Taking charge: protecting property owners from regulators

Reason, July, 1994 by Rick Henderson

DURING THE PAST FEW YEARS, DOZens of grass-roots property-rights organizations have sprung up across the country to protest what their members see as environmental regulations run amok. "After 20 years of dealing with intrusive regulatory regimes in the United States, people are starting to realize these rules are affecting them and aren't protecting the environment," says David Almasi, publicity director of Defenders of Property Rights, a public-interest law firm in Washington, D.C.

The letter-writing and networking campaigns of these tiny organizations have started paying off. In April, Mississippi Gov. Kirk Fordice signed a bill that lets owners demand compensation when new state regulations reduce the value of privately held forest land by 40 percent or more. Since 1991, six states--Arizona, Delaware, Indiana, Utah, Virginia, and Washington--have enacted laws that require environmental regulators to assess the costs they impose on property owners. And 91 property-rights protection bills are pending in 36 state legislatures.

Under most of these bills, whenever a state agency proposes a regulation that would limit an owner's use of his property, such as designating property as wetlands or as habitat for endangered species, the agency has to estimate how much that regulation would reduce the property's value and report the cost. Many of these measures would also require the agency to consider less-costly alternatives to the proposed regulation. (The bills generally do not apply to eminent domain, forfeiture, and compliance with federal or state court orders.)

Thirty-two of the bills go a step further. Whenever a new regulation results in a "taking" of property, the owner can demand either that the state condemn the property and purchase it at fair market value or that the state pay him the amount the regulation would cost him. Most of these bills define a taking as any regulation or other government action that reduces the property's value by more than 50 percent.

As of mid-April, property-protection bills had passed one house of the legislature in 11 states. The bills, says University of South Carolina law professor Steve Smith, "provide sunshine," requiring regulators to think about and publicize the implications of their actions.