Regulatory Takings and Private Property Rights

By Tarso Ramos

"Regulatory takings" has become the cornerstone of the "Wise Use" movement's legislative agenda as well as the ideology underlying the movement's "property rights" wing. Under the regulatory takings banner, Wise Use leaders have rounded up a broad range of economic and political interests, including developers, small property owners, timber companies, and others into the so-called "property rights" movement. More accurately termed "property primacy" for its subordination of the public good to private financial interests, this is the fastest growing wing of the Wise Use movement.

In their newsletters, journals, books, and presentations, Wise Use leaders routinely object that environmental regulations are destroying private property rights--that the green movement has generated an avalanche of regulatory red tape that threatens to suffocate small property owners and destroy industrial civilization altogether. "If the government wants your land, they should pay for it!" is a common declaration at Wise Use rallies, generally in reference to wetlands laws, "wild and scenic" rivers designations, or other environmental protections. Wise Use national leader Chuck Cushman in particular has led the "property rights" charge against the creation of national parks, and, with Ron Arnold and other leaders, has helped to cultivate a network of local "property rights" groups across the nation. Organizations such as Defenders of Property Rights and the Alliance for America are active at the national level, and former Alliance chairman David Howard shares movement updates and analysis through his publication, Land Rights Letter. Corporate-funded "public interest" legal firms, such as the Mountain States Legal Foundation, Pacific Legal Foundation, and the Northwest Legal Foundation, have carried the banner in the courts, while conservative think tanks decry the erosion of property rights in guest editorials that provide support for state-level takings legislation. Regulatory takings doctrine has provided the theoretical and rhetorical basis for much of this activity.

Regulatory takings doctrine holds that government regulatory action that negatively affects the value--actual or potential--of private property constitutes a "taking" of property and, as such, is prohibited under the takings clause of the Fifth Amendment of the US Constitution unless affected property owners are fairly compensated. (The relevant portion of the Fifth Amendment reads, "nor shall private property be taken for public use, without just compensation.") Historically, the courts have interpreted the takings clause as pertaining to cases of condemnation under eminent domain--that is, the government cannot confiscate your land or other property without paying you a fair price for it. However, only in instances where government regulations have been found to eliminate virtually all economic value of property have some Supreme Court justices supported financial compensation for a "regulatory takings." By contrast, regulatory takings doctrine deems a vast array of public interest and regulatory laws to be illegal.

The regulatory takings movement appears to have its origins in the libertarian school of legal thought associated with the University of Chicago and epitomized by professor Richard Epstein. Epstein's 1985 book, Takings: Private Property and the Power of Eminent Domain, provided the impetus for a regulatory takings legal and legislative strategy. It is useful to examine Epstein's writings, for although proponents of regulatory takings legislation invariably argue that the scope of such laws would be finite, Epstein openly asserts that his position on regulatory takings "invalidates much of the twentieth century legislation," including the National Labor Relations Act, minimum wage laws, civil rights legislation, virtually all government entitlement programs, and quite possibly Social Security. In fact, Epstein proposes to challenge the entire New Deal as "inconsistent with the principles of limited government and with the constitutional provisions designed to secure that end."

For instance, Epstein argues that minimum wage laws are "undoubted partial takings, with all the earmarks of class legislation, which requires their complete constitutional invalidation." Under regulatory takings doctrine, employers forced to pay a statutory minimum wage higher than wages set by free market forces suffer from a government takings of their property. "Collective bargaining," Epstein asserts, "is yet another system in which well-defined markets are displaced by complex common pool devices whose overall wealth effects are in all likelihood negative and whose disproportionate impact, especially on established firms, is enormous."

Here Epstein's argument raises the obvious question: for whom are the wealth effects of collective bargaining negative? It also provides the answer: the owners of "established firms." Collective bargaining has increased the economic means of the great majority of working people in the United States by securing decent wages and benefits for union members, and driving wages higher even for the unorganized. Thus, while regulatory takings has come to be deployed in the war against environmental regulations, and, by extension, the environmental movement, it threatens to undo the gains of other great movements for progressive social change of the last century and a half: the labor movement, the civil rights movement, the women's movement, the anti-poverty movement, and others. Indeed, this is part of the strategy of takings advocates, who hope to use anti-environmental campaigns to popularize "property rights" rhetoric and build support for takings legislation, as well as a redefinition of takings by the courts.

