Regulatory takings and climate change

Significantly reducing the threat of climate change will require collective action. More aggressive government regulation of land use and other economic activity must play a critical role in that effort. Political obstacles aside, the expansion of government regulation, though necessary to avoid serious environmental degradation, risks running headlong into the legal obstacle of the regulatory takings doctrine.

The takings clause of the Fifth Amendment provides that private property shall not be "taken" for public use without compensation. Like other provisions of the Constitution, the takings clause was deliberately written in general terms, with the expectation that its language would be interpreted to apply to specific situations. When the takings clause was added to the Constitution in 1789, its purpose was to require the government to pay compensation only where it used eminent domain to take property for public projects.

Since 1922, however, the Supreme Court has interpreted the takings clause to require compensation for "regulatory takings," where government regulation merely restricts the use of property. Under this rule, the public is sometimes compelled to pay for the privilege of adopting environmental laws that limit harmful businesses activity. The Orwellian notion that environmental regulation limiting the use of property is the same as taking the property has been repeated for so long that it is now gospel.

A closer look, however, reveals that the emperor has no clothes. This construction of the takings clause cannot be justified under any of the major competing theories of constitutional interpretation: textualism, originalism or evolutionary document. If this nation is to have a fighting chance of addressing our environmental problems, the Supreme Court should abolish the pernicious regulatory takings doctrine.

One recent Supreme Court decision, Koontz v. St. Johns River Water Management District, illustrates the corrosive effect of a regulatory takings doctrine. There, a majority indicated that the judicial branch has the power to determine whether a property owner seeking to destroy wetlands as part of a development project could be forced to pay a fee to restore other wetlands. Koontz thus allows judges to second-guess the wisdom of a state's policy to preserve the natural environment.

Where did the court go wrong in interpreting "take" and "regulate the use of" to mean the same thing? Clearly, the takings clause does not grant judges the authority to weigh developer profits against the public interest under any of the major theories of constitutional interpretation.

Textualists claim to enforce a literal, plain meaning of the terms of the Constitution. The plain text of the takings clause, however, does not support a regulatory takings doctrine. The clause provides that private property shall not be "taken" for public use without compensation. Most jurists agree that the word "take" requires compensation only for the government's appropriation of possession or title to property by eminent domain. The notion that a regulation of the use of property could effect a taking requires textualists to do what they are loathe to do - depart from the text.

Like textualism, originalism adopts a fixed view of the Constitution. But originalism transcends plain text, attempting to discern the intent or understanding of the constitutional text at the time it was ratified. The most plausible original meaning of "taking" was the narrow category of direct physical appropriation of property - i.e., eminent domain. Even Justice Antonin Scalia, the leading champion of regulatory takings on the Supreme Court, virtually conceded in Lucas v. S.C. Coastal Council that the clause was not originally intended to encompass regulatory takings, where he said, "it was generally thought [prior to 1922] that the 'takings clause reached only a 'direct appropriation' of property."

In contrast with the mechanical theories of textualism and originalism, the evolutionary theory proposes that the Constitution provides a general framework for governance of a nation that is constantly evolving. This theory considers the text, original understanding, precedent, and the core values embodied in the various provisions of the Constitution and the Declaration of Independence. Evolutionary theory aims to apply changed circumstances, new values, and knowledge gained since the Constitution was drafted. This less rigid model preserves the legitimacy of the Constitution among a citizenry that may grow skeptical of a document that prevents government from responding to problems of the current day. But it does not provide support for a robust regulatory takings doctrine.

For example, regulatory takings does not protect liberty interests as that core value has come to be understood. As used in the Constitution, "liberty" means restrictions on government power to constrain fundamental personal rights such as conscience, freedom of thought, freedom of association, the right to live with one's family, the right to travel, the right to marry, the right to decide whether to bear children, and the right to define one's identity. While the right to be free from a government taking of private property without compensation could also be deemed a fundamental right, regulation of the use of property, in sharp contrast, does not encroach on the liberty interests recognized by the framers as fundamental. Indeed, the right to use property for maximum economic gain enjoys no specific protection under the Constitution. In recognition of these principles, the Supreme Court has drawn a clear distinction between liberty and economic interests protected by the Constitution. Restrictions on the exercise of the fundamental right to liberty are subject to heightened scrutiny, but courts generally defer to the political branches on economic regulations, overturning them only where they are irrational or arbitrary. By allowing courts to conduct non-deferential review of regulation of economic activity, regulatory takings does not promote liberty as that term is used in the Constitution.

Regulatory takings doctrine also is inconsistent with the core constitutional value of equality. The doctrine exacerbates inequality by allowing businesses to benefit from externalizing to the public the costs of their property use, such as power plant emissions of greenhouse gases.

Libertarian proponents of a robust regulatory takings doctrine compare the use of private property with personal rights that have received protection from the Supreme Court, such as freedom of speech and privacy. Under this view, the Constitution should be interpreted in a consistent manner - one interest expressly identified in the Constitution should enjoy the same degree of protection as other interests expressly identified. Through the libertarian lens, the constitutional provisions that protect citizens from deprivation of private property "without due process of law" or "without just compensation," protect an individual's right to use their property for maximum profit, or at least in accordance with their preferences, without regard to the impact of the use on the community. According to the libertarian position, the clause should be adapted to the libertarian ideology, which leans toward self-reliance, meritocracy, and protection of individual wealth.

This reductionist view, however, misses the point of the evolutionary document theory. It is not sufficient to adapt the Constitution to the libertarian view of contemporary norms (even if it is assumed that such norms are generally held, rather than a throw-back to the Gilded Age); that adaptation must also remain faithful to the core and enduring values of the Constitution. There is nothing in the text, original intent, core principles, or the jurisprudence of the Constitution since the New Deal (aside from regulatory takings doctrine) that places unfettered use of property and a laissez-faire economy as fundamental rights on par with liberty, equality, or the right to engage in activity essential to participation in a democratic republic. To the contrary, the Constitution and Declaration of Independence express a desire on the part of the framers for a government that protects and furthers the general health, safety, and welfare through the creation and implementation of laws. There is no support in the Constitution for broad rights to use property - or compensation for restrictions on use - similar to the right of free speech or privacy.

Regardless of the theory of constitutional interpretation that one finds compelling or that has the most currency at a given time, none of the contending theories warrants the Supreme Court's current, expansive application of the takings clause. This realization should cause a long overdue reexamination of the regulatory takings doctrine. The stakes are high - the health of the planet depends on it.

Andrew Schwartz is a partner in the San Francisco environmental law firm Shute Mihaly & Weinberger LLP. His article expanding on this column, titled "No Competing Theory of Constitutional Interpretation Justifies Regulatory Takings Ideology," was published in September 2015 in the Stanford Environmental Law Journal at 34 Stan. Envtl. L.J. 247.