The Rise of the “Takings” Clause, Part Two

by | Aug 14, 2000 | LAW

"Takings" Reform is Undercut by Relativism

By Larry Salzman

The first part of this article summarized how, although property rights have never been completely protected, they received good protection in the 19th Century. Beginning with the 20th Century, the protection deteriorated until virtually no property was safe from the state’s “police power”: the power to regulate for the “good of the community.”

In 1982, the Supreme Court began to reverse this policy. This reversal was led by pro-property rights reformers whose strategy was to reduce the scope of the “police power.” The leading case that resulted from their efforts is Lucas v. South Carolina Coastal Commission, 505 U.S. 1003 (1992) which, in an opinion authored by Justice Antonin Scalia and relying on the common law of nuisance, held that a South Carolina regulatory agency should be ordered to compensate a landowner for losses resulting from prohibiting him from building two homes on the edge of his eroding beachfront lot.

As most commentators suggest, Justice Scalia’s ruling in Lucas may be the high-water mark for the modern reform of the “takings” clause. Its explicit reliance on the common law of nuisance takes an important step forward defending property rights.

The strategy of the “takings” reformers was to launch the return of property rights by calling upon courts to shrink the “police power,” the power of the state to regulate without compensating the regulated individual. If the power could be reined in, governments could avoid liability for confiscations, and for restrictions on the use of property, only by regulating less.

One powerful statement of this reform was presented to the Court in an amicus curiae brief by a pro-capitalist public interest law firm, The Institute for Justice. The brief was authored, in part, by Richard Epstein, one of the most radical fathers of the “takings” reform movement and renowned for his influential text, Takings, published in 1987. In this brief, the Institute argued that the state must compensate an owner for every deprivation of an “ordinary” use of his property caused by virtually any regulation. “Ordinary” in this context denoted uses that did not violate traditional, usually objective, nuisance laws.

The strategy almost worked. The reasoning of the Lucas decision tracks closely key elements of the Institute’s brief—with a crucial limitation: The rule, incredibly, is limited only to cases where “the State seeks to sustain regulation that deprives land of all economically beneficial use.”1 It gives no security to the owner who is deprived of any less of the productive use of his land.

In addition, it applies in no way to personal property where, “by reason of the State’s traditionally high degree of control over commercial dealings, [the owner] ought to be aware of the possibility that new regulation might even render his property economically worthless.”2

Consequently, Lucas and its progeny have not eliminated the vast majority of uncompensated “takings,” and the number of compensated “takings” has skyrocketed during the past 20 years. Among the continuing compensated “takings” are “redevelopment” projects that include the forced sale of land from one private owner to another facilitated by the power of eminent domain. In the realm of uncompensated “takings,” one finds new rent control laws, in some cities so onerous that they force landlords to rent at actual financial losses; an increase in building or city blocks labeled historic imposing building moratoriums and direct costs on their owners; a massive increase in the acreage defined as “wetlands,” obligating owners to remove those segments of their land from productive use.3

Clearly, then, Lucas is mischaracterized as giving teeth to the “takings” clause. It is, rather, a pathetic assertion of judicial review over more than one hundred years of relentless, unconstitutional legislative degradation of property rights.

Despite its timidity and certain contrary language in the opinion, Lucas was a break from precedent. Having already broken from tradition, one wonders why the Court would have limited limit itself in this way. In fact, the trend of the prior few years indicates that a majority of the Court may have been looking to strike a bold rule in favor of property rights. So why did the Court squander this opportunity?

The answer lies in the legal doctrine of “judicial restraint.” A proper interpretation of this policy has its source in the principle of separation of powers. Originally, when commentators recommended that the judiciary show “restraint,” they generally meant that the Court should respect its Constitutional role. That is, it should neither legislate nor enforce laws, but adjudicate according to the laws—including rendering null those federal statutes exercising powers not enumerated by the Constitution. The attitude was stated early by Chief Justice John Marshall who boasted that during his tenure, the Court “never sought to enlarge the judicial power beyond its proper bounds, nor feared to carry it to the fullest extent that duty required.”4 It also meant that the Court ought not make a broad Constitutional rule where prudence suggested relying on state or federal statutory law.

Early 20th Century courts regularly nullified acts of the legislature, especially those regulating property and economic liberty, as unconstitutional. It accepted the Constitution and an implicit natural rights legal philosophy as its guide: “To sustain the individual freedom of action contemplated by the Constitution is not to strike down the common good but to exalt it.”5 The famous Lochner6 case typified the practice. Lochner centered on a challenge to a New York statute prohibiting bakers from working more than 10 hours per day or sixty hours per week. The Court struck down this law as a violation of liberty of contract. It had no qualm about its moral authority to do so.

In the 1930s, such rulings became an increasing barrier to the New Deal. And as FDR and Congress worked to undermine capitalism, the Court often found itself obligated to strike down programs that enjoyed very wide (if appalling) popular support. As program after program was invalidated, many persons—ignorant of, or antagonistic to individual rights—began to ask a basic political question: by what authority do nine unelected judges claim the power to override the will of legislative and popular majorities?

FDR’s constant refrain was that the court had no such authority. The culmination of the dispute was his infamous “court packing” scheme in which he threatened to appoint one new sympathetic Justice to the Supreme Court for each current member voting against New Deal legislation—effectively eliminating the Court’s independence and exempting New Deal programs from judicial review. Faced with its destruction, and with no explicit, philosophic understanding of individual rights, the Court capitulated.

