Property myths, judicial activism, and the Lucas case.

If you were to put words in my mouth, Professor Huffman,(1) I would fully expect the great environmental goddess in the sky to come down here and strike me down as I speak. You should be comforted to know that, whether I sit on your right or your left, I disagree with almost everything you said. I also find myself troubled by one of Bill Funk's statements. Bill claimed that if the government had to pay for things it got "free," that might change the way we look at environmental regulation.(2) My question is: doesn't that presuppose the existence of development rights? Huffman is, of course, right to suggest that we must have a definition of property rights before we know what the government got free,(3) but his definition assumes that development rights are essential property rights. That is a theory that Anglo-American law has never accepted, and one that I have argued elsewhere is inconsistent with life in the late twentieth century,(4) although it might be appropriate for life on Mars.(5)

Jim Huffman's solution is, I think, very close to that of Justice Scalia, which is to separate property notions from positive law requirements contained in the South Carolina Beachfront Management Act and other environmental and land use regulations. Their idea is to decide rights on the basis of good sound, dependable, concrete property law. That approach makes sense only if you don't understand property law.

The relevant property law is the law of nuisance. Every first-year law student learns that a nuisance is a substantial and unreasonable interference with the use of another person's property or the rights of the public.(6) What constitutes "substantial and unreasonable" is highly uncertain and has always been highly uncertain. Consult Morton Horowitz on the history of nuisance law; people have always had their expectations disappointed because of nuisance law.(7) Moreover, nuisance law includes, there is no question, the background of statutes. What is substantial and unreasonable is a reflection of what the Endangered Species Act,(8) or section 404 of the Clean Water Act,(10) or the South Carolina Beachfront Management Act(10) requires. There's no sharp separation between property law on the one hand and environmental regulation on the other hand. That is simply a false dichotomy.

Nuisance means harm. Why should only courts be in the business of suggesting what is harmful? Why can't statutes, why can't legislators declare harm? Legislatures have greater fact-finding capabilities than courts. In fact, as Don Large pointed out, the old cases, like Mugler,(11) Hadacheck,(12) and Miller v. Schoene(13) were about statutory, not common law nuisances.(14) Those cases involved changes effected by the legislature. It was intellectually dishonest for Justice Scalia to have assumed otherwise.

As Bill Funk said, since Justice Scalia raised without answering the "size of the property" issue, it's hard to know how significant a case Lucas is.(15) My bet is that we're at the end of what we will look back on as a transition era, where the Court was fumbling around with basic concepts. We might date this transition era from the 1987 takings trilogy,(16) especially the Nollan case, where the Court announced that it was going to look more carefully at certain kinds of regulation, and not give as much deference to certain kinds of legislative findings.(17) Many people thought that Nollan was the beginning of a rise of substantive due process in the property rights area,(18) something which Professor Huffman has been advocating for years.(19) That should remind students of constitutional law of the Lochner era, when judges decided large social policy issues and reversed legislative action on the basis of their notions of liberty and contract.(20) Lochner and its progeny helped bring on a constitutional crisis, you may recall.(21)

We seem to be heading toward a new era of close judicial scrutiny in the name of property rights, especially since another case from the 1987 takings trilogy, the First English case,(22) makes money available in takings cases. First English held that landowners may collect damages for temporary takings.(23) There is no question that there is now an active bar interested in arguing taking cases on contingent fees. And there are a few people, like Richard Epstein - who wrote an amicus brief in Lucas on which Justice Scalia relied heavily(24) - who are pushing for a property rights revolution out of their vision of public spiritedness.(25) We also have the Claims Court, which, as Bill Funk mentioned, has taken a much more extreme view of the takings clause than even Justice Scalia. (26) So, in the next few years, we're going to have a lot of cases that will address the issues that the Lucas decision didn't resolve, like the size of the property. When and if they reach the Supreme Court, those cases will mark the end of this transition era and will tell us just how big of a property rights revolution is underway.

As for Lucas, the most sagacious opinion in the case was one that the panelists have not mentioned yet, and that was Justice Souter's.(27) He claimed that the Court should not have granted certiorari, asking "What are we taking this case for?" In Souter's view, the case's fundamental assumption - that Lucas' land had no economic value after application of the regulation - was highly unlikely.(28) In fact, all the other opinions - Justice Kennedy's concurrence and the dissents of Justices Blackmun and Stevens(29) - agree that it was improbable that there was no economic value remaining. The land almost certainly had resale or use value, apart from its development value. So why take this case, especially a Supreme Court that has been extremely stingy about granting standing to environmental plaintiffs?(30) I think Justice Souter had it right; the key assumption on which the Court premised certiorari was a flawed one.

