Ronit Levine-Schnur & Gideon Parchomovsky, Is the Government Fiscally Blind? An Empirical Examination of the Effect of the Compensation Requirement on Eminent Domain Exercises
, 45 J. Legal Stud.
(forthcoming 2016), available at Penn Law: Legal Scholarship Repository Paper 1595
(Oct. 13, 2015).
This article delves into the issue of compensation, which looms large in debates about eminent domain for two reasons. The first reason is the concern that owners may be systematically undercompensated when property is taken by eminent domain because the constitutionally mandated “fair market value” measure of compensation, articulated in United States v. Miller (U.S. 1943), does not take account of subjective losses.
The second is the presumption, especially prevalent among law and economics scholars, that the compensation requirement cures the “fiscal illusion” problem (i.e., the fact that government actors presumably ignore costs that are not reflected in their budgets). According to this view, compensation ought to deter excessive takings by forcing “takers” to internalize the financial cost of their actions. This assumption is reflected in post-Kelo v. New London (U.S. 2004) state eminent domain reforms that mandate above-market compensation for certain categories of takings. It is also offered as a justification for compensating certain categories of “regulatory takings.”
Unfortunately, there is a dearth of scholarship empirically testing the fiscal illusion hypothesis. One particular challenge is disentangling the political and financial pressures influencing takings policies. For example, a handful of studies found that federally funded takings slowed following the enactment of the federal law mandating additional compensation for relocation assistance in the early 1970s.
These studies are cited for the proposition that heightened compensation deters the exercise of eminent domain. However, the relocation assistance mandate was itself a response to a mounting concern that the takings for urban renewal and interstate highway construction were excessive and unjust. Given the political pressure to reduce takings activity, the causal connection between the increased compensation mandate and the decline in the use of eminent domain that followed is difficult to establish. More recently, the post-Kelo backlash demonstrated the powerful effects of political pressure on governmental decisions whether or not to take property by eminent domain.
Drawing upon a novel data set from Israel, Ronit Levine-Schnur and Gideon Parchomovsky begin to fill the gap in our understanding about the connection between compensation and takings in their forthcoming article, Is the Government Fiscally Blind? An Empirical Examination of the Effect of the Compensation Requirement on Eminent Domain Exercises. In contrast to the United States, where compensation is constitutionally mandated whenever property is taken by eminent domain, Israeli law does not mandate compensation for all physical takings of real property. In fact, local governments are permitted to take up to 40% of a parcel of property for certain public uses without providing any compensation. Compensation is graduated when between 41% and 99% of a parcel is taken (e.g., if a local government takes 45% of a parcel, the compensation due is 5% of the parcel’s value; if it takes 75% of the parcel, the compensation due is 35%, etc.).
Moreover, in 2001, the Israeli Supreme Court—in a sharp departure from past practice—carved out an exception for total takings, requiring the government to pay full compensation whenever it takes the entirety of a parcel. (Prior to 2001, even total takings enjoyed the 40% compensation exemption.) This legal shift set up a perfect natural experiment, since the change presumably should have incentivized governments to avoid total takings after 2001.
Levine-Schnur and Parchomovsky analyzed all exercises of eminent domain by the City of Tel Aviv between 1990 and 2014 (a total of 3140 cases) to determine whether the takings behavior was influenced by these unique compensation rules. They expected to see two “notch points” in the City’s eminent domain behavior: First, they expected that takings would be bunched around the 40% compensation exemption; second, in the post-2001 period, they expected to find fewer total takings, which cause the government to lose the exemption. They found neither.
On the contrary, only 3% of takings fell in the 35 to 45% range, and most takings in the exempt category bunched around 25%. The only other discontinuity point was at 100% of the total parcel: nearly half of takings were total takings. Moreover, the rate of total takings increased after the 2001 legal change. That is to say, the Israeli Supreme Court’s decision that mandated full compensation for total takings had no observable effect on the City of Tel Aviv’s takings behavior.
At a minimum, these findings suggest that the compensation requirement is not the only factor influencing government takings behavior. As Levine-Schnur and Parchomovsky observe, “[O]ur findings refute the claim that without mandatory compensation, government officials will be oblivious to the private cost of their actions and will take the maximum percentage of every lot that they can possibly take without compensation.” Indeed, the following are most certainly true: The government might take parcels in their entirety for political reasons, since partial takings are not only incompletely compensated in Israel but may leave owners with dramatically devalued remnants of property. The government might also take entire parcels because it needs them (or believes that it needs them) in their entirety. And, the government might take less than the 40% safe harbor because it doesn’t need the excess land and doesn’t want the trouble of maintaining post-takings vacant property.
Unfortunately, the authors’ data set focuses on a major urban city situated in a specific cultural context, making it difficult to extrapolate the findings to other contexts (e.g., suburban U.S. localities). Indeed, this “anecdata” difficultly represents a persistent problem with all efforts to empirically measure eminent domain activity since, by definition, all real property is situated in specific places and cultural contexts. Still, Is the Government Fiscally Blind? represents a significant contribution to the literature on eminent domain. It also invites further investigation into the effects of graduated compensation requirements both domestically (in states that have increased compensation levels above the federal constitutional minimum) and internationally.
Cite as: Nicole Stelle Garnett, Does Compensation Deter Takings? New (and Surprising) Evidence
(September 28, 2016) (reviewing Ronit Levine-Schnur & Gideon Parchomovsky, Is the Government Fiscally Blind? An Empirical Examination of the Effect of the Compensation Requirement on Eminent Domain Exercises
, 45 J. Legal Stud.
(forthcoming 2016), available at Penn Law: Legal Scholarship Repository Paper 1595 (Oct. 13, 2015)), https://property.jotwell.com/does-compensation-deter-takings-new-and-surprising-evidence/
Yxta Maya Murray, Detroit Looks Toward a Massive, Unconstitutional Blight Condemnation: The Optics of Eminent Domain in the Motor City
, 23 Geo. J. on Poverty L. & Pol’y
395 (2016), available at SSRN
One usually thinks of law review articles as detached, dry, formal, and arcane. This is particularly true of those dealing with property. Even if articles are billed as an “interdisciplinary” effort, this generally means the occasional introduction of similarly detached and desiccated material from other fields.
