This volume presents a series of papers delivered in 1975 at a conference entitled  The Taking Issue: An Economic Analysis.  It is prefaced with an essay by Professor B. H. Siegan,  the chairperson of the conference. The central paper, by M. Bruce Johnson, decries the present practice of land use regulation without compensation as  Planning Without Prices.   Several distinguished commentators, both legal and economic, comment on Johnson\u27s position. This review will examine some of the major topics discussed in the volume and raise a few objections to its analysis

Abrams, Robert H

English

Florida Agricultural & Mechanical University College of Law

Florida A&M University College of LawScholarly Commons @ FAMU LawJournal Publications Faculty Works1978Planning Without Prices: The Taking Clause As ItRelates to Land Use Regulation WithoutCompensation [Review of book edited by BernardH. Siegan]Robert H. AbramsFlorida A & M University College of Law, robert.abrams@famu.eduFollow this and additional works at: http://commons.law.famu.edu/faculty-researchPart of the Constitutional Law Commons, and the Land Use Law CommonsThis Book Review is brought to you for free and open access by the Faculty Works at Scholarly Commons @ FAMU Law. It has been accepted forinclusion in Journal Publications by an authorized administrator of Scholarly Commons @ FAMU Law. For more information, please contactlinda.barrette@famu.edu.Recommended CitationRobert H. Abrams, review of Planning Without Prices: The Taking Clause As It Relates to Land Use Regulation WithoutCompensation, edited by Bernard H. Siegan, 24 Wayne L. Rev. 1561 (1978)BOOK REVIEWROBERT H. ABRAMStReviewing: PLANNING WITHOUT PRICES: THE TAKINGCLAUSE AS IT RELATES TO LAND USE REGULATION WITHOUTCOMPENSATION. Edited by Bernard H. Siegan. Lexington,Mass.: D.C. Heath & Co., 1977. Pp. 191. $14.50.This volume presents a series of papers delivered in 1975 ata conference entitled "The Taking Issue: An EconomicAnalysis."' It is prefaced with an essay by Professor B. H.Siegan, 2 the chairperson of the conference. The central paper,by M. Bruce Johnson, decries the present practice of land useregulation without compensation as "Planning WithoutPrices." Several distinguished commentators, both legal andeconomic, comment on Johnson's position.4 This review will ex-amine some of the major topics discussed in the volume andraise a few objections to its analysis.Siegan's preface has unusual prominence for an introduc-tion. 5 In part this stems from the fact that the publication of thebook lagged more than a year and one-half behind the con-ference and in the interim several judicial opinions had beenrendered which allegedly required exegesis. In part this reflectsthe need to establish a working understanding of the concept oftAssociate Professor of Law, Wayne State University. B.A., 1969; J.D. 1973,University of Michigan.1. The legal problem, which is generically described as the taking issue,arises in determining when in the wake of governmental regulation compensationmust be paid under the due process clause of the fifth amendment (applied to thestates by the fourteenth amendment). The relevant language is: "nor shall privateproperty be taken for public use without just compensation." U.S. CONST., Amend.V.2. Siegan, Editor's Introduction: The Anomaly of Regulation under the Tak-ing Clause, in PLANNING WITHOUT PRICES (B. Seigan, ed. 1977).3. Johnson, Planning Without Prices: A Discussion of Land Use Regulationwithout Compensation, in PLANNING WITHOUT PRICES 63 (B. Siegan, ed. 1977).4. They are: Anderson, Some Thoughts on the Political Economy of LandUse Regulation; Hagman, Land Use Regulation without Compensation: A Mugwum-pian View; Davis, A Political Economist Views the Taking Issue; Tarlock, A Cor-relative Rights Approach to the Taking Issue; Johnson, Response to the Discussants of"Planning Without Prices," in PLANNING WITHOUT PRICES (B. Siegan, ed. 1977).5. The essay occupies 62 of 184 pages in the volume, thus exceeding inlength the principal essay of Johnson, even when Johnson's rebuttal remarks are add-ed.1561WAYNE LAW REVIEWprivate property6 at the outset of any discourse on the takingissue. Siegan's preface, however, becomes an assault on thespate of modem precedents7, which have broadened the ambitof permissible governmental activity in the area of land useplanning. In the face of calls for even broader governmentalfreedom from the compensation requirement of the Bill ofRights,8 Siegan offers a redefinition of the problem.Siegan attempts to draw from the condemnation and inversecondemnation cases, which were decided under the Holmesianformulation from Pennsylvania Coal Co. v. Mahon,9 a defini-tion of private property that includes as a compensible propertyinterest the invasion of landowner expectations of future profitsor profitable uses.10 The relevant