I also have some problems with the history that the Court used in Lucas. The first concern of a conservative Court, one would think, should be the original intent of the Constitution's Framers. Jim Huffman made a passing reference to originalism,(31) but the original intent of the Framers was that compensation would be available only for loss of possession, not for loss of value.(32) There is no evidence to suggest before or after adoption of the Constitution that there existed judicially mandated compensation for loss of value.(33) But Justice Scalia in effect says that this history does not matter. He claims that the relevant history does not begin until 1897, because in that year the Fourteenth amendment made the Fifth Amendment's taking clause applicable to the states.(34) This clever bit of historiography allows Justice Scalia to maintain that takings clause history begins with the twentieth century substantive due process era. This is hardly the history of original intent, hardly the history a truly conservative Court would employ.(35)

One of the more curious aspects of Justice Scalia's opinion was the distinction he drew between the regulation of personalty and the regulation of realty. The state may, according to Justice Scalia, regulate personalty even to the point of eliminating all economic value without transgression of constitutional limits because of the state's "traditionally high degree of control over commercial dealings."(36) The commercial nature of personalty which allows the state to enact a new regulation making the property economically worthless apparently does not characterize real property in the eyes of the Lucas majority. While no one doubts that land use involves non-economic concerns,(37) to intimate that the commercial nature of personalty transactions distinguishes them from real estate transactions seems fanciful. Personalty transactions are frequently inter-familial, where commercial objectives are unlikely.(38) On the other hand, the objectives of David Lucas, a land developer, were almost certainly commercial in nature.(39) Yet Justice Scalia discounted these motives, preferring a more idyllic, static, Jeffersonian notion of the purpose of the realty. This willingness to embrace an anarchistic, eighteenth century notion of the value of land, while at the same time dismissing the original intent of the eighteenth century framers of the takings clause,(40) makes the Lucas opinion seem to be a particularly result-oriented one.

Perhaps the most disturbing aspect of the Lucas case is the Court's willingness to second-guess the legislature. Justice Scalia has placed a burden on legislatures that may be formidable, depending upon how the Court eventually defines the loss of all value, because he has disallowed the traditional judicial deference to legislative findings isn't given.(41) Justice Scalia hints that there is a fundamental right to develop property. That would be a curious result because if there is a fundamental right to develop property, and there are two landowners whose developments conflict, whose right is more fundamental? It is odd to think of property as fundamental because it's so unequally distributed.(42) In that sense, property is inherently different from speech or religion, where individuals stand on relatively the same footing. On the contrary, property is a reflection of the social and economic inequities of past generations.(43) Present inequities in its distribution are the source of numerous problems confronting the nation and the world today. Any decision, like Lucas, which suggests that the development plans of this generation's property holders enjoy constitutional protection is likely to help perpetuate inequities in the current distribution of property. Such a decision might help to establish the Constitution as an unfortunate restraint on the ability of environmental and land use regulation to control the adverse effects of development.

In addition to signalling more exacting judicial scrutiny of legislative regulation of land use, Lucas may also have authorized a significant role for the U.S. Supreme Court in reviewing state Supreme Court taking clause decisions. At first glance, because the Lucas Court establishes state common law nuisance principles as an exception to constitutional takings, it might seem that the state courts have unfettered license to declare which land use projects enjoy constitutional protection and which do not. This could lead to a significant fracturing in takings clause law; one's constitutional property rights might vary significantly from one state to the next, depending on the state's common law background principles of nuisance (or, more probably, the individual predilections of the local judiciary).(44) Justice Scalia's opinion, however, did attempt to restrain this "fifty points of light" approach to the takings clause. In his last footnote, he wrote: "We stress that an affirmative decree eliminating all economically beneficial uses may be defended [by the state] only if an objectively reasonable application of relevant precedents would exclude those beneficial uses in the circumstances which the land is presently found."(45) This language appears to promise Supreme Court review of state court interpretations of state nuisance law to ascertain whether they constitute "objectively reasonable application[s] of relevant precedents." If so, Justice Scalia and his colleagues will have established a federal law of property,(46) another surprising result from a purportedly conservative Court.