The article Detroit Looks Toward a Massive, Unconstitutional Blight Condemnation: The Optics of Eminent Domain in the Motor City, by Yxta Maya Murray, shatters that mold. In this work, Murray – a legal scholar and the author of six novels – writes of the infinitely complex layers of law, politics, psychological bias, and human need that eminent domain involves in a way that it has not been done before.
Eminent domain has long been an extremely controversial idea in the American legal and political landscape. Indeed, the Kelo decision can well be described as the most universally vilified United States Supreme Court decision in the last twenty years. That decision, which upheld the taking of modest private homes for the purpose of commercial and residential economic development, ignited a firestorm of controversy. Some of this reaction might be discounted as unjustified popular hysteria, fueled by politicians and interest groups with little understanding of the true legal issues involved. But the breadth and depth of public outrage indicated that something about this decision tapped a raw nerve beyond the usual concern about winners and losers in politics and government.
Particularly powerful, in my view, was the lurking recognition that the losers in that case – and other eminent domain cases – were preordained. Justice O’Connor, in her famous dissent in Kelo, expressed the view that after the decision “all private property is now vulnerable to being taken and transferred to another private owner,” in the service of some imagined public benefit. But we know better. The risk of loss of one’s home through eminent domain is not a risk equally extended to all; it is, as a structural matter, extended only to a particular class of persons. If the goal is to create “new jobs and increased tax revenue,” or “beautiful …, spacious …, [and] well-balanced spaces,” as stated in Kelo, there is little doubt how the older, “run-down” neighborhood will fare as compared with an area of half-million-dollar homes with manicured lawns and gardens.
The idea that the community-destruction aspects of eminent domain fall on those without political and economic power is not new. Although Murray agrees with this, her article takes on a much deeper and more difficult issue: What if eminent domain is used to eliminate blocks of presumably vacant and crumbling structures that everyone – including politically and economically disenfranchised residents – believe must be removed? What if – in other, more specific words – eminent domain is used as a transformation strategy in Detroit?
Murray introduces us to Detroit, the real Detroit, through both narratives and photographs. “Detroit,” she writes, “is the most dilapidated city in the nation and desperately needs to repair or remove the unsound housing that clutters its many neighborhoods.” (Pp. 397-98.) Murray has long been a critic of eminent domain, with particular criticism of so-called “blight condemnation.” Such programs, she has written, exploit and normalize racial and class-based vulnerabilities that determine the urban targets of removal efforts. However, in this article – through detailed interviews with developers and city residents, legal and political analysis, and relentless critiques of her own and others’ points of view – she explores the issues more deeply. She concludes that eminent domain, as a tool, might in fact be used in a way that vindicates both human and institutional values.
The ride toward that conclusion is both unsparing and rough. First, Murray points out that the Detroit Blight Removal Task Force, which is in the process of condemning dilapidated properties under an enhanced version of the city’s Nuisance Abatement Program, is operating in violation of both state and federal law. Under this scheme, titles of condemned property are transferred to the Detroit Land Bank Authority with no payment of compensation.
Next, Murray discusses how the views of political and economic decisionmakers are the product of what she calls the “optics” of eminent domain. (P. 421.) In a “downward-looking” view, dilapidated neighborhoods are equated with threats of illness and contagion. Blight is described in these accounts as a “malignant disease,” a “cancer” that is “contagious” and “radioactive,” as well as a “calamity,” a “tumor” to be excised. (P. 425.) In pictures and in narrative accounts, including those by photojournalists, poverty is mesmerizing, which gives observers a kind of “voyeur’s pleasure.” (P. 421.) The “upward” or aspirational gaze, on the other hand, contemplates visions of commercial beauty and affluence such as have been achieved with Detroit’s “Starbucks-bejeweled downtown” (P. 401). Images are created of coffers filled with jobs and money, and developers and allied politicians are portrayed as heroes with out-sized powers.
In both visions, the poor people who live in condemned neighborhoods are rendered invisible. For instance, a neighborhood after blight removal is seen by eminent domain architects as a “blank slate,” a “frontier.” (P. 432.) As Murray quotes one African-American woman, who works with the homeless, “‘[p]eople in Detroit don’t like that because … [it] means there’s nothing here.’” (P. 429.)
Murray’s critique of such visions, however, is not – itself – uncritical or simplistic. She forces herself to reckon, by her own account, with her own personal biases and the lenses through which she sees the world. She also wrestles with the truth – expressed by those she interviewed on Detroit’s streets – that “you can’t be a city full of poor people forever.” (P. 407.) Some economic development and capital investment is necessary to improve conditions and reduce abject poverty.
Murray’s suggested solution is surprising, in a way: that formal eminent domain should be used, with the stated goal of the alleviation of poverty in condemned neighborhoods. However, this is eminent domain with a twist. The decisionmakers will not be the usual city politicians and developers, left to their own judgment. Rather, “officials should 1) avoid using ‘anti-poverty’ as a cover for [economic programs that primarily benefit the upper classes] …; 2) guard against the condescension and paternalism [that interviews with people on the street consistently identified]; and 3) ensure that the agenda [for eradicating Detroit’s poverty traps] be shaped … by low-income people,” (P. 448) who understand those problems and are less likely to peer disgustedly at themselves.
This is not easy reading. We, in the academy, are not used to relentless and no-holds-barred critiques of our own motivations and biases. Yet, if we are honest, we know that Murray is right when she states that “legal actors who engage a low-income community in an eminent domain (or any other) scheme [for the purpose of rehabilitating it must] learn from that community.” (P. 449.) The goal is not simply to come up with another test – such as the “alleviation of poverty” or “awareness of human dignity” – in the legal equation of eminent domain; rather, we must learn how “to be with low-income people.” (Pp. 449-50.) Those who want to address the nation’s severe problems in Detroit and other urban centers must create “a practice of caring about” low-income people, pay attention to them, and challenge their own perspectives and ways of relating to others. (P. 452.)
Murray is not naive; she acknowledges that “I risk catastrophic understatement when I admit that this proves [to be] a very ambitious aspiration, even among intimates.” (P. 450.) “Disgust, hate, prurience, and condescension are difficult to prove [and graph].” (P. 447.) However, perhaps it took a novelist and scholar to figure out that we should try.