inquiry becomes: When may aproperty owner successfully pursue an action for inverse con-demnation. Taken together, the inverse condemnation decisionspresent a series of ad hoc determinations that in the particularcircumstances the government must compensate. It is not ob-vious that an award of damages to a particular plaintiff is in-dicative of the appropriate outer limits of governmentalauthority, let alone a basis for wholesale invalidation of theregulatory powers of government." While Siegan does not ex-plicitly make such a claim, he appears to have such a goal inmind, for if his definition of private property is correct, then allthat is left is a mechanical denouement reciting that all govern-6. Taking issues occur in many contexts where the asserted effect of govern-mental activity is the curtailment or destruction of private property. See, e.g., Millerv. Schoene, 276 U.S. 272 (1928) (legislation requiring destruction of private propertyto prevent spread of blight); Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922)(legislation prohibiting full exercise of privately owned mineral rights to avoid sub-sidence of residentially occupied lands); Hadacheck v. Sebastian, 239 U.S. 394 (1915)(restriction on type of use to be made of a parcel, which forced elimination of a highlyprofitable existing use, leaving no commensurate use available).7. See, e.g., Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926);San Diego Bldg. Contractors Ass'n v. City Council, 13 Cal. 3d 205, 529 P.2d 570, 118Cal. Rptr. 146 (1974); Golden v. Planning Bd. of Ramapo, 30 N.Y.2d 359, 285N.E.2d 291, 334 N.Y.S.2d 138 (1972).8. See THE USE OF LAND: A CITIZEN'S POLICY GUIDE TO URBAN GROWTH(W. Reilly ed. 1973); F. BOSSELMAN. D. CALLIES, & J. BANTA, THE TAKING ISSUE(1973); Sax, Takings, Private Property and Public Rights, 81 YALE L.J. 149 (1971).9. 260 U.S. 393 (1922). Justice Holmes' famous formulation is that a regula-tion which is too restrictive becomes a taking. Id. 413.10. Siegan's discussion of Almota Farmers Elevator & Warehouse Co. v.United States, 409 U.S. 470 (1973), and Keystone Assocs. v. State, 82 Misc. 2d 620,371 N.Y.S.2d 814 (Ct. Cl. 1975), affd, 33 N.Y.2d 848, 307 N.E.2d 254, 352N.Y.S.2d 194 (1972) is particularly in point. Siegan, supra note 2, at 7-8, 15-16.11. See generally L. TRIBE, AMERICAN CONSTITUTIONAL LAW 459-65 (1978).[Vol. 241562BOOK REVIEWmental land use controls interfere with such property interests,and are therefore appropriately viewed as takings. 12The Johnson paper starts with a similar premise, that "[i]t isimportant to agree at the outset that the debate is over propertyrights . -.13 Unlike Siegan, Johnson initially leaves the term"private property" undefined so that the issue becomes whatproperty interests will be protected by the taking clause.Johnson demonstrates the profundity of the consequences whichwill follow from the definition ultimately chosen. Johnson'sargument is essentially simple although its legal underpinningsare difficult to follow: absent some price mechanism, govern-ment regulators of property use will overregulate, causing aseverely sub-optimal utilization of land as a resource. Johnson'ssolution is an indirect one, calling for further research into therole of property rights in civil and economic liberty. 14 Implicitin his plea' 5 is the threat that too narrow a definition of com-pensible property interests will vitiate important constitutionalguarantees of individual freedom.' 6The legal reasoning which prefaces the bold leap to such aconclusion is deserying of explication. Initially Johnson notesthat the Constitution's language sets up two entirely separateprotections-one requiring due process for all deprivations oflife, liberty, and property; another requiring (without apparentqualification) compensation when private property is taken forpublic use. 1 He then notes that the broad due process protec-tion is a qualified protection; the police power of the state canpermissibly operate to the detriment of individual claims of pro-tected interests. Moreover, the concept of permissible regulationhas grown from nuisance abatement, a long acknowledgedgovernmental prerogative, to nuisance prevention with the 1926decision of Euclid v. Ambler Realty Co. 18 Shortly thereafter, the12. Indeed, Siegan attempts such a demonstration, with emphasis on refutingthe propriety of the special deference given to zoning regulation. See Siegan, supranote 2, at 16-50.13. Johnson, supra note 3, at 65.14. Id. 104.15. Johnson's discussion makes this point explicit. Id. 79-81.16. Perhaps overstating his own position, Johnson, in conclusion, raises thespectre that other guaranteed freedoms will also perish in the wake of uncheckedgovernment regulation: "Until this task is accomplished, fundamental individualrights will continue to erode in the face of pressures to advance the cause c6lbre ofthe day." Id. 104.17. Id. 68.18. 