The Lucas decision also continues Justice Scalia's assault on legislative attempts to change the common law model of public and private rights with respect to land and environmental regulation. In Lucas, Justice Scalia resurrected common law nuisance as a paradigm for takings jurisprudence. Only seventeen days earlier, in Lujan v. Defenders of Wildlife, he limited Congress' ability to create standing for citizens' groups that did not satisfy traditional common law norms.(47) In Lucas, Scalia employed common law nuisance to suggest that the takings clause creates a constitutionalized, federalized notion of property rights. But Scalia's view may not be the way of the future: Justice Kennedy's concurrence indicates substantial uneasiness with the common law paradigm as the appropriate line between public and private rights:

The Takings Clause does not require a static body of state property law ... I agree with the Court that nuisance prevention accords with most common expectations of property owners who face regulation, but I do not believe this can be the sole source of state authority to impose severe restrictions. Coastal property may present such unique concerns for a fragile land system that the State can go further in regulating its development and use than the common law of nuisance might otherwise permit.(48)

This may be a truer reflection of the Court's real attitude toward the common law paradigm than Justice Scalia's. If so, legislatures will want to carefully scrutinize the chief reasons Justice Kennedy voted to join the majority in overturning the South Carolina statute: (1) the statute's purpose of promoting tourism did not comport with traditional notions of preventing nuisance-like activities, and (2) the South Carolina regulation singled out Lucas' and other undeveloped properties for "the whole burden of the regulation" after allowing other seemingly similarly situated properties to develop.(49)

In the final analysis, from a property lawyer's perspective, Lucas is a flawed decision because it assumes that property rights amount to development rights. Justice Scalia quotes Lord Coke for the proposition that "[w]hat is the land but the profits thereof.?"(50) The answer is: quite a bit. Most obviously, land involves privacy as well as development rights.(51) And it is those rights that the Supreme Court ought to be concerned about zealously protecting from governmental regulation, not development rights like those of Mr. Lucas'.(52) Property rights protecting private autonomy are closer to the speech, religion, and association rights that Americans hold as fundamental. They are all classic minority rights. Development property rights, on the other hand, have never been regarded as fundamental rights, probably because they involve one person exercising economic power over others. Courts have, for most of the twentieth century, allowed legislatures a relatively free hand to regulate development property rights in the public interest. This is no accident; development rights are well represented in the legislatures and hardly need the protection of the judiciary for their existence. Justice Scalia's unwillingness to recognize the critical distinction between development property rights and privacy property rights may be seen, some years hence, to be the Lucas opinion's biggest failure.