Cite as: Laura Underkuffler, The Challenge of Eminent Domain
(August 11, 2016) (reviewing Yxta Maya Murray, Detroit Looks Toward a Massive, Unconstitutional Blight Condemnation: The Optics of Eminent Domain in the Motor City
, 23 Geo. J. on Poverty L. & Pol’y
395 (2016), available at SSRN), https://property.jotwell.com/the-challenge-of-eminent-domain/
Looking at property law from only one particular national perspective – even if that perspective is impressive, as is the case with U.S. law – is, in our globalising world, no longer possible. Markets are integrating, both at a regional and at a worldwide level, and what happens elsewhere, in both economic and legal terms, affects all of us.
This is how European Union law, and the laws of the E.U. Member States, may begin to affect U.S. lawyers (but certainly not them alone) after the agreement on the Transatlantic Trade and Investment Partnership (TTIP) enters into force. The creation of one integrated transatlantic market will result in more and more areas where U.S. and E.U. law will meet and may result in legal conflict.
The European Union does not have one system of property law. Each Member State has its own law of property. However, E.U. internal market law, with its freedom of goods, services, capital, and persons, has an increasing impact on national property law. More and more the question is raised if a European property law could be developed.
In his recently published article (based upon his recently published book), Christian von Bar from the University of Osnabrück in Germany explains his view on how a European property law could look like. His approach is based on the civil law tradition, more particularly the German civil law tradition. In that tradition, the academic analysis of the law is highly abstract and aimed at overall systematisation by presenting strictly defined concepts and meticulously formulated rules. As a consequence, law professors play a prominent role in the process of lawmaking and adjudication.
The civil law tradition in France is less rigorous and more open. To give but one example from property law: Under the German Civil Code, “ownership” is the most complete right a person can have regarding a physical thing (§ 90 German Civil Code). As a consequence of this definition, ownership of claims does not exist; you can only be “entitled” to a claim.
It may be obvious that, given this very strict definition, German property law has considerable problems incorporating virtual ownership. In France, however, “ownership” is not so much a strictly delineated concept, but far more an open “notion.” Under French law, therefore, ownership of claims is possible. Do not make the mistake that this is just a play of words: In a codified civil law system, different rules may apply to ownership in comparison to entitlement. Understanding concepts is vital and definitions matter, also in legal practice.
Christian von Bar’s article clearly reflects the German style of legal thinking. In a long and carefully built line of arguments, he describes the common features of the European property law systems. His focus is on not only the civil law tradition in Germany, France, or the Scandinavian countries (which are far more open to a case-based than a rule-based approach), but also the common law tradition that can be found in England, Wales, Northern Ireland, and Ireland.
In Europe we also have several so-called “mixed” legal systems (Cyprus, Malta, and Scotland) and so-called “micro” legal systems (e.g. the Channel Islands, where old customary property law from the Duchy of Normandy still applies, and Liechtenstein). The article does not discuss these mixed and micro systems.
In his article von Bar asks himself three questions: (1) Can sufficient common elements be found in the legal systems of the European Union to establish a European law of patrimonial rights with effect against third parties (patrimony meaning a person’s assets or estate), (2) what can such a European “property” law say about the content of such rights, and (3) how can the various property law systems be analysed in such a way that they can be studied from an overall viewpoint, without ignoring regional differences? He then asks himself, first of all, what “property law” is and what “property rights” are, which objects of property law can be found, and which types of property rights can be distinguished.
The objects of property rights are classified by von Bar as, first of all, everything that is not a person, but still is an entity; things are those objects (entities) as to which property rights are possible. He then goes on to distinguish tangibles from intangibles (“normative things”) and qualifies a plot of land as a normative thing with a physical substratum (“normative Sachen mit einem physischen Substrat”).
It is the law that creates ownership of a particular plot of land, by delineating what the law accepts as plots of land. As long as there is no, by legal definition, plot of land, there can be no object of property law and hence no ownership of land. This qualification should be understood against the background of the German system of land registration under which, to mention but one aspect, a transfer of land cannot take place without the exact boundaries of the relevant plot of land having been set before the transfer becomes effective.
In a highly interesting part of von Bar’s article, he then discusses the various types of property rights by describing these in terms of physical characteristics of their object, and the temporal nature and content of such rights. Certain property rights are possible only with regard to tangibles (such as, in the German tradition, ownership), other property rights are possible with regard to both real and normative things (e.g. security rights). Some property rights are of unlimited duration (such as ownership), others are limited in time, whereas, again, some property rights give you almost complete power over an object (again: ownership) and others only limited powers (security rights).
The study offered by von Bar comes rather close to the “new private law” analysis, recently advocated by, among others, Henry Smith from Harvard Law School. The new private law analysis looks at interactions between individuals and firms from the perspective that contracts, torts, and property are connected to one another, belonging to one system of law: private law, distinguished from public law, which deals with interactions between individuals and the government. For property lawyers who are interested in this approach, von Bar’s study shows how European legal scholarship could contribute to this development in the U.S.
Property often seems like a force field, a socially protected clearing in which an owner can act (within specified bounds) or do nothing at all. On this account, property is institutionalized noninterference. Trouble arises, we are given to understand, only when someone—an owner, an outsider, or the government—does something that impinges on someone else’s entitlements. The pervasive language of exclusion and encroachment, of boundaries defended and breached, cultivates the perception that property law operates to constrain action, not to compel it.
Two recent articles challenge the idea that property law is, or should be, complacent about inactivity. Nadav Shoked’s piece, The Duty to Maintain, examines the affirmative obligations that law routinely places on owners and finds them to be normatively well-grounded. And in Passive Takings, Christopher Serkin suggests that there are circumstances in which government should be subject to takings liability for passivity as well as for action. Each of these pieces emphasizes the contingent and interdependent nature of property interests, and each highlights the weakness and ultimate incoherence of using a line between acts and omissions to determine the duties owed by and to owners.
Shoked uses the recent foreclosure crisis as a central example and a lens through which to evaluate the normative status of legal obligations to care for and maintain one’s property. The duty to keep one’s property to a certain standard is a quite longstanding one, however, manifested in myriad well-established doctrines, as Shoked demonstrates. Bringing these pockets of affirmative obligations together shows that property law is a mechanism for distributing obligations, not just for protecting spaces from cross-boundary incursions. Shoked’s analysis complements recent accounts of the affirmative obligations of owners by Larissa Katz and Robert Ellickson; instead of focusing on what duties owners are particularly well-positioned to perform, Shoked considers what duties are fairly implied from relationships among property owners. In so doing, he stresses the socially embedded nature of each owner’s holding and the potential for omissions as well as acts to generate negative spillovers.