Proponents of takings legislation argue that it will provide relief to small property owners who, they say, are increasingly restricted by wetlands ordinances, growth management laws, and other environmental statutes. Such arguments can be persuasive, since government bureaucracy does sometimes generate burdensome, irrational, and even harmful regulations, and as the relationship between, for example, wetlands protection and the public health is somewhat technical, as well as indirect. However, under regulatory takings doctrine, in order to prohibit industrial polluters from fouling air, land, and water, the public would be required to pay the cost of pollution prevention. This quite direct relationship between regulatory takings law, environmental protections, and the public health is either ignored by proponents or is resolved in the manner suggested by Ron Arnold: if a citizen can show a violation of rights by a corporate polluter or anyone else, let her or him sue.

Epstein found allies for his radical legal theories in a most influential place, the White House. In March 1988, President Ronald Reagan signed Executive Order 12630, which codified Epstein's doctrine and advised that "[e]xecutive departments and agencies should review their actions carefully to prevent unnecessary takings and should account in decision-making for those takings that are necessitated by statutory mandate." Executive Order 12630 amounted to a presidential order against regulating industry and an attack on public interest law.

In his memoir, Reagan Administration Solicitor General Charles Fried offers the following analysis of Executive Order 12630:

"Attorney General [Edwin] Meese and his young advisors--many drawn from the ranks of the then fledgling Federalist Societies and often devotees of the extreme libertarian views of Chicago law professor Richard Epstein--had a specific, aggressive, and, it seemed to me, quite radical project in mind: to use the Takings Clause of the Fifth Amendment as a severe brake upon federal and state regulation of business and property. The grand plan was to make government pay compensation as for a taking of property every time its regulations impinged too severely on a property right--limiting the possible uses for a parcel of land or restricting or tying up a business in regulatory red tape. If the government labored under so severe an obligation, there would be, to say the least, much less regulation."

Following Reagan's second term as president, Idaho Senator Steve Symms (a strong Wise Use ally who, before retiring from the Senate, helped to pass the National Recreational Trails Trust Fund, to date the only successful item on the 25-point Wise Use Agenda) attempted to pass federal legislation codifying Executive Order 12630. With his retirement in 1992, Symms (who now heads Ollie North's Freedom Alliance) passed the takings torch to Senator Bob Dole, who has carried it since. When support for takings, typically introduced as a "Private Property Rights Act," was not forthcoming from the Democrat-controlled Congress, Dole and others managed at times to defeat their opponents' legislation by attaching takings language to, for instance, bills giving cabinet status to the Environmental Protection Agency. Reps. Billy Tauzin (D-La.) and Richard Pombo (R-Cal.), later became visible advocates of regulatory takings in the House, and during the successful 1994 Republican campaign for control of Congress, takings was incorporated into the Republican "Contract with America" as part of the proposed Job Creation and Wage Enhancement Act. Unlike Reagan's takings order--an assessment-type measure that hamstrung regulatory enforcement with bureaucratic red tape--the version of takings now promoted by Congressional Republicans requires financial compensation for "regulatory takings" of property.

At the national level, "takings" legislation has been opposed by labor, environmental, civil rights, religious, and other public interest organizations. Among these groups are the AFL-CIO Industrial Union Department, AFL-CIO Food and Allied Service Trades Department, Alliance for Justice, Coalition Against Childhood Lead Poisoning, Defenders of Wildlife, Farmworker Justice Fund, Izaak Walton League of America, League of Conservation Voters, National Audubon Society, National Parks and Conservation Association, National Urban League, National Wildlife Federation, Public Citizen, Sierra Club, United Food and Commercial Workers Union, United Church of Christ, United Steelworkers of America, and the Wilderness Society. As this broad opposition attests, of the various Wise Use efforts, the intersection of the movement's anti-labor, anti-environmental, and anti-civil rights elements are most immediately evident in regulatory takings legislation. This recognition has been critical to blocking passage of federal takings legislation, and has helped to stem the tide of regulatory takings bills at the state level.

