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Environmental regulation and private property rights

Joseph Perkins

February 13, 2004

The recent court decision didn't make the front pages of the nation's newspapers. It didn't rate a mention on the evening newscasts. But it could, ultimately, have the same impact on property rights in America that, say, Brown v. Board of Education had on school desegregation.

The precedent-setting case involved 275 San Joaquin Valley farmers whose water was taken from them by the U.S. Fish and Wildlife Service a decade ago to accommodate two fish on the federal endangered species list the chinook salmon and the delta smelt.

In 1998, the Tulare Lake Basin Water Storage District and Kern County Water agency sued the federal government on behalf of the aggrieved farmers, to whom they deliver so many acre-feet of water.

The water districts maintained that the government's order that they curtail water deliveries to their farming customers amounted to a regulatory "taking" of the farmers' rightful property.

Three years ago, Judge John Paul Wiese of the U.S. Court of Federal Claims ruled that the government owed the 275 farmers for their water losses. And this past New Year's Eve, he set the amount of damages at $14 million plus interest (a momentous judgment that received little notice until a few weeks ago).

Alf W. Brandt, the Interior Department lawyer who argued the government's case, says that, in the wake of Judge Wiese's decision, "There may be implications for how the Endangered Species Act is implemented."

Indeed, no longer can government regulators take private property be it water or, presumably, land to protect this snail darter or that spotted owl with no consideration whatsoever for the economic loss that may be suffered by private property owners.

If the government feels that a species is so endangered that it needs to take a farmer's water, that it needs to deprive a landowner of full economic use of his or her land, then the government ought to pay the farmer, the landowner for the loss.

After all, the Fifth Amendment states that private property shall not be "taken for public use, without just compensation."

Environmental activists insist that the Fifth's "takings" clause applies only to property that has been physically taken from a private property owner.

However, in recent decades, the U.S. Supreme Court has ruled on several occasions that the takings clause also applies when government regulation leaves property in private hands while restricting (or forbidding) use of the property.

In 1987, the high court went so far as to liken a state land-use regulation to "extortion" in Nollan v. California Coastal Commission.

Five years later, the justices issued a landmark ruling in Lucas v. South Carolina Coastal Council, declaring that "when the owner of a real property has been called upon to sacrifice all economically beneficial uses in the name of the common good," he or she must be paid for the regulatory taking.

In a 1994 case, Dolan v. City of Tigard, the supremes stated that "we see no reason why the takings clause of the Fifth Amendment, as much a part of the Bill of Rights as the First Amendment or the Fourth Amendment, should be relegated to the status of poor relation."

And in Palazzolo v. Rhode Island, a 2001 case, the justices held that, even though a property owner acquired title to land after certain restrictive environmental regulations took effect, that did not negate his takings claim.

Otherwise, the majority declared, "A state would be allowed, in effect, to put an expiration date on the takings clause."

It remains to be seen whether the Justice Department will appeal Judge Wiese's recent decision.

If it does, the Supreme Court might get its ripest opportunity yet to resolve the long-running conflict between environmental regulation and private property rights.

The justices almost certainly would affirm the government's authority to regulate the use of private property for protection of endangered species or some other common good.

But they likely would agree with Judge Wiese that private property owners are entitled to compensation when government regulation restricts the reasonable use of their property.

Perkins can be reached via e-mail at joseph.perkins@uniontrib.com.


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