Recognizing the positive obligations of ownership puts pressure on another well-accepted but faulty idea: that ownership is always wanted or voluntary. As Shoked observes, the duties attaching to ownership can produce negative-value property, like Detroit lots that would not sell for one dollar. Neglected property represents a social threat precisely because it exposes a gap in a usually unnoticed system of widely dispersed and continually ongoing maintenance activity undertaken by owners collectively. The need to keep that system in good working order connects to a set of questions I have touched on previously: what forms of unwanted ownership should the law tolerate or enforce, and when should it help owners unburden themselves of undesired ownership?
Just as an owner’s inaction can generate harm when it interacts with natural or human-made forces, so too can a government’s inaction. Here we come to Serkin’s piece, which suggests that the government could commit a taking by failing to act. His core example is sea level rise, which could interact with a previously innocuous regulatory constraint (such as a limit on building height) to deprive an owner of valuable use of her land. Other kinds of government inaction can generate momentous losses for private property owners as well, as where the government has deprived owners of self-help alternatives but then fails to act itself. As Serkin is careful to note, not all such lapses will rise to the level of a taking, just as not all affirmative acts that diminish value constitute takings. Moreover, even those omissions that constitute takings would not obligate the government to act; it could instead pay just compensation to avoid concentrating burdens on particular landowners. Yet the government is put to a choice—act or pay—that mirrors the one choice it faces when its actions constitute a taking.
Serkin’s concerns about passivity resonate for a reason: Inaction rarely occurs in a vacuum, but rather against a backdrop of pervasive and indeed inevitable governmental involvement in constructing the conditions of resource access, including the allocation of property entitlements. The web of past and ongoing government involvement in property interests can turn regulatory continuity or passivity into a dynamic reallocation of societal burdens at least as significant as new regulatory impositions. Such an idea is hardly far-fetched. Indeed, a recent Maryland decision, Litz v. Maryland Department of the Environment, 446 Md. 254 (2016), recognized that inaction can generate a viable takings claim, at least where past actions give rise to a duty towards the landowners in question.
Both Shoked and Serkin enrich our understanding of property rights by focusing on the potential for harm to flow from inactivity. Their ideas could be extended further by questioning not only the line between acts and omissions, but also the (equally mutable) line between harms and benefits. Social losses from inactivity encompass not only the damage inflicted by neglected homes and rising tides—large as those may be—but also the opportunity costs of failing to put together the most valuable urban uses and connect them with the most useful infrastructure and institutional arrangements. While the doctrinal sources of duty that Shoked and Serkin examine may not stretch far enough to address these latter sorts of losses, the project of property must ultimately find ways to do so. By chipping away at assumptions about inaction, Shoked and Serkin offer fresh insights for adapting property to meet these evolving challenges.
Timothy M. Mulvaney, Legislative Exactions and Progressive Property
, Harv. Envtl. L. Rev.
(forthcoming), available at SSRN
In Legislative Exactions and Progressive Property, Professor Timothy Mulvaney provides a clear and thoughtful discussion of whether legislative exactions should be subjected to the same heightened level of scrutiny that applies to administrative exactions under current Supreme Court doctrine. For those who view exactions as a device that internalizes externalities and forces owners wishing to intensify their use of land to bear the full cost of their development, the conventional wisdom is that Nollan v. California Coastal Commission and Dolan v. Tigard should be read as narrowly as possible.
Both of those cases addressed only administrative exactions and did not need to decide the question of whether similar rules should apply in cases in which the exaction is imposed through more generally applicable legislation. Those who believe that Nollan and Dolan hold government actors to an unreasonably high standard may naturally resist expanding their reasoning to legislative exactions. While acknowledging and largely agreeing with this first-order reasoning, Mulvaney notes second-order effects of confining those two cases to administrative exactions. These second-order effects, he argues, might be more harmful in the long run than those who object to expanding the reach of Nollan and Dolan may have initially recognized.
Mulvaney notes and discusses three straightforward and persuasive reasons why progressive property scholars may object to interpreting Nollan and Dolan as applying to legislative exactions: reliance on “the checks and balances of democratic government, the likelihood of reciprocal advantages stemming from legislation, and an aversion to judicial usurpation of the legislative process.” (P. 8.) But he discourages too much reliance on the initial appeal of these arguments by noting that any approach that applies a higher level of scrutiny to administrative exactions risks marginalizing administrative action more generally, which may lead to closer scrutiny of administrative acts in other contexts.
More broadly, any interpretation that leads regulators to rely more heavily on inflexible legislative processes reduces the ability of regulators to consider the individual facts presented by particular humans who may merit the greater flexibility that only administrative exactions can afford. By raising these second-order concerns, Mulvaney is warning progressive property scholars to be careful what they wish for.
Mulvaney’s warning springs from the progressive property movement, which encourages the consideration of individualized factors when assessing what ownership means and when deciding how a land use law should be applied to a particular owner. Relying on this influential line of scholarship, he suggests that only more flexible administrative exactions can be tailored to these circumstances and—citing the work of several progressive property scholars—that the use of legislative exactions exclusively might disfavor marginalized groups. His creative and thorough review of the literature seeks to caution progressive property scholars that attempts to limit the perceived damage of Nollan and Dolan in this way might backfire, or at least to consider the question with care before assuming otherwise.
But Nollan, Dolan, and the more recent Koontz v. St. Johns River Water Management District give progressive property scholars plenty to worry about already. To the extent the Supreme Court seems attentive to the individualized circumstances of particular property owners, it seems most concerned with the rights of those who wish to intensify existing uses of property, a group that may overlap little with the types of owners of concern to progressive property scholars.
Thus, in Dolan, the Court demanded a high level of correlation between the externalities the owner would create—increased road traffic from an enlarged store and increased water runoff from an expanded and paved parking lot—and the measures the government sought to impose to ameliorate those problems. In Koontz, the Court required the government defendant to make a similar showing before it could impose a monetary fee on a landowner to offset the negative environmental effects the owner’s proposed development was expected to have on local water resources. The Court shows heightened concern for the rights of the owner that wishes to use property more intensively, with a concomitant reduction in concern about the rights of that owner’s neighbors.
