GGeeoorrggeettoowwnn UUnniivveerrssiittyy LLaaww CCeenntteerr SScchhoollaarrsshhiipp @@ GGEEOORRGGEETTOOWWNN LLAAWW 1997 TThhee AArrmmssttrroonngg PPrriinncciippllee,, tthhee NNaarrrraattiivveess ooff TTaakkiinnggss,, aanndd CCoommppeennssaattiioonn SSttaattuutteess William Michael Treanor Georgetown University Law Center, [email protected] This paper can be downloaded free of charge from: https://scholarship.law.georgetown.edu/facpub/1041 38 Wm. & Mary L. Rev. 1151-1176 (1997) This open-access article is brought to you by the Georgetown Law Library. Posted with permission of the author. Follow this and additional works at: https://scholarship.law.georgetown.edu/facpub Part of the Constitutional Law Commons, Courts Commons, Judges Commons, and the Property Law and Real Estate Commons THE ARMSTRONG PRINCIPLE, THE NARRATIVES OF TAKINGS, AND COMPENSATION STATUTES WILLIAM MICHAEL TREANoR• INTRODUCTION The Takings Clause of the Fifth Amendment1 is famous for inspiring disagreement. More than one hundred years have passed since the Supreme Court departed from the original un derstanding of the clause and interpreted regulations as poten tially falling within its ambit.2 Although the passage of time has established the principle that regulations can run afoul of the Takings Clause, the Court has been unable to offer a coherent vision of when compensation is required. 3 Academic commenta tors also have failed to reach agreement on the issue, offering an enormous range of solutions to the takings question.4 The new- * Associate Professor, Fordham Law School. Earlier versions of this Essay were presented at the Institute of Bill of Rights Law Symposium on Defining Takings: Private Property and the Future of Government Regulation held at the College of William & Mary School of Law on April 11, 1996 and at a Fordham Law School fac ulty colloquium. I am grateful to all the participants in those sessions for their help ful and stimulating comments, and I am particularly grateful to Lynda Butler and Neal Deyins. I also thank Louise Halper, Jim Kainen, Bob Kaczorowski, Paul Schwartz, Hank McGee, and John Nagle for their valuable suggestions and Frank Michelman for his discussions about the Armstrong Principle and compensation stat utes. Fordham Law School generously provided research assistance for this project. 1. "[N]or shall private property be taken for public use, without just compensa tion." U.S. CONST. amend. V. 2. See Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362 (1894); William Mi chael Treanor, The Original Understanding of the Takings Clause and the Political Process, 95 COLUM. L. REV. 782, 791-97 (1995) (explaining that the original under standing of the Takings Clause included only physical seizures of property). 3. For an excellent synthesis of different tests employed by the Court, see Andrea L. Peterson, The Takings Clause: In Search of Underlying Principles Part I-A Critique of Current Takings Clause Doctrine, 77 CAL. L. REv. 1299 (1989). For the leading deci sions after Professor Peterson's article, see Dolan u. City of Tigard, 512 U.S. 374 (1994) and Lucas u. South Carolina Coastal Council, 505 U.S. 1003 (1992). 4. See Treanor, supra note 2, at 810-18, 866-75 (listing and discussing academics' differing treatments of the Takings Clause's original understanding and describing 1151 HeinOnline -- 38 Wm. & Mary L. Rev. 1151 1996-1997 1152 WILLIAM AND MARY LAW REVIEW [Vol. 38:1151 est field of controversy involves compensation statutes.5 In a few short years, the property rights movement's demand that both state and national legislatures provide compensation when government regulations diminish property value has won wide spread support, which, since 1994, has begun to translate into legislative success.6 The Contract with America provides that "property owners [are] to receive compensation . . . for any re duction in the value of their property" greater than ten percent.7 Shortly after the 104th Session of the House of Representatives began, its members passed an act requiring compensation when certain regulations decreased the value of land by more than twenty percent.8 Five state legislatures have passed statutes directing that property owners be paid for losses that they suffer as the result of governmental regulations.9 The success of the property rights movement, however, has provoked a powerful response. Academic criticism has been sharp,1 0 and political opposition has been intense.11 Property variations among Takings Clause public choice theories). 5. See infra notes 6-9 and accompanying text. 6. See infra notes 7-9 and accompanying text. 7. Job Creation and Wage Enhancement Act, reprinted in CONTRACT WITH AMEru CA 134-35 (Ed Gillespie & Bob Schellhas eds., 1994). 8. Private Property Protection Act of 1995, H.R. 925, 104th Cong. § 2. 