(1.) See James L. Huffman, Lucas: A Small Step in the Right Direction, 23 Envtl. L. 901, 906 (1993). (2.) William F. Funk, Revolution or Restatement? Awaiting Answers to Lucas' Unanswered Questions, 23 Envtl. L. 891, 892 (1993). (3.) Huffman, supra note 1, at 902. (4.) See Michael C. Blumm, Public Property and the Democratization of Western Water Law: A Modern View of the Public Trust Doctrine, 19 Envtl. L. 573, 599 n.108 (1989): Professor Huffman's static view of property rights and his absolutist approach to the takings issue assumes a world in which the public interest is simply the aggregate of those fortunate enough to own land. This eighteenth century view of the world not only would fail to produce just or efficient results in the late twentieth century, it would also stifle recognition of the essential public nature of natural resources allocation, substituting an artificial, atomistic view of the world for one in which individual landowner preferences are tempered by community values and collective choice concerning resources in which all have a legitimate stake. See also Michael C. Blumm, The Fallacies of Free Market Environmentalism, 15 Harv. J.L. & Pub. Pol'y 371, 389 (1992) ("The public interest is not simply the aggregate of the existing preferences of this generation's property owners"). (5.) I owe this observation to Dan Farber who, while presenting a takings paper to the LL.M. Seminar at Lewis and Clark a few years ago, suggested that Professor Huffman's theory might well work for Martians, but he doubted its utility on this planet. Farber subsequently published his paper which Justice Stevens relied on in his dissent in Lucas. See Daniel A. Farber, Economic Analysis and Just Compensation, 12 Int'l Reev. of Law & Econ. 175 (1992), cited in Lucas v. South Carolina Coastal Council, 112 S. Ct. 2917, 2922 n.5 (1992) (Stevens, J., dissenting). (6.) Restatement (Second) of Torts [subsection] 821A-F (1977). (7.) Morton J. Horowitz, The Transformation of American Law, 1780-1860, at 74-78 (1977). (8.) 16 U.S.C. [subsection] 1531-1544 (1988). (9.) 33 U.S.C. [section] 1344 (1988). (10.) 16 S.C. Code Ann. [subsection] 48-39-250 to -360 (Law. Co-op. Supp. 1992). (11.) Mugler v. Kansas, 123 U.S. 623 (1887). (12.) Hadacheck v. Sebastian, 239 U.S. 394 (1915). (13.) 276 U.S. 272 (1928). (14.) See Donald W. Large, Lucas: A Flawed Attempt to Redefine the Mugler Analysis, 23 Envtl. L. 883, 888 (1993). (15.) Funk, supra note 2, at 893 (citing Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2894 n.7. (1992)). Note, however, that while footnote 7 raises the "size of the property" issue as if it were unresolved, the Lucas decision does not overturn either Keystone Bituminous Coal Ass'n. v. Debenedictis, 480 U.S. 470, 496-502 (1987) (rejecting a narrow view of the affected property by refusing to confine consideration only to the two percent of the property subject to the restriction, even though the state defined the support estate as a distinct property interest), or Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 136-37 (1978) (rejecting a narrow view of the affected property by refusing to confine consideration only to the development rights in the airspace above the terminal, considering also existing uses and transferable development rights, available to other locations). See also Andrus v. Allard, 444 U.S. 51, 65-66 (1979) (holding that "where an owner possesses a full bundle of property rights, the destruction of one |strand' of the bundle is not a taking because the aggregate must be viewed in its entirety"). In Penn Central, the Court explained: |Taking' jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated. In deciding whether a particular governmental action has effected a taking, this Court focuses rather both on the character of the action and on the nature of the interference with rights in the parcel as a whole - here the city block designated as the |landmark site.' 438 U.S. at 130-31. Thus, despite Lucas' footnote 7, the Keystone, Penn Central, and Andrus cases have all have resolved the "size of the property" issue in favor of a broad view of the property. Until the Court overturns these decisions, they are the law of the land. (16.) See generally Donald Large, The Supreme Court and the Takings Clause: The Search for a Better Rule, 18 Envtl. L. 3, 35-50 (1987). (17.) See Nollan v. California Coastal Comm'n, 483 U.S. 825, 840-41 (1987). (18.) See Robert A. Williams, Jr., Legal Discourse, Social Vision and the Supreme Court's Land Use Planning Law: The Genealogy of the Lochnerian Recurrence in First English Lutheran Church and Nollan, 59 U. Colo. L. Rev. 427, 463 (1988). (19.) See, e.g., James L. Huffman, A Coherent Takings Theory at Last: Comments on Richard Epstein's Takings: Private Property and the Power of Eminent Domain, 17 Envtl. L. 153 (1986) (book review). (20.) Lochner v. New York, 198 U.S. 45 (1905). (21.) See generally William E. Leuchtenburg, The Origins of Franklin D. Roosevelt's "Court-Packing" Plan, 1966 Sup. Ct. Rev. 347. (22.) First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304 (1987). (23.) Id. at 321. Interestingly, ultimately there was no taking in First English. See First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 210 Cal. App. 3d 1353, 1374 (1989), cert. denied, 493 U.S. 1056 1990). (24.) See Brief of the Institute for Justice as Amicus Curiae in Support of Petitioner, Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886 (1992) (No. 91-453), reprinted in 25 Loy. L.A. L. Rev. 1233 (1992). (25.) See Richard A. Epstein, Takings: Private Property and the Power of Eminent Domain (1985). (26.) See Funk, supra note 2, at 893. See also Thomas Hanley, A Developers Dream: The United States Claims Court's New Analysis of Section 404 Takings Challenges, 19 B.C. Envtl. Aff. L. Rev. 317 (1991). (27.