These applicants may be the sorts of owners whose stories concern progressive property scholars. Or they may simply be what many takings plaintiffs are: property owners who believe that government efforts to require them to bear costs they would rather not bear infringe unconstitutionally on their private property rights. And scholars are likely to disagree about the extent to which these two groups intersect. But it is not clear that increased consideration of individualized stories will benefit the types of owners (or neighbors) about which progressive property scholars are most concerned.
Justice Alito’s opinion for the five-member Koontz majority is instructive. It portrays regulatory officials as overreaching bureaucrats who must be vigilantly monitored rather than as public servants charged with protecting the common good. If they are not supervised, regulatory officials may engage in “out-and-out…extortion.” (Koontz, 133 S. Ct. 2586, 2595). They might seek “to evade the limitations of Nollan and Dolan.” (Id.) Their activities may be “pressuring someone into forfeiting a constitutional right” and “coercively withholding benefits from those who exercise them.” (Id.) The Koontz Court demonstrates no similar concerns about the behavior of property owners.
In short, exaction cases present a real problem to progressive property scholars, who are concerned with individual human stories. The reason is that these cases, much like nuisance cases, often present facts in which an owner’s gain is a neighbor’s loss. Regulatory takings law, however troubled and confusing it may be, seeks to strike a balance between the applicant’s right to use property and the community’s right not to suffer unreasonably from that use.
Mulvaney insightfully reminds us that progressive property scholars need to be concerned with the individual parties on both sides of that dispute and warns us against reflexively assuming that the wisest course is to limit Nollan and Dolan to administrative exactions. It is entirely possible, though, that after reflecting on the issues Mulvaney raises, those same scholars will conclude that their initial instinct was correct, and that the application of Nollan and Dolan to legislative exactions will cause more harm than good. At least now they will have reached that conclusion after a more sophisticated consideration of the issues his fine article highlights.
Joseph Blocher & G. Mitu Gulati, A Market for Sovereign Control
, Duke L.J.
(forthcoming 2016), available at SSRN
International law currently finds itself in a bit of a jam. The time-honored principle of territorial integrity grants nations near-absolute control over their borders. Central governments, for example, routinely reject boundary changes proposed by neighboring states or internal secessionist movements. At the same time, however, the increasingly relevant principle of self-determination demands that all peoples have the opportunity to choose their own national affiliations, govern themselves, and develop free political institutions.
What happens when these two doctrines come into tension? When does the desire for self-determination and the search for better governance trump the inviolability of international borders? And how should the international community respond when a local region seeks to escape an unjust parent country?
In a new article, Joseph Blocher and Mitu Gulati propose an audacious solution to this defining quandry of modern international relations. Blocher and Gulati attempt to solve the problem of international boundary disputes and increase good governance by introducing property theory into the arena of international law. The crux of their idea is that a nation’s control over its borders should become subject to a liability rule rather than a property rule if it discriminates against one of its constituent regions.
Under Blocher and Gulati’s proposal, a nation that denies equal treatment to a local area would lose the ability to prevent a secession. However, the authors also insist that the government receive compensation for its lost land—compensation that would be set by a global “market” for sovereign territory.
For example, imagine that the Sami people of northern Finland believe they would be better off living under a different government. Under the current legal regime, the Sami have few options—the national government of Finland can veto any suggested change, no matter how reasonable.
Blocher and Gulati argue that this shouldn’t always be so. They contend that if Finland has denied the Sami meaningful access to the government, then the Sami desire for self-determination should trump the Finns’ absolute control over the region. Under their proposal, the Sami region could exit Finland with the support of the international community, provided that it compensates the government in Helsinki for the loss of territory.
If all this weren’t radical enough, Blocher and Gulati further argue that regions have a quasi-property right in their own sovereignty that can be sold to the highest bidder. Thus, the Sami could purchase their independence directly from the Finns, or they could solicit offers for their sovereignty from other nation states.
The authors envision that neighboring countries like Sweden, Norway, and Russia might all submit bids to bring the Sami lands under their sovereign control. To protect the principle of self-determination in this scheme, Blocher and Gulati suggest that a super-majority of the people in a transacted area approve any final transfer. Thus, the Sami couldn’t end up as part of a Russian oblast without significant support of voters.
This is bold stuff, and it deserves a wide readership. A Market for Sovereign Control is important because it describes a novel approach to scaling good government. As Blocher and Gulati emphasize, many people around the world would be happier, more productive, and safer if they lived under a different regime. But how do we improve the lives of the unlucky multitudes surrounded by the “wrong” border? Advocating for a dollop of war or colonialism lies beyond the pale. Immigration, the traditional safety valve for peoples seeking better opportunities, also has many serious drawbacks. It’s inefficient, it helps only a small number of individuals, and tends to weaken communities in the poorest countries.
Blocher and Gulati have demonstrated a new way forward. Rather than wait for individuals from poor countries to scrap their way into nations with good governments, they envision a world where property transactions can bring good government to the masses.
Importantly, this idea could improve the lives of peoples well beyond the transacted regions. Borrowing from the ideas of Charles Tiebout, A Market for Sovereign Control shows that the mere threat of border changes and inter-jurisdiction competition for sovereign land should induce some governments to treat disfavored regions with more respect and regard.
Blocher and Gulati are at their spritely best toward the very end of the paper, when they anticipate some of the potential objections to their ideas. The authors argue, quite vigorously, that their market for sovereignty would not lead to the exploitation of poor nations, or an unhealthy commodification of democratic values, or an uptick in aggressive behavior between nations.
Perhaps the most stinging criticism launched at Blocher and Gulati is that their proposal seems rather unworkable and utopian. A Market for Sovereign Control, one could argue, ignores the facts on the ground; boundary disputes currently belong to the irrational world of nationalism and violence, rather than the tidy world of rule-oriented markets. But that is exactly why this idea is so vital.
Since at least the days of the Oresteia, people have used legal structures—like the one proposed here—to domesticate conflicts that once seemed stuck in spirals of vengeance. Property laws in particular have proven successful at draining some of the bloodlust out of disputes between rivals.
The bold strokes of A Market for Sovereign Control leave intriguing questions for further discussion. What counts as a “region”? What happens if the parent country refuses all offers of compensation from an area that wants to succeed? What role, exactly, will international organizations play in the scheme? The article could benefit more discussion of these granular (but important) details, as well as a few more real world examples. Do the authors have any reason to believe their scheme would have better resolved the conflict between Ukraine and Russia over the fate of Crimea? Might it help ease tensions in the South China Sea? These seem like vital questions.