272 U.S. 365 (1926).1978] 1563WAYNE LAW REVIEWdoctrine of substantive due process fell into disrepute,eliminating another check on the potential majoritarian tyrannyof the legislature and the agencies it creates. Reflecting on thisstate of affairs, Johnson, after establishing an unusual model ofconstitutional values, 19 concludes that the "submissive" due pro-cess protection of the fifth amendment offers no protection toproperty. Thus, the taking clause remains the only hope: "[I]fthe state does not pay compensation for damage it does by itsregulation, then private property rights have vanished."20 Oneneed not parse Johnson's words to realize that his empty vesselattitude toward property rights is already filled with intuitivenotions of substantive content. The "damage" that will flowfrom government regulation not accompanied by compensationmust be damage stemming from the destruction of some aspectof private property. In short, Johnson's paper is not neutralbecause he implicitly defines the content of private propertyrights without justifying his choice.In contrast to Johnson's implicit definition of protected pro-perty rights is the definition offered by Professor A. DanTarlock. Tarlock states that: "The current tension betweenprivate property and government regulation arises out of needto assign property rights in common property resources thathave not been previously seen as common." 2' Noting, as doesJohnson, that natural law and natural rights theories of proper-ty have been eclipsed in the twentieth century, Tarlock proceedsin an entirely different direction. He does not seek to reinvestthe private property tradition with new vitality, rather he buildson a model which acknowledges the authority of society tosubordinate individual interests to societal interests. Specifical-ly, Tarlock nurtures the concept that the goal of modern pro-perty law is "to assign [property] rights so that the maximumnumber of users can make an efficient use of the property." 2219. This description of Johnson's constitutional model may, in fact, be toopolite, for the model proposed appears to be nonsense. Johnson envisions a con-tinuum which runs between "absolute police power at one end and the due processprotection at the other." Johnson, supra note 3, at 80. Realistically, however, Johnsonis seeking to assert (albeit inartfully) that the scope and standard of judicial review oflegislative reduction of individual freedom varies depending on the right allegedlyabridged. He argues property should regain its former place, close to speech, in thehierarchy of constitutionally valued and judicially protected freedoms.20. Johnson, supra note 3, at 81.21. Tarlock, supra note 4, at 163.22. Id. 168.1564 [Vol. 24BOOK REVIEWThus, society as a regulator can validly regulate, without payingcompensation, when the object of the regulation is an assertionof the correlative rights in the property, which are "owned" byother property holders or society at large. In contrast, regula-tions which expropriate a benefit and confer it on a broader,more diffuse class are compensable. While this is an interestingthesis, it is not developed with enough detail to allow trulymeaningful discussion. 23The use of economic analysis in Planning Without Prices oc-casions somewhat less comment than did the definition ofprivate property. The presentation is largely direct andunderstandable; the principles applied are familiar even tothose who have only a passing knowledge of price theory andmicroeconomics. There are, however, some interesting wrinklesto Johnson's presentation. For example, Johnson maintains thatthe displeasure of those who object to a private market decisionto develop previously untrammeled natural resources should beignored. This is a specific illustration of the general problem oftreating adverse psychological effects as externalities. 24Although Johnson recognizes that it is theoretically possible tocreate an economic system that considers the welfare of theseremote third parties, 25 he concludes that "this organization ofsociety could theoretically block all economic activity ....Recognizing that a typical market economy will not reflect thepsychological costs to those opposing a particular resource deci-sion, he notes that the alternative method of accounting forsuch costs is state regulation.2 723. See Johnson's intriguing rebuttal on the ground that there is much am-biguity inherent in Tarlock's model regarding the original assignment of correlativeproperty interests. Johnson, supra note 4, at 182-83.24. For a thorough definition of externality, see Johnson, supra note 3, at 74.Johnson quotes Pigou:[O1ne person A, in the course of rendering some service... to a second per-son B, incidentally also renders services or disservices to other persons (notproducers of like services), of