property rights fundamental. The point of not making them fundamental is that we apply a lowered level of scrutiny with respect to property rights and a higher level of scrutiny with respect to so-called fundamental rights. Generally, Carolene Products says that courts should defer to the legislature in all cases except those that are suggested as possibilities in footnote 4.(27) But in a system that is essentially designed to be a limited government, one that was rooted in the essential distrust of government, why would we have a constitutional rule of interpretation that is deferential to government? It's absolutely backwards. The system should always place the burden on the government to justify what it's doing. The Court ought always to side with the individual, whether it's property rights, First Amendment rights, rights of privacy or anything else. That's my fundamental problem with the Supreme Court.

(1.) Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. [sub-section] 9601-9675 (1988). (2.) Resource Conservation and Recovery Act of 1976, 42 U.S.C. [sub-section] 6901-6992k (1988). (3.) Pennsylvania Coal v. Mahon, 260 U.S. 393, 415 (1922) ("While property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking"). (4.) Lochner v. New York, 198 U.S. 456 (1905). (5.) Griswold v. Connecticut, 381 U.S. 479 (1965). (6.) Roe v. Wade, 410 U.S. 113 (1973). (7.) United States v. Carolene Products Co., 304 U.S. 144 (1938). (8.) Loretto v. Teleprompter Manhattan CATV, 458 U.S. 419 (1982). (9.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2902 n.18 (1992). (10.) See Michael C. Blumm, Property Myths, Judicial Activism, and the Takings Clause, 23 Envtl. L. 907, 914-15 (1993). (11.) Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 133-34 n.30 (1978). (12.) Lucas, 112 S. Ct. at 2897. See also Daniel A. Farber, Economic Analysis and Just Compensation, 12 Int'l Rev. of Law & Econ. 175 (1992). (13.) Lucas, 112 S. Ct. at 2922-23. (14.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2894-95, 2897 (1992). (15.) William Funk, Revolution or Restatement? Awaiting Answers to Lucas' Unanswered Questions, 23 Envtl. L. 891, 898 (1993). (16.) State ex rel. Thornton v. Hay, 462 P.2d 671 (Or. 1969). (17.) Lucas, 112 S. Ct. at 2902 n.18. (18.) Stevens v. City of Cannon Beach, 835 P.2d 940 (Or. App. 1992), petition for review allowed, 315 Or. 271 (Dec. 22, 1992), where the Oregon Court of Appeals held that a motel owner's attempt to build a seawall was not taken by regulation because the right never existed due to the doctrine of custom recognized by Oregon in Thornton. The appeals court cited to Lucas, 112 S. Ct. at 2899, as support for its decision to decide the issue under the "State's law of property and nuisance." 835 P.2d at 942. (19.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2902 n.18 (1992). (20.) Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 135-36 (1978). (21.) Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 500-01 (1987). (22.) Lucas, 112 S. Ct. at 2894 n.7. (23.) See Keystone, 480 U.S. at 488. (24.) See, e.g., 40 C.F.R. [section] 230 (1992). (25.) See Exec. Order 12630, 53 Fed. Reg. 8859, 8861-62 (1988). (26.) 16 U.S.C. [sub-section] 1531-1544 (1988). (27.) United States v. Carolene Products, 304 U.S. 144, 152-53 n.4 (1938).