9. Bert J. Harris, Jr., Private Property Rights Protection Act, ch. 181, 1995 Fla. Sess. Law Serv. 1311 (West) (codified at FLA. STAT. ANN. § 70.001 (West Supp. 1996)); Act of June 15, 1995, No. 302, 1995 La. Sess. Law Serv. 344 (West) (codified at LA. REV. STAT. ANN. §§ 3601-3602, 3608-3612, 3621-3624 (West Supp. 1996)); Mis sissippi Agricultural and Forestry Activity Act, 1995 Miss. Laws 379 (codified at MISS. CODE ANN. §§ 49-33-1 to -19 (Supp. 1995)); Private Real Property Rights Pres ervation Act, ch. 517, 1995 Tex. Sess. Law Serv. 3266 (West) (codified at TEx. Gov'T CODE ANN. §§ 2007.001-.006, .021-.026, .041-.045 (West Supp. 1996)); Private Proper ty Regulatory Fairness Act of 1995, ch. 98, 1995 Wash. Legis. Serv. 261 (West) (re pealed by referendum, Nov. 7, 1995). 10. See, e.g., Frank I. Michelman, A Skeptical View of "Property Rights" Legisla tion, 6 FORDHAM ENVTL. L.J. 409 (1995) (critiquing H.R. 925, 104th Cong. § 2 (1995) and S. 605, 104th Cong. (1995)). H.R. 925, which was passed by the House in March, 1995, would compensate property owners if specified government action de valued their property by 20% or more. Id. at 409-10. S. 605, which was introduced in the Senate on March 23, 1995, would compensate property owners in the event specified government action devalued their property by 33% or more. Id. at 401, 417 n.36. See also Carol M. Rose, A Dozen Propositions on Private Property, Public Rights, and the New Takings Legislation, 53 WASH. & LEE L. REV. 265, 293 (1996) (arguing that property rights legislation "could seriously disrupt the balancing effort of takings jurisprudence"). 11. See, e.g., David Postman, Property-Rights Measure Draws Big Contributors on HeinOnline -- 38 Wm. & Mary L. Rev. 1152 1996-1997 1997] ARMSTRONG PRINCIPLE 1153 rights legislation already has been repealed by referendum in Washington state12 and rejected in an Arizona referendum.13 President Clinton has threatened to veto any federal property rights bill. 14 Opponents of compensation statutes accurately have seen in both the proposed and enacted statutes a direct threat to the continued existence of the regulatory state: by requiring compensation for regulations these statutes will make the imposition of many regulations too costly. Given the extraordinary diversity of opinion about when com pensation is owed, it would be only natural to expect that an equal lack of agreement would exist about what purpose the Takings Clause serves. The reality, however, directly contradicts that expectation. Justice Black crisply stated his view of the purpose of the Takings Clause in Armstrong v. United States:15 The Takings Clause is "designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole."16 Justice Black's view has received a remarkable degree of assent across the spectrum of opinion.17 The Armstrong principle has become, according to Professor Glynn Lunney, a part of the "ritual lita ny" employed in takings decisions.18 The principle has been em braced repeatedly by Chief Justice Rehnquist and by Justice Scalia, the judicial champions of a broad reading of the Takings Clause/9 as well as Florida's compensation statute.20 It is con- Both Sides of Fight, SEATI'LE TIMES, Oct. 27, 1995, at A1 (listing groups and individ uals contributing to the fight against Washington state's property rights referendum). 12. See Recent Legislation, 109 HARV. L. REV. 542, 543 n.5 (1995). 13. See Washington State Voters, Arizonans Agree on 'Takings', PHOENIX GAZETI'E, Nov. 20, 1995, at B1. 14. See Property Wrongs, NEW REPUfJLIC, June 17, 1996,. at 8. u.s. 15. 364 40 (1960). 16. Id. at 49. 17. See infra notes 18-22 and accompanying text. 18. Glynn S. Lunney Jr., Compensation for Takings: How Much Is Just?, 42 CATH. U. L. REv. 721, 747 (1993). 19. See, e.g., Dolan v. City of Tigard, 512 U.S. 374, 384 (1994) (Rehnquist, C.J., writing for the mltiority); Pennell v. City .of San Jose, 485 U.S. 1, 9 (1988) (Rehnquist, C.J., writing for the mltiority); id. at 19 (Scalia, J., concurring in part and dissenting in part); Nollan v. California Coastal Comm'n, 483 U.S. 825, 835 n.4 (1987) (Scalia, J., writing for the mltiority); Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 512-13 (1987) (Rehnquist, C.J., dissenting); Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 140 (1978) (Rehnquist, J., dissenting). 