Despite these quibbles, A Market for Sovereign Control remains a real achievement. In a world of dry and overlong law review articles, this is a Harry-Potter-esque page-turner. The ideas presented are grand in scale and the authors don’t back away from upsetting some of the most settled principles of international law. Most importantly, Blocher and Gulati have used their formidable creativity to find ways to improve the lives of people who often get overlooked.
For academics, takings jurisprudence is a continuing source of scholarly fodder and intellectual challenge. However, for the lawyers and judges involved in takings litigation, the procedural barriers created by the 1985 decision in Williamson County Reg. Plan. Agency v. Hamilton Bank and subsequent cases have resulted in a “ripeness” mess, frustrating the access of property owners to federal courts. Michael Berger, a top takings litigator from Manett and Phelps, has called this a “Catch 22” rule because property owners are required to first ripen their claims by filing suit in state court, but are then precluded from filing suit in federal court because the state decision is res judicata.
In response to a long-standing call for reform of this formidable hurdle for litigants, Professor Thomas Merrill has suggested a possible solution encompassed in the title of his new work, Anticipatory Remedies for Takings. The new remedial system proposed by Merrill works alongside the eventual just compensation remedy.
Professor Merrill identifies two lines of Supreme Court decisions that address the appropriate remedies for a Takings Clause violation. He calls these lines of authority the A line and the B line. The A line requires the takings claimant to pursue a just compensation claim in the court that is designated to provide compensation. This line of cases requires that claims against the federal government be brought to the Federal Court of Claims based on the “Tucker Act doctrine” and that claims against state and local governments be brought in state court as required by the “Williamson County doctrine.”
In the B line cases, the Court adjudicates takings claims even when the claims have not been brought first to a court having the authority to award just compensation. Merrill asserts that the trend in the Supreme Court is to follow the B line. He uses the Court’s decisions in Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, Horne v. Department of Agriculture, and Koontz v. St. Johns River Water Management District, to illustrate his theory.
The anticipatory remedies proposal is addressed primarily to regulatory takings claims and it encourages courts to principally use the declaratory judgment remedy to “resolve the antecedent question of whether the government action constitutes a taking” while leaving the actual award of just compensation to the appropriate compensatory court. (p. 1650.) Merrill argues that the A line of authority (most distinctly identified in Williamson County) is flawed in finding that the Takings Clause is not violated until just compensation is denied.
Instead, the anticipatory remedies proposal would allow a Takings Clause violation to be litigated “when the property is taken and the government does not offer to pay compensation.” (p. 1647.) This would be similar to the “rule implicitly followed in eminent domain proceedings . . . that a violation of the Takings Clause is complete when the government condemns property without offering to pay just compensation.” (p. 1648.)
Professor John Echeverria responded to Professor Merrill’s solution to the procedural takings litigation mess in Eschewing Anticipatory Remedies for Takings: A Reply to Professor Merrill. Echeverria finds significant disadvantages in adopting Merrill’s anticipatory remedies proposal as adoption would: 1) “risk demeaning the Court of Federal Claims and the state courts;” 2) “alter the established balance between property owners and local governments in takings litigation;” 3) “inject significant new kinds of uncertainty into takings litigation;” and 4) “create new uncertainty about the nature and scope of the substantive protections provided by the Takings Clause.” However, most of Professor Echeverria’s concerns seem to focus on the shift in power from local governments to property owners in regulatory takings litigation.
Without wading into the pros and cons of Professor Merrill’s proposal, it is certainly clear that his essay (together with Professor Echeverria’s response) illuminates how all of the procedural pieces of the current takings litigation morass may fit into one overall structure. The anticipatory remedies proposal provides a framework for understanding the overlapping puzzles of ripeness, jurisdiction, justiciability, mootness, sovereign immunity, and standing as they relate to takings claims.
As an academic, I expect to reread Merrill’s essay every time I teach takings litigation in my Land Use class. I anticipate that it will allow me to speak more intelligibly about the confusion that exists and how that confusion might eventually be overcome when brilliant minds seek solutions. Merrill’s work should also provide guidance to litigators and judges confronting the procedural complexity in takings cases when framing their arguments to resolve constitutional rights under the Fifth Amendment Takings Clause and for finding ways to avoid claims being bounced between (and out of) state and federal courts.
Cite as: Shelley Saxer, Finding a Way Out of the Ripeness Mess
, JOTWELL (April 19, 2016) (reviewing Thomas W. Merrill, Anticipatory Remedies for Takings
, 128 Harv. L. Rev.
1630 (2015) and John D. Echeverria, Eschewing Anticipatory Remedies For Takings: A Reply to Professor Merrill
, 128 Harv. L. Rev. F.
202 (2015)), http://property.jotwell.com/ finding-a-way-ou…he-ripeness-mess/
Andrea J. Boyack, American Dream in Flux: The Endangered Right to Lease a Home
, 49 Real Prop. Tr. & Est. L. J.
203 (2014), available at SSRN.
The “American Dream” referred to by Andrea Boyack, an Associate Professor of Law at Washburn University School of Law, is homeownership. As first year Property students are taught, the dream of homeownership has its hallowed roots in Thomas Jefferson’s conviction that widespread ownership of real property was a predicate for a functioning democracy. “The small landowners,” Jefferson wrote, those with “a little portion of land” are “the most precious part of a state.” The idea that the government should encourage more people to own “a little portion of land”—first farms and now single family homes—has inspired public policy since the Revolution.
Boyack does not argue that the American Dream is dead, or that promoting homeownership is an illegitimate policy goal. Instead, she convincingly argues that by myopically focusing on increasing homeownership and owner occupancy, a combination of public land use controls, private land use controls, and federal policies are undermining “important public concerns.” (P. 299.)
An important part of the puzzle, Boyack acknowledges, are widespread private restrictive covenants that prevent homeowners from renting. These covenants effectively bar renter households from many communities, particularly those in growing suburbs.
Much has been written about common interest communities and restrictive covenants in the residential context. The chief contribution that Boyack makes to the literature is her well-reasoned argument that restrictive covenants limiting home rentals do not express a naked “private neighborhood preference[s] for owner occupancy.” (P. 212.)
