IV. BENEFITS AND CHALLENGES OF THE ADDITIONAL TAKINGS RULE
Like any article that proposes a significant change to regulatory takings law, this Article would not be complete without a discussion of the likely practical impacts of its proposed rule for veiled takings of airspace easements. Takings laws ultimately influence the allocation of scarce resources among governments and private citizens, so fine-tuning such laws can have important impacts on society. (170) If the Supreme Court were to adopt the supplemental takings rule for veiled airspace easements outlined in Part III above, or if Congress were to enact the rule, how might the new rule affect the long-run productivity of the nation's airspace? And what sorts of unintended consequences could result from the rule?
Given the critical role that airspace plays in renewable energy and sustainable development, (171) clearer takings protections for airspace have the potential to simultaneously strengthen private property rights and promote sustainability. These dual benefits are particularly noteworthy, given that property rights protection and environmentalism are often at odds in the land use regulatory context. (172) The following parts examine how the rule for veiled takings of airspace easements advocated in this Article would increase the overall productivity of the nation's airspace and clarify an ambiguous area of takings law. They also acknowledge and address some potential criticisms of the rule.
More Efficient Use of Airspace
The supplemental takings rule proposed in this Article would not only promote more equitable treatment of landowners vis-a-vis the government; it would also encourage more efficient use of private airspace. By compelling public entities to internalize more of the social cost of taking negative airspace easements through regulation, the rule would discourage governments from overregulating airspace solely to secure it for their own use.
A simple equilibrium model is helpful in highlighting the efficiency-promoting benefits of the proposed rule. (173) The model begins by distinguishing rival airspace uses from non-rival uses. Many common airspace uses are largely nonrival, meaning that they neither preclude nor increase the cost of several other coincident uses of the same space. (174) For example, a single column of open airspace can simultaneously deliver sunlight to a neighborhood's gardens, skylights, and solar panels, preserve a parcel's territorial views, and carry electromagnetic signals at dozens of different frequencies to satellite dishes, radio receivers, and cell phones. (175) Multiple parties can concurrently enjoy all of these nonrival uses of the same airspace without disrupting each other. In contrast, some airspace uses are primarily rival, tending to interfere with or prevent other uses of the same space. For instance, a landowner who grows a tree or erects a structure in airspace imposes costs on neighbors by interfering with their views, sunlight access, or other rival or nonrival uses of the space. (176)
Obviously, some airspace is most valuable to society as a place for rival uses such as trees and buildings, while other airspace is more socially valuable as an open space capable of serving various nonrival uses. Height restrictions and other laws prohibiting rival airspace uses can promote the social welfare by preserving certain airspace as a sort of "conservation commons" for nonrival uses--a "commons whose most efficient use is nonuse" (177) in the physical sense. (178) By optimally balancing rival and nonrival airspace uses, airspace restrictions can maximize the productivity of the airspace above a community. Framed more rigorously within microeconomic theory: airspace restrictions in a given area are cost-justified up to some equilibrium height at which the marginal social benefit of allowing rival use of an additional inch of the space ([MB.sub.r]) equals the marginal social cost to non-rival users of allowing the rival use within that inch of space ([MC.sub.r]). (179) This equilibrium height is shown as H* in Figure A below.
[FIGURE A OMITTED]
Public entities that impose veiled airspace easement regulations like those described in Part II.A above abandon their pursuit of H* and instead calibrate airspace restrictions based on their own resource needs. To illustrate the inefficiency of such restrictions, reconsider the fictional city of Suntown described in Part II.A.3. (181) Suntown had planned to install solar panels on its city hall and feared that future building construction in the area could ultimately shade its panels. Assuming that the existing 120-foot height restriction in the relevant area of Suntown was socially optimal, that restriction height would corresponded to H* in Figure A. In contrast, securing adequate solar access for Suntown's panels required that construction heights on blocks immediately south of the city hall be limited to just 60 feet, a level corresponding to Hi in Figure A.
Suppose that the takings rule for veiled airspace easement regulations proposed in Part III above had applied in Suntown. Under the rule, Suntown's only available means of preventing buildings from occupying the airspace between H* and Hi would have been to acquire solar access easements from neighbors through voluntary purchases or eminent domain. In either case,
Suntown would have had to pay amounts approximating fair market value to obtain the easement rights. Assuming that Suntown's officials acted rationally on behalf of the city and were accurately informed, they would have determined that the city's cost of such easements exceeded the benefits of protecting solar access on the roof of the city hall. Suntown thus would have opted not to purchase the easements. Such a decision would have produced the socially optimal outcome, permitting buildings to occupy the space between H* and [H.sub.1]--a rival use for that airspace that was of greater social value than the value of keeping the space open for solar access and other nonrival uses. (182)
Of course, in the original Suntown example, the proposed takings rule did not apply. Suntown was thus able to acquire solar access protection by amending existing height restrictions to make H; the new restriction height on those parcels immediately south of the city hall that posed a shading risk. These increased restrictions prohibited development within the airspace between H* and [H.sub.1], even though the marginal benefit of allowing buildings--a rival use--within that space would have exceeded the marginal costs that such development would have imposed on Suntown and other nonrival users. By precluding socially optimal use of the airspace between H* and [H.sub.1], Suntown's ordinance generated a deadweight loss represented by the shaded area in Figure B below. This deadweight loss arose because the potential development value of the airspace between [H.sub.1] and H* exceeded the aggregate value of Suntown's solar access and of all other nonrival uses of the space protected by the restriction. (183) Such deadweight losses are a risk under current regulatory takings laws, which provide no clear rule to compel public entities like Suntown to weigh the social costs of veiled takings of airspace easements. (184)
[FIGURE B OMITTED]
Similar deadweight losses can arise when the FAA restricts wind energy development solely to prevent interference with the DOD's radar systems. The DOD is often the "cheapest cost avoider" in these disputes, capable of preventing radar interference with wind turbines at a lower social cost than the alternative approach of prohibiting the turbines. (185) As mentioned above, FAA restrictions aimed at protecting military radar systems have significantly slowed valuable wind energy development in recent years, even though relatively low-cost radar system upgrades are often available that could prevent wind turbine conflicts. (186) In many cases, the costs of such upgrades are considerably lower than the potential social benefits of wind farm projects that are abandoned or postponed due to the FAA's restrictions. (187) In the context of these conflicts between wind energy development and the DOD, the deadweight loss in Figure B reflects the positive difference between the social benefits lost due to abandoned and delayed wind farm projects and the cost of the military's upgrading of its own radar equipment. By enabling the federal government to hinder wind farm developments in private airspace at little or no expense, current takings laws incentivize the government to excessively obstruct these valuable projects.
Under the supplemental takings rule described in Part III above, such deadweight losses would arise less frequently because the federal government would be obligated to compensate landowners for restrictions of non-navigable airspace aimed at preventing disruption of the DOD's radar. The rule would compel the DOD to either update its radar equipment or purchase airspace easements from landowners sufficient to protect against interference with wind turbines. Assuming that the DOD were acting rationally and with perfect information under such a policy, the DOD would engage in a cost-benefit analysis and ultimately elect to restrict wind energy development only in cases where the cost of upgrading its radar exceeded the potential social value of the wind farm at stake. This ability to incentivize governments to internalize more of the social cost of veiled airspace easement regulations is a primary benefit of the proposed takings rule. (188)
Greater Clarity in Takings Law
In addition to promoting more efficient use of scarce airspace, the supplemental takings rule described in Part III above would also provide needed clarity to regulatory takings law as it relates to airspace. The greater clarity afforded under the rule would reduce airspace development risk and thereby encourage more investment in...