20. Bert J. Harris, Jr., Private Property Rights Protection Act, FLA. ANN. STAT. § HeinOnline -- 38 Wm. & Mary L. Rev. 1153 1996-1997 1154 WILLIAM AND MARY LAW REVIEW [Vol. 38:1151 tained specifically in the text of, and invoked in support of, vari ous property rights proposals recently introduced in the Sen ate.21 The champions of a narrow reading of the clause, Justices Brennan, Blackmun, Marshall, and Stevens have espoused the 22 Armstrong principle with equal fervor. At one level, this striking unanimity results from Justice Black's broad language. His language avoids confrontation of the hard question: What do fairness and justice require? People with very different ideas about fairness can accept the Armstrong principle while diverging sharply as to what it means. Nonethe less, cultural conventions exist to give the principle meaning. Bruce Ackerman has offered the leading scholarly treatment of cultural conventions concerning the Takings Clause in his book Private Property and the Constitution.23 Ackerman devel ops what the Takings Clause means to "Layman"24 by examin ing "Ordinary language"25 in order to reveal what would "be 26 called takings in ordinary life." He argues that Layman un derstands the word "property" to refer, most fundamentally, to tangible, physical possessions and the word "take" to refer, most 27 fundamentally, to physical seizures. Thus, when the govern ment physically seizes his property and uses it for some purpose, 70.001(3)(e) (West Supp. 1996). 21. See 141 CONG. REc. S10037 (daily ed. July 14, 1995) (statement of Sen. Gramm); id. at S4504 (daily ed. Mar. 23, 1995) (statement of Sen. Hatch); id. at S4497 (daily ed. Mar. 23, 1995) (statement of Sen. Dole); id. at S567 (daily ed. Jan. 6, 1995) (statement of Sen. Hatch); id. at S391 (daily ed. Jan. 4, 1995) (statement of Sen. Hatch). 22. See, e.g., Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1071 (1992) (Stevens, J., dissenting); Bowen v. Gillim-d, 483 U.S. 587, 608 (1987) (Stevens, J., writing for the majority); United States v. Locke, 471 U.S. 84, 106 n.15 (1985) (Mar v. shall, J., writing for the majority); Kirby Forest Indus. United States, 467 U.S. 1, 14 n.23 (1984) (Marshall, J., writing for the majority); San Diego Gas & Elec. Co. v. City of San Diego, 450 U.S. 621, 656 (1981) (Brennan, J., dissenting); Webb's Fabu lous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 163 (1980) (Blackmun, J., writing for the majority); Penn Central, 438 U.S. at 123-24 (Brennan, J., writing for the ma jority); National Bd. of YMCA's v. United States, 395 U.S. 85, 89 (1969) (Brennan, J., writing for the majority). 23. See BRUCE A. ACKERMAN, PRIVATE PROPERTY AND THE CONSTITUTION 113-67 (1977). 24. See id. (discussing "Layman's Things"). 25. Id. at 129. 26. Id. at 139. 27. See id. at 123-36. HeinOnline -- 38 Wm. & Mary L. Rev. 1154 1996-1997 1997] ARMSTRONG PRINCIPLE 1155 Layman would say that his property has been taken. Similarly, using "standard English," Layman would also describe his prop erty as having been taken when the government destroys it.28 Finally (and most problematically), when government renders something useless, Professor Ackerman argues that Layman again would say that that thing has been taken from him be cause "the principal point of property talk is to permit Layman to identify some things in his environment that he may exploit to his advantage without incurring adverse social sanction."29 To say that an individual still owns something that no longer has any value is to "exhibit[ ] either a bad sense of humor or a complete ignorance of the point of property-talk in American society."30 Ackerman's primary analytic tool is linguistic. Rather than drawing on any empirical data indicating when lay people be lieve property has been taken and compensation owed, he focus es on w:hat the relevant terms mean in everyday speech. The claims he makes have an intuitive appeal: they seem to capture common understanding. Moreover, the categories of situations he identifies as being ones in which the layperson believes her pr9perty to have been taken-ones in which the property is physically seized, or destroyed, or stripped of all value-are the ones that courts treat as easy cases for compensation (even though scholars often disagree with this result).31 Judicial prac tice thus supports the existence of cultural conventions. In this Essay, I argue that there is an additional category of cases in which there is a cultural convention that fairness re quires compensation. This category consists of cases in which unanticipated regulations destroy a significant portion of the total assets of a property owner. From a legal vantage point, these cases are very different from those situations Ackerman discusses: courts will not necessarily order payment to be made to these property owners nor will they necessarily invalidate the 28. Id. at 130. 29. Id. at 140. 