Instead, Boyack argues, “Government and quasi-government policies actively encourage covenant-based leasing prohibitions, both as a reflection of owner occupancy and homeowner policies and as an underwriting strategy.” (P. 212.) Underwriting standards “crafted and imposed” by the Federal Housing Authority, Fannie Mae, and Freddie Mac “promote[e] owner occupancy as a property value enhancer … [and] punish would-be renters and landlords as well as entire communities that become majority-renter-occupied by denying them access to mortgage capital.” (P. 212.)
This argument is significant for two reasons. First, Boyack contends that this revelation shows why much of the deference granted to these restrictive covenants by courts is undeserved. Second, Boyack argues that a public policy that focuses on “owner occupancy as an end in itself … [rather than] legitimate lender concerns such as property maintenance and community fiscal health” (p. 299) promotes broader social harms. Private covenants and federal underwriting standards that collaborate to segregate renter households from owner households undermine housing affordability and accessibility and further entrench racial segregation.
Boyack provides a thorough overview of the private and public prohibitions on leasing in privately government communities. She also discusses the alleged costs and benefits of such restrictions for both communities and homeowners.
Boyack concludes that “covenant-based prohibitions on leasing” create a variety of costs: “(1) to the property owner who cannot rent out the home, (2) to the community who is adversely impacted by unoccupied and financially distressed properties, (3) to the would-be tenant who cannot reside in the community, and (4) to the public in general that suffers decreased rental housing affordability and persistent, insidious housing segregation.” (P. 291.) At the same time, she acknowledges that “most of the asserted purposes for no-lease covenants appear to be legitimate” (p. 293) and are designed to achieve “better-maintained housing, community harmony, and financeability due to compliance with FHA and GSE underwriting mandates.” (P. 291.)
Boyack proposes to balance these costs and benefits through “more targeted community restrictions and requirements” that focus on “property use rather than property users.” (P. 291.) In particular, Boyack argues that the interests of neighbors and lenders could be protected through community covenants that regulate property maintenance, occupant behavior, and contributions to the upkeep of the community. (P. 297.)
Although Boyack does not expressly make this argument, her article supports the proposition that we have been mis-defining the American Dream as ownership rather than occupancy. The number of renter households in the United States has increased significantly since the 2008 Financial Crisis, and households may choose to rent for a myriad of reasons. As a result, although renters as a group are more likely than homeowners to be young, unmarried, female, and non-white, “[i]n terms of age, income, and transience, a renter of a single-family home is a closer match with single-family homeowners than with apartment dwelling renters.” (P. 208.)
That is certainly true for my family, which is a renter household in a neighborhood of single-family homes. When my husband, two sons and I moved to Winston-Salem six years ago, we had no interest in purchasing a home or living in a multi-family development. We found our options were therefore significantly limited by the legal structures identified by Boyack, particularly in parts of town with newer community amenities and highly-rated public schools. We were fortunate to be able to afford to rent a home in an older neighborhood that served our needs. Many renter households are not so fortunate. The reforms proposed by Boyack will allow millions of households to grab a piece of the American Dream, even if they cannot afford to own their own home.
Maureen Brady, Defining “Navigability”: Balancing State Court Flexibility and Private Rights in Waterways
, 36 Cardozo L. Rev.
1415 (2015), available at SSRN
More than 86,000 square miles of inland waterways traverse and meander throughout the United States. Since ancient times, navigable waterways were not subject to private ownership, but were reserved to the public under the public trust doctrine. In contrast, non-navigable waterways could be privately owned. While riparian and littoral rights are firmly fixed in the common law, what has proven to be more fluid is the definition of “navigability.”
In Defining “Navigability”: Balancing State Court Flexibility and Private Rights in Waterways, 36 Cardozo L. Rev. 1415 (2015), Maureen Brady explains that over the last two centuries, state courts have broadened the concept of navigability, and applied the new definitions to alter existing land titles. As a consequence, many non-navigable waterways have become navigable waterways, increasing public ownership and extinguishing private rights.
Brady’s exhaustive historical analysis reveals that in judicial decisions resolving competing claims to control the use of waterways, the courts have unmoored the meaning of navigability from its early conception—touched by the tides or capable of commercial transport of people or goods—to the present liberal conception, in many states, that includes pleasure boating, floating and similar uses other than navigation. She identifies two significant movements in American history that were the driving forces for these changes: the industrial movement of the mid-nineteenth century that favored expansions of private rights and the environmental movement of the mid-twentieth century that urged greater public access.
What seems to concern Brady is not only that these shifts in the classification of waterways are occurring without notice to private owners, but that they are occurring without constraints and that some of the rationales offered have been strained, if not disingenuous. Her study is rich with cases that present both earnest and opportunistic claims to the waterways, sometimes erupting in violence that cowered even the judges. With perfectly circular logic, one case cited found a waterway to be navigable because purely recreational boating could be turned into commercial use by offering paid paddling tours. Though the trend is concerning, Brady shows that the shift has been neither linear, nor universal, as some courts have viewed the re-routing as a transmogrification that portends a host of negative externalities, including noise from more users, loss of privacy and productivity to the private owners and harm to wildlife from disturbances to habitats. One court noted that in many spots in the waterways deemed navigable under the new rules, there was less water than in a bathtub.
Brady’s main aim is to question the authority of state court judges to reshape the common law definition of navigability, charging them with conducting “judicial takings” without compensation and deprivations of property without due process. Brady does not maintain that the line between navigable and non-navigable waterways can never be redrawn, for that would lead to the ossification of the common law, whose beauty is in its ability to flex and expand as society demands. On the contrary, she insists that state judges, by having leeway to revise and reshape common law definitions, occupy the singular position to mediate between private rights and larger public interests—in water recreation, protecting the environment and in the efficient allocation of water, and to act without the political constraints that compromise legislatures.
Practical wisdom having only limited sway, Brady is doubtful of the capacity of the Due Process and the Takings Clauses to curb judicial decisions that often seem a naked transfer of property from owners to neighbors or competitors, even as modes of commercial transport change. She plumbs the cases to reveal gaps and limitations in the constitutional jurisprudence as meaningful constraints. For example, the Supreme Court has not applied the Fourteenth Amendment to judicial actions to revise common law property rules, and existing takings doctrine is not structured to address novel forms of regulatory incursions.