As of October 1995, takings bills (a mix of assessment and compensation type measures) had passed in Arizona, Delaware, Florida, Idaho, Indiana, Kansas, Louisiana, Mississippi, North Dakota, Oregon, Tennessee, Utah, Virginia, Washington, and West Virginia, and had been introduced in all the other states in the Union. Some of the new takings laws have been challenged and overturned. In November 1994, the Arizona law was repealed by citizens' referendum with 60 percent of the vote. (A takings measure was removed from the 1994 Florida ballot after a legal challenge, and during the same campaign season, ballot measures were filed but failed to qualify in Oregon and Washington.) The Oregon law which passed in 1995 was later vetoed, and a measure to repeal the Washington law was being considered by voters in November 1995. The rapid and pervasive dissemination of regulatory takings legislation has been facilitated by the American Legislative Exchange Council (ALEC), a national organization of right-wing ideologues and business interests that drafts policy on a wide range of economic and social issues and offers a smorgasbord of model bills to conservative state legislators in all 50 states. The group's model legislation ranges from reactionary AIDS/HIV policy, to telecommunications proposals, anti-labor "right-to-work" bills, and Wise Use regulatory takings legislation. ALEC's task force on natural resources includes representatives from such environmentally sensitive and labor-friendly corporations and organizations as Waste Management, Amoco, Shell, Texaco, Union Pacific Railroad, Chevron, American Petroleum Institute, American Nuclear Energy Council, and Coors, among others. The author of ALEC's model takings bill is Mark Pollot, who also drafted Reagan's takings order and who now heads a division of Ron Arnold's organization in Idaho. ALEC's support for the Wise Use movement is not limited to model bills; the February 1991 issue of the group's newsletter, The State Factor, carried a long speech by Detroit News columnist Warren Brookes entitled "The Attack of the Killer Watermelons: Flat Earth Science and Zero Risk." Nor is ALEC's anti-labor activity limited to the dissemination of "right-to-work" legislation; ALEC has also spearheaded a national campaign targeting public sector unions as "America's protected class" that facilitated a successful 1994 ballot campaign in Oregon to cut public worker wages by six percent.

The fight against state-level regulatory takings bills has been difficult. Cloaked in the Fifth Amendment, and branded "property rights," the bills are attractive to state legislators unaware of their broad implications and pleased at the opportunity to go on the record with a vote in favor of "property rights." Moreover, entrenched political forces in the form of the Farm Bureau, Cattlemen's Association, National Association of Builders, timber companies, and others have repeatedly put their considerable weight behind takings legislation. Finally, state-level labor and environmental leaders were at first less educated about regulatory takings than their national counterparts; and, to make matters worse, in several states seemingly innocuous takings language has been stealthily incorporated into other bills. Due to the powerful forces marshaled in support of takings bills, broad coalitions have been important to defeating them. In particular, organized labor and environmental groups have worked to block regulatory takings in legislatures and to secure governors' vetoes where bills have passed. Possibly in response to the success of such coalitions, in 1993 the Oregon Wise Use organization Oregonians In Action announced a regulatory takings ballot initiative narrowly restricted to compensation for "takings" resulting from the protection of wildlife habitat. Catered to attract the support of timber unions, as well as pro-timber Wise Use groups, the narrow focus of the initiative might have forestalled a labor/environmental alliance to oppose it. Fortunately, the initiative failed to qualify for the ballot. However, in some states takings forces have successfully pursued a strategy of incrementalism, enacting narrow laws in a given legislative session, and expanding their scope in subsequent years. Also, if the state takings statutes now on the books are upheld by the courts, we may well find ourselves on the slippery slope toward the rollback of the New Deal advocated by Epstein. For, once regulatory takings doctrine is ruled constitutional, there is little to prevent its application beyond wetlands and wildlife protection to minimum wage laws, civil rights statutes, and other public interest legislation.

Due to the increasingly conservative composition of state legislative bodies, some previously successful anti-takings coalitions are finding themselves unable to hold the line, even against progressively onerous takings proposals. Washington State provides an instructive example. In the spring of 1992, Ron Arnold declared that "The future of the property rights issue for the next decade will probably be centered in Washington State." Opponents of Washington's recently enacted Growth Management Act (GMA) had just managed to saddle it with an assessment-type takings provision, and their earlier, successful ballot fight against a more stringent version of the GMA proposed by environmental groups had served to galvanize corporate support for the burgeoning property rights movement. Working to realize Arnold's prediction, and responding to a GMA requirement that counties develop local land-use plans, Wise Use organizers constructed a network of county-level "property rights" groups across the state. Various of these local groups have stymied implementation of the GMA, taken over local governments, launched campaigns to form new counties under their command, and passed Wise Use "county rule" ordinances that claim control of federal lands within county boundaries. With the assistance of the Alliance for America, Washington Wise Use activists formed The Umbrella Group (TUG) as a statewide coalition vehicle. TUG executive director Dan Wood went to work lobbying the strongly Democratic legislature to pass a regulatory takings law, but was rebuffed. Wood formed the Washington Property Protection Coalition and in 1994 tried to place a takings measure (written by the Northwest Legal Foundation) on the Washington ballot, but failed to collect the requisite number of signatures. However, in the 1994 elections Republicans seized control of the Washington House and reduced Democrat's control of the Senate to a one-vote majority. The following spring, Wood again collected signatures for the measure, now in the form of a citizens' initiative to the state legislature (I-164). As the signature deadline neared and Wood again appeared destined for failure, timber, building, and real estate interests rescued the effort with an infusion of more than $250,000, much of it used to pay professional signature gatherers. Despite the discovery that a significant number of the signatures submitted were forgeries, enough of them were found valid to qualify the measure and send it to the legislature. To the astonishment of many political observers, both houses of the Washington legislature passed I-164, the strongest compensation-type regulatory takings law in the nation.

