Friday, August 19, 2005

Regulatory Takings

The comments section of Protected Species = Endangered Property contains a link to an article written by Walter Williams. He lists some excellent examples and makes points worth repeating:
John Taylor, of Mount Vernon, Va., was ordered not to build a small house on his lot to accommodate his wheelchair-bound wife. The FWS [U.S. Fish & Wildlife Service] says it would harm a bald eagle nest located 90 feet away.

Oregon's Board of Forestry has forced Alvin and Marsha Seiber to set aside 37 acres of their 200-acre commercially harvestable land to protect the northern spotted owl ...

Holding title to private property, all by itself, doesn't mean very much. For example, suppose the government recognizes that you can hold title to your house but forbids you from living in it. The fact that you hold title to the house would be meaningless because the government has restricted your options. By decree the government has reduced the value of your property, and as such it is a "taking" of property without just compensation in violation of the U.S. Constitution.

Let's look at Oregon's Board of Forestry forcing the Seiber family to set aside 37 acres of their 200-acre plot to protect the northern spotted owl. It just might be that protecting the spotted owl is vital to the national interests. But the burden and cost of protecting the spotted owl should be borne by all Americans, not fall on particular Americans -- Mr. and Mrs. Seiber. Justice and fairness require that the Seibers be compensated for the loss in value of their property from having to set aside 37 acres.

Regulations restricting the use of property, even when the original owner still holds title to the property, amount to a taking. As I explained in Giving in a Capitalist System, the bundle of legal rights with regard to ownership has six elements. You may possess the property, control the property, enjoy the property, exclude others from any right to your property, encumber, or lessen, one's rights of ownership, and dispose of the property. In fee simple ownership, the highest level of ownership of real property, these elements are unencumbered and unconditional. When any of the rights are denied, a valuable level of ownership is taken. This is not simply an abstract matter; although value is subjective, value is quantifiable and the existence of value is undeniable. If we look at identical parcels of land and vary the degree of ownership, the higher level of ownership sells for a higher price than the lower, restricted level. When the property is purchased, the purchaser is buying all of the rights associated with the level of ownership he purchases. Even worse than eminent domain, regulatory takings are a much more subversive tactic as they take a purchased property right without just compensation.

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