30. Id. 31. Indeed, one of the central points of Ackerman's book is that there is a gap in the takings realm between the lay perspective, which is reflected in much of the case law, and the views of "sophisticated judges and lawyers of the present day." I d. at 168. HeinOnline -- 38 Wm. & Mary L. Rev. 1155 1996-1997 1156 WILLIAM AND MARY LAW REVIEW [Vol. 38:1151 regulations. Courts will not always order compensation because judicial takings inquiries typically focus on the harm to the property, not on the actual harm to the property owner. If a reg ulation equally affects the value of Blackacre and Whiteacre, courts will analyze the cases of the owners of Whiteacre and Blackacre identically. The courts will treat the cases in similar fashion even if the owner of Whiteacre also owns many other properties that are not affected by the regulation, and the owner of Blackacre owns nothing else and thus is deprived of most of the value of her total assets by the regulation. As a matter of constitutional interpretation and the institu tional role of the courts, this result is the correct one. The fact that courts will not direct compensation, however, does not mean that legislatures should not provide it. In this Essay, I argue for compensation statutes at the state and national level designed to ensure compensation in the final category of cases described above, those in which the total net worth of a property owner is dealt a disproportionate blow as a result of a newly instituted government regulation. At the outset, the limited goals of this Essay should be made clear. It is an initial, but admittedly partial, attempt to sketch out a new kind of compensation statute. It begins from the twin premises that takings law and compensation practices should reflect the Armstrong principle-the principle that individuals should not bear an unfair share of public burdens-and that this principle should be substantiated through cultural conventions. In other words, I start from the assumption that compensation is due in at least those cases in which there is a consensus that it should be provided and then offer a model compensation stat ute designed to provide compensation in those cases. My claim is not that there are no additional cases in which compensation should be paid; only that compensation statutes should, at a minimum, cover this category of cases. Neither will I attempt to offer a full defense of the legitimacy of these premises. They seem to me, however, to be obviously correct. A democratic gov ernment should not treat its citizens in a way that is generally thought to be unfair.32 32. The view that takings law should reflect cultural conventions is one that has HeinOnline -- 38 Wm. & Mary L. Rev. 1156 1996-1997 1997] ARMSTRONG PRINCIPLE ' 1157 The enterprise of this Essay is important, in part, for pruden tial reasons. Though critics of the property rights movement's compensation statutes effectively have revealed a range of those statutes' shortcomings,33 they have not offered an alternative vision for what compensation statutes should look like. As a political matter, this is a mistake. The absence of an alternative makes the property rights movement's proposals significantly more attractive to many people. Although many individuals may find these statutes too broad, the statutes offer the only mecha:. nism available to help those who, despite being greatly harmed by regulation, have no hope of judicial redress. My proposal seeks to remedy unfairness without simultaneously making reg ulation impossible. In addition, statutes of the kind I propose here are necessary if the Takings Clauf:!e is to reach its appropriate role in the con stitutional framework. In the past few years, process theories about the Takings Clause have achieved prominence in scholarly debates regarding the clause. 34 These theories are, to quote Professor James Krier, the "latest fad in the field."35 Most pro ponents of process theories (myself included) believe that courts should defer to the decisions made by the majoritarian political process about regulation and compensation, ·except in those cas es in which reason exists to suspect process failure.36 In focus ing on the judicial role, however, process theorists have not offered a complementary theory laying out an appropriate framework for majoritarian decisionmakers' compensation deter- important support in the scholarly literature. In particular, it lies at the heart of the approaches of Professors Fischel and Ellickson. See WILLIAM A FISCHEL, REGU LATORY TAKINGS (1995); Robert C. Ellickson, Suburban Growth Controls: An Econom ic and Legal Analysis, 86 YALE L.J. 385, 416-424 (1977). 33. See, e.g., Property Wrongs, supra note 14. 34. See, e.g., FISCHEL, supra note 32; Daniel Farber, Public Choice and Just Com pensation, 9 CONST. COMMENTARY 279 (1992); Saul Levmore, Just Compensation and Just Politics, 22 CONN. L. REv. 285 (1990); Saul Levmore, Takings, Torts and Spe cial Interests, 77 VA. L. REV. 1333 (1991); Glynn S. Lunney Jr., A Critical Reexami nation of the Takings Jurisprudence, 90 MICH. L. REv. 1892 (1992); Marc R. Poirier, Takings and Natural Hazards Policy: Public Choice on the Beach Front, 46 RUTGERS L. REV. 243 (1993); Treanor, supra note 2. 