The most recent case in which the Supreme Court discussed the philosophical plausibility of a “judicial taking,” Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, 560 U.S. 702 (2010), does not help to determine the extent to which adjustments at the margins of navigability would result in the elimination of “established rights.” While she does not predict what the world will be like if the trend continues, Brady’s analysis does conclude that the likelihood of successful takings challenges is fairly low, leaving state courts with almost unchecked power to affect property rights in waterways.
In the end, the vehicle Brady crafts for checking the abusive use of judicial power to recast rights, is both perceptive and evident. It uses the Due Process and Takings Clauses, not as discrete, mutually exclusive tests, but as interrelated parts of a whole analysis. A judicial redefinition would be invalidated if it does not conform to the requirements of the Due Process clause, ensuring that settled expectations are not unduly frustrated and that there is regard for reasonable reliance on prior law.
Even if it overcomes this hurdle, judicial redefinitions of navigability must still undergo a takings analysis, in which the owner might show, for example, that the stream on the property was a significant part of the value of the property. Though denominated as separate stages, Brady perceives that the two clauses overlap in significant respects—reliance on existing state law will simultaneously present a due process question and establish sufficient expectations to trigger the takings clause. But the difference is in the remedy—takings clause scrutiny will not prevent the change in judicial definition of such rights if a public use is present, but instead will only offer some measure of compensation.
Brady concedes that the interests on both sides are too important to offer a normative suggestion on where the line between private/public, majoritarian/individual, industry/environment, should be drawn, but the framework she develops helps to insure that at least both sides factor into the equation. She helps us to see that, in developing that calculus, the imperatives of sustainable land use in a rapidly changing world climate may require owners to cede some measure of control or accept new understandings of what it means to own property.
Daniel B. Kelly, The Right to Include
, 63 Emory L.J.
857 (2014), available at SSRN
Quite often, “private property” brings with it characterizations of individualism, isolation, and exclusion along with images of fences, gates, locks, boundaries, and barriers. In fact, a “keep out” sign has often been identified as a symbol for the essence of private property rights and their function. Professor Daniel B. Kelly reminds us that such images and characterizations miss a huge portion of the utility served by property law that fosters the capacity and motivation to hang a different sign—one that says “come on in.” Professor Kelly’s recent article, The Right to Include, 63 Emory L.J. 857 (2014), catalogs and analyzes the range of legal options available to owners to include others in the use, possession, and enjoyment of real property.
In recent property law literature, the “right to exclude” has gotten most of the ink. In fact, Kelly explains that, “[i]n delineating the bundle of rights that characterizes property, courts have not identified the right to include as a distinct attribute of ownership,” (P. 868) and most scholars have only hinted at the importance of this separate strand of rights within ownership. Professor Kelly’s work is a welcome rectification of this imbalance of affection. If indeed human beings are dependent on each other to survive and flourish, then finding ways to facilitate inclusiveness in relation to property is vital to nourishing our “interaction imperative.” Kelly thoroughly explores the rules and doctrines in property and related fields of law that have emerged to ignite inclusion and spur human sociability.
Professor Kelly dissects the reality that we do, after all, exercise our right to include every day. And, with each such inclusion, we are faced with potential conflicts. It is useful to think about just how ubiquitous inclusion is in our lives by reflecting for a moment on some archetypal examples. We invite colleagues or friends over for dinner, including them in our home. We grant our gardener access to the back gate and license to roam the grounds, taking advantage of his specialized expertise so that he can beautify our home and surrounding land. The plumber is invited in to make sure all flows well. We may share our homes with strangers in operations like Airbnb and the like. We are willing to lease our property to others, including them in order to receive the benefit of income. We enter into co-tenancies to help reduce the costs of our housing.
With each of these arrangements (and others like them) there are both rewards and risks—the dinner guest who overstays his welcome; the gardener who breaks your lawn gnome because he is just not quite as careful with your property as you would have been or as he might have been with his own property; the overnight guest who unwittingly aids a bedbug migration into your space; the tenant who fails to report the cracks in the roof that could have been repaired to avoid the ceiling collapse; or the college roommate that never wanted to do the dishes but was happy to occupy more than her fair share of the apartment with her junk. One of the greatest benefits of Professor Kelly’s work is that he helps us understand how the law anticipates and navigates these pitfalls while optimizing the potential rewards of inclusivity along the way.
Kelly reveals a roadmap for how the law should support a wide range of inclusion options in order to move owners’ private incentives toward a convergence with the socially optimal level of inclusion. Inclusion can be informal (including by choosing not to exercise or waiving one’s right to exclude), contractual (including licenses), or enabled by strengthening inclusive property forms (such as easements, leases, trusts, concurrent estates, and co-ownership arrangements). Most of the time, inclusion is a matter of choice, but Kelly also takes a valuable moment to discuss those rules that cause “involuntary inclusion” as well, such as public accommodation and antidiscrimination laws.
Key factors to consider when identifying and protecting inclusion rights, according to Kelly, include whether the rights enable sharing and exchange, facilitate financing, spread risks, and promote specialization. Along the way, the law of inclusion rights struggles with coordination difficulties (when multiple parties must negotiate over when they may use or enjoy certain parts of the property), strategic behavior (where a party included tries to expand the scope of their inclusion or when owners acquire assets for the purpose of exploiting inclusion possibilities), and usage conflicts (when, for example, a non-owner might not internalize the long term costs of her actions so she uses the property excessively or does not maintain it well).
Each purposefully-varied legal form comes with differing rights of revocability, varying levels of certainty, different remedies to vindicate rights, and different costs of negotiation, drafting, and enforcement. Kelly taps into some key insights on human nature and owner fears when he explains that, “Owners are more likely to include others if they are able to select from among multiple forms [of inclusion regimes],” (P. 919), so the law has created this diversity of “‘focal points’ around which parties can organize their activities by including others through different combinations of anti-opportunism devices” that control unwanted strategic manipulation of the inclusion and coordinate among multiple users. (P. 920.)
One need only examine one’s own activities to find anecdotal examples of our implicit recognition of the utility of inclusion. We must also remain acutely aware of some of the obstacles and problems with inclusion for which the law already has created varied legal forms to offer tailored solutions that, at the very least, mediate the potential negative effects so that we can maximize the benefits of including others in our property. By examining these issues in depth, Professor Kelly’s work advances our understanding of the contours of the right to include and our appreciation for its unique characteristics.