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2925-26 (1992) (Souter, J., separate statement). (28.) Id. (29.) See id. at 2902-03 (Kennedy, J., concurring); id. at 2908 (Blackmun, J., dissenting); id. at 2919 (Stevens, J., dissenting). (30.) See infra note 47 and accompanying text. (31.) See Huffman, supra note 1, at 902. (32.) See Lucas, 112 S. Ct. at 2915 (Blackmun, J., dissenting). See also Mugler v. Kansas, 123 U.S. 623, 668-69 (1887). (33.) See Stephen A. Siegel, Understanding the Nineteenth Century Contract Clause: The Role of the Property-Privilege Distinction and "Takings" Clause Jurisprudence, 60 S. Cal. L. Rev. 1, 76 (1986); William M. Treanor, Note, The Origins and Original Significance of the Just Compensation Clause of the Fifth Amendment, 94 Yale L.J. 694, 711 (1985). (34.) See Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2900 n.15 (1992) (citing Chicago B. & Q.R. Co. v Chicago, 166 U.S. 226 (1897)). (35.) Cass Sunstein has explained the Relinquist Court's uneven approach to original intent by referring to the Court's adherence to Burkean philosophy. According to Sunstein, the Burkean approach of the Court is evident in (1) its skepticism of legislative or judicial innovation as social engineering, and its belief in stability as an independent good; (2) its emphasis on tradition, and its willingness to test principles by experience, not theoretical consistency; (3) its suspicion of theory, and its assumption that the past has wisdom because it tests principles by individual outcomes; and (4) its embrace of incrementalism, out of a fear that unleashing of forces inattentive to the past will produce untoward consequences. Cass R. Sunstein, Remarks at the Constitutional Law Session of the Association of American Law Schools (Jan. 5, 1993). (36.) Lucas, 112 S. Ct. at 2899. (37.) See generally Margaret J. Radin, Property and Personhood, 34 Stan. L. Rev. 957 (1982). (38.) See generally Elias Clark et al., Cases and Materials on Gratuitous Transfers: Wills, Intestate Succession, Trusts, Gifts and Future Interests 2 (2d ed. 1977) (estimating that of $100 billion of wealth passing at death each year, less than nine percent is real estate and indicating that there has been no systematic attempt to estimate the overall dollar value of gratuitous transfers). See also Ray Andrews Brown, The Law of Personal Property 13 (2D ed. 1955) (indicating that distinctions in property law antedate "the development of our modern commercial life"). (39.) See Lawrence Watters, Introduction and Decision, 23 Envtl. L. 869, 870-71 (1993). (40.) See supra notes 32-35 and accompanying text. (41.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2894 (1992). (42.) James Madison, in The Federalist No. 10, said that "the most common and durable source of factions has been the various and unequal distribution of property." Quoted in Daniel A. Farber & Philip P. Frickey, Law and Public Choice: A Critical Introduction 10 (1991). (43.) See, e.g., John W. Chapman, Justice, Freedom, and Property, in Property: Nomos XXII 289, 316-317 (J. Roland Pennock & John W. Chapman eds. 1980). (44.) Thus, in Oregon, where courts have recognized the public's customary right to use the ocean beaches, constitutional property rights would be considerably less extensive than in the majority of states which do not recognize such rights. See, e.g., State ex rel. Thornton v. Hay, 462 P.2d 671 (Or. 1969) (holding that private landowner could not interfere with public use of dry sand area of beach because of longstanding custom of public use); Stevens v. City of Cannon Beach, 835 P.2d 940 (Or. App. 1992), petition for review allowed, 315 Or. 271 (Dec. 22, 1992) (relying on both Thorton and Lucas to hold that a motel owner's attempt to build a seawall was not a property right taken by regulation, since the right never existed under the Oregon common law of customary rights). (45.) Lucas, 112 S. Ct. at 2902 n.18. (46.) On the remand of Lucas from the Supreme Court, the South Carolina Supreme Court failed to find any state common law basis for the restriction on Lucas' property and thus remanded to the circuit court only on the issue of the amount of actual damages sustained by Lucas due to the temporary taking of his property by deprivation of use. See Lucas v. South Carolina Coastal Council, 1992 WL 358,097 at *2 (S.C. Nov. 20, 1992) (unpublished opinion). (47.) Lujan v. Defenders of Wildlife, 112 S. Ct. 2130, 2143-45 (1992). See Cass R. Sunstein, What's Standing After Lujan: Of Citizen Suits, "Injuries," and Article III, 91 Mich. L. Rev. 163 (1992) (criticizing Justice Scalia's interpretation of the text and history of Article III). Justice Scalia has been a longstanding proponent of narrowing the scope of judicial review, restricting congressional ability to confer standing, and increasing the separation of powers to eliminate judicial protection of interests that could be protected through the legislative process. See Antonin Scalia, The Doctrine of Standing as an Essential Element of the Separation of Powers, 17 Suffolk U. L. Rev. 881 (1983). (48.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2903 (1992) (Kennedy, J., concurring).