Judicial restraint became: “A state is free to adopt whatever economic policy may be reasonably deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such
policy, or, when it is declared by the legislature, to override it.”7 An exception may be made, the Court noted, where legislative actions were “palpably in excess of legislative power.”8

To stay within its authority, the Court, it was thereafter said, should give “deference” to the legislative enactments. It must not, as in Lochner, “imperiously” declare its own view of what legislative acts the Constitution prohibits. The judiciary must show “restraint.” The new policy accepted the idea that there is no objective meaning to the Constitution, nor to rights, that there is only a competition of “will”—that of the legislature and that of the Court. A key source of modern “restraint” is this moral relativism.

Yet the Declaration of Independence and the Constitution speak clearly of rights. And it was not certain how rights fit in with the Court’s new approach. The Court continued to use the terminology, if not the substance, of rights.

In 1938, the Court clarified its view with its ruling in United States v. Carolene Products.9 The case was a fairly routine challenge to a New Deal era law regulating the dairy industry. As an aside, in a single footnote, the court announced a dichotomy of rights, separating them into two classes: fundamental and non-fundamental. A law attacked as violating a non-fundamental right is subject to a “presumption of Constitutionality.” This meant that laws affecting the rights regarded as “non-fundamental” would almost never be struck down unless their victims could show essentially that no argument supported by even the barest shred of fact could be made in favor of the legislation. But “fundamental rights,” specifically those identified in the first eight amendments (arbitrarily excepting economic and property rights) might receive some greater degree of judicial review. This footnote now rules the adjudication of virtually every Constitutional case brought before the federal courts.10

Created by judges on the “left,” the entire scheme has not only been accepted, but championed with far greater moral fervor, by those on the “right.”11 The doctrine that undercut rights to make way for collectivist economic policies works equally to undercut rights for collectivist social policies. So while liberals complain that Lochner allowed “activist judges” to stop “the public” from determining the nation’s economic policy, conservatives today complain that “activist judges,” through Roe v. Wade, for instance, stop “the public” from preventing abortion in those states where a majority would outlaw the procedure. Both argue against “judicial activism” in favor of “judicial restraint.”12 Justice Scalia is today among the foremost advocates of “restraint.” This explains his Lucas opinion. Finding nothing in the first eight amendments about a prohibition on the building of houses, or the regulation of personal property, he regards striking down such legislative acts as a judicial usurpation of legislative authority. However, where the government deprives landowners of 100% of their property, he can find a role for the Court. Such deprivations are “palpably excessive” and therefore fall within the authority of judges.

As a conservative, what little authority to defend the right to property Justice Scalia accepts is found not in morality, but in common law (i.e. tradition). And by his reading, there is not sufficient tradition to protect less than total “takings,” or personal property, from state control. So, in fidelity to his ideal, he exempts these objects from the Lucas rule.

This failure illustrates why legal reform requires more than tinkering with the “takings” clause. To save the right to property —and, ultimately, all other rights—the tradition-bound mind of Justice Scalia is insufficient. The task requires a total repudiation of the modern doctrine of judicial restraint and a defense of the moral legitimacy of the judiciary as a co-equal branch of government. Only then can we begin reforming the adjudication of specific Constitutional clauses.

The philosophic collapse of the judiciary’s authority was made final during the New Deal. To restore it, we must answer the crucial question common at that time: by what authority do nine unelected judges claim the power to override the will of legislative and popular majorities?

The answer is, of course, by right. The full defense of that authority was not available to New Deal era thinkers—it required Ayn Rand. It requires the knowledge that rights are not subjective, but objective requirements of society. It requires Ayn Rand’s full, philosophic defense of rights that Jefferson could describe only as “self-evident.”13

The object of America’s brilliant separation of powers doctrine was not some relativist goal of balancing judicial versus legislative “will,” but of subordinating both to moral law.

Judges must look to the objective theory of rights to anchor the meaning of the Constitution. The Declaration implicitly served this purpose for the best 19th Century judges. But the legal philosophy of the Enlightenment could not live long into the 20th Century after the 19th Century collapse of the philosophy’s fundamental core.

The movement against property rights—against all rights—has been so successful in law largely because the guardians of rights were morally disarmed. Objectivism is uniquely able to restore to 21st Century judges the vital moral confidence of their 19th Century counterparts. And more, they will be securely armed against the anti-rights assaults that destroyed their forebears.

1. 505 U.S. 1003. 1027 (1992) (Emphasis in original). The decision also parts company with the Institute’s brief in additional important, but less fundamental, aspects.

  1. Id.
  2. For examples of each, see generally Bernard H. Siegan. Property and Freedom, 111-228 (1997).
  3. Quoted in Siegan at 50.
  4. Adkins v. Children’s Hospital of the District of Columbia. 261 U.S. 525. 560 (1923)
  5. Lochner v. New York, 198 U.S. 45 (1905)
  6. Nebbia v. New York, 291 U.S. 502. 537 (1934)
  7. Id. at 538
  8. 304 U.S. 144 (1939)
  9. See Roger Pilon. “Essay: A Court Without a Compass,” N. Y. Law School L. Rev. 40,999. 1002-1004 (1996) (briefly identifying key 1930s roots of modern Constitutional law).
  10. The paradigmatic example of this phenomenon is Robert H. Bork, Slouching Toward Gomorrah (1996).
  11. Id. See also generally Robert H. Bork, The Tempting of America (1990).
  12. See Ayn Rand “Man’s Rights,” Capitalism: The Unknown Ideal, (1967); see also Leonard Peikoff, Objectivism: The Philosophy of Ayn Rand, 351-369 (1991).



Copyright © The Association for Objective Law. All rights reserved. Republished in Capitalism Magazine by permission of TAFOL.

The Association for Objective Law is a non-profit corporation whose purpose is to advance Objectivism, the philosophy of Ayn Rand, as the basis of a proper legal system.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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