such a sort that payment cannot be exactedfrom the benefited parties or compensation enforced on behalf of the in-jured parties.Id., quoting A.C. PIGOu, THE EcONOMICS OF WELFARE 183 (1932).25. This describes a Pareto-optimal system. Stated simply, a transaction isPareto-preferred when there is no one in the society who would feel themself worse offif the transaction were made. A particular set of transactions is Pareto-optimal if allpossible Pareto-preferred transactions have occured. See generally Johnson, supranote 3, at 72-73 and authorities cited therein.26. Id. 76.27. He states, "the market itself will internalize in a private property systemsome (many or few?) of the externalities without state interference." Johnson, supranote 3, at 83.1978] 1565WAYNE LAW REVIEWIn a series of oblique passages, Johnson then discusses thelimitations on state power to regulate in order to avoid the im-position of psychological costs on those opposing a particularresource decision, such as the development of previouslyundeveloped resources. In this analysis, Johnson explores sideconstraints, which he largely defines by example. In his view,for instance, the first amendment free speech guarantee can beconsidered a side constraint that would insulate the sale ofbooks advocating unpopular ideas from state regulation. Whilethere will still be some individuals who may feel less well offbecause the unpopular views are being disseminated, the sideconstraint prevents government from acting to protect theirfeelings. Restated in economic terms, the net effect of side con-straints is to allow analysis of a particular transaction to ignoreexternalities if the cause of those externalities is within the am-bit of the side constraint.Having developed this elaborate analytic superstructure,Johnson is then able to unleash side constraints as a basis for ig-noring the welfare losses of conservationists. Government in-tervention to prevent these losses would appear impossible in aPareto-preferred 28 system because of the presumed diversity ofindividual tastes. Some individuals will feel themselves less welloff as a consequence of the regulation unless compensation ispaid.29 Of course, the payment of compensation would in turnengender disappointment in those who oppose its payment. 30To Johnson, the means of avoiding this unhappy state action isto increase the constraint set of individual rights, particularlythe rights of private property. Thus, it seems Johnson has takenan interesting but circuitous path only to assume hisconclusion.1While it would be possible to comment further on other im-portant themes32 found in Planning Without Prices, this review28. For a definition of Pareto-preferred see note 26 supra.29. Johnson, supra note 3, at 83.30. It is apparent that such individuals exist, see, e.g., Plater, The TakingsIssue in a Natural Setting: Floodlines and the Police Power, 52 TEx. L. REV. 201(1974).31. In fact, Johnson himself seems to say as much. He states:"The larger the constraint set of individual rights, the smaller the set of admissi-ble externalities subject to state action. This approach, which may strike some as afinesse of the problem, reduces the area of controversial activities by definition."Johnson, supra note 3, at 83.32. Johnson's analysis of why bureaucracies produce over regulation and theJohnson-Hagman debate over the impact of land use controls on the poor, are buttwo of many topics which merit attention.[Vol. 2415661978] BOOK REVIEW 1567.has sufficiently conveyed the flavor of the volume and the issuestherein. Although the book is heavily weighted toward Siegan'sposition,"3 which favors market economics as the preferredallocative device, it makes a useful contribution to the literatureon the role of the fifth amendment in the land use planningcontext. Despite its organizational faults and gaps in logic thepapers are well researched and provocative, making it avaluable source of information on the taking issue. The volumeis weakened by the relative brevity of the papers and the inade-quacy of conference paper format for so vast a subject. There isstill much to be said of the taking issue in the planning.context. 433. See, e.g., B.H. SIEGAN, OTHER PEOPLE'S PROPERTY (1976); B.H. SIEGAN,LAND USE WITHOUT ZONING (1973).34. For a recent attempt at clarification in this difficult field see, B.A. ACKER-MAN, PRIVATE PROPERTY AND THE CONSTITUTION (1977). But see Epstien, BookReview, 30 STAN. L. REV. 635 (1978).

Planning Without Prices: The Taking Clause As It Relates to Land Use Regulation Without Compensation [Review of book edited by Bernard H. Siegan]

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Planning Without Prices: The Taking Clause As It Relates to Land Use Regulation Without Compensation [Review of book edited by Bernard H. Siegan]

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