The Future of Property Rights

AFTER YEARS OF FALSE STARTS, the prospect for the passage of property rights legislation this fall is suddenly a possibility. More than a dozen property rights bills have come before Congress over the last five years, but most have failed to gain the critical support necessary to survive the perilous path through committee, floor debate and ultimate passage. This Congress, however, two companion bills seem poised to succeed.

Representative Elton Gallegly and Senator Paul Coverdell have sponsored nearly identical bills in their respective chambers that have significant bipartisan support. Indeed, the House version, the Private Property Rights Implementation Act of 1997, has more than 220 cosponsors, forty of whom are Democrats; while the Senate version, the Property Owners Access to Justice Act of 1997, has four Democrat cosponsors. The bipartisan support seems especially heartening considering the general lack of media attention that has been afforded to the issue of property rights.

Importantly, the Gallegly and Coverdell bills address the longstanding problem of “ripeness.” The Supreme Court ruled, in essence, that a plaintiff must exhaust all agency and state court remedies before proceeding to federal court in many property rights cases, leaving plaintiffs a nearly impossible task. These bills clarify this requirement and clear up a mess of contradictory and confusing lower court rulings based on the same issue. Specifically, these bills provide that a takings claim “ripens,” that is, it may be heard by a federal court, after one “meaningful” development application has been submitted and then denied, and after one waiver request or appeal to an administrative agency is rejected. Under these proposals, the plaintiff and government can avoid the endless negotiations and gamesmanship that is typically associated with property rights cases.

Two other bills receiving bipartisan support come from Senator Orrin Hatch and Representative Lamar Smith. Their bills address another confusing jurisdictional situation often referred to as the “Tucker Act Shuffle.” While district courts generally hold injunctive power, the power to declare regulations invalid lies with the Court of Federal Claims, which The Tucker Act of 1887 established specifically to adjudicate financial claims against the United States.

For a victim of a regulatory taking, where government actions raise both injunctive and compensation questions, this split in jurisdiction has been a disaster. Most plaintiffs struggle for years just to lock down a forum to hear their case. Typically, the government argues one court against the other, claiming that the case requires compensatory adjudication before the district court, or, conversely, claiming that it requires injunctive adjudication before the Court of Federal Claims. In most cases, the government uses the split in jurisdiction to litigate by attrition, slowly exhausting the resources of the plaintiff on procedural battles.

This practice has had a chilling effect on landowners who know that they cannot compete in a court system that is heavily tilted toward the biggest bidders. The Smith and Hatch bills make the field more fair by removing the competition between federal district courts and the Court of Federal Claims. In essence, the courts would no longer need to settle the question of jurisdiction before either invalidating a regulation or ordering just compensation to an owner for property taken. Each court would more clearly have the power to adjudicate either question. Property owners, while still needing to meet a strict burden of proof, at least would know that the deck was not stacked against them from the outset.

While other aspects of the Bill of Rights have gained widespread attention, property rights, as protected by the Just Compensation Clause of the Fifth Amendment, has not. This fact alone indicates the strength of the issue at the grass roots level. The property rights movement is rising almost entirely from local activity as a host of property owners have found themselves displaced or destitute as a result of government inaction. While elected representatives can, upon a second look, come to realize the justice of a cause, it is more likely that the growing support for property rights on Capitol Hill has more to do with the “restlessness of the natives” than it does with the efforts of bureaucrats, judges and politicians. In fact, progress on legislation has been so quick that it has “surprised opponents of the measures,” wrote the New York Times, “including Clinton administration officials who had considered the property rights issue dormant in Congress.”

And while the importance of the legislation remains the primary reason for its progress, two unrelated events have helped as well. First, the balanced budget agreement has produced the positive side effect of releasing property rights from the eclipse of the annual budget battle. In September, the House held four hearings on property rights or property rights related legislation, and this month the Senate has held two more. The on-going campaign finance reform hearings have also indirectly helped property rights legislation. These hearings have kept the administration’s public relations juggernaut focused on campaign finance issues and away from property rights. With the administration distracted, the facts about the issue have had a chance to slip out from under its heavy hand of misinformation.

Although these legislative measures will not finish the job of property rights reform, they are a necessary and crucial first step. Fixing the procedures for litigating in federal court will move us closer to effectuating the Fifth Amendment in the age of regulation. The next step is for Congress to set a clear standard that the courts may use to determine when regulatory enforcement becomes a taking. Also, and perhaps most importantly, Congress must pass legislation that installs accountability into the regulatory system, requiring agencies to recognize and stand responsible for any unconstitutional activities they perform.

On the whole, however, the news of the last few months has been exciting. In the constant ebb and flow of legislative trends, property rights has found itself riding the current wave of activity, as well it should. The fact that Capitol Hill is finally recognizing a fact obvious to all of us, that government rarely respects party affiliation when taking civil rights, means that property rights will only become more important as the years go by.

Ms. Marzulla is President and Chief Legal Counsel of Defenders of Property Rights.