35. James E. Krier, Takings from Freund to Fischel, 84 GEO. L.J. 1895, 1908 (1996) (book review) (reviewing FISCHEL, supra note 32). 36. See, e,.g., Treanor, supra note 2, at 784, 855-78. HeinOnline -- 38 Wm. & Mary L. Rev. 1157 1996-1997 1158 WILLIAM AND MARY LAW REVIEW [Vol. 38:1151 minations. My proposal here represents an effort to start filling that gap. The project of the Essay, then, is two-fold: to demonstrate the current consensus and to develop the case for a new kind of com pensation statute. To demonstrate the current consensus, I start with a surprising (because partisan) source: the narratives told by proponents of the property rights movement. NARRATIVES OF THE PROPERTY RIGHTS MOVEMENT The property rights movement derives its political strength from the power of its stories. As the National Review has ob served, "[T]he real impetus for the property-rights movement is outrage at specific cases of government abuse of landowners."37 Those stories of abuse are almost formulaic. Thus, Representa tive Billy Tauzin, the chief sponsor of one leading proposal, of fers what one environmentalist has dubbed "the favorite 'horror story' of Endangered Species Act (ESA) opponents. "38 This insanity came to a head last year during the California brush fires. Many people watched in dismay as their homes burned down because they were not allowed to dig around them and create fire breaks. Why? Because the US Fish and Wildlife Service summarily and arbitrarily determined that such precautions would disturb the habitat of the kangaroo rat. Imagine that. A rat!39 Representative Tauzin tells another prominent horror story featuring the Army Corps of Engineers as the wrong-doers: 37. Jonathan H. Adler, Takings Cause, NAT'L REV., Dec. 19, 1994, at 32, 35. 38. Michael Allan Wolf, Overtaking the Fifth Amendment: The Legislative Backlash Against Environmentalism, 6 FORDHAM ENVTL. L.J. 637, 644 (1995) (citing GAO De bunks Endangered Species "Horror Story", Bus. WIRE, July 14, 1994 (quoting Michael Bean, Chair of Environmental Defense Fund wildlife program), available in LEXIS, News Library, Arcnews File). 39. Wolf, supra note 38, at 644 (citing W.J. "Billy" Tauzin, 'If You Take It, Pay For It!': Something's Wrong When a Rat's Home Is More Important Than an American's Home, ROLL CALL, July 25, 1994, available in LEXIS, News Library, Arcnws File; W.J. "Billy" Tauzin, Private Property & Public Rights, CHRISTIAN SCI. MONITOR, Aug. .1 5, 1994, at 19). HeinOnline -- 38 Wm. & Mary L. Rev. 1158 1996-1997 1997] ARMSTRONG PRINCIPLE 1159 [T]he Chaconases ... bought their home from a family called the Gautreaus. The Gautreaus built their home. They built it first checking with the Corps of Engineers to see if it was all right to dig _a pond and to use the material from the pond as a foundation for the home. The Corps said, "No problem." They built the home. Then they built another home across the street and sold that first home as an investment to the Chaconases. Oh, but guess what happened in the meantime. The Corps of Engineers showed up because some neighbor did not like the drainage situation in the area and reported him to the EPA. Mr. Chairman, the Corps of Engineers showed up and said to the Chaconases, new owners, "You may have to take down part of your home because it's built on a wetland," and the Chaconases said, "What's going on here? Did anybody notice me before I bought this home that it was a wetland?" The answer was no. [The Chaconases and the Gatreaus subsequently learned from the Corps of Engineers that the road to both their homes crossed a wetland and could not be used. Gautreau asked a government official how he could continue to use his home.] And that official of this U.S. Government who is paid by the taxes that Mr. Gautreau spends each year, sends to this Government, has the arrogance, the audacity, to tell that man, "Take a helicopter. You want to get home after noon, after work, you've sweated and toiled and sent your tax dol lars to this government, take a helicopter because we're tak ing your road. mo Representative Jack Fields offers another narrative that scholar Michael Allan wolf describes as a "morality tale [that] is a favorite among opponents of the ESA. mt In Maryland, a couple was prohibited from preventing ero sion on their property because the government told them that it might destroy tiger beetles. Meanwhile, a fifteen-foot sec tion of their property plunged into the bay. Their home is now the endangered species.42 40. 141 CONG. REC. H2544 (daily ed. Mar. 2, 1995) (statement of Rep. Tauzin). 41. Wolf, supra note 38, at 646. 42. ld. at 645-46 (citing 140 CONG. REC. E225 (daily ed. Fe};l. 23, 1994) (statement HeinOnline -- 38 Wm. & Mary L. Rev. 1159 1996-1997