The Washington takings measure was enacted by a legislature financially beholden to the corporate interests that invested over $250,000 in this "citizens'" initiative. Major contributors to the I-164 campaign gave a combined total of more than $309,000 to legislative candidates in the 1994 election cycle alone, with over 87 percent of these dollars supporting Republican candidates. But while the vote for I-164 split largely along party lines, passing by a vote of 28-20 in the Republican-controlled House, the most critical votes cast in favor of I-164 may have been those of Democratic Senators James Hargrove and Brad Owen, who gave takings proponents the majorities they needed to pull the initiative from committee and put it to a vote of the full Senate. Both Hargrove and Owen had received significant contributions from I-164's corporate sponsors in their last election campaigns, when Hargrove's campaign manager had been none other than I-164's Dan Wood. Four other Senate Democrats voted in favor of I-164, three of whom also had taken significant campaign contributions from real estate and natural resource corporations, while two Republicans voted against the initiative. Following the passage of I-164, corporate backers of the measure disclaimed any relationship with the Wise Use movement. By contrast, Ron Arnold told a Seattle newspaper, "How do you help people speak up in a voice that will help big industry? The Wise Use Movement does that. The little people are the real constituency. They do the work of big industry."

In Washington, citizens' initiatives passed by the legislature become law without needing the governor's approval. However, a coalition of environmental, labor, and good government groups gathered enough signatures to force a referendum on the takings law, to be decided in November 1995.

While there is at least active opposition to regulatory takings as a legislative effort, the forces marshaled in favor of takings appear to be gaining, rather than losing, momentum. This is also true outside of the legislative arena, where regulatory takings provides the underpinnings for the expanding "property rights" wing of the Wise Use movement. This focus on "property rights" represents a shift in emphasis away from the movement goals presented in Arnold's 1989 volume, The Wise Use Agenda. The 25-point Agenda reads like a wish list for natural resource interests on the public lands, and most Wise Use campaigns have centered on public lands issues such as grazing, hard rock mining, timber harvesting, and petroleum exploration. By casting environmental regulations as a threat to individual property rights and economic security, Wise Use has found a means to tap the vast demographic base located in suburban and urban areas (as well as the deep pockets of a new set of corporate sponsors). In contrast, organizing around natural resource industries and control over federal lands generally limits movement support to the rural West. Also, with the regulatory takings approach, Wise Use has discovered powerful populist organizing "handles." Focusing on such issues as wetlands designation, controls on urban growth, and "wild and scenic" rivers designation--rather than industrial contamination of water supplies or minimum wage statutes--the movement has developed "little people" messengers for its big business agenda. Finally, Wise Use strategists have endeavored to use regulatory takings doctrine as a bridge between two distinct and seemingly incompatible movement constituencies: the free marketeer and privatization types, and corporate interests seeking to maintain and expand subsidized access to public lands and resources. Thus, public lands grazing permits have been redefined by the movement as "property rights," and efforts by critics of public lands grazing to bring subsidized permit fees in line with the going rates on private lands are now characterized by some as "takings."

Regulatory takings is by no means the only component of the Wise Use legislative agenda. Other items include measures to free states from federal laws unaccompanied by federal largesse (termed "unfunded mandates") and to turn portions of the public lands over to the states--an old Sagebrush Rebellion demand finding new support among Congressional "devolution" (a new term for "states' rights") advocates. However, "takings" represents the single most comprehensive Wise Use assault on our ability as a society to check the worst excesses of corporate capitalism. Moreover, "property rights" has become a bridge issue linking Wise Use with other right-wing movements. In the Northwest, the multi-state network of the Oregon Citizens Alliance--best known for its campaigns to deny civil rights protections to lesbians and gay men--has declared "property rights" to be one of its top priorities. At the national level, the Christian Right cable television network, National Empowerment Television, broadcasts Wise Use specials on property rights, and in turn, Wise Use publications promote NET as a source of news and commentary. With this expanding base of support, takings may prove to be not only one of most onerous components of the Wise Use agenda, but one of the most viable.

Tarso Ramos is an analyst with the Western States Center in Portland, Oregon. Earlier versions of this article have appeared in several Western States Center publications. To obtain a copy of this article accompanied with footnotes, contact the Western States Center. © 1995, Tarso Ramos.

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