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2 Regulation of Private Property The Takings Clause This chapter addresses land use regulation and more comprehensive forms of economic regulation, including wage and price controls, on the assumption that these are all . . . takings of private property. —­Richard Epstein1 W e now turn to ideological and constitutional law battles over government regulation of economic rights and private property. By “economic rights,” we mean the ability of property owners to use and develop private property as they see fit, or the ability of individuals and businesses to contract with each other for the exchange of goods and services on their own terms. Obviously, in the United States today, these rights are not absolute and are subject to a good deal of government regulation. How much power the government has to regulate these rights, however, has been a matter of intense debate since the late eighteenth century. We discuss these issues in the context of the takings clause of the Fifth Amendment. Most people are familiar with the takings clause as the constitutional provision that requires government to pay compensation to private owners for property it takes for public purposes (for example, when the state takes someone’s land to build a highway). But in a modern, heavily regulated economy, one may argue that government regulations that do not physically seize private property but limit the owner’s ability to develop it also amount to a “taking” of that person’s property rights. On the other hand, if government had to pay private property owners compensation for every regulation it enacted, much of what government does today would have to be shut down. The question is how and where to draw the line. As we discuss in greater detail below, a consequence of the Great Depression and the New Deal in the 1930s was a dramatic change in the Supreme Court’s analysis of when government regulation of private property is constitutional. This permitted much greater government regulation of wages and hours, occupational safety, consumer protection, protection of the environment, and many other areas. Business interests, economic conservatives, and libertarians have attempted to find new arguments to restrain such regulation. Expanding the takings clause to require compensation for regulation has been one of their principal strategies. Members 47 of the Federalist Society are largely responsible for the intellectual resources behind that movement, and for much of the litigation to remake constitutional law concerning the takings clause. In 1985, society member Richard Epstein published Takings: Private Property and the Power of Eminent Domain, in which he argued that any governmental regulation constituted a compensable taking. Epstein’s theory was received as radical by many, including some in the conservative establishment. It has become the linchpin, however, for conservatives’ deregulation efforts. In fact, it is difficult to overstate the power of Epstein’s theory and how far it has carried the organized Right in the past three decades. To do justice to the constitutional issues in this area, we will first have to spend some time exploring the intellectual history and political philosophy of property rights. What is property? Where does a citizen’s entitlement to own and use property come from? What justifies interference with private property by the government in an organized society? Are modern theorists about these matters true to the ideas of our constitutional framers? More contemporaneously, we will be discussing how and when the government can limit the ability of property owners to control what happens on their property: What and where they can develop on their property? (For example, what are their rights when building extra floors onto the terminal at New York’s Grand Central Station or excavating valuable minerals from beneath the surface of their land?) Where and when can environmental agencies limit the impact of private development ? (For example, can the agencies enforce limits on the seashore, or on land with a wetlands designation?) What concessions can government exact from property owners in return for permits to develop their property? (For example, can the government require a retailer to grant public easements for foot traffic in exchange for a building permit to increase the size of her store?) Can government force individuals to sell their homes or land if it will bring broad economic benefits to an entire community? A History of the Takings Clause and Constitutional Protections of Private Property Rights The Fifth Amendment to the U.S. Constitution protects citizens against abuse of government authority: No person shall be held to answer for...


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