The politics of mine-ing

Common Cause Magazine, Summer, 1994 by Peter Overby

In the overheated real estate market of the 1980s, few places were hotter than Kitsap County, Wash. A half-hour ferry ride across Puget Sound from Seattle, the county was becoming one of the most affluent markets in the continental United States. Its economy was stoked by the Reagan administration's defense buildup, which was pouring millions of dollars into the Puget Sound Naval Shipyard and Trident submarine base.

Kitsap's sudden affluence meant big profits in real estate. Among those hoping to capitalize was a partnership called Ventures Northwest. In the early '80s, Ventures Northwest bought 5.36 acres near Kitsap Mall, a $35 million shopping mecca then in the works. The partners anticipated that developing the pastureland or "flipping" it to another developer would bring them a profit of 450 percent or so on a $467,000 investment.

What they didn't know ruined their plan. The acreage was wetlands, its development severely limited by the federal Clean Water Act. As a succession of prospective buyers backed off, Kitsap County foreclosed on the property for overdue taxes.

The partners are suing Uncle Sam, and not just for the original $467,000. They say taxpayers owe them $2.3 million. The legal logic behind their claim is, like the massive defense spending that had sparked their hopes, largely a product of the Reagan administration.

The Fifth Amendment of the Bill of Rights ends with the so-called takings clause: "... nor shall private property be taken for public use without just compensation." The clause originally was applied when the government needed land for a road, say, or a fort. But in 1922, the Supreme Court said it also covers "regulatory" takings in which a government regulation causes a loss of economic value. This thinking hardly changed for the next 60 years -- until Ronald Reagan's administration, when conservatives yanked the takings clause from obscurity and seized upon a precedent perfect for the go-go '80s: Just compensation was not merely the property's purchase price, or even its current value, but its anticipated return when fully developed. Hence Ventures Northwest's claim for five times the price of the land.

This one strategy had three results. First, conservatives finally got a bumper sticker-sized slogan, "Protect Private Property Rights," that could compete with "Save the Environment."

Second, sympathetic judges are supporting property owners in court. Last month the Supreme Court voted 5-4 to uphold business owner Florence Dolan's lawsuit challenging environmental restrictions in Tigard, Ore. All the briefs filed by property rights groups on her behalf "make it obvious that the pecuniary value of her victory is far less important than the rule of law that this case has been used to establish," Justice John Paul Stevens wrote in dissent. The ruling extends previous pro-development decisions, including a 1992 case in which South Carolina had to compensate developer David Lucas for shore protection measures that kept him from building on two beachfront lots.

And third, the strategy offered a legalistic foundation for something much more radical. If carried to its logical conclusion -- which some conservatives say they wouldn't do -- it could unravel more than half a century of regulations that protect us all. In fact, Charles Fried, Reagan's solicitor general, wrote in his memoir that then-Attorney General Edwin Meese and his subordinates "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. ... If the government labored under so severe an obligation, there would be, to say the least, much less regulation."

For instance, if job-site safety regulations were deemed to cause a major loss of a property's economic value, workers might have to swap higher wages for a safer workplace. Another likely target is the Americans With Disabilities Act, or ADA. A California restaurant owner alleged a taking when he was sued by a disabled lawyer in 1992. The lawyer had tried to use the restroom, found the door-way too narrow for his wheelchair and been forced to crawl across the floor. The restaurateur claimed that ADA compliance would eliminate 20 seating places, unconstitutionally depriving him of income. Two courts have rejected the takings claim.

"Their campaign isn't about protecting private property rights," says Debbie Sease, legislative director of the Sierra Club. "Look below the surface and there's another agenda, and that agenda is an anti-government, anti-community, anti-environmental agenda."

"WE'RE BEING BEATEN"

The regulatory takings issue has been melded with two other causes -- unfunded federal mandates and risk assessment -- into what some environmentalists ironically dubbed "the unholy trinity," a three-pronged attack on federal regulation (see "It's Safe. It's Cheap. Is It Possible?" page 11). They're reluctant to admit it on the